ALGORAE PHARMACEUTICALS LIMITED - Annual Report 2019

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Living Cell Technologies Limited

ACN: 104 028 042 ASX: LCT OTCQX: LVCLY

ASX ANNOUNCEMENT

Preliminary Final Report 30 June 2019

29 August 2019 – Sydney, Australia & Auckland, New Zealand – Living Cell Technologies Limited today announced the Preliminary Final Report (Appendix 4E) on the financial results for the year ended 30 June 2019. In accordance with Listing Rule 4.3A, the report is attached.

This financial year has been a period of continuing our follow up of NTCELL safety and efficacy in our clinical studies of NTCELL in Parkinson’s Disease and initiating research partnerships with the University of Auckland that target migraine and obesity.

Financial Results

The loss after income tax from continuing operations has increased from a loss of $(374,492) in the year ended 30 June 2018 to a loss of $(3,181,363).

Revenue and other income increased from $767,220 to $769,677 and research and development expenses have decreased from $(3,390,078) to $(3,328,905).

Cash and cash equivalents decreased from $6,861,663 to $4,907,957 due to completing current clinical studies and investing into product opportunities while containing costs.

– Ends –

For further information: www.lctglobal.com

At the company: Media enquires: Ken Taylor Rachael Joel Chief Executive Botica Butler Raudon Partners Tel: +64 9 276 2690 Tel: +64 9 303 3862 Mobile: +64 21 796000 Mobile: +64 21 403 504 [email protected] [email protected]

About Living Cell Technologies

Living Cell Technologies Limited (LCT) is an Australasian biotechnology company improving the wellbeing of people with serious diseases worldwide by discovering, developing and commercialising regenerative treatments which restore function using naturally occurring cells.

As well as NTCELL, LCT is also advancing research collaborations with the University of Auckland to identify products that are candidates for out licensing to global pharmaceutical companies. Projects that have been initiated target obesity and migraine where the lead product candidates utilise patented novel peptide synthetic chemistry technology.

LCT is listed on the Australian (ASX: LCT) and US (OTCQX: LVCLY) stock exchanges. The company is incorporated in Australia, with its operations based in New Zealand.

For more information, visit www.lctglobal.com or follow @lctglobal on Twitter.

Forward-looking statements

This document may contain certain forward-looking statements, relating to LCT’s business, which can be identified by the use of forward-looking terminology such as “promising,” “plans,” “anticipated,” “will,” “project,” “believe,” “forecast,” “expected,” “estimated,” “targeting,” “aiming,” “set to,” “potential,” “seeking to,” “goal,” “could provide,” “intends,” “is being developed,” “could be,” “on track,” or similar expressions, or by express or implied discussions regarding potential filings or marketing approvals, or potential future sales of product candidates. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no assurance that any existing or future regulatory filings will satisfy the FDA’s and other health authorities’ requirements regarding any one or more product candidates nor can there be any assurance that such product candidates will be approved by any health authorities for sale in any market or that they will reach any particular level of sales. In particular, management’s expectations regarding the approval and commercialisation of the product candidates could be affected by, among other things, unexpected clinical trial results, including additional analysis of existing clinical data, and new clinical data; unexpected regulatory actions or delays, or government regulation generally; our ability to obtain or maintain patent or other proprietary intellectual property protection; competition in general; government, industry, and general public pricing pressures; and additional factors that involve significant risks and uncertainties about our products, product candidates, financial results and business prospects. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. LCT is providing this information and does not assume any obligation to update any forward-looking statements contained in this document as a result of new information, future events or developments or otherwise.

Living Cell Technologies Limited

ABN: 104 028 042

Appendix 4E full year ended 30 June 2019

(Previous corresponding period: Year ended 30 June 2018)

Results for Announcement to Market

	2019	2018
	$	$
Total revenue and other income	769,677	767,220
Total revenue and other income	769,677	767,220
Loss before income tax expense	(3,477,517)	(576,294)
Income tax benefit	296,154	201,802
Reported net loss after tax attributable to members of the parent entity	(3,181,363)	(374,492)

Reported

Total revenue and other income increased 0.3% to $769,677.
Net loss from ordinary activities attributable to members of the parent entity has increased to $3,477,517.
Net loss after tax for the year attributable to members of the parent entity has increased to $3,181,363.

Dividends

	Amount per	Franked
	security	amount per
		security
Final dividend	NIL	-
Previous corresponding period	NIL	-
Record date for determining entitlements to the	N/A
dividend:
Date the dividend is payable	N/A

Explanation of results

For further explanation of the results please refer to the ASX release.

Other information required by Listing Rule 4.3A

The remainder of the information requiring disclosure to comply with Listing Rule 4.3A is contained in the attached Consolidated Financial Report and media release.

Additional Information

NTA Backing

30 June 2019 30 June 2018 Net tangible asset backing per ordinary share 0.72 cents per share 1.25 cents per share

Changes in controlled entities

No companies were acquired during the year. One company was disposed of during the year.

Audit Report

The audit report is contained in the attached Financial Report.

Living Cell Technologies Limited advises that its Annual General Meeting will be held on Thursday 7 November 2019. The time and other details relating to the meeting will be advised in the Notice of Meeting to be sent to all shareholders and released to ASX immediately after despatch.

In accordance with ASX Listing Rules, valid nominations for the position of director are required to be lodged at the registered office of the Company by 5.00pm (AEST) 18 September 2019.

Elizabeth McGregor Company Secretary

29 August 2019

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Living Cell Technologies Limited

Consolidated financial statements

For the Year Ended 30 June 2019

For the year ended 30 June 2019

	Page
Consolidated Financial Statements
Director's report	3
Auditors independence declaration under section 307C of the Corporations Act 2001	15
Consolidated statement of profit or loss and other comprehensive income	16
Consolidated statement of financial position	17
Consolidated statement of changes in equity	18
Consolidated statement of cash flows	19
Notes to the consolidated financial statements	20
Director's declaration	36
Independent Auditor’s Report	37
Additional information for listed public companies	40

Living Cell Technologies Limited

Directors’ report

30 June 2019

The directors present their report, together with the financial statements of the consolidated entity, being Living Cell Technologies Limited (LCT, the company) and its controlled entities, for the financial year ended 30 June 2019.

Directors have been in office since the start of the financial year until the date of this report unless otherwise stated.

1. General information

Information on directors

The names, qualifications, experience and special responsibilities of each person who has been a director during the year and to the date of this report are:

Bernard Tuch Independent director Interim Chairman (Age: 68) Qualifications BSc, MBBS (Hons), FRACP, PhD, GAICD Experience Dr Tuch is an Honorary Professor at The University of Sydney where he is supervising a bioengineering diabetes cell therapy project. Previously, he was a senior scientist with CSIRO Australia. He is a director of Sydney Cell Therapy Foundation Pty Limited, the not-for-profit Australian Foundation for Diabetes Research, and is a Specialist Practitioner, Endocrinology, at the Prince of Wales Private Hospital & St Vincent’s Private Hospital, Sydney. He is also an Adjunct Professor at Monash University. His experience includes capital raising to support his considerable research team and a large international scientific publication list. He has had previous scientific collaborations with LCT and knows the company’s direction intimately. Special responsibilities Dr Tuch is chairman of the Remuneration and Nomination Committee. He was appointed to the board on 20 July 2011. Other directorships in listed No directorships in listed entities held in the previous three years entities held in the previous three years Robert Elliott Non-executive director (Age: 84) Qualifications MBBS, MD, FRACP Experience Professor Elliott trained as a paediatrician at Adelaide University. He moved to New Zealand in 1970 to become the Foundation Professor, Director of Paediatrics at The University of Auckland. Professor Elliott co-founded LCT. He is an Emeritus Professor of Child Health Research and a world leader in diabetes and autoimmune related research. He resigned from the position of Director, Clinical Research and Innovation on 27 February 2015.

In 1999 he was awarded a CNZM (a Companion of the New Zealand Order of Merit) for services to the community. In 2011 he was awarded the prestigious World Class New Zealander (Life Sciences) award.

He is on the board of Cure Kids and patron of the NZ Cystic Fibrosis Foundation. He is a director and shareholder of Breath Easy Limited, Kopu Limited, Visregen Technologies Limited, Fac8 Limited and NZeno Limited.

Special responsibilities Professor Elliott resigned as Chairman of the Diatranz Otsuka Limited board of directors in January 2018. He was appointed to LCT board on 15 January 2004. Other directorships in listed No directorships in listed entities held in the previous three years entities held in the previous three years

Living Cell Technologies Limited

Directors’ report

30 June 2019

1. General information (continued)

Laurie Hunter Independent director (Age: 72) Qualifications MA (Hons) Experience Mr Hunter has over 40 years’ experience as a stockbroker, investment banker and corporate investor in London, Paris and San Francisco. He was a Member of The Stock Exchange, London, a partner at L. Messel and Co, London, a director of Shearson Lehman Hutton and founder of Hunter Capital. His recent focus has been on investing and providing strategic advice to developing companies.

Special responsibilities Mr Hunter is a member of the Audit, Risk and Compliance Committee. He was appointed to the LCT Board on 25 August 2006. Other directorships in listed Mr Hunter resigned from the board of listed company StratMin Global Resources Plc entities held in the previous on 16 February 2016. three years Robert Willcocks Independent director (Age: 71) Qualifications BA, LLM Experience Robert Willcocks is a senior executive with an extensive legal and business background working with Australian listed public companies. He has Bachelor of Arts and Bachelor of Laws degrees from the Australian National University and a Master of Laws degree from the University of Sydney. Mr Willcocks was a partner with the law firm Stephen Jaques & Stephen (now King & Wood Mallesons) from 1980 until 1994, where he was a member of the Corporate Advisory Group with an emphasis on the mining and oil and gas sectors. As corporate adviser, he has undertaken assignments in a range of industry sectors.

Mr Willcocks has been a director and Chairman of a number of Australian Securities Exchange (ASX) listed public companies. He is a former director of ASX listed ARC Exploration Limited, and Hong Kong Stock Exchange listed APAC Resources Ltd. He is also chairman and director of Trilogy Funds Management Ltd, a Responsible Entity under Australian law.

Special responsibilities Mr Willcocks is chairman of the Audit, Risk and Compliance Committee and a member of the Remuneration and Nomination Committee. He was appointed to the board on 29 March 2011. Other directorships in listed No directorships in listed entities held in the previous three years. entities held in the previous three years Carolyn Sue Independent director (Age: 56) Qualifications PhD, MB, BS, FRACP Experience Professor Sue has a background in neurological science and medicine in relation to chronic illnesses. She is the Head of Neuroscience Research at the Kolling Institute at Sydney’s Royal North Shore Hospital, and Director of Neurogenetics, Director of the National Centre for Adult Stem Cell Research and a Senior Staff Specialist in the Department of Neurology at Royal North Shore Hospital. Professor Sue is also the incoming Chair of the Education committee for the International Movement Disorder Society.

Special responsibilities Professor Sue is a member of our medical advisory board. Professor Sue was appointed to the board on 16 May 2019. Other directorships in listed No directorships in listed entities held in the previous three years. entities held in the previous three years

Living Cell Technologies Limited

Directors’ report

30 June 2019

1. General information (continued)

Ken Taylor Executive director (Age: 76)

Qualifications MPharm, Phd Experience Dr Taylor has had a prestigious international career in both academia and business. He completed a postdoctoral fellowship in Pharmacology and Experimental Therapeutics at the Johns Hopkins University School of Medicine in Maryland, USA, and subsequently held a joint appointment in neurosciences at Princeton University and the Squibb Institute of Medical Research in Princeton, New Jersey. He joined Roche Australia and was soon promoted to the role of Medical Director, Australia, before becoming Managing Director of Roche New Zealand. In 1990, Ken was appointed Managing Director of the Roche UK affiliate and then transferred to Syntex in Palo Alto, California to convert the corporate pharmaceutical company to the Roche Bioscience Research Centre.

Prior to joining LCT, Dr Taylor was CEO of Antipodean Pharmaceuticals where he managed the Phase I and II studies of its lead compound in Parkinson’s disease.

	New Zealand-born Dr Taylor holds Honours and Doctorate degrees in
	pharmaceutical chemistry and pharmacology from the University of Otago School
	of Medicine and completed a business management program at IMD in Lausanne,
	Switzerland.
	He holds a number of other directorships in private companies.
Special responsibilities	Ken Taylor was appointed to the board on 31 August 2018.
Other directorships in listed	No directorships in listed entities held in the previous three years.
entities held in the previous
three years
Roy Austin	Independent director, resigned (Age: 70)
Qualifications	BCOM, FCA
Experience	Mr Austin is a consultant to investment banking firm Northington Partners in New
	Zealand. He brings considerable commercial depth to the LCT Board with over 25
	years’ investment transaction experience across multiple sectors including
	healthcare and biotechnology. His experience includes capital raisings, mergers and
	acquisitions, IP commercialisation, venture capital and international business
	development.
	Mr Austin is Chairman of New Zealand based Cure Kids, a child health research
	charitable trust and its commercial biotech venture capital fund, Cure Kids Ventures
	Limited. He is a director of NZX listed company CDL Investments New Zealand
	Limited. In 2017 he was awarded a CNZM (a Companion of the New Zealand Order
	of Merit) for services to children’s health and the community.
	He holds a number of other directorships in private companies, has a BCom and is
	a member of the New Zealand Institute of Directors and Chartered Accountants
	Australia + New Zealand.
Special responsibilities	Mr Austin was elected Chairman on 20 July 2011.
	He is a member of the Remuneration and Nomination Committee; a member of the
	Audit, Risk and Compliance Committee and resigned from Diatranz Otsuka Limited
	board of directors in January 2018 (since 1 November 2011).
	He was appointed to the LCT board on 25 February 2011 and resigned from the
	chairmanship and board on 31 August 2018.
Other directorships in listed	No directorships in listed entities held in the previous three years.
entities held in the previous
three years

Living Cell Technologies Limited

Directors’ report

30 June 2019

1. General information (continued)

Principal activities and significant changes in nature of activities

The principal activities of the consolidated entity during the financial year were:

Improving the wellbeing of people with serious diseases worldwide by discovering, developing and commercialising regenerative treatments which include naturally occurring cells to restore function.

There were no significant changes to the nature of the principal activities during the financial year.

2. Operating and financial review

Operations

The loss after income tax from continuing operations has increased from a loss of $(374,492) in the year ended 30 June 2018 to a loss of $(3,181,363).

Revenue and other income increased from $767,220 to $769,677 and research and development expenses have decreased from $(3,390,078) to $(3,328,905).

Governance expenses in the previous year included exploration of collaboration opportunities. Shareholder expenses are similar to last year.

R&D loss tax credit of $296,154 (2018: $201,802) was received in exchange for forgoing NZD1,400,000 (2018: NZD800,000) of tax losses.

Financial position

Net assets of the consolidated entity have decreased from $7,135,323 to $4,138,491 mainly due to ongoing research and development expenditure and new product opportunities with the Auckland University.

Cash and cash equivalents decreased from $6,861,663 to $4,907,957 due to completing current clinical studies and investing into product opportunities while containing costs. This balance is projected to allow the current level of operations to continue for approximately 16 months if no further funds are raised. The directors also acknowledge that the expenditure in relation to the operating activities are predominantly discretionary and no material expenditure has been committed as at the date of this financial statement. Cash outflow in relation to operating activities is being managed by the directors to the extent of funding available.

The directors have prepared this report on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. After taking into account all available information, the directors have concluded that there are reasonable grounds to believe:

The consolidated entity will be able to pay its debts as and when they become due and payable; and
The basis of preparation of the financial report on a going concern basis is appropriate.

Living Cell Technologies Limited

Directors’ report

30 June 2019

2. Operating and financial review (continued)

Business strategies and prospects for future years

Living Cell Technologies' mission is to improve the wellbeing of people with serious diseases worldwide by discovering, developing and commercialising regenerative treatments which include naturally occurring cells to restore function.

The in-depth analysis of the entire Phase IIb study of NTCELL data by statisticians and other experts indicates to progress NTCELL towards a marketable product LCT would have to undertake a larger Phase III study which would require further resources and clinical study design.

Strategies to achieve the above mission include:

With expert input explore the feasibility of a confirmative larger Phase III study in NTCELL.
Continue with our initial proof-of-principle projects that led to the designed and establishment of research partnerships with the globally recognised Chemical Sciences department at the University of Auckland to proceed with therapeutic targets that include migraine and anti-obesity.

Prospects for future years include execution of the above strategies to create value for shareholders by maximising the number and quality of target opportunities for achieving revenues in the near term.

In common with other biotech companies, there is a risk that these prospects for future years will not be achieved, depending on the outcomes of trials and research projects. These risks are mitigated by diversifying targets and reducing dependency on the outcome of any single research project.

3. Other items

Significant changes in state of affairs

Except as outlined in the Operating and Financial review there have been no significant changes in the state of affairs of the consolidated entity during the year.

Events after the reporting date

No matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in future financial years.

Environmental issues

The consolidated entity's operations are not regulated by any significant environmental regulations under a law of the Commonwealth or of a state or territory of Australia and New Zealand.

Company secretary

The following persons held the position of company secretary at the end of the financial year:

Mark Licciardo (B Bus (Acc), GradDip CSP, FGIA, GAICD) has been the joint company secretary since 1 January 2016.

Elizabeth McGregor (BA (Hons), MBA, GIA (Cert)) has been the joint company secretary since 30[th] August 2018.

Dividends

There was no dividend paid, recommended or declared during the current financial year.

Living Cell Technologies Limited

Directors’ report

30 June 2019

3. Other items (continued )

Meetings of directors

During the financial year, 15 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows:

	Directors'	Meetings	Audit, Risk and Compliance Committee	Audit, Risk and Compliance Committee	Remuneration and Nomination Committee	Remuneration and Nomination Committee
	Number eligible to attend	Number attended	Number eligible to attend	Number attended	Number eligible to attend	Number attended
Roy Austin	1	1	1	1	1	1
Robert Elliott	7	7	-	-	-	-
Bernard Tuch	7	7	-	-	4	4
Laurie Hunter	7	5	2	2	-	-
Robert Willcocks	7	7	2	2	4	4
Carolyn Sue	1	1	-	-	-	-
Ken Taylor	5	5	-	-	-	-

Indemnification and insurance of officers and auditors

The company has paid premiums to insure each of the directors against liabilities for costs and expenses incurred by them in defending legal proceedings arising from their conduct while acting in the capacity of director of the company, other than conduct involving a wilful breach of duty in relation to the company. The amount of the premium was $70,500 (2018: $70,500).

The company has not during or since the end of the financial year indemnified or agreed to indemnify the auditor of the company. Furthermore, the company has not paid any premiums in respect of insurance for the auditor.

The number of ordinary shares in Living Cell Technologies Limited held by each key management person of the consolidated entity during the financial year is as follows:

2019
Bernard Tuch2
Robert Elliott
Laurie Hunter1
Robert Willcocks
Carolyn Sue
Roy Austin
Ken Taylor
Daya Uka
2018
Bernard Tuch2
Robert Elliott
Laurie Hunter1
Robert Willcocks
Roy Austin
Ken Taylor

Balance at
beginning of
year
On exercise of
options
Other changes
during the year
Balance at the
end of the year
36,800
-
-
36,800
4,776,269
-
-
4,776,269
2,645,661
-
-
2,645,661
-
-
-
-

-
-
-
-

-
-
-
-

-
-
-
-
-
-
-
-

7,458,730
-
-
7,458,730
36,800
-
-
36,800
4,776,269
-
-
4,776,269

2,645,661
-
-
2,645,661
-
-
-
-

-
-
-
-

-
-
-
-
7,458,730
-
-
7,458,730

The shares are held by a related entity: European American Holdings Limited
The shares are held by a related entity: DTU Pty Limited < The Beryl Super Fund>

Living Cell Technologies Limited

Directors’ report

30 June 2019 3. Other items (continued)

Options

At the date of this report, the unissued ordinary shares of Living Cell Technologies Limited under option are as follows:

Grant date Date of Expiry Exercise Price 1 July 2014 1 July 2020 $ 0.1000 1 July 2014 1 July 2020 $ 0.1400 1 July 2015 1 July 2021 $ 0.1000 1 July 2015 1 July 2021 $ 0.1900 1 July 2017 1 July 2020 $ 0.1130 13 December 2018 1 September 2020 $ 0.0310 13 December 2018 13 December 2021 $ 0.0487 13 December 2018 13 December 2022 $ 0.0487 Options at 30 June 2019	No. under Option 250,000 100,000 250,000 100,000 600,000 1,100,000 250,000 2,400,000
	5,050,000

Non-audit services

The board of directors, in accordance with advice from the audit, risk and compliance committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor's independence for the following reasons:

all non-audit services are reviewed and approved by the audit and compliance committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

The following fees were paid or payable to the external auditors for non-audit services provided during the year ended 30 June 2019: $2,857 (2018: $2,778)

Auditor's independence declaration

The auditor's independence declaration in accordance with section 307C of the Corporations Act 2001 for the year ended 30 June 2019 has been received and can be found on page 15 of the financial report.

Living Cell Technologies Limited

Directors’ report

30 June 2019

Remuneration report (audited)

Remuneration policy

The remuneration policy of Living Cell Technologies Limited has been designed to align key management personnel (KMP) objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting consolidated entity's financial results. The board of Living Cell Technologies Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage consolidated entity, as well as create goal congruence between directors, executives and shareholders.

The board's policy for determining the nature and amount of remuneration for key management personnel of the consolidated entity is as follows:

The remuneration policy has been developed by the remuneration and nomination committee and approved by the Board following professional advice from independent external consultants.
All key management personnel receive a base salary (which is based on factors such as qualifications, length of service and experience), statutory contributions to KiwiSaver and options.
Options are based on the extent to which predetermined objectives, which contribute to the company’s strategies, are met.
Incentives paid in the form of options are intended to align the interests of the KMP and Company with those of the shareholders. In this regard, key management personnel are prohibited from limiting risk attached to those instruments by use of derivatives or other means.
The remuneration and nomination committee review key management personnel packages annually by reference to consolidated entity’s performance, executive performance and comparable information from industry sectors.

The performance of key management personnel is measured against criteria agreed annually with each executive and is based predominantly on achievement of predetermined agreed objectives which drive shareholder value. All bonuses and incentives must be linked to predetermined performance criteria. The board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can recommend changes to the Committee’s recommendations. The policy is designed to attract a high calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.

Key management personnel receive company contributions to KiwiSaver in New Zealand and Superannuation Fund in Australia by the law, which is currently 3% and 9.5% respectively, and do not receive any other retirement benefits. One director has sacrificed part of his director’s fees to his superannuation fund.

Upon retirement, key management personnel are paid employee benefit entitlements accrued to the date of retirement. Key management personnel are paid an agreed number of weeks salary in the event of redundancy. Any options not exercised before or on the date of termination will lapse.

All remuneration paid to key management personnel is valued at the cost to the Company and expensed.

The boards policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The remuneration and nomination committee determine payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting, the current maximum is $450,000 which was approved at the 2007 AGM and have no predetermined performance-based remuneration.

Key management personnel are also entitled and encouraged to participate in the employee share and option arrangements to align their interests with shareholders' interests.

Options granted under these arrangements do not carry dividend or voting rights. Each option is entitled to be converted into one ordinary share and is valued using the Black-Scholes methodology.

Living Cell Technologies Limited

Directors’ report

30 June 2019

Performance conditions linked to remuneration

The key performance indicators (KPIs) are set annually, in consultation with key management personnel to ensure support. The measures are specifically tailored to the area each individual is involved in and has a level of control over. The KPIs contribute to the strategies approved by the board.

Performance in relation to the KPIs is assessed annually, with options being awarded depending on the extent to which the measures are achieved.

The earnings of the LCT Group for the five years to 30 June 2019 are summarised below:

	2019	2018	2017	2016	2015
Revenue and other income	769,677	767,220	1,166,624	841,447	1,044,639
Loss after income tax	(3,181,363)	(374,492)	(4,090,257)	(3,093,163)	(7,043,402)
The factors that are considered to affect total	shareholders	return (“TSR”) are	summarised below:
Share price at financial year end (cents)	0.024	0.025	0.11	0.07	0.05
Total dividend declared (cents per share)	-	-	-	-	-
Basic earnings per share (cents per share)	(0.56)	(0.07)	(0.76)	(0.69)	(1.75)

Employment details of members of key management personnel

The following table provides the employment details of persons who were, during the financial year, members of key management personnel of consolidated entity. The table also illustrates the proportion of remuneration that was performance based and the proportion of remuneration received in the form of options.

		Performance	based remuneration	based remuneration
		Bonus	Shares	Options
		%	%	%
KMP
Ken Taylor	Chief Executive	-	-	5

Service agreements

On appointment to the board, all non-executive directors enter into a service agreement with the company in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration, relevant to the office of director.

The remuneration and other terms of employment for the chief executive and senior executives are set out in formal employment agreements as summarised below.

All employment agreements are for an unlimited duration. The agreements for executives may be terminated by giving 20 to 60 working days’ notice (except in cases of termination for cause where termination is immediate). Redundancy entitlements are 2-4 weeks for the first year of service and one week's payment for each six-month’s subsequent service. Employment agreements do not include the specific performance criteria which are linked to bonuses or incentives, so amounts paid in accordance with the above remuneration policy are effectively at the discretion of the board.

In cases of resignation, no separation payment is made to the executive, except for amounts due and payable up to the date of ceasing employment, including accrued leave entitlements.

Living Cell Technologies Limited

Directors’ report

30 June 2019

Remuneration details for the year ended 30 June 2019

The following table of benefits and payment details, in respect to the financial year, the components of remuneration for each member of the key management personnel of the consolidated entity.

2019 Directors Bernard Tuch Roy Austin Robert Elliott Laurie Hunter Robert Willcocks Carolyn Sue KMP Ken Taylor Daya Uka 2018 Directors Roy Austin Robert Elliott Laurie Hunter Bernard Tuch Robert Willcocks KMP Ken Taylor	Short term Post- employment Long term benefits Share based payments Total benefits and payments Cash salary fees Bonus Total short term benefits Pension and superannuation Options and rights $ $ $ $ $ $ $ 61,172 - 61,172 5,495 - 27,900 94,567 11,667 - 11,667 - - - 11,667 50,000 - 50,000 - - 27,900 77,900 50,000 - 50,000 - - 27,900 77,900 50,000 - 50,000 - - 27,900 77,900 6,249 6,249 - - - 6,249 380,952 - 380,952 - - 9,187 390,139 145,074 - 145,074 - - 5,878 150,952
	755,114 - 755,114 5,495 - 126,665 887,274
	70,000 - 70,000 - - - 70,000 50,000 - 50,000 - - - 50,000 50,000 - 50,000 - - - 50,000 45,716 - 45,716 4,284 - - 50,000 50,000 - 50,000 - - - 50,000 361,074 - 361,074 - - 31,980 393,054
	626,790 - 626,790 4,284 - 31,980 663,054

Securities received that are not performance related

Options are issued to the directors and executives as part of their remuneration. Each share option converts to one ordinary share of Living Cell Technologies Limited on exercise. The options that are not issued based on performance criteria, are issued to the directors and executives of Living Cell Technologies Limited and its subsidiaries to align the interest of executives, directors and shareholders.

Options granted, vested and lapsed during the year

Details of key management personnel options granted as remuneration, vested, and lapsed during the year:

Bernard Tuch
Laurie Hunter
Robert Elliott
Robert Willcocks
KMP
Ken Taylor
Daya Uka

Number
of
options
Exercise
price per
option
Value
per
option at
grant
date
Grant
date
Vesting
date
Expiry
date
Vested
during
period
Forfeited
during
period
$
$
%
%
600,000
0.0487
0.0465
13-Dec-18
13-Dec-18
13-Dec-22
100
-
600,000
0.0487
0.0465
13-Dec-18
13-Dec-18
13-Dec-22
100
-
600,000
0.0487
0.0465
13-Dec-18
13-Dec-18
13-Dec-22
100
-
600,000
0.0487
0.0465
13-Dec-18
13-Dec-18
13-Dec-22
100
-
250,000
0.0487
0.0441
13-Dec-18
13-Dec-19
13-Dec-21
-
-
300,000
0.0310
0.0235
01-Sep-18
01-Aug-19
01-Sep-20
-
-

Options do not have any voting rights, dividend or other distribution entitlements.

The weighted average fair value of options granted during the year was $0.0396 (2018: $0.0553)

Living Cell Technologies Limited

Directors’ report

30 June 2019

Options granted, vested and lapsed during the year (continued)

The fair value of each option at grant date was calculated by using the Black Scholes option pricing model that takes into account the expected volatility, risk free interest rate, expected life of the option, exercise price and the share price at grant date. For each option granted historical volatility has been calculated based on the length of the options life.

During the year ended 30 June 2019, no ordinary shares of LCT were issued on the exercise of options grants. No further shares have been issued since that date. No amounts are unpaid on any of these shares. There are no cash-settlement alternatives. All options were issued by Living Cell Technologies Limited and entitle the holder to ordinary shares in Living Cell Technologies Limited for each option exercised.

There have not been any alterations to the terms or conditions of any share-based payment arrangements since grant date.

Key management personnel options and rights holdings

	Balance at beginning of year Granted as remuneration Exercised Expired Balance at the end of year Vested during the year Vested and exercisable Total non- exercisable
	- - - - - - - - - 600,000 - - 600,000 600,000 600,000 - - 600,000 - - 600,000 600,000 600,000 - - 600,000 - - 600,000 600,000 600,000 - 600,000 600,000 600,000 600,000 - - - - - - - - 2,100,000 250,000 - 800,000 1,550,000 250,000 850,000 850,000 - 300,000 - - 300,000 300,000 300,000 300,000
	2,100,000 2,950,000 - 800,000 4,250,000 2,950,000 3,550,000 1,150,000
	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,500,000 600,000 - - 2,100,000 - 1,500,000 600,000
	3,655,000 600,000 - - 2,100,000 - 1,500,000 600,000

(1) Robert Willcocks' options are held by his superannuation fund, Tonda Pty Ltd AFT the Elaland Superannuation Pty Ltd Fund.

(2) Resigned during the year on the 31 August 2018

This concludes the remuneration report which has been audited.

Living Cell Technologies Limited

Directors’ report

30 June 2019

Corporate governance statement

The board is committed to achieving and demonstrating the highest standards of corporate governance. The board continues to refine and improve the governance framework and practices in place to ensure they serve the interests of shareholders. The company complies with the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations.

Living Cell Technologies Limited's corporate governance statement and board and board committee charters and key corporate governance policies are available in the Governance policies section of the website at www.lctglobal.com.

This directors’ report, incorporating the remuneration report, is signed in accordance with a resolution of the Board of Directors.

==> picture [117 x 40] intentionally omitted <==

Director

Dated: 29 August 2019

Tel: +61 2 9251 4100 Level 11, 1 Margaret St Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

==> picture [78 x 31] intentionally omitted <==

DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF LIVING CELL TECHNOLOGIES LIMITED

As lead auditor of Living Cell Technologies Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been:

No contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the audit; and
No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Living Cell Technologies Limited and the entities it controlled during the period.

Gareth Few Partner

BDO East Coast Partnership

Sydney, 29 August 2019

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

Living Cell Technologies Limited

Consolidated statement of profit or loss and other comprehensive income For the Year Ended 30 June 2019

Note Revenue and other income 2 Expenses Research and development Governance Shareholder General Loss on disposal of equipment Total expenses 3 Operating loss Foreign exchange gain/(loss) Sale of joint venture 24 Loss before income tax R&D loss tax credit Income tax expense 4 Loss after income tax from continuing operations Loss attributable to members of the parent entity Other comprehensive income, net of income tax Exchange difference on translation of foreign operations Total other comprehensive income Total comprehensive income attributable to members of the parent entity Earnings per share Continuing operations Basic earnings/(loss) per share (cents) 5 Diluted earnings/(loss) per share (cents) 5	2019 2018 $ $ 769,677 767,220 (3,328,905) (3,390,078) (567,352) (463,773) (223,537) (297,093) - (66,779) (93,938) - (4,213,732) (4,217,724)
	(3,444,055) (3,450,504) (33,462) (125,790) - 3,000,000
	(3,477,517) (576,294) 296,154 201,802 - - (3,181,363) (374,492)
	(3,181,363) (374,492)
	(137,306) 16,890
	(137,306) 16,890
	(3,318,669) (357,602)
	(0.56) (0.07) (0.56) (0.07)

Living Cell Technologies Limited

Consolidated statement of financial position

as at 30 June 2019

Note ASSETS Current assets Cash and cash equivalents 18 Trade and other receivables 6 Inventories 8 Total current assets Non-current assets Property, plant and equipment 7 Biological assets Other financial assets Total non-current assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 8 Short-term provisions 9 Total current-liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 10 Reserves 11 Accumulated losses Total equity attributable to equity holders of the Company TOTAL EQUITY	2019 2018 $ $ 4,907,957 6,861,663 487,588 304,080 1,058 1,019
	5,396,603 7,166,762
	178,798 304,439 99,048 95,413 85,172 42,179
	363,018 442,031
	5,759,621 7,608,793
	1,551,409 414,118 69,720 59,352
	1,621,129 473,470
	1,621,129 473,470
	4,138,491 7,135,323
	74,371,070 74,371,070 4,125,017 3,940,486 (74,357,596) (71,176,233)
	4,138,491 7,135,323
	4,138,491 7,135,323

Living Cell Technologies Limited

Consolidated statement of changes in equity

for the year ended 30 June 2019

2019 Balance at 1 July 2018 Total other comprehensive income for the year Total other comprehensive income Transaction with equity holders in their capacity as owners Shares issued during the year Transaction costs Share based remuneration Option exercised Expired options Balance at 30 June 2019 2018 Balance at 1 July 2017 Total other comprehensive income for the year Total other comprehensive income Transaction with equity holders in their capacity as owners Shares issued during the year Transaction costs Share based remuneration Option exercised Expired options Balance at 30 June 2018	Ordinary shares Accumulated losses Foreign currency translation reserve Option reserve Total $ $ $ $ $ 74,371,070 (71,176,233) 3,780,717 159,769 7,135,323 - (3,181,363) - - (3,181,363) - - 137,306 - 137,306 - - - - - - - - - - - - - 142,330 142,330 - - - - - - - - (95,105) (95,105)
	74,371,070 (74,357,596) 3,918,023 206,994 4,138,491
	Ordinary shares Accumulated losses Foreign currency translation reserve Option reserve Total $ $ $ $ $ 74,339,770 (70,801,741) 3,797,607 182,704 7,518,340 - (374,492) - - (374,492) - - (16,890) - (16,890) 40,750 - - - 40,750 (9,450) - - - (9,450) - - - 81,074 81,074 - - - (16,987) (16,987) - - - (87,022) (87,022)
	74,371,070 (71,176,233) 3,780,717 159,769 7,135,323

Living Cell Technologies Limited

Consolidated statement of cash flows

for the year ended 30 June 2019

Note CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers and grants (GST inclusive) Payments to suppliers and employees (GST inclusive) Interest received Net cash used in operating activities 18 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment Sale of 50% share in DOL Payment for bond security Net cash used by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issue of shares Payment of transaction costs Net cash provided by financing activities Effect of exchange rates on cash holdings in foreign currencies Net decrease in cash and cash equivalents held Cash and cash equivalents at beginning of year Cash and cash equivalents at end of financial year	2019 2018 $ $ 946,963 1,129,072 (3,035,248) (4,834,636) 97,755 135,258
	(1,990,530) (3,570,306) (10,322) (2,990) - 3,000,000 (42,993) -
	(53,315) 2,997,010 - 40,750 - (9,450)
	- 31,300 90,139 (126,374)
	(1,953,706) (668,370) 6,861,663 7,530,033
	4,907,957 6,861,663

The accompanying notes form an integral part of these financial statements.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

1. About this report

(a) Basis of preparation

This general purpose financial report for the year ended 30 June 2019 has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 as appropriate for profit oriented entities. Compliance with Australian Accounting Standards ensures that the consolidated entity financial report conforms to International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The financial report covers the consolidated entity of Living Cell Technologies Limited and its controlled entities. Living Cell Technologies Limited (hereafter referred to as LCT, the consolidated entity and the Group) is a listed for profit public company, incorporated and domiciled in Australia.

The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

The financial report has been presented in Australian dollars, which is the consolidated entity’s presentation currency. The report has been prepared on an accruals basis and is based on historical cost modified by the revaluation of selected non-current assets and financial assets and financial liabilities for which the fair value basis of accounting has been applied.

(b) Critical accounting estimates and judgements

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and based on current trends and economic data, obtained both externally and within the Group.

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined.

The separate financial statements and notes of the parent entity, Living Cell Technologies Limited, have not been presented within this financial report as permitted by amendments made to the Corporations Act 2001. Parent entity disclosures are included in note 17.

(c) Going concern

The consolidated entity will be able to pay its debts as and when they become due and payable; and
The basis of preparation of the financial report on a going concern basis is appropriate.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

2. Revenue and other income

Revenue from unconditional government grants received is reported as income when the grant becomes receivable. If such a grant is conditional, it is recognised as income only when the conditions have been met. Grant income comprises Callaghan Innovation grants. There are no unfulfilled conditions.

All revenue is stated net of goods and services tax (GST).

Interest revenue is recognised as the interest accrued using the effective interest method.

Other Income Grant income Interest income Services provided Other income	2019 2018 $ $ 636,657 608,477 123,251 149,476 9,769 9,105 - 162
	769,677 767,220

3. Expenses

Employee benefits

Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on costs. Employee benefits payable later than one year have been measured at present value of the estimated future cash outflows to be made for those benefits.

Share-based payments

Share based payments are provided to employees through issue of options.

Issue of options

The fair value of options is recognised as a benefit to directors/employees. The fair value is measured at the grant date and recognised over the period during which the options vest to the directors/employees.

The fair value at the grant date is independently determined using the Black Scholes binomial convergence model for the employee's options. These models take into account the exercise price, the life of the option, the current price of the underlying share, the expected volatility of the share price and the risk-free rate for the life of the option.

Research and development

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

Governance

Governance expenses include directors’ fees, travel and meeting expenses, company secretary costs and legal expenses related to governance.

Shareholder

Shareholder expenses include listing fees, registry costs, audit, annual general meeting and annual report costs.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

3. Expenses (continued)

Expenses include the following:

Employee benefits Wages and salaries Contributions to employees' savings plans Share-based payments Staff training Total employee benefits Depreciation Plant and equipment depreciation Furniture, fixtures and fitting depreciation Total depreciation Lease payments	2019 2018 $ $ 859,229 1,566,365 13,271 27,664 47,224 (20,884) 1,112 3,255
	920,836 1,576,400
	1,358 1,606 50,940 60,459
	52,298 62,065
	233,318 194,026

4. Income tax expense

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the reporting date.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Reconciliation of income tax to accounting loss: Loss before income tax Effective tax rate Add tax effect of: - Non-deductible expenditure - Accounting capital gain - Deferred tax asset not bought into account Income tax expense	2019 2018 $ $ (3,477,517) (576,297) 27.5% 30%
	(973,705) (158,481) 7,498 12,621 - (825,000) 966,207 970,860
	- -

Tax losses	2019	2018
	$	$
Unused tax losses for which no deferred tax asset has been recognised	36,739,220	43,161,738
Potential tax benefit at 27.5% AU (previously 30%)	8,421,362	9,679,015
Potential tax benefit at 28% NZ	1,058,820	2,858,293
The benefit will only be obtained if:

The group derives future assessable income of a nature and amount sufficient to enable the benefits from the deductions for the losses to be realised;
the group continues to comply with the conditions for deductibility imposed by the law; and
no changes in tax legislation adversely affect the group in realising the benefit from the deductions for the losses.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

4. Income tax expense (continued)

A R&D loss tax credit of $296,153 (2018:201,801) was received from NZ Inland Revenue in exchange for forgoing NZD 1,200,000 (2018: NZD 800,000) of tax losses.

5. Earnings/(loss) per share

Basic EPS is calculated as net profit/(loss) attributable to members of the consolidated entity, adjusted to exclude costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as net profit/(loss) attributable to members of the consolidated entity, adjusted for:

costs of servicing equity (other than dividends)

 the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

 other non-discretionary changes in revenues or expenses during the period that would result from dilution of potential ordinary shares divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

Reconciliation of earnings to profit or loss from continuing operations

econciliation of earnings to profit or loss from continuing operations
	2019	2018
	$	$
Profit/(loss) used in calculation of basic and diluted EPS	(3,181,363)	(374,492)
	No.	No.
Weighted average number of ordinary shares outstanding during the year used in	571,440,981	539,563,951
calculating basic EPS
Weighted average number of ordinary shares and convertible securities	571,440,981	539,563,951
outstanding during the year used in calculating diluted EPS
Basic earnings/(loss) per share (cents)	(0.56)	(0.07)
Diluted earnings/(loss) per share (cents)	(0.56)	(0.07)

6. Trade and other receivables

Trade receivables are recognised and carried at original invoice amount less an expected credit loss allowance.

Trade receivables Grant receivables Prepayments Accrued interest Other receivables Total current trade and other receivables	2019 2018 $ $ 21,803 - 238,997 177,762 21,286 44,799 77,001 51,504 128,501 30,015
	487,588 304,080

Aged analysis

At 30 June 2019, there were no past due trade receivables (2018: Nil). The ageing analysis of trade receivables is as follows:

0-30 days 31-60 days 61-90 days	21,803 - - - - -
	21,803 -

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

6. Trade and other receivables (continued)

Allowance for impairment

Trade receivables are non-interest bearing and are generally on 30 to 60-day terms. The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. There is no expected credit loss allowance for the current year (2018: $Nil) for the consolidated entity.

7. Property, plant equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Cost includes purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and restoring the asset, where applicable.

The carrying amount is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Depreciation

The depreciable amount of all fixed assets is depreciated on a diminishing value basis over their useful lives to consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable asset are shown below:

Fixed asset class		Depreciation rate DV	Depreciation rate DV
Plant and equipment			8-50%
Leasehold improvements			10-16%
The assets' residual values and useful lives are reviewed, and adjusted if		appropriate, at each reporting date.
	Plant and	Leasehold	Total
	equipment	improvements
Cost
Balance at 1 July 2018	357,087	141,445	498,532
Additions	10,608	-	10,608
Disposals	(25,519)	(128,930)	(154,449)
Foreign exchange movement	14,750	5,846	20,596
Balance June 2019	356,926	18,361	375,287
Accumulated Depreciation
Balance at 1 July 2018	160,247	33,846	194,093
Depreciation expense	40,953	10,858	51,811
Disposals	(16,724)	(40,097)	(56,821)
Foreign exchange movement	6,012	1,394	7,406
Balance June 2019	190,488	6,001	196,489

Carrying Amount June 2019	166,438	12,360	178,798

Carrying Amount June 2018	196,840	107,599	304,439

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

8. Trade and other payables

Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity.

Unsecured liabilities Trade payables Other payables Accrued expenses Total trade payables and other payables	2019 2018 $ $ 1,459,051 304,573 728 14,300 91,631 95,245
	1,551,410 414,118

All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value.

9. Provisions

Provisions are recognised when the consolidated entity 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.

10.

Opening balance Leave accrued Leave taken Balance at end of the year Issued Capital Balance as at 1 July 2017 Issued shares Share issue transaction costs net of tax Balance as at 30 June 2018 Issued shares Share issue transaction costs net of tax Balance as at 30 June 2019	No. of shares 570,816,081 625,000 -	2019 2018 $ $ 59,352 101,859 75,088 114,823 (64,216) (157,330)
		69,720 59,352
		Issue price $ 74,339,770 0.07 40,750 - (9,450)
	571,441,081	74,371,070
	- -	- - - -
	571,441,081	74,371,070

Ordinary Shares

Ordinary shares entitle the holder to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

The company does not have par value in respect of its shares.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

10. Issued capital (continued)

Options

For information relating to the Living Cell Technologies Limited employee option plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year-end, as well as information relating to share options issued to key management personnel during the financial year, refer to the Remuneration Report in section 5 of the Directors' Report and Key Management Personnel compensation in note 14.

The weighted average fair value of options granted during the year was $0.0396 (2018: $0.0553)

Capital management

Capital of consolidated entity is managed to safeguard the ability to continue as a going concern so that it can provide returns to shareholders and benefits to other stakeholders and to maintain an optimal capital structure. The capital risk management policy remains unchanged from the 30 June 2018 Annual Report.

Consolidated entity’s capital comprises shares.

There are no externally imposed capital requirements.

Consolidated entity manages the group's capital structure by assessing the group's financial risks and adjusting the capital structure in response to changes in these risks and the market. These responses include the issue of additional shares and/or convertible securities.

11. Reserves

Foreign currency translation reserve

The foreign currency translation reserve comprises all translation exchange differences arising on the retranslation of opening net assets together with differences between the statement of profit or loss and other comprehensive income translated at average and closing rates. It also includes adjustments in relation to investments in foreign operations.

Option reserve

The option reserve reflects the accumulated expenses associated with the granting of outstanding options to directors and staff.

12. Currency translation rates

	NZD	NZD
	2019	2018
Year-end rates used for the consolidated statement of financial position, to	0.95	0.91
translate the following currencies into Australian dollars (AUD), are:
Weighted average rates for the year used for the consolidated statements of profit	0.93	0.92
or loss and other comprehensive income and cash flows, to translate the following
currencies into Australian dollars (AUD), are:

NZD = NZ dollar

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

13. Capital and leasing commitments

Minimum lease payments: Within 12 months Between 12 months and 5 years Greater than 5 years Total	2019 2018 $ $ 159,725 193,897 83,861 100,479 - -
	243,586 294,376

Finance leases

The consolidated entity has no finance leases (2017: Nil).

Capital commitments

The consolidated entity has no capital commitments (2017: Nil).

14. Key management personnel disclosures

Key management personnel remuneration included within employee expenses for the year is shown below

Short term employee benefits Post-employment benefits Share-based payments Total	2019 2018 $ $ 755,114 626,790 5,495 4,284 126,665 31,980
	887,274 663,054

Short-term employee benefits

These amounts include fees and benefits paid to the non-executive Chair and non-executive directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.

Post-employment benefits

These amounts are the current-year’s estimated costs of providing for the group’s, superannuation contributions made during the year.

Other long-term benefits

These amounts represent long service leave benefits accruing during the year.

Share-based payments

These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured by the fair value of the options, rights and shares granted on grant date.

The remuneration report contained in the directors’ report contains details of the remuneration paid or payable to each member of the consolidated entity’s key management personnel for the year ended 30 June 2019

Other key management personnel transactions

For details of other transactions with key management personnel, refer to note 16: Related party transactions.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

15. Controlled entities

Principles of consolidation

All controlled entities have a 30 June financial year end.

As at year end the assets, liabilities of all controlled entities have been included in the consolidated financial statements as well as their results for the year. The directors have deemed that control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those policies applied by the parent entity. The consolidated financial statements include the financial position and performance of controlled entities from the date on which control is obtained until the date that control is lost.

e date that control is lost.
	Country of	Percentage	Percentage
	Incorporation	Owned	Owned
		(%)	(%)
		2019	2018
Parent entity and ultimate parent of the group:
Living Cell Technologies Ltd	Australia
Subsidiaries:
Living Cell Products Pty Ltd	Australia	100	100
LCT Australia Pty Ltd	Australia	100	100
Living Cell Technologies New Zealand Ltd	New Zealand	100	100
NeurotrophinCell Pty Ltd	Australia	100	100

 Percentage of voting power is in proportion to ownership.

16. Related parties

Parent entity:

The parent entity and ultimate parent entity of the group is Living Cell Technologies Limited.

Subsidiaries

Subsidiaries are detailed in note 15 to the financial statements.

Related Party

Diatranz Otsuka Limited (DOL) and Living Cell Technologies New Zealand Limited provides services to each other on a cost-plus margin basis. In the prior year Living Cell Technologies Limited sold It’s 50% shareholding in the joint venture company Diatranz Otsuka Limited to the other 50% shareholder, Otsuka Pharmaceutical Factory Inc (OPF) for $3,000,000. All transactions were provided at arm’s length.

Loans

All loan balances between companies in the consolidated entity have been eliminated on consolidation. All inter-company loan transactions to and from subsidiaries and with the parent entity are fully provided for.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

16. Related parties (continued)

Key management personnel

Disclosures relating to key management personnel have been set out in note 14 and the Directors' Report.

17. Parent entity disclosures

Statement of financial position Current assets Total assets Current liabilities Total liabilities Net assets Accumulated losses Issued capital Reserves Total Equity Statement of profit or loss and other comprehensive income Profit/(loss) after income tax Total comprehensive income	2019 2018 $ $ 2,531,815 4,720,068 2,531,815 4,720,068 (72,964) (111,798) (72,964) (111,798)
	2,458,851 4,608,270
	(72,119,216) (69,922,574) 74,371,073 74,371,073 206,994 159,771
	2,458,851 4,608,270
	364,146 2,218,621
	364,146 2,218,621

The parent company has no guarantees, contingent liabilities or capital commitments as at 30 June 2019 and 30 June 2018.

18. Cash flow information

ash flow information
Cash at the end of the financial year as shown in the is reconciled to items in the consolidated statement of financial position as follows: Cash and cash equivalents	2019 $ 4,907,957	2018 $
		6,861,663

The company also has two business MasterCard facilities with Westpac New Zealand totally $206,000.00. These are both undrawn at year end.

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short term highly liquid investments.

Reconciliation of result for the year to cash flows from operating activities

Profit/(loss) for the year Cash flows excluded from profit attributable to operating activities Non-cash flows in loss - depreciation - Net loss on disposal of asset - Sale of joint venture - net foreign currency (gains)/losses - share options expensed Changes in assets and liabilities: - (increase)/decrease in trade and other receivables - (increase)/decrease in other assets	(3,181,363) 52,298 93,938 - 33,462 47,225 (183,508) (39)	(374,492)
		29 62,065 163 (3,000,000) 125,790 (22,935) 272,020 69,633

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

- increase/(decrease) in trade and other payables - increase/(decrease) in employee benefits Cash flow used in operations	1,137,289 (660,043) 10,368 (42,507)
	(1,990,530) (3,570,306)

19. Segment reporting

General 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 (chief operating decision makers) in assessing performance and determining the allocation of resources.

The consolidated entity only operates one business segment being the research and development into living cell technologies, predominantly in New Zealand.

20. Financial risk management

The consolidated entity's principal financial instruments comprise receivables, payables, cash and short-term deposits. These activities expose the group to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The group manages the different types of risks to which it is exposed by considering risk and monitoring levels of exposure to interest rate and foreign currency risk and by being aware of market forecasts for interest rates and foreign exchange rates. The group's policy is to invest in a spread of maturities to manage interest rate risk and to invest in currencies in approximate proportions of forecast expenditure to manage foreign exchange risk.

The group holds the following financial instruments

Financial Assets Cash and cash equivalents Trade and other receivables Total financial assets Financial Liabilities Financial liabilities at amortised cost Trade and other payables Total financial liabilities	2019 2018 $ $ 4,907,957 6,861,663 487,588 259,281
	5,395,545 7,120,944
	- - 1,551,410 308,184
	1,551,410 308,184

Liquidity risk

The consolidated entity manages liquidity risk by monitoring forecast cash flows and ensuring that sufficient working capital is available to enable the company to maintain adequate reserves to allow the company to achieve identified strategic objectives.

The tables below analyse the consolidated entity's financial assets and liabilities. The amounts disclosed in the table are the contractual cash flows.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

20. Financial risk management (continued)

Financial assets - cash flows realisable Trade and other receivables Trade and other payables Total anticipated outflows	Within 1 Year 1 to 5 Years Over 5 Years 2019 2018 2019 2018 2019 2018 $ $ $ $ $ $ 487,588 259,281 - - - - (1,551,410) (308,184) - - - -
	(1,063,822) (48,903) - - - -

Interest rate risk

The group's exposure to market interest rates relates primarily to the group's short-term deposits held. The company manages this risk by investing in term deposits ranging from call to 12 months. This investment policy is adopted to manage risks and enhance returns.

Interest rate risk sensitivity analysis

At 30 June 2019, the effect on profit/(loss) and equity as a result of changes in the interest rate, based on interest income at the average rate for the year, with all other variables remaining constant would be as follows:

	2019	2018
	$	$
+ 1% (100 basis points)	55,865	57,316
- 0.5% (50 basis points)	(27,933)	(28,658)

The consolidated entity's activities expose it to the risk of changes in foreign currency exchange rates and interest rates. These risks are managed at a company and consolidated level through sensitivity analysis. There has been no change to the consolidated entity's exposure to market risks or the way it manages and measures the risk from the previous period.

Credit risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognise financial assets, is the carrying amount, net of any allowances for doubtful debts, as disclosed in the statement of financial position and notes to the financial statements.

Receivable balances are monitored on an on-going basis with the result that the consolidated entity's exposure to bad debts is not significant. There are no significant concentrations of credit risk.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The consolidated entity's exposure to the risk of changes in foreign exchange rates relates primarily to operating activities (when revenue or expense is denominated in a different currency from the consolidated entity's presentation currency and the net investment in foreign subsidiaries. The following table shows the foreign currency risk on the financial assets and liabilities of consolidated entity's operations denominated in currencies other than the presentation currency of operations.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

20. Financial risk management (continued)

2019	NZD Total
Consolidated
Cash and cash equivalents	2,395,206
Trade and other receivables	462,731
Trade and other payables	(1,475,026)
2018
Consolidated
Cash and cash equivalents	2,253,742
Trade and other receivables	237,901
Trade and other payables	(280,448)

Foreign currency risk sensitivity analysis

The following sensitivity analysis is based on the foreign currency risk exposures in existence at the end of the reporting period.

The consolidated entity is mainly exposed to New Zealand dollars (NZD). The table demonstrates the sensitivity of profit before tax to a reasonably possible change in the AUD/NZD exchange rate.

A fluctuation of the New Zealand dollar would have impacted equity and profit or loss by the amounts shown below. This analysis assumes that other variables are held constant.

	Increase by	Decrease by
	5%	5%
2019	143,766	(158,899)
2018	107,989	(119,357)

Price risk

Consolidated Entity is not exposed to any material commodity price risk.

21. Remuneration of auditors

emuneration of auditors
Remuneration of the auditor of the parent entity, BDO, for:  Auditing or reviewing the consolidated financial report and the Australian based subsidiaries Remuneration of other auditors of subsidiaries for:  Auditing the New Zealand based subsidiaries  Other services Total	2019 2018 $ $ 70,000 80,000 14,457 13,130 2,857 2,778
	87,314 95,908

Other services comprise of a review of the LCTNZ accounts for a Callaghan Innovation Grant application.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

22. Contingent assets and liabilities

The Company issued two bank bonds over the Pig facility lease of $43,919 (2018: $42,179), and 23 Edwin street lease of $41,253 (2018: nil) both secured by a term deposit.

In the opinion of the of the directors, the company did not have any other contingencies as at 30 June 2019 (2018; nil)

There have been no unfulfilled conditions and other contingencies attached to government assistance.

23. Events occurring after the reporting date

No matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of consolidated entity, the results of those operations, or the state of affairs of consolidated entity in future financial years.

24. Summary of significant accounting policies

(a) Inventories

Inventories of raw materials are measured at the lower of weighted average cost and net realisable value.

(b) Biological assets

The Auckland Island pig herd has been recorded at cost and not depreciated, as fair value cannot be reliably

measured, given the highly specialised and unique characteristics of the pig herd.

(c) Joint venture

Interest in joint venture operations

The company in the prior year sold its 50% shareholding in the joint venture company Diatranz Otsuka Limited to the other 50% shareholder, Otsuka Pharmaceutical Factory Inc (OPF) for $3,000,000.

(d) Foreign currency transactions and balances

Functional and presentation currency

The functional currency of each of consolidated entity's entities 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 statement of profit or loss and other comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in the statement of profit or loss and other comprehensive income. Foreign currency transactions are recorded at the spot rate on the date of the transaction.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

24. Summary of significant accounting policies

Group companies

The financial results and position of foreign operations whose functional currency is different from consolidated entity's presentation currency are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for each month during 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 are transferred directly to consolidated entity's foreign currency translation reserve in the consolidated statement of financial position. These differences are recognised in the consolidated statement of profit or loss and other comprehensive income in the period in which the operation is disposed.

(e) Comparative amounts

When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Where a change in comparatives has also affected the opening retained earnings previously presented in a comparative period, an opening consolidated statement of financial position at the earliest date of the comparative period has been presented.

(f) 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 tax authorities. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

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.

(g) Adoption of new and revised accounting standards

The Consolidated Entity has adopted all the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

AASB 9 Financial Instruments

The consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.

Living Cell Technologies Limited

Notes to the consolidated financial statements

for the year ended 30 June 2019

24. Summary of significant accounting policies (continued)

AASB 15: Revenue from Contracts with Customers

The consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period. Due to the current trading environment we believe this to have no impact on the Group's financial statements. At present the company has two contracts with customers; a service contract and a grant contract. Revenue from these contracts are recognised when the performance obligations are satisfied.

Impact of adoption

The consolidated entity has adopted AASB 9 and AASB 15 for the financial year ended 30 June 2019. The Accounting Standards were adopted using the transitional rules that allow for comparatives not to be restated. The adoption of AASB 9 and AASB 15 did not result in any change to the opening retained earnings as at 1 July 2018.

(h) Accounting standards and interpretations issued but not yet effective

Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below:

AASB 16 Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases. The main changes introduced by the new Standard include recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets); depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date; by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead account for all components as a lease; and additional disclosure requirements. The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. The consolidated entity will adopt this standard from 1 July 2019. On adoption, the consolidated entity will be required to capitalise operating lease commitments (as disclosed in Note 13) on the balance sheet. This will result in a non-current asset representing the right-of-use asset inherent in the lease, and the related current and non-current liability associated with the future lease payments. The asset will be valued at the present value of future minimum lease payments and depreciated over the term of the lease.

Based on the current terms of the leases the impact of the adoption of this standard will not have a significant impact on the consolidated entity’s 2019 financial statements.

25. Company Details

The registered office of the company is:

Living Cell Technologies Limited

Level 7, 330 Collins Street Melbourne VIC 3000 Australia

Living Cell Technologies Limited

Director's declaration

The directors of Living Cell Technologies Limited declare that:

the financial statements and notes for the year ended 30 June 2019 are in accordance with the Corporations Act 2001 and:
comply with the Corporations Regulations 2001 and the Accounting Standards, which, as stated in accounting policy note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and
give a true and fair view of the financial position and performance of the consolidated entity;
the Chief Executive Officer and Chief Finance Officer have given the declarations required by Section 295A that:
the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the Accounting Standards; and
the financial statements and notes for the financial year give a true and fair view.
in the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the board of directors.

Director:

Dated: 29 August 2019

Tel: +61 2 9251 4100 Level 11, 1 Margaret St Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

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INDEPENDENT AUDITOR'S REPORT

To the members of Living Cell Technologies Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Living Cell Technologies Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration.

In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001 , including:

(i) Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year ended on that date; and
(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Going Concern

*Key audit matter* *How the matter was addressed in our audit*	*Key audit matter* *How the matter was addressed in our audit*

Note 1 (c) to the financial report discloses the going concern assumption and the Group’s ability to fund the ongoing research, corporate and operating expenses. The Group’s annual going concern assessment is a key audit matter due to the size of research and operational expenditure activities, the Group’s history of operating losses and negative operating cash flows and the degree of estimation and assumptions required to be made by the Group concerning future cash flows makes this a Key Audit Matter In assessing the going concern assumption and the Group’s future expenditure we undertook, amongst others, the following audit procedures: • Reviewed management’s assumptions in the cash flow forecasts to assess whether current cash levels along with expected cash inflows and expenditure can sustain the operations of the Group for a period of at least 12 months from the date of signing of the financial statements. • Assessing the accuracy of the forecasts by comparing previous forecasts with the Group’s actual results. • Assessing the adequacy of the Group’s disclosures within the consolidated financial statements.

Key audit matter
How the matter was addressed in our audit

Note 1 (c) to the financial report discloses the going
concern assumption and the Group’s ability to fund the
ongoing research, corporate and operating expenses.
The Group’s annual going concern assessment is a key
audit matter due to the size of research and
operational expenditure activities, the Group’s history
of operating losses and negative operating cash flows
and the degree of estimation and assumptions required
to be made by the Group concerning future cash flows
makes this a Key Audit Matter
In assessing the going concern assumption and the
Group’s future expenditure we undertook, amongst
others, the following audit procedures:
•
Reviewed management’s assumptions in the
cash flow forecasts to assess whether current
cash levels along with expected cash inflows and
expenditure can sustain the operations of the
Group for a period of at least 12 months from
the date of signing of the financial statements.
•
Assessing the accuracy of the forecasts by
comparing previous forecasts with the Group’s
actual results.
•
Assessing the adequacy of the Group’s
disclosures within the consolidated financial
statements.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2019, but does not include the financial report and the auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

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In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:

http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf

This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 10 to 13 of the directors’ report for the year ended 30 June 2019.

In our opinion, the Remuneration Report of Living Cell Technologies Limited, for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

BDO East Coast Partnership

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Gareth Few Partner

Sydney, 29 August 2019

Living Cell Technologies Limited

Additional information for listed public companies

30 June 2018

ASX Additional Information

Additional information required by the ASX Listing Rules and not disclosed elsewhere in this report is set out below. This information is effective as at 13 August 2019.

Substantial shareholders

The number of substantial shareholders and their associates are set out below:

ubstantial shareholders he number of substantial shareholders and their associates are	set out below:
Shareholders	Number of shares
Milford Asset Management	36,078,640

Voting rights

Ordinary Shares

On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Options

No voting rights.

Distribution of equity security holders at 13 August 2019

Holding 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,000 and over	Holders Shares 175 38,748 395 1,243,623 359 2,961,230 1,327 53,123,577 496 514,073,803
	2,752 571,440,981

There were 407 holders of less than a marketable parcel of ordinary shares.

Twenty largest shareholders at 13 August 2019

enty largest shareholders at 13 August 2019
	Number	% of issued
	held	shares
HSBC Custody Nominees (Australia) Ltd	47,889,131	8
Citicorp Nominees Pty Limited	41,601,924	7
Otsuka Pharmaceutical Factory, Inc.	25,000,000	4
National Nominees Limited	23,335,364	4
Investment Custodial Services Limited	21,784,269	4
Waiaua Bay Farm Limited	16,548,466	3
Ms Elena Borisovna Titova	16,170,599	3
Masfen Securities Limited	15,190,788	3
Peter C Cooper and Susan E Cooper	14,705,195	3
Jiangsu Aosaikang Pharmaceutical Co	14,334,080	3
BNP Paribas Nominees Pty Limited	10,851,433	2
Custodial ServcesLimited	10,358,810	2
ASB Nominees Limited	9,511,822	2
Peter C Cooper	9,195,670	2
Mr Dale Anthony Reed	9,000,000	1
Mr Terence Roland Harrison + TRH trustee Limited	7,099,471	1
J P Morgan Nominees Australia Limited	6,668,803	1
Hepzibah PTY LTD	6,660,680	1
Natalie Parke Trustee Limited	5,149,537	1
SC Trustee Limited	5,149,537	1

Securities exchange

The company is listed on the Australian Securities Exchange.

AI assistant

ALGORAE PHARMACEUTICALS LIMITED — Annual Report 2019

64249_rns_2019-08-28_726138cc-1a3e-49a6-82d1-1cb971824e4b.pdf

Living Cell Technologies Limited

ASX ANNOUNCEMENT

Preliminary Final Report 30 June 2019

Financial Results

– Ends –

For further information: www.lctglobal.com

About Living Cell Technologies

Forward-looking statements

Living Cell Technologies Limited

Appendix 4E full year ended 30 June 2019

Results for Announcement to Market

Reported

Dividends

Other information required by Listing Rule 4.3A

Additional Information

NTA Backing

Audit Report

Living Cell Technologies Limited

Contents

For the year ended 30 June 2019

Directors’ report

30 June 2019

1. General information

Information on directors

Directors’ report

30 June 2019

1. General information (continued)

Directors’ report

30 June 2019

1. General information (continued)

Directors’ report

30 June 2019

1. General information (continued)

Principal activities and significant changes in nature of activities

2. Operating and financial review

Operations

Financial position

Directors’ report

30 June 2019

2. Operating and financial review (continued)

Business strategies and prospects for future years

3. Other items

Significant changes in state of affairs

Events after the reporting date

Environmental issues

Company secretary

Dividends

Directors’ report

30 June 2019

3. Other items (continued )

Meetings of directors

Indemnification and insurance of officers and auditors

Shares

Directors’ report

30 June 2019 3. Other items (continued)

Options

Non-audit services

Auditor's independence declaration

Directors’ report

30 June 2019

Remuneration report (audited)

Remuneration policy

Directors’ report

30 June 2019

Performance conditions linked to remuneration

Employment details of members of key management personnel

Service agreements

Directors’ report

30 June 2019

Remuneration details for the year ended 30 June 2019

Securities received that are not performance related

Options granted, vested and lapsed during the year

Directors’ report

30 June 2019

Options granted, vested and lapsed during the year (continued)

Key management personnel options and rights holdings

Living Cell Technologies Limited

ALGORAE PHARMACEUTICALS LIMITED Annual Report 2019