IMMUTEP LIMITED - Annual Report 2011

ABN 90 009 237 889

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Annual Report
2011
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>> CoNteNts

Corporate Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04 Chairman’s Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06 Review of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08 Intellectual Property Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Corporate Governance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Management Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Directors’ Report (Continued) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Auditors’ Independence Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

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>> Corporate direCtory

Ms Lucy Turnbull, AO (Non – Executive Chairman) Mr Albert Wong (Non – Executive Deputy Chairman) Mr Martin Rogers (Managing Director & Chief Executive Officer) Dr Neil Frazer (Chief Medical Officer) Dr Richard Hammel (Non – Executive Director)

Directors

Company secretary Mr Ian Bangs Registered office Level 7 151 Macquarie Street Sydney NSW 2000

Principal place of business Level 7 151 Macquarie Street Sydney NSW 2000 Share register Boardroom Limited 207 Kent Street Level 7 Sydney, NSW 2000

Auditor MDHC Audit Assurance Pty Ltd Level 3, 302 Burwood Road Hawthorn, VIC 3122 Solicitors McCabe Terrill Level 14, 130 Elizabeth Street Sydney, NSW 2000

Stock exchange listing Prima BioMed Ltd shares are listed on the Australian Securities Exchange (ASX code: PRR) Website address www.primabiomed.com.au

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Page 04

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Certain values define
the way we innovate:
integrity, scientific method
and creative thinking.
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>> ChairmaN’s letter

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dear shareholder

It gives me great pleasure to report on what has been a tremendous 12 months of progress for Prima BioMed, in both the development of our CVac™ ovarian cancer vaccine and also in the corporate and fi nancial position of the Company.

The Company’s core focus remains on the development and commercialisation of CVac™ into the multi-billion dollar pharmacy oncology market – to provide a new treatment option for ovarian cancer patients globally and deliver signifi cant value for our shareholders.

And, over the past year we have continued to make signifi cant advances towards this goal. this is highlighted by the following achievements.

A Potency Assay has successfully been developed for the CVac™ vaccine. This ensures that a given batch of CVac™ will have a pre-defi ned minimum level of potential biological activity, and helps demonstrate a batch-to-batch consistency of the treatment.

An agreement has been reached for the strategy and design for CVac[TM] ’s upcoming Phase III Trial. The Phase III clinical trial has been formally named CANVAS (CANcer VAccine Study) and the trial is now referred to as CANVAS. This is signifi cant as it allows the Company to progress with preparations for patient recruitment into the trial. Also during the year, CVac™ was also granted Orphan Drug status by the US Food and Drug Administration (FDA).

On our Phase IIb Trial, which is currently being conducted under the guidance of the FDA, we reported that the fi rst patient cohort – of seven patients – had successfully completed their fi rst treatment with the CVac[TM] vaccine, without any safety data concerns. As a result, randomised patient enrolment for the balance of the trial has recently been completed.

Another important milestone was the granting of marketing and distribution approval for CVac™ in Dubai, by Dubai Health Care City. This represented CVac[TM] ’s fi rst commercial approval, and provides a unique opportunity for Prima to provide treatment for cancer patients in the Middle Eastern region.

Company is in a strong fi nancial position following a successful capital raising of over $41 million dollars through a combined share placement and shareholder purchase plan completed this year.

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ChairmaN’s letter CoNtiNued

Our plans to list on the NASDAQ market in the US were announced last September, and while the process has taken longer than anticipated, we remain committed to the process and look forward to providing further details in due course. The Company is of the view that a NASDAQ listing will provide a listed structure that better meet the needs of our investors in both Australia and the US.

Finally, I would like to thank all shareholders for their continued support. The year ahead promises to be another of signifi cant growth and progress as we embark on our key CANVAS Trial for CVac[TM] , and I look forward to sharing news of this progress with you.

Yours sincerely

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Lucy Turnbull, AO Chairman, Prima BioMed Ltd 27 September 2011

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>> reVieW of operatioNs

On behalf of the Board and Management of Australian cancer treatment development company Prima Biomed (ASX: PRR) I am pleased to provide the following review of operations and activities of the Company over the previous 12 months.

Key achievements for fy 2010 / 2011

A$ 41.3 million raised in successful Capital Raising
Potency Assay for CVac[TM] ovarian cancer vaccine successfully developed
CVac[TM] commercialisation plans commenced in the Middle East – CVac[TM] at Dubai Healthcare City
Scientifi c Advice granted provided by EMA regulatory for CVac[TM] Phase III Trial

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First patient cohort successfully treated in CVac[TM] Phase IIb Trial
New board and management appointments broadens Company skill set
Orphan Drug Designation granted for CVac™ by US Food and Drug Administration building on EMA Orphan Product Designation

a$ 41.3 million raised in successful Capital raising

In May 2011 the Company completed a successful Capital Raising which raised a total of A$ 41.3 million. It comprised a Placement to institutional and sophisticated investors which raised a total of A$21 million, and a Share Purchase Plan (SPP) to existing shareholders, which raised A$ 20.3 million. Deutsche Bank AG and Ord Minnett Limited were joint lead managers for the Placement.

The price of shares under the Placement and the SPP was 28 cents, which represented a discount of 18.8 % to the adjusted volume weighted average price for the fi ve day period up to and including Tuesday 24 May 2011.

The funds raised under the Capital Raising will be used by Prima for its ongoing development of the CVac[TM] immunotherapy ovarian cancer vaccine, including its upcoming Phase III Clinical Trials, and also to provide working capital for the Company. The Company was delighted with the response from institutional investors to its Capital Raising.

potency assay for CVac[tm] ovarian cancer vaccine successfully developed

In June 2011 Prima confi rmed that a Potency Assay for the CVac™ immunotherapy ovarian cancer vaccine had been successfully developed.

The purpose of a Potency Assay is to ensure that a given batch of the CVac™ vaccine has a predefi ned minimum level of potential biological activity that will deliver an expected result. It also helps demonstrate a batch-to-batch consistency of the treatment.

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The development of a Potency Assay is an important step for CVac™. It gives Prima BioMed an opportunity to compare manufacturing across manufacturing facilities used world-wide and will lead to a validation tool for regulatory purposes; once patient data from the upcoming Phase III study is available ensuring consistency of biological activity.

The assay is a key component in the process to establish CVac™

as a pharmaceutical grade product, and will become an integral part of the Chemistry Manufacturing and Controls (CMC) section of a future registration regulatory package for CVac™.

CVac[tm] commercialisation plans commenced in the middle east – CVac[tm] at dubai healthcare City

In May 2011, Dubai Healthcare City (DHCC) granted approval for the marketing and distribution of the CVac[TM] vaccine in DHCC. This represented the fi rst approval globally to make CVac[TM] commercially available, and is a major market opportunity for Prima to provide treatment for cancer patients in the Middle Eastern region and generate revenues.

Subject to fi nalising regulatory and logistical steps, the fi rst sales of CVac[TM] in DHCC are expected before the end of 2011.

CVac[TM] will be available in DHCC through Prima’s partnership with The City Hospital, a state-of-the art multi-disciplinary hospital in Dubai. Prima and The City Hospital has signed a Memorandum of Understanding on the terms and conditions by which CVac[TM] will be available. A full agreement between the parties has been signed. There is also the potential, in the future, to extend the application of CVac[TM] Dubai to other mucin-1 positive tumours.

At the same time Dr Hind Al Saadi was appointed General Manager of Prima BioMed’s Middle East operations to lead the commercialisation effort for CVac[TM] in the region. Dr Al Saadi is a pharmacist by training with nearly 20 years industry experience in marketing, sales, distribution, and regulatory affairs.

[tm] phase iii CaNVas trial

In February 2011 an agreement was entered into for the strategy and design for the Phase III Trial of the CVac[TM] immunotherapy therapeutic ovarian cancer vaccine. The agreement came after the European regulator, the European Medicines Agency (EMA) advised that Scientifi c Advice for the Phase III Trial had been granted.

The Phase III clinical trial has been formally named CANVAS (CANcer VAccine Study) and the trial will be referred to as CANVAS going forward.

This was a signifi cant milestone in the development of CVac[TM] , and allowed Prima to progress with preparations for patient recruitment into the CANVAS Trial. The Company also advises that it recently completed a successful progress meeting with the US Food and Drug Administration (FDA) regarding the upcoming CANVAS trial.

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reVieW of operatioNs CoNtiNued

The CANVAS Trial will be conducted on 800 patients in a double-blind placebo controlled study, randomized 1 : 1 of CVac[TM] vs placebo. It will be conducted across multiple sites in Europe, the US and Australia. Full enrollment for the trial is expected to be complete by the start of 2013. Interim data from the CANVAS Trial is expected to be available in 2013, and would provide the fi rst opportunity to observe statistical analysis of progression free survival. CANVAS is an event driven study and actual study timelines will be dependent on patient outcomes in the trial (i.e. how long patients stay in remission and stay alive). As such, these timelines are indicative only and are provided only as a guideline. Prima will provide regular updates regarding actual enrolment and progression events throughout the CANVAS trial.

If statistical endpoints are successfully reached in the CANVAS Trial, CVac[TM] should be well placed to become the world’s fi rst ovarian cancer immunotherapy treatment.

first patient cohort successfully treated in CVac[tm] phase iib trial and enrolment complete Also in February 2011, the fi rst seven patients in the CVac[TM] Phase IIb Trial successfully completed the fi rst treatment cohort with the CVac[TM] vaccine, and no safety data concerns were expressed by the Data Safety Monitoring Board (DSMB). The DSMB voted unanimously to allow the study to progress as planned.

As a result, patient enrollment into the randomised component of the Phase IIb Trial (a further 54 patients) opened and now has been completed. This patient cohort will be tracked on standard of care vs treatment with CVac[TM] . The trial is open in fi ve premier sites in Australia and 15 sites across the US.

The initial cohort of seven subjects (who met the Phase IIb Trial’s eligibility criteria) completed their fi rst injection of the CVac[TM] vaccine, in an open label fashion. Post the treatment, the patient group was monitored for a period of (at least) 28 days to assess any treatment-related adverse effects.

New board and management appointments

In October 2010 ms lucy hughes turnbull, ao was appointed the Company’s new Chairman. She replaced acting Chairman, Mr Albert Wong, who remains on the Board as Deputy Chairman. Ms Turnbull has strong links to the healthcare sector.

She was previously the Chairman of the New South Wales Government’s Ministerial Advisory Committee on Biotechnology from 2001-2, a Director of the Sydney Cancer Foundation from 2002-6 and Director and Chair of the Sydney Children’s Hospital Foundation from 1993-2000. She is currently on the Board of the Cancer Institute NSW.

Ms Turnbull also has a strong depth of experience in commercial legal practice and investment banking. During her career she has held a number of high profi le positions, including Lord Mayor of the City of Sydney from 2003-2004 and, prior to that, Deputy Lord Mayor of Sydney from 1999-2003.

In July 2010, the Company’s Chief Medical Offi cer dr Neil frazer joined the Board as an executive

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reVieW of operatioNs CoNtiNued

director . The appointment increased the level of clinical expertise on the Board. Dr Frazer resides in the US and plays a key role in overseeing Prima’s late-stage trials for CVac™. He has more than 23 years experience in the pharmaceutical industry, including 10 years experience in oncology drug development, and has a strong depth of expertise in managing the clinical development process of new drug applications.

He has been involved in the successful applications for 10 new chemical entities (NCE) in multiple therapeutic areas, plus more than 20 applications for line extensions of pharmaceutical drug applications. Dr Frazer has a Bachelor of Medicine and Bachelor of Surgery (MB ChB) from the University of Edinburgh Medical School, and has a Fellowship from the Royal College of Anaesthetists in London (FRCA) and a Fellowship in Pharmaceutical Medicine from the Royal College of Physicians.

The Company’s previous Chairman Mr Ata Gokyildirim resigned from the Company on 27 July 2010.

Mr Ian Bangs was appointed the Company’s new Company secretary and Chief financial officer . He has a strong depth of experience and expertise in the fi nancial management of publicly listed companies, and has previously held the roles of Chief Financial Offi cer and Company Secretary for a number of ASX-listed companies.

These include property and funds management group LandMark White Limited (ASX: LMW) and, prior to that, IFC Capital Limited (ASX: IFC) for six and a half years. He was also the CFO of the Four Seasons Hotel (formerly the Regent Hotel) in Sydney for 10 years.

Mr Bangs has a Bachelor of Commerce degree and is a Fellow CPA.

dr sharron Gargosky was appointed senior Vice president for CVac™ Clinical programs in August 2010. She has 18 years experience in the biotechnology and pharmaceutical industries, and has worked in senior positions for a number of companies which have successfully received FDA approval for orphan drugs.

She is based in the US in her role and is a key senior member of Prima’s world class executive team. Dr Gargosky is responsible for managing the clinical team working on the CVac™ immunotherapy cancer vaccine.

orphan product designation granted for CVac™ by us food and drug administration Building on EMA Orphan Product Designation in June 2010 in September 2010 Prima was granted Orphan Medicinal Product Designation for CVac™ by the US Food and Drug Administration (FDA). The approval was given under the generic name Autologous Dendritic Cells Pulsed With Recombinant Human Fusion Protein (Mucin1- Glutathione S Transferase) Coupled To Oxidized Polymannose for treatment of ovarian cancer.

Orphan Product designation provides Prima with major benefi ts during CVac™’s development process in the US. Key incentives include; the exclusive rights to the cure, or treatment, for a specifi c condition for a period of 7 years post the approval to commercially market CVac™, providing priority review

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reVieW of operatioNs CoNtiNued

within the FDA, waiving of FDA fees, grant eligibility and the provision of tax reductions. Orphan Product designation is intended to provide incentives to encourage companies to pursue cures and treatments for rare diseases, such as ovarian cancer. These include; priority review, research support, eligibility for protocol assistance, and possible exemptions in certain regulatory fees during development, or at the time of application.

other activity

In April 2011, Prima’s subsidiary company, Cancer Vac Pty Ltd, was granted a patent for CVac™ from the Japanese Patent Offi ce. The claims secured in patent number 4669930 provide for the manufacture of mannan fusion protein (MFP) conjugated vaccine to a patient’s own dendritic cells. The granted patent claims will allow the conjugation of Mucin-1 as well as other cancer antigens to MFP. Prima now intends to fi le for Orphan Drug Designation for CVac™ in Japan.

In January 2011, the Company reached an agreement for the early termination of its convertible loan funding facility with New York-based investment fund SpringTree Special Opportunities Fund, LP (SpringTree). At the same time SpringTree agreed to make an additional one-off investment of $ 2.5 million in Prima.

In August 2010, Prima’s subsidiary company Oncomab Pty Ltd, entered into a licensing agreement for the development of a Cripto-1 cancer monoclonal antibody (mAB) with leading Dutch pharmaceutical development company Bioceros. The Licensing Agreement is a 70 (Prima):30 (Bioceros) project split and the work will be undertaken by Bioceros. The agreement expands Prima’s clinical development programs in the area of immunotherapy cancer treatments.

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Martin Rogers Managing Director & Chief Executive Offi cer (CEO)

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>> iNtelleCtual property report

The following describes the status of the Intellectual Property portfolio at 30 June 2011:

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Patent Family Title Status Expiry
CANCERVAC
Family 1
Mannan fusion Composition of matter patent –Mucin-Mannan granted in australia, Canada, Japan (x2), 2014
conjugates, antigen carbohydrate compounds, USa (x2), UK, Italy, France, germany,
or mucin-1 derived antigens and their use in Ireland.
immunotherapy.
application allowed in the USa.
Family 2
Mimics Mucin -1 mimicking peptides and their use granted in australia, New Zealand, 2016
in cancer immunotherapy. USa, Japan, UK, Italy, France, germany,
Switzerland.
application allowed in Canada.
Family 3
ex vivo cell Method of producing dendritic cells pulsed granted in australia, austria, Belgium, 2018
therapy with MFP (family 1). Denmark, France, germany, Italy, Ireland,
Japan, Luxembourg, Spain, Sweden,
Switzerland, Netherlands, UK.
applications pending in the USa,
and allowed in Canada .
Family 4
Non-VNTR New immunogenic regions of Mucin-1 and their granted in australia and the USa. US: 2014
regions use in cancer immunotherapy. ROW: 2021
applications pending in europe, Canada,
and Japan.
Biomira licensed Human mucin core protein, antibodies granted in the US (3 patents) and 2018
patents and probes. Canada.
Note CVac [TM ] has Orphan Drug Designation. US FDA & EMA 7 years & 10 years exclusively from product launch.
ONCOMAB
Family 1
Cancer Therapeutic cancer antibodies targeting granted in australia, China, New Zealand, 2022
antibodies cancer antigen, cripto-1. South Korea, and USa.
applications pending in Canada, europe
and Japan.
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>> Corporate GoVerNaNCe report

A review of the Company’s ‘Corporate Governance Framework’ is performed on a periodic basis to ensure that it is relevant and effective in light of the changing legal and regulatory requirements. The Board of Directors continues to adopt a set of Corporate Governance Practices and a Code of Conduct appropriate for the size, complexity and operations of the Company and its subsidiaries.

Unless otherwise stated all policies and charters meet the ASX Corporate Governance Best Practice Recommendations. All charters and policies are available from the Company.

structure the board to add value

Directors are selected to achieve a broad range of skills, experience and expertise complementary to the Company’s activities. The names of the Directors, their independence, qualifi cations and experience are stated in the Directors’ Report along with the term of offi ce held by each.

The roles of Chairman and Chief Executive Offi cer are not exercised by the same individual.

The Directors can take independent professional advice at the expense of the Company as they determine necessary to carry out its duties.

The Board continually review and assess the benefi ts associated with the introduction of external independent Non-Executive Directors, and accordingly 3 of the 5 Directors of the Company are now Non-Executive Directors, including the Chairman.

On the 31st August 2011, the Company announced it had implemented a Diversity Policy. While the key focus of the Diversity Policy and the ASX Corporate Governance Council’s recommendations is on promoting the role of women within organisations, the Company recognises that other forms of diversity are also important and will seek to promote and facilitate a range of diversity initiatives throughout the Company beyond gender diversity. The Board will ensure that appropriate procedures and measures are introduced and responsibilities delegated to the Remuneration committee to ensure that the Company’s diversity commitments are implemented appropriately.

At the date of release of the Annual Report, the Company has 50 % of its employees being female. The Board is comprised of fi ve directors with the Chairman being female. This is a participation rate of 20 %.

A copy of the Diversity Policy is available on the Company’s website.

performance evaluation

No formal performance evaluation of the Board was conducted for the year ended 30 June 2011 as the majority of the current Board have been in their positions for a period of less than 12 months. The Company believes that this process would be best conducted once the Board members have been able to establish themselves in their positions for a minimum of 12 months. The Board recognises the importance of performance evaluations and will continually assess the necessity and timing of future performance evaluation.

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Corporate GoVerNaNCe report CoNtiNued

audit Committee

The membership of the Audit Committee only comprises Non-Executive Directors. The Chairman of the Audit Committee is a Non-Executive Director who is not the Chairman of the Board.

The role of the Audit Committee is to oversee the integrity the Company’s fi nancial reporting process.

The Audit Committee has direct and unlimited access to the external Auditor.

Nomination Committee

The Board believes that the Company is not of size, nor are its fi nancial affairs of such complexity, to justify the establishment of a Nomination Committee of the Board of Directors as recommended by the Council. All matters which might be properly dealt with by a Nomination Committee are considered by full Board of Directors.

The Board considers the necessity to establish a Nomination Committee annually.

share trading policy

Whilst the Board encourages its Directors and employees to own securities in the Company, it is also mindful of its responsibility that the Company complies with the Corporations Act 2001 pertaining to ‘insider trading’ and its ‘proper duties in relation to the use of insider trading’.

To ensure that the above issues comply with the requirements of the Corporations Law, the Board has established and implemented a policy on share trading in the Company’s securities by Directors and employees.

Essentially, the policy restricts Directors and employees from acting on material information until it has been released to the market, adequate time has been given for this to be refl ected in the securities prices, and implements restrictions on share trading in the Company’s securities by Directors and employees during ‘black-out periods’ as defi ned by the Share Trading Policy.

recognised and manage risk

The Audit, Risk & Compliance Committee has established a policy for risk management and oversight, and internal control within the Company. This is periodically reviewed and updated.

The Board has received a report from management that the Company’s material business risks are being managed effectively.

The CEO and CFO have given a statement to the Board, in accordance with ‘Best Practice Recommendation 7.3’, that:

a) the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control; and
b) the Company’s ‘Risk Management and Internal Control System’, is operating effectively in all material respects in relation to fi nancial reporting risks.

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Corporate GoVerNaNCe report CoNtiNued

remunerate fairly and responsibly

Profi les of members and attendance at meetings of the Remuneration Committee are detailed in the Directors’ Report.

The Committee is responsible for, but not limited to:

Setting the remuneration and conditions of service of all executive and Non-Executive Directors, offi cers and employees of the Company.
Approving the design of executive & employee incentive plans (including equity-based plans) and proposed payments or awards under such plans.
Reviewing performance hurdles associated with incentive plans.
Making recommendations to the Board on the remuneration of Non-Executive Directors within the aggregate approved by shareholders at general meetings from time to time.
Consulting appropriately qualifi ed consultants for advice on remuneration and other conditions of service.
Succession planning for the CEO and senior executive offi cers.
Performance assessment of the CEO and senior executives.
Recommending policy on the selection of Board members.
Recommending prospective Board members to the full Board of the Company.

The Company is committed to remunerating its senior executives in a manner that is market-competitive and consistent with ‘Best Practice’ as well as supporting the interests of shareholders. Senior executives may receive a remuneration package based on fi xed and variable components, determined by their position and experience. Shares and/or options may also be granted based on an individual’s performance, with those granted to Directors subject to shareholder approval.

Non-Executive Directors are paid their fees out of the maximum aggregate amount approved by shareholders for the remuneration of Non-Executive Directors. Non-Executive Directors do not receive performance based bonuses and do not participate in equity schemes of the Company without prior shareholder approval.

Current remuneration is disclosed in the Remuneration Report on Page 24.

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>> direCtors’ report

The directors present their report, together with the fi nancial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of Prima BioMed Ltd (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled for the year ended 30 June 2011.

Directors

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

Ms Lucy Turnbull, AO (appointed on 7 October 2010) Mr Albert Wong Mr Martin Rogers (appointed on 23 July 2010) Dr Neil Frazer (appointed on 23 July 2010) Dr Richard Hammel Mr Ata Gokyildirim (resigned on 27 July 2010)

principal activities

During the fi nancial year the principal continuing activities of the consolidated entity consisted of: research and commercialisation of licensed medical biotechnology.

dividends

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

review of operations

The loss for the consolidated entity after providing for income tax and non-controlling interest amounted to $ 21,081,095 (30 June 2010: $ 17,960,320).

There were no signifi cant changes in the state of affairs of the consolidated entity during the fi nancial year.

Refer to Note 35 detailing events occurring after the reporting date.

No other matter or circumstance has arisen since 30 June 2011 that has signifi cantly affected, or may signifi cantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future fi nancial years.

likely developments and expected results of operations

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

direCtors’ report CoNtiNued

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

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

Company secretary

Mr Bangs was appointed company secretary on 3 May 2011.

Mr Phillip Hains resigned as company secretary on 1 July 2011 after 9 years service as company secretary.

meetings of directors

The number of meetings of the company’s Board of Directors and of each board committee held during the year ended 30 June 2011, and the number of meetings attended by each director were:

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Full Board Nomination and Audit and Risk Committee
Remuneration Committee
Attended Held Attended Held Attended Held
Ms Lucy Turnbull, aO 5 5 – – – –
Mr albert Wong 8 8 1 1 2 2
Mr Martin Rogers 8 8 – – – –
Dr Neil Frazer 8 8 – – – –
Dr Richard Hammel 6 8 1 1 2 2
Mr ata gokyildirim – 1 – – – –
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Held: represents the number of meetings held during the time the director held offi ce or was a member of the relevant committee. Mr Ata Gokyildirim resigned on 27 July 2010.

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>> maNaGemeNt direCtory

==> picture [111 x 149] intentionally omitted <==

mr matthew lehman,

Chief Operating Offi cer

Mr Lehman has served as our Chief Operating Offi cer since February 2010. Mr. Lehman has experience in clinical research, development programs and obtaining drug approval. He has specifi c expertise in clinical development strategies, operations and in-outsourcing. From 2000 until 2010, Mr. Lehman was chief operating offi cer for SPRI Clinical Trials in the US and Europe, where he managed teams in all areas of clinical operations.

Mr. Lehman is based in Berlin, Germany and plays a key role in leading our research and development plans, and clinical trials for its Cvac ovarian cancer therapy vaccine. Mr. Lehman has a Master of Science from Columbia University in New York, and a Bachelor of Arts from the University of Louisville, Kentucky.

He is also a member of the European Business Association and Association for Clinical Research Professionals.

==> picture [115 x 149] intentionally omitted <==

mr ian Bangs,

Chief Financial Offi cer & Company Secretary

Ian Bangs has over 25 years’ experience working in senior fi nance positions with companies involved in a range of diversifi ed industries. Mr Bangs has worked as Chief Financial Offi cer and Company Secretary for a number of public companies listed on the ASX including LandMark White Limited, IFC Capital Limited and 10 years as the CFO of the Regent Hotel in Sydney. He has been responsible for the day to day fi nancial and administrative operations together with the statutory reporting and compliance obligations of these organisations. He has a Bachelor of Commerce degree and is a Fellow CPA.

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maNaGemeNt direCtory CoNtiNued

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dr sharron Gargosky,

Senior Vice President, CVac™ Program

Dr Gargosky has 17 years’ experience in the biotechnology and pharmaceutical industries, and has worked in senior positions to successfully received FDA approval for orphan drugs. She is responsible for managing the clinical team working on the CVac™ immunotherapy cancer vaccine. Prior to joining Prima, Dr Gargosky was a member of ILMU consulting LLC, where she provided project management and operational expertise on pharmaceutical drug and biologic development – from early research to Phase IV Trials and the FDA approval process. Dr Gargosky has also previously held the positions of; Chief Scientifi c Offi cer at Pulse Health LLC in Portland in the USA, and Chief Scientifi c Offi cer and Senior Vice President of Corporate Development at Hyperion Therapeutics Inc. in San Francisco. At Ucyclyd Pharma she managed the approval

of orphan drug products (Ammonul) and the development of the NCE, and within Medics Pharmaceuticals, the successful BLA submission and approval for Reloxin.

As Vice President of Business Development for Diagnostic System Laboratories she was responsible for business expansion through evaluation and implementation of new growth opportunities and patent portfolio management.

Dr Gargosky has a Postdoctoral Fellowship in Pediatric Endocrinology from Stanford University in California, a Ph.D in biochemistry from University of Adelaide in Australia (in collaboration with CSIRO Divisions of Human Nutrition, South Australia), First Class Honours in Biochemistry from University of Adelaide, and a Bachelor of Science, Biochemistry (Distinction), Microbiology, Immunology & Virology (Distinction) from University of Adelaide.

==> picture [116 x 149] intentionally omitted <==

dr hind al saadi,

General Manager Prima BioMed Middle East

Dr Hind Al Saadi has been appointed as General Manager of Prima BioMed Middle East operations and will lead the commercialization effort for CVac™in the region. Dr Al Saadi a pharmacist by training has nearly 20 years of international industry experience in marketing, sales, distribution, and regulatory affairs. She has previously worked for Baxter Healthcare in New Zealand, as well as Globalpharma and The Center for Healthcare Planning and Quality in Dubai.

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mr marc Voigt,

General Manager, European Operations

Mr Voigt has extensive experience in the corporate and biotechnology sectors. He joined Prima BioMed’s management team in 2011 as the General Manager of the Company’s European operations at Prima BioMed GmbH. He has previously worked as an investment manager for Allianz Insurance biotech venture fund, and as a personal assistant to a member of the Executive Board of Allianz Insurance.

Mr Voigt has also worked for German investment bank, net.IPO.AG, in the area of business development and German securities offerings. In the biotech sector, he has held the positions of CFO/CBO at Revotar Biopharmaceuticals AG and Medical Enzymes AG.

He has a Masters Degree in Business Administration from the Freie Universität of Berlin, and is a member of the pharma licencing club Germany and a member of the judging panel of Germany’s largest business plan competition.

==> picture [115 x 149] intentionally omitted <==

ms Vanessa Waddell,

Business Development and Intellectual Property Manager

Ms Waddell is the Business Development Manager and Intellectual Property Manager of Prima BioMed Limited. Previous industry experience includes technical specialist and product development roles with AMRAD Biotech.

Prior to joining Prima BioMed, Ms Waddell was employed in the commercialisation company of the Austin Research Institute. Since joining Prima BioMed, Ms Waddell has overseen project management of the company’s fi rst two investments, Cancer Vac Ltd and Arthron Ltd. In addition she has assisted in the identifi cation, evaluation and structuring of two further investments made by the company.

Ms Waddell has a BSc (Hons) degree in Science from the University of Sydney and a Masters of Business Administration from Deakin University.

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maNaGemeNt direCtory CoNtiNued

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ms larisa Chisholm,

Intellectual Property Manager

Ms Chisholm has an Honours degree at LaTrobe University (1992, studying the role of Natural Killer Cells in immune surveillance of cancer). From 1993 – 1996 she worked in the same laboratory and then joined the Immunogenetics and Xenotransplantation Laboratory at the then Austin Research Institute (Burnet). In 2001 she left to complete a Masters of Business Administration at La Trobe University. Ms Chisholm joined Prima BioMed in 2003 and her understanding of the Austin Research Centre and its people has proven invaluable.

She has since worked in a variety of roles including market research, Grants Coordinator. Her current role is Intellectual Property Manager and she also assists with various business development activities.

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remuNeratioN report (audited)

The remuneration report, which has been audited, outlines the director and executive remuneration arrangements for the consolidated entity and the company, in accordance with the requirements of the Corporations Act 2001 and its Regulations.

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

A Principles used to determine the nature and amount of remuneration

B Details of remuneration

C Service agreements

D Share-based compensation

A Principles used to determine the nature and amount of remuneration

remuneration policy

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

The Company is committed to remunerating Senior Executives and Executive Directors in a manner that is market competitive and consistent with “Best Practice” including the interests of shareholders. Remuneration packages are based on fi xed and variable components, determined by the Executives’ position, experience and performance, and may be satisfi ed via cash or equity.

Non-Executive Directors are remunerated out of the aggregate amount approved by shareholders and at a level that is consistent with industry standards. Non-Executive Directors do not receive performance based bonuses and prior Shareholder approval is required to participate in any issue of equity. No retirement benefi ts are payable other than statutory superannuation, if applicable.

The Company’s Remuneration Policy is not directly based on its fi nancial performance, rather on industry practice, given the Company operates in the biotechnology sector and the Company’s primary focus is research activities with a long term objective of developing and commercialising the research & development results.

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

performance based remuneration

The purpose of a performance bonus is to reward individual performance in line with Company objectives. Consequently, performance based remuneration is paid to an individual where the individual’s performance clearly contributes to a successful outcome for the Company. This is regularly measured in respect of performance against key performance indicators (KPI’s).

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The company uses a variety of KPI’s to determine achievement, depending on the role of the executive being assessed. These include:

successful contract negotiations
achievement of research project milestones within scheduled time and / or budget
company share price reaching a targeted level on the ASX or applicable markets over a period of time

B Details of remuneration

amounts of remuneration

Details of the remuneration of the directors, other key management personnel (defi ned as those who have the authority and responsibility for planning, directing and controlling the major activities of the consolidated entity) and specifi ed executives of Prima BioMed Ltd are set out in the following tables.

==> picture [463 x 313] intentionally omitted <==

----- Start of picture text -----

30 June 2011 Short-term Benefi ts Post Long-term Share-based Total
Employment benefi ts Payments
Benefi ts
Cash salary Bonus Non Super- Long service Equity-
and fees Monetary annuation leave settled
$ $ $ $ $ $ $
Non-Executive Directors
– – –
Ms L Turnbull, aO * 81,016 7,291 324,000 412,307
– – –
Mr a Wong 68,930 6,203 368,000 443,133
Dr R Hammel 60,516 – – – – 162,000 222,516
Executive Directors
Mr M Rogers *** 348,703 50,000 – 22,000 – 324,000 744,703
– – – – –
Mr a gokyildirim * 37,500 37,500
Dr N Frazer 261,215 7,500 – – – 40,515 309,230
Other Key Management
Personnel
Mr M Lehman 229,338 7,500 – – – 5,299 242,137
Mr P Hains ** 270,589 – – – – 84,000 354,589
– – – –
Mr I Bangs 78,974 7,108 86,082
1,436,781 65,000 – 42,602 – 1,307,814 2,852,197
----- End of picture text -----**

resigned on 27 July 2010.
** The fees for Mr P. Hains were paid to The CFO Solution.
**** appointed as director on 23 July 2010.
* appointed as director on 7 October 2010.
*** re-appointed as director on 23 July 2010.

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==> picture [476 x 297] intentionally omitted <==

----- Start of picture text -----

30 June 2010 Short-term Benefi ts Post Long-term Share-based Total
Employment benefi ts Payments
Benefi ts
Cash salary Other Non Super- Long service Equity-
and fees Monetary annuation leave settled
$ $ $ $ $ $ $
Non-Executive Directors
Dr R Hammel * 63,325 5,412 – – – 350,000 418,737
Mr a Wong 7,556 – – 680 – – 8,236
Executive Directors
– – – –
Mr a gokyildirim 223,333 945,000 1,168,333
Other Key Management
Personnel
Dr N Frazer 152,126 – – – – – 152,126
Mr M Lehman 123,804 – – – – 1,513 125,317
– – – –
Ms g Raymond * 98,840 123,917 222,757
Mr P Hains ** – 130,667 – – – 42,000 172,667
– – – –
Mr M Rogers 238,333 1,400,000 1,638,333
907,317 259,996 – 680 – 2,738,513 3,906,506
----- End of picture text -----

The fees included under ‘Short-term Benefi ts – Other’ for Dr R. Hammel and Ms G. Raymond were consulting fees.

Ms g. Raymond was a consultant to the Company until 1 December 2009. She was then employed until February 2011.

** The fees for Mr P. Hains were paid to The CFO Solution.

performance income as a proportion of total remuneration

All executives are eligible to receive incentives whether through employment contracts or by the recommendation of the Board. Their performance payments are based on a set monetary value, set number of shares or options or as a portion of base salary. Therefore there is no fi xed proportion between incentive and non incentive remuneration.

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C Service agreements

Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:

==> picture [464 x 245] intentionally omitted <==

----- Start of picture text -----

—
Mr Martin Rogers Managing Director & CEO
—
agreement commenced: 1 January 2011
Details — The agreement is for a 2 year period and can be terminated with 6 months notice.
The termination terms are payment of base salary in lieu of notice period.
Dr Neil Frazer — Chief Medical Offi cer
—
agreement commenced: 28 February 2010
Details — The agreement is for a 4 year period and can be terminated with 3 months notice.
The termination terms are payment of base salary in lieu of notice period.
Mr M Lehman — Chief Operating Offi cer
—
agreement commenced: 1 February 2010
Details — The agreement is for a 4 year period and can be terminated with 3 months notice.
The termination terms are payment of base salary in lieu of notice period.
----- End of picture text -----

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

D Share-based compensation

issue of shares

Details of shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2011 are set out below:

Name	Date	No of shares	Issue price	$
Mr albert Wong 6 December 2010 1,250,000 $ 0.10 125,000

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options

The terms and conditions of each grant of options affecting remuneration in this fi nancial year or future reporting years are as follows:

==> picture [464 x 73] intentionally omitted <==

----- Start of picture text -----

Grant date Vesting date and Expiry date Exercise price Fair value
exercisable date per option
at grant date
6 December 2010 * 6 December 2014 $ 0.10 $ 0.057
6 December 2010 ** 6 December 2013 $ 0.10 $ 0.032
----- End of picture text -----

No vesting conditions.

** Vesting of the options is subject to one of the following conditions being met

(i) the Company securing FDa approval for its CVac technology;

(ii) the Company’s share price on aSX reaching $ 0.20 and stays at or about that amount for a consecutive period of 20 days prior to the expiry Date; or

(iii) the Company successfully commercialising a product which generates revenue during any twelve month period of at least $ 10,000,000 for the Company.

Options granted carry no dividend or voting rights.

Details of options over ordinary shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2011 are set out below:

==> picture [464 x 111] intentionally omitted <==

----- Start of picture text -----

Name Number of options granted during the year Number of options vested during the year
30 June 2011 30 June 2010 30 June 2011 30 June 2010
– – –
Ms Lucy Turnbull, aO 10,000,000
– – –
Mr albert Wong 7,500,000
Dr Richard Hammel 5,000,000 – – –
Dr Neil Frazer 2,000,000 – – –
– – –
Mr Martin Rogers 10,000,000
----- End of picture text -----

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direCtors’ report CoNtiNued

Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel during the year ended 30 June 2011 are set out below:

==> picture [468 x 169] intentionally omitted <==

----- Start of picture text -----

Value of options Value of options Value of options Remuneration Percentage of total
granted exercised lapsed consisting of options remuneration for the
during the year during the year during the year for the year year that consisted of
$ $ $ $ options.
Ms Lucy Turnbull, aO 324,000 – – 324,000 79
Mr a Wong 243,000 – – 243,000 55
Dr R Hammel 162,000 – – 162,000 73
Mr M Rogers 324,000 – – 324,000 44
Dr N Frazer 40,515 – – 40,515 13
Dr N Lehman – 5,299 – 5,299 2
Mr P Hains 84,000 – – 84,000 24
----- End of picture text -----

This concludes the remuneration report, which has been audited.

shares under option issued to third parties excluding directors and executives

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

==> picture [469 x 208] intentionally omitted <==

----- Start of picture text -----

Expiration Date Exercise Price Number under Option Listed/Unlisted Options
31 December 2011 $0.020 56,433,669 Listed
9 November 2014 $ 0.269 1,884,253 Unlisted
8 December 2014 $ 0.236 1,884,253 Unlisted
12 January 2015 $ 0.227 1,061,411 Unlisted
12 February 2015 $ 0.235 1,118,211 Unlisted
18 March 2015 $ 0.228 1,075,269 Unlisted
19 april 2015 $ 0.220 1,076,095 Unlisted
6 May 2015 $ 0.250 2,500,000 Unlisted
19 May 2015 $ 0.235 1,055,011 Unlisted
6 May 2015 $ 0.250 2,500,000 Unlisted
1 February 2016 $ 0.339 740,741 Unlisted
68,828,913
----- End of picture text -----

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direCtors’ report CoNtiNued

shares issued on the exercise of options for reporting period

The following ordinary shares of Prima BioMed Ltd were issued during the year ended 30 June 2011 on the exercise of options granted:

==> picture [464 x 285] intentionally omitted <==

----- Start of picture text -----

Date options exercised Exercise Price Number of shares issued
1 February 2011 (eSOP options) $ 0.100 100,000
2 June 2011 (PRRaa options) $ 0.220 1,076,095
24 May 2011 (PRRaC options) $ 0.250 2,000,000
2 June 2011 ( PRRae options) $ 0.207 1,144,726
21 april 2011 (PRRaF options) $ 0.161 1,722,017
21 april 2011 (PRRag options) $ 0.141 1,741,294
6 May 2011 (PRRaH options) $ 0.194 1,540,154
February - april 2011 (PRRaI options) $ 0.063 15,000,000
6 May 2011 (PRRaJ options) $ 0.189 1,315,789
21 april 2011 PRRaK options) $ 0.144 1,694,915
6 May 2011 (PRRaL options) $ 0.187 1,473,684
2 June 2011 (PRRaM options) $ 0.105 1,547,988
2 June 2011 (PRRaO options) $ 0.223 1,844,253
2 June 2011 (PRRaQ options) $ 0.133 1,766,784
Various (PRRO options) Listed $ 0.020 35,068,529
69,036,228
----- End of picture text -----

The company has indemnifi ed the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith or dishonest conduct.

During the fi nancial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.

indemnity and insurance of auditor

The company has not, during or since the fi nancial year, indemnifi ed or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.

During the fi nancial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

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proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

Non-audit services

Details of the amounts paid or payable to the auditor for non-audit services provided during the fi nancial year by the auditor are outlined in note 29 to the fi nancial statements.

The directors are satisfi ed that the provision of non-audit services during the fi nancial year, by the auditor (or by another person or fi rm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 29 to the fi nancial statements do not compromise the external auditor’s independence for the following reasons:

all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor, and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decisionmaking capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.

There are no offi cers of the company who are former audit partners of MDHC Audit Assurance Pty Ltd.

auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 36.

auditor

MDHC Audit Assurance Pty Ltd continues in offi ce in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors, pursuant to section 298 (2) (a) of the Corporations Act 2001.

On behalf of the directors

Lucy Turnbull, AO Chairman 27 September 2011 Sydney

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>> auditor’s iNdepeNdeNCe deClaratioN

AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF PRIMA BIOMED LTD

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2011 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

MDHC Audit Assurance Pty Ltd

Kevin P Adams Hawthorn Director 27 September 2011

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==> picture [135 x 174] intentionally omitted <==

Page 36

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>> fiNaNCial report

Statement of comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Statement of fi nancial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Statement of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Statement of cash fl ows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Notes to the fi nancial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Directors’ declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Independent auditor’s report to the members of Prima BioMed Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . 100

General information

The fi nancial report covers Prima BioMed Ltd as a consolidated entity consisting of Prima BioMed Ltd and the entities it controlled. The fi nancial report is presented in Australian dollars, which is Prima BioMed Ltd’s functional and presentation currency.

The financial report consists of the financial statements, notes to the financial statements and the directors’ declaration.

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

>> statemeNt of ChaNGes iN eQuity

for the year eNded 30 JuNe 2011

==> picture [465 x 508] intentionally omitted <==

----- Start of picture text -----

Consolidated Contributed Reserves Accumulated Non-controlling Total
Equity Losses interests
$ $ $ $ $
–
Balance at 1 July 2009 42,565,806 (40,753,048) (236) 1,812,522
– –
Other comprehensive income 19,397 (18) 19,379
for the year, net of tax
– – –
Loss after income tax expense (17,960,569) (17,960,569)
for the year
Total comprehensive income – 19,397 (17,960,569) (18) (17,941,190)
for the year
Transactions with owners in their
capacity as owners:
– – –
Contributions of equity, net of 31,968,607 31,968,607
transaction costs
Balance at 30 June 2010 74,534,413 19,397 (58,713,617) (254) 15,839,939
Consolidated Contributed Reserves Accumulated Non-controlling Total
Equity Losses interests
$ $ $ $ $
Balance at 1 July 2010 74,534,413 19,397 (58,713,617) (254) 15,839,939
– –
Other comprehensive income (19,630) (70) (19,700)
for the year, net of tax
– – –
Loss after income tax expense (21,081,097) (21,081,097)
for the year
–
Total comprehensive income (19,630) (21,081,097) (70) (21,100,797)
for the year
Transactions with owners in their
capacity as owners:
– – –
Contributions of equity, 60,360,588 60,360,588
net of transaction costs
Transactions with – (924) – 324 (600)
non-controlling interests
Balance at 30 June 2011 134,895,001 (1,157) (79,794,714) – 55,099,130
----- End of picture text -----

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

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>> statemeNt of Cash floWs

for the year eNded 30 JuNe 2011

==> picture [464 x 371] intentionally omitted <==

----- Start of picture text -----

Note Consolidated Group
30 June 2011 30 June 2010
$ $
Cash fl ows related to operating activities
Payments to suppliers (inclusive of gST) (9,966,609) (6,634,692)
Interest received 210,906 124,315
grant income – 48,697
Net cash used in operating activities 36 (9,755,703) (6,461,680)
Cash fl ows related to investing activities
–
Payment for acquisition for term deposit (>3 months) (10,000,000)
Payments for plant and equipment (44,751) (95,327)
–
Proceeds from sale of plant and equipment 1,814
Net cash used in operating activities (44,751) (10,093,513)
Cash fl ows related to fi nancing activities
Proceeds from issue of shares 23 48,602,601 15,096,258
Proceeds from borrowings 5,411,750 6,334,717
Share issue transaction costs (3,933,687) (177,001)
Net cash from fi nancing activities 50,080,664 21,253,974
Net increase in cash and cash equivalents 40,280,210 4,698,781
Cash and cash equivalents at the beginning of the year 5,638,342 939,561
Cash and cash equivalents at the end of the year 9 45,918,552 5,638,342
----- End of picture text -----

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>> Notes to the fiNaNCial statemeNts

Note 1. siGNifiCaNt aCCouNtiNG poliCies

The principal accounting policies adopted in the preparation of the fi nancial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New, revised or amending accounting standards and interpretations adopted

The consolidated entity has adopted all of 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.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Any signifi cant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and Interpretations are disclosed in the relevant accounting policy.

The adoption of these Accounting Standards and Interpretations did not have any impact on the fi nancial performance or position of the consolidated entity. The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

AASB 2 Share-based Payment Transactions – amendments for Group Cash-settled Share-based Payment Transactions

The consolidated entity has applied the amendments to AASB 2 from 1 July 2010. The amendments clarifi ed the scope of AASB 2 by requiring an entity that receives goods or services in a share-based payment arrangement to account for those goods or services no matter which entity in the consolidated entity settles the transaction, and no matter whether the transaction is settled in shares or cash.

AASB 2009-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Project

The consolidated entity has applied AASB 2009-5 amendments from 1 July 2010. The amendments result in some accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes had no or minimal effect on accounting. The main changes were:

AASB 101 ‘Presentation of Financial Statements’ – classifi cation is not affected by the terms of a liability that could be settled by the issuance of equity instruments at the option of the counterparty;
AASB 107 ‘Statement of Cash Flows’ – only expenditure that results in a recognised asset can be classifi ed as a cash fl ow from investing activities;
AASB 117 ‘Leases’ – removal of specifi c guidance on classifying land as a lease;
AASB 118 ‘Revenue’ – provides additional guidance to determine whether an entity is acting as a principal or agent;

and

AASB 136 ‘Impairment of Assets’ – clarifi es that the largest unit permitted for allocating goodwill, acquired in a business combination, is the operating segment as defi ned in AASB 8 ‘Operating Segments’ before aggregation for reporting purposes.

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AASB 2009-10 Amendments to AASB 132 – Classifi cation of Rights Issues

The consolidated entity has applied AASB 2009-10 from 1 July 2010. The amendments clarifi ed that rights, options or warrants to acquire a fi xed number of an entity’s own equity instruments for a fi xed amount in any currency are equity instruments if the entity offers the rights, options or warrants pro-rata to all existing owners of the same class of its own non-derivative equity instruments. The amendment therefore provides relief to entities that issue rights in a currency other than their functional currency from treating the rights as derivatives with fair value changes recorded in profi t or loss.

Basis of preparation

These general purpose fi nancial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. These fi nancial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’).

Historical cost convention

The fi nancial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale fi nancial assets, fi nancial assets and liabilities at fair value through profi t or loss, investment properties, certain classes of property, plant and equipment and derivative fi nancial instruments.

Critical accounting estimates

The preparation of the fi nancial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signifi cant to the fi nancial statements, are disclosed in note 2.

parent entity information

In accordance with the Corporations Act 2001, these fi nancial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 33.

principles of consolidation

The consolidated fi nancial statements incorporate the assets and liabilities of all subsidiaries of Prima BioMed Ltd (‘company’ or ‘parent entity’) as at 30 June 2011 and the results of all subsidiaries for the year then ended. Prima BioMed Ltd and its subsidiaries together are referred to in these fi nancial statements as the ‘consolidated entity’.

Subsidiaries are all those entities over which the consolidated entity has the power to govern the fi nancial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The effects of potential exercisable voting rights are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

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

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the ‘business combinations’ accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of comprehensive income and statement of fi nancial position of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a defi cit balance.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the con sideration received and the fair value of any investment retained together with any gain or loss in profi t or loss.

operating segments

Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

foreign currency translation

The fi nancial report is presented in Australian dollars, which is Prima BioMed Ltd’s functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at fi nancial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profi t or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximates the rate at the date of the transaction, for the period. All resulting foreign exchange differences are recognised in the foreign currency reserve in equity.

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The foreign currency reserve is recognised in profi t or loss when the foreign operation or net investment is disposed of.

revenue recognition

Revenue is recognised when it is probable that the economic benefi t will fl ow to the consolidated entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Interest

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

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

income tax

The income tax expense or benefi t for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses and under and over provision in prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profi ts; or
When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profi ts will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profi ts available to recover the asset.

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Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entity’s which intend to settle simultaneously.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with fi nancial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes in value.

trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the receivables. Signifi cant fi nancial diffi culties of the debtor, probability that the debtor will enter bankruptcy or fi nancial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash fl ows, discounted at the original effective interest rate. Cash fl ows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment.

inventories

Stock on hand is stated at the lower of cost and net realisable value. Cost comprises purchase and delivery costs, net of rebates and discounts received or receivable.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

Derivatives are classifi ed as current or non-current depending on the expected period of realisation.

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Investments and other fi nancial assets are measured at either amortised cost or fair value depending on their classifi cation. Classifi cation is determined based on the purpose of the acquisition and subsequent reclassifi cation to other categories is restricted. The fair values of quoted investments are based on current bid prices. For unlisted investments, the consolidated entity establishes fair value by using valuation techniques. These include the use of recent arms length transactions, reference to other instruments that are substantially the same, discounted cash fl ow analysis, and option pricing models.

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

Available-for-sale fi nancial assets are non-derivative fi nancial assets, principally equity securities, that are either designated as available-for-sale or not classifi ed as any other category. After initial recognition, fair value movements are recognised directly in the available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in profi t or loss when the asset is derecognised or impaired.

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

Available-for-sale fi nancial assets are considered impaired when there has been a signifi cant or prolonged decline in value below initial cost. Subsequent increments in value are recognised directly in the available-for-sale reserve.

property, plant and equipment

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

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Furniture and Fittings – 3-20 years
Plant and equipment – 3-5 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

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An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefi t to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profi t or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profi ts.

intangible assets

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profi t or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of fi nite life intangibles are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Patents and trademarks

Signifi cant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the period of their expected benefi t, being their fi nite life of 20–25 years.

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

Recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. The value-in-use is the present value of the estimated future cash fl ows relating to the asset using a pretax discount rate specifi c to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash fl ows are grouped together to form a cash-generating unit.

trade and other payables

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the fi nancial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classifi ed as non-current.

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finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other fi nance costs are expensed in the period in which they are incurred, including: — interest on short-term and long-term borrowings

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefi ts, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Non-accumulating sick leave is expensed to profi t or loss when incurred.

Long service leave

The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outfl ows.

Contributed equity

Ordinary shares are classifi ed as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Business combinations

The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets trans ferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the noncontrolling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifi able net assets. All acquisition costs are expensed as incurred to profi t or loss.

On the acquisition of a business, the consolidated entity assesses the fi nancial assets acquired and liabilities assumed for appropriate classifi cation and designation in accordance with the contractual terms, economic conditions, the consolidated entity’s operating or accounting policies and other pertinent conditions in existence at the acquisitiondate.

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Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profi t or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of contingent consideration classifi ed as an asset or liability is recognised in profi t or loss. Contingent consideration classifi ed as equity is not remeasured and its subsequent settlement is accounted for within equity.

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifi able net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profi t or loss by the acquirer on the acquisition-date, but only after a reassessment of the identifi cation and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profi t attributable to the owners of Prima BioMed Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the fi nancial year, adjusted for bonus elements in ordinary shares issued during the fi nancial year.

Diluted earnings per share

Diluted earnings per share adjusts the fi gures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other fi nancing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Goods and services tax (‘Gst’) and other similar taxes

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

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Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of fi nancial position.

Cash fl ows are presented on a gross basis. The GST components of cash fl ows arising from investing or fi nancing activities which are recoverable from, or payable to the tax authority, are presented as operating cash fl ows.

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

New accounting standards and interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2011. The consolidated entity’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.

AASB 9 Financial Instruments, 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and 2010-7 Amendments to Australian Accounting Standards arising from AASB 9

This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2013 and completes phase I of the IASB’s project to replace IAS 39 (being the international equivalent to AASB 139 ‘Financial Instruments: Recognition and Measurement’). This standard introduces new classifi cation and measurement models for fi nancial assets, using a single approach to determine whether a fi nancial asset is measured at amortised cost or fair value. To be classifi ed and measured at amortised cost, assets must satisfy the business model test for managing the fi nancial assets and have certain contractual cash fl ow characteristics. All other fi nancial instrument assets are to be classifi ed and measured at fair value. This standard allows an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not heldfor-trading) in other comprehensive income, with dividends as a return on these investments being recognised in profi t or loss. In addition, those equity instruments measured at fair value through other comprehensive income would no longer have to apply any impairment requirements nor would there be any ‘recycling’ of gains or losses through profi t or loss on disposal. The accounting for fi nancial liabilities continues to be classifi ed and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity’s own credit risk is to be presented in other comprehensive income unless it would create an accounting mismatch. The consolidated entity will adopt this standard from 1 July 2013 but the impact of its adoption is yet to be assessed by the consolidated entity.

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AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project

These amendments are applicable to annual reporting periods beginning on or after 1 January 2011. These amendments are a consequence of the annual improvements project and make numerous nonurgent but necessary amendments to a range of Australian Accounting Standards and Interpretations. The amendments provide clarifi cation of disclosures in AASB 7 ‘Financial Instruments: Disclosures’, in particular emphasis of the interaction between quantitative and qualitative disclosures and the nature and extent of risks associated with fi nancial instruments; clarifi es that an entity can present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes in accordance with AASB 101 ‘Presentation of Financial Instruments’; and provides guidance on the disclosure of signifi cant events and transactions in AASB 134 ‘Interim Financial Reporting’. The adoption of these amendments from 1 July 2011 will not have a material impact on the consolidated entity.

AASB 2010-5 Amendments to Australian Accounting Standards

These amendments are applicable to annual reporting periods beginning on or after 1 January 2011. These amendments makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to refl ect changes made to the text of International Financial Reporting Standards by the International Accounting Standards Board. The adoption of these amendments from 1 July 2011 will not have a material impact on the consolidated entity.

AASB 124 Related Party Disclosures (December 2009)

This revised standard is applicable to annual reporting periods beginning on or after 1 January 2011. This revised standard simplifi es the defi nition of a related party by clarifying its intended meaning and eliminating inconsistencies from the defi nition. The defi nition now identifi es a subsidiary and an associate with the same investor as related parties of each other; entities signifi cantly infl uenced by one person and entities signifi cantly infl uenced by a close member of the family of that person are no longer related parties of each other; and whenever a person or entity has both joint control over a second entity and joint control or signifi cant infl uence over a third party, the second and third entities are related to each other. This revised standard introduces a partial exemption of disclosure requirement for government-related entities. The adoption of this standard from 1 July 2011 will not have a material impact on the consolidated entity.

AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets

These amendments are applicable to annual reporting periods beginning on or after 1 July 2011. These amendments add and amend disclosure requirements in AASB 7 about transfer of fi nancial assets, including the nature of the fi nancial assets involved and the risks associated with them. The adoption of these amendments from 1 July 2011 will increase the disclosure requirements on the consolidated entity when an asset is transferred but is not derecognised and new disclosure required when assets are derecognised but the consolidated entity continues to have a continuing exposure to the asset after the sale.

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IAS 1 (AASB 101) Presentation of Financial Statements (Revised)

This revised standard is applicable to annual reporting periods beginning on or after 1 July 2012. The amendments requires grouping together of items within other comprehensive income on the basis of whether they will eventually be ‘recycled’ to the profi t or loss. The change provides clarity about the nature of items presented as other comprehensive income and their future impact. The adoption of the revised standard from 1 July 2012 will impact the consolidated entity’s presentation of its statement of comprehensive income.

AASB 1054 Australian Additional Disclosures

This Standard is applicable to annual reporting periods beginning on or after 1 July 2011. The standard sets out the Australian-specifi c disclosures, which are in addition to International Financial Reporting Standards, for entities that have adopted Australian Accounting Standards. The adoption of these amendments from 1 July 2011 will not have a material impact on the consolidated entity.

AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project and AASB 2011-2 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project – Reduced Disclosure Requirements

These amendments are applicable to annual reporting periods beginning on or after 1 July 2011. They make changes to a range of Australian Accounting Standards and Interpretations for the purpose of closer alignment to IFRSs and harmonisation between Australian and New Zealand Standards. The amendments remove certain guidance and defi nitions from Australian Accounting Standards for conformity of drafting with International Financial Reporting Standards but without any intention to change requirements. The adoption of these amendments from 1 July 2011 will not have a material impact on the consolidated entity.

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirement

These amendments are applicable to annual reporting periods beginning on or after 1 July 2013, with early adoption not permitted. They amend AASB 124 ‘Related Party Disclosures’ by removing the disclosure requirements for individual key management personnel (KMP). The adoption of these amendments from 1 July 2013 will remove the duplication of relating to individual KMP in the notes to the fi nancial statements and the directors report. As the aggregate disclosures are still required by AASB 124 and during the transitional period the requirements may be included in the Corporations Act or other legislation, it is expected that the amendments will not have a material impact on the consolidated entity.

AASB 2011-5 Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation and AASB 2011-6 Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation – Reduced Disclosure Requirements

AASB 2011-5 is applicable to annual reporting periods beginning on or after 1 July 2011 and AASB 2011-6 on or after 1 July 2013. These amendments extend relief from consolidation, the equity method and proportionate consolidation where the ultimate or intermediate parent applies not-for-profi t Aus paragraphs in Australian IFRSs as adopted in Australia, or Australian Accounting Standards – Reduced Disclosure Requirements (RDR). The adoption of these amendments from 1 July 2011 and 1 July 2013 respectively will not have impact on the consolidated entity.

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Note 2. CritiCal aCCouNtiNG JudGemeNts, estimates aNd assumptioNs

The preparation of the fi nancial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the fi nancial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below.

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

Share-based payment transactions

The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profi t or loss and equity.

Provision for impairment of receivables

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specifi c knowledge of the individual debtors fi nancial position.

The consolidated entity is required to classify fi nancial instruments, measured at fair value, using a three level hierarchy, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). An instrument is required to be classifi ed in its entirety on the basis of the lowest level of valuation inputs that is signifi - cant to fair value. Considerable judgement is required to determine what is signifi cant to fair value and therefore which category the fi nancial instrument is placed in can be subjective.

The fair value of fi nancial instruments classifi ed as level 3 is determined by the use of valuation models. These include discounted cash fl ow analysis or the use of observable inputs that require signifi - cant adjustments based on unobservable inputs.

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Estimation of useful lives of assets

The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and defi nite life intangible assets. The useful lives could change signifi cantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

The consolidated entity assesses impairment of non-fi nancial assets other than goodwill and other indefi nite life intangible assets at each reporting date by evaluating conditions specifi c to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs to sell or valuein-use calculations, which incorporate a number of key estimates and assumptions.

Income tax

The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Signifi cant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity’s current understanding of the tax law. Where the fi nal tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Long service leave provision

As discussed in note 1, the liability for long service leave is recognised and measured at the present value of the estimated future cash fl ows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and infl ation have been taken into account.

Business combinations

As discussed in note 1, business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the consolidated entity taking into consideration all available information at the reporting date. Fair value adjustments on the fi nalisation of the business combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported.

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Convertible Loan Agreement

The agreement was treated as a debt facility which enables Prima periodically to drawdown on the facility, rather than one arrangement with a three-year term that should be recognised in its entirety at inception, on the basis that Prima could terminate the arrangement at any point in time at a minimal fee. Accordingly each drawdown was treated as an additional borrowing under the facility.

The substance of the agreement was assessed when determining the appropriate accounting treatment. The agreement is similar to a funded fixed return arrangement, including a right for the Lender to participate in any upside in share price. Because the debt will be settled in a variable number of shares, each drawdown has been classified as a financial liability.

Two embedded derivatives were identified and recognised separately from the host debt instrument in each drawdown, being the equity conversion feature and the floor price cash payment feature.

Collateral shares and commitment options

The purpose of the collateral shares and commitment options was to compensate SpringTree for making the commitment to provide the funding through the life of the Convertible Loan Agreement on terms that provided an acceptable level of funding certainty.

As the compensation to SpringTree for providing the service of committing to the Convertible Loan Agreement was paid in equity instruments of the Company, we applied the requirements of IFRS 2 to their measurement and recognition. Measurement inputs to the Monte-Carlo simulation option pricing model include the share price on the measurement date, the exercise price of the instruments, expected volatility (based on an evaluation of the Company’s historic volatility over a period commensurate with the expected term), expected term of the instruments, expected dividends, and the riskfree interest rate (based on government bonds).

Volatility

Although implied volatility is generally considered to more accurately represent ‘expected’ volatility than historical volatility, the lack of exchange-traded derivative prices for Prima BioMed required the model to use historical volatility for the purposes of these indicative valuations. The historical volatilities have been calculated based on Prima Biomed’s daily share price movements for a period commensurate with the expected life of each option. The historical share price data was obtained from an independent external market data source.

Dividend Yield

We have used a dividend yield of 0 % for the model based on Prima BioMed’s nil dividend history.

Risk-free rate

The expected risk-free rates of return used in the valuations are based on the Australian government bond rate commensurate with the tenor of the options.

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Page 56

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It might be a small step
for you, but a giant leap for
our fight against cancer.
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Note 3. restatemeNt of ComparatiVes

statement of comprehensive income

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Consolidated
30 June 2010 30 June 2010
$ $ $
Extract Note Reported Adjustment Restated
Expenses
Corporate administrative expenses (i) (3,236,506) (2,579,500) (5,816,006)
Finance expenses (iii) (1,789,108) (5,157,520) (6,946,628)
–
Impairment losses (ii) (1,935,548) 1,935,548
Loss before income tax expense (12,159,115) (5,801,472) (17,960,587)
– – –
Income tax expense
Loss after income tax expense for the year (12,159,115) (5,801,472) (17,960,587)
Other Comprehensive Income
–
— Unrealised foreign exchange gain on available-for-sale (ii) 19,397 19,397
fi nancial assets
–
— Impairment of available-for-sale fi nancial assets (ii) 1,954,945 (1,954,945)
Other comprehensive income for the year, net of tax 1,954,945 (1,935,548) 19,397
Total comprehensive income for the year (10,204,170) (7,737,020) (17,941,190)
Loss for the year is attributable to
–
Non-controlling interest (267) (267)
Owners of Prima BioMed Ltd (12,158,848) (5,801,472) (17,960,320)
(12,159,115) (5,801,472) (17,960,587)
Total comprehensive income for the year is attributable to
Non-controlling interest (16) (2) (18)
Owners of Prima BioMed Ltd (10,204,154) (7,737,018) (17,941,172)
(10,204,170) (7,737,020) (17,941,190)
Basic and diluted loss per share (cents per share) (2.43) (1.17) (3.60)
Statement of fi nancial position at the beginning of the earliest comparative period
Consolidated
1 July 2009 1 July 2009
$ $ $
Extract Note Reported Adjustment Restated
Equity
Reserves (ii) (1,954,694) 1,954,694 –
accumulated losses (ii) (38,798,354) (1,954,694) (40,753,048)
Total equity 1,812,522 – 1,812,522
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Consolidated
30 June 2010 30 June 2010
$ $ $
Extract Note Reported Adjustment Restated
ASSETS
Current Assets
Other (iv) 1,059,116 (195,182) 863,934
Total current assets 16,774,352 (195,182) 16,579,170
Non-current assets
Other fi nancial assets (v) 1,639,504 (1,065,000) 574,504
Other (iv) – 299,289 299,289
Total Non-Current Assets 2,236,832 (765,711) 1,471,121
TOTAL ASSETS 19,011,184 (960,893) 18,050,291
LIABILITIES
Current Liabilities
Borrowings (vi) 700,000 (96,938) 603,062
–
Derivative fi nancial instruments (vi) 83,620 83,620
Total current liabilities 2,222,783 (13,318) 2,209,465
TOTAL LIABILITIES 2,223,670 (13,318) 2,210,352
NET ASSETS 16,787,514 (947,575) 15,839,939
EQUITY
Contributed equity 67,744,968 6,789,445 74,534,413
Reserves (ii) – 19,397 19,397
accumulated losses (50,957,202) (7,756,415) (58,713,617)
equity attributable to the owners of Prima BioMed Ltd 16,787,766 (947,573) 15,840,193
Non-controlling interests (252) (2) (254)
TOTAL EQUITY 16,787,514 (947,575) 15,839,939
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Notes

(i) The Company has restated its 2010 Annual Accounts in connection with an error in the valuation of Share Based Payments to directors. Previously, the valuation was based on historic pricing and Black Scholes Barrier pricing model and assumed performance risks. The appropriate value under the Australian Accounting Standard AASB 2 – Share Based Payments – requires the valuation to be based on the price as at the date of issue (August 5, 2009). This adjusted valuation has increased corporate administrative expenses by $ 2,579,500.
(ii) The Company has restated its 2010, 2009 and 2008 Annual Accounts in connection with the fair value movement of the available-for-sale fi nancial assets. Previously, the decline in fair value of $ 1,954,945, which was based on adjusting the price of the most recently issued shares, being convertible preference shares, using an option pricing model to determine the value of ordinary shares, was recorded in the asset revaluation reserve in 2008, and transferred from the asset revaluation reserve to the income statement in 2010. The decline in value should have been impaired in 2008. In addition, an unrealised foreign exchange gain of $ 19,397 has been recognized in the fi nancial assets valuation reserve in 2010.

The net impact on Impairment of available of sale fi nancial assets in June 2010 is $ 1,935,548. The net impact on Changes in fi nancial assets revaluation reserve in June 2010 is $ 1,935,548.

(iii) The Company has restated its accounts for the period ended 30 June 2010 in connection with the treatment of the Spring Tree loan facility. A remeasurement of the fair value of shares and options issued to repay the loan, commitment options and collateral shares issued have been expensed over the period of the facility as fi nance expenses. In addition, loan transaction costs have been amortised over the period of the facility.

The excess of fair value of consideration conveyed (being shares and options issued) over the debt from each tranche has now been calculated and recorded as a fi nance cost in accordance with paragraph 56 of IAS 39. This has increased fi nance costs by $ 5,883,768.

The Tranche 6 fi nance cost included an amount which related to the repayment of the loan for that tranche. This amount has now been removed from fi nance costs. This has reduced fi nance costs by $ 602,732.

The total loan transaction costs, including the initial commencement fee and the maintenance fees, have now been amortised over the term of the Spring Tree loan facility for each tranche in proportion to the total facility. This has increased fi nance costs by $ 296,737 and reduced other current assets by $ 296,737.

Reversal of fi nance costs previously expensed as incurred. This has reduced fi nance costs by $ 907,600 and increased other current assets by $ 907,600.

The value of the commitment options have been recalculated using the Black-Scholes option pricing model for each tranche and expensed over the term of the Spring Tree loan facility for each tranche in proportion to the total facility. This has increased fi nance costs by $ 499,047.

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Reversal of the commitment options previously expensed on a straight-line basis based on fair value at commencement of loan facility. This has reduced fi nance costs by $ 243,244 and increased other current assets by $ 243,244.

The fair value of the option to retain the collateral shares at a discount has now been calculated based on a Monte Carlo pricing model for each tranche and expensed over the term of the Spring Tree loan facility for each tranche in proportion to the total facility. This has increased fi nance costs by $ 477,527.

In addition, the charge for a modifi cation of the option has now been calculated based on a Monte Carlo pricing model and expensed. This has increased fi nance costs by $ 136,943.

The Tranche 12 fi nance cost has now been apportioned to refl ect the exact cost to 30 June 2010. This has reduced fi nance costs by $ 382,926.

The overall impact of these restatements on fi nance costs was an increase in fi nance costs of $ 5,157,520. The net impact on Finance expenses in June 2010 is $ 5,157,520.

(iv) Reversal of commitment options previously calculated at fair value at commencement of loan facility and recorded as a prepayment in other current assets. This has reduced other current assets by $ 750,000.

Reallocation between current and non-current components of other assets. This has reduced other current assets by $ 299,289 and increased other non-current assets by $ 299,289.

The net impact on Other current assets is $ 195,182.

The net impact on Other non-current assets is $ 299,289.

(v) Reversal of the collateral shares valued on the issuing date. This has reduced other fi nancial assets – non-current by $ 1,065,000 and reduced issued capital by $ 1,065,000.

The net impact on Other fi nancial assets non-current is $ 1,065,000.

(vi) The Tranche 12 fair value movement in the shares and options issued and the embedded derivatives have been calculated to refl ect the exact balance at 30 June 2010. This has reduced borrowings by $ 13,318 and reduced issued capital by $ 369,608.

The net impact on Borrowings is $ 13,318.

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Note 4. operatiNG seGmeNts

The consolidated entity is organised into two operating segments: Cancer Immunotherapy and Other R & D. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identifi ed as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.

The CODM reviews both adjusted earnings before interest, tax, depreciation and amortisation (segment result) and profi t before income tax.

Types of products and services

The principal products and services of each of these operating segments are as follows:

— Cancer Immunotherapy

Other R & D

The Consolidated Group has identifi ed its operating segments based on the internal reports that are reviewed and used by the management team in assessing performance and determining the allocation of resources.

The operating segments are identifi ed by management based on the manner in which the expenses are incurred. Discrete fi nancial information about each of these operating segments is reported to the board on a regular basis.

The reportable segments are based on aggregated operating segments determined by similarity of expenses, where expenses in the reportable segments exceed 10 % of the total expenses for either the current and / or previous reporting period.

Intersegment receivables, payables and loans

Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

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operating segment information

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30 June 2011 Cancer Other R&D Intersegment Consolidated
Immunotherapy eliminations / unallocated
$ $ $ $
Revenue
Other income – – 1,066,196 1,066,196
Total Revenue – – 1,066,196 1,066,196
– – – –
Segment Result
– –
Depreciation and amortisation (64,287) (64,287)
Other expenses (7,944,531) (401,813) (12,670,536) (21,016,880)
Loss before income tax expense (7,944,531) (401,813) (12,734,823) (21,081,167)
–
Income tax expense
Loss after income tax expense (21,081,167)
30 June 2010 Cancer Other R&D Intersegment Consolidated
Immunotherapy eliminations / unallocated
$ $ $ $
Revenue
Other income 41,417 – 482,317 523,734
Total Revenue 41,417 – 482,317 523,734
– – – –
Segment Result
– –
Depreciation and amortisation (53,209) (53,209)
Other expenses (5,155,122) (2,445,777) (10,306,479) (17,907,378)
Loss before income tax expense (5,155,122) (2,445,777) (10,359,688) (17,960,587)
–
Income tax expense
Loss after income tax expense (17,960,587)
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NOTE 5. REVENUE

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Consolidated
30 June 2011 30 June 2010
$ $
Other revenue
Interest 1,066,196 475,037
Revenue 1,066,196 475,037
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Notes to the fiNaNCial statemeNts CoNtiNued

Note 9. CurreNt assets – Cash aNd Cash eQuiValeNts

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Consolidated
30 June 2011 30 June 2010
$ $
Cash on hand 2,888 –
Cash at bank 45,540,530 1,567,067
Cash on deposit 375,134 4,071,275
45,918,552 5,638,342
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Note 10. CurreNt assets – trade aNd other reCeiVaBles

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Consolidated
30 June 2011 30 June 2010
$ $
Trade receivables – 750
Other receivables 35,899 76,095
BaS receivable – 49
35,899 76,894
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Impairment of receivables

The consolidated entity has recognised a loss of $ nil (2010: $ 10,832) in profi t or loss in respect of impairment of receivables for the year ended 30 June 2011.

Note 11. CurreNt assets – iNVeNtories

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Consolidated
30 June 2011 30 June 2010
$ $
Stock on hand – at cost 214,346 –
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Note 12. CurreNt assets – other fiNaNCial assets

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Consolidated
30 June 2011 30 June 2010
$ $
Not less than three month term deposit 10,000,000 10,000,000
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Note 13. CurreNt assets – other

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Consolidated
30 June 2011 30 June 2010
$ $
Prepayments 498,014 510,770
Security deposits 12,212 2,265
accrued interest 383,779 350,899
894,005 863,934
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Note 14. NoN-CurreNt assets – aVailaBle-for-sale fiNaNCial assets

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Consolidated
30 June 2011 30 June 2010
$ $
Unlisted investments at recoverable amount. – 574,504
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Refer to note 27 for detailed information on fi nancial instruments.

Note 15. NoN-CurreNt assets – property, plaNt aNd eQuipmeNt

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Consolidated
30 June 2011 30 June 2010
$ $
Plant and equipment – at cost 143,397 98,579
Less: accumulated depreciation (27,772) (5,755)
115,625 92,824
Fixtures and fi ttings – at cost 6,708 6,708
Less: accumulated depreciation (2,380) (2,045)
4,328 4,663
119,953 97,487
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Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous fi nancial year are set out below:

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Plant and equipment Furniture and fi ttings Total
$ $ $
Consolidated
Balance at 1 July 2009 8,633 10,678 19,311
additions 95,327 – 95,327
Disposals (1,327) (4,720) (6,047)
Depreciation expense (9,809) (1,295) (11,104)
Balance at 30 June 2010 92,824 4,663 97,487
additions 44,817 – 44,817
Depreciation expense (22,016) (335) (22,351)
Balance at 30 June 2011 115,625 4,328 119,953
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Note 16. NoN-CurreNt assets – iNtaNGiBles

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Consolidated
30 June 2011 30 June 2010
$ $
Patents, trademarks and licenses - at cost 1,915,671 1,915,671
Less: accumulated amortisation (547,766) (513,907)
Less: Impairment (909,999) (901,923)
457,906 499,841
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Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous fi nancial year are set out below:

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Patents, licenses and trademarks Total
$ $
Consolidated
Balance at 1 July 2009 541,777 541,777
amortisation expense (41,936) (41,936)
Balance at 30 June 2010 499,841 499,841
amortisation expense (41,935) (41,935)
Balance at 30 June 2011 457,906 457,906
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Note 17. NoN-CurreNt assets – other

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Consolidated
30 June 2011 30 June 2010
$ $
Other non-current assets – 299,289
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Note 18. CurreNt liaBilities - trade aNd other payaBles

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Consolidated
30 June 2011 30 June 2010
$ $
Trade payables 1,770,121 1,351,987
Other payables 701,091 147,104
2,471,212 1,499,091
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Refer to note 27 for detailed information on fi nancial instruments.

Note 19. CurreNt liaBilities – BorroWiNGs

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Consolidated
30 June 2011 30 June 2010
$ $
Total secured liabilities
The total secured current liabilities are as follows:
Convertible loan – 603,062
–
Derivative liability at fair value 83,620
– 686,682
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Note 20. CurreNt liaBilities – deriVatiVe fiNaNCial iNstrumeNts

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Consolidated
30 June 2011 30 June 2010
$ $
Derivative liability at fair value – 83,620
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Refer to note 27 for detailed information on fi nancial instruments.

Note 21. CurreNt liaBilities – employee BeNefits

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Consolidated
30 June 2011 30 June 2010
$ $
annual leave 65,879 23,692
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Note 22. NoN-CurreNt liaBilities – employee BeNefits

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(b) Options Note Consolidated Consolidated
30 June 2011 30 June 2010
No. $ No. $
at the beginning of reporting period 152,958,086 5,608,078 166,698,302 429,097
Options movements during year
Options issued during year (i) 44,728,594 2,194,810 56,498,254 4,918,131
exercise of Options (ii) (69,076,228) (69,380) (85,338,470) (215,177)
(Shares issued during the year)
expiry of options (iii) (300,000) (300) - -
–
Commitment options (iv) 2,069,576 15,000,000 474,931
eSOP options (v) – 26,215 100,000 1,096
At reporting date 128,310,452 9,828,999 152,958,086 5,608,078
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2011 Details Note Number Issue Price Total
$ $
21 Jul 2010 SpringTree Convertible Loan – T12 Options exercisable at i) 1,722,017 0.081 140,180
$ 0.1605 21/7/2015
21 Jul 2010 exercise of PRRO Options ii) (1,251,850) (0.002) (2,504)
06 aug 2010 expiry of PRRaK options (exercisable at $ 0.20 6/8/2010) iii) (300,000) 0.001 (300)
11 aug 2010 exercise of PRRO Options ii) (890,000) (0.002) (1,780)
23 aug 2010 SpringTree Convertible Loan – T13 Options exercisable at $ 0.1439 i) 1,694,915 0.071 119,499
20/8/2015
30 aug 2010 exercise of PRRO Options ii) (1,011,538) (0.002) (2,023)
24 Sep 2010 SpringTree Convertible Loan – T14 Options exercisable at $ 0.1414 i) 1,741,294 0.070 122,400
22/9/2015
01 Oct 2010 exercise of PRRO Options ii) (200,000) (0.002) (400)
08 Oct 2010 exercise of PRRO Options ii) (489,000) (0.002) (978)
22 Oct 2010 exercise of PRRO Options ii) (200,000) (0.002) (400)
27 Oct 2010 SpringTree Convertible Loan – T15 Options exercisable at $ 0.1944 i) 1,540,154 0.108 165,997
27/10/2015
28 Oct 2010 exercise of PRRO Options ii) (261,000) (0.002) (522)
11 Nov 2010 exercise of PRRO Options ii) (200,000) (0.002) (400)
24 Nov 2010 SpringTree Convertible Loan – T16 Options exercisable at $ 0.1893 i) 1,315,789 0.097 127,834
24/11/2015
06 Dec 2010 Issue of options to Directors (20 cents, 6 Dec. 2013) i) 32,500,000 0.032 1,053,000
06 Dec 2010 Issue of options to Director (10 cents, 6 Dec. 2014) i) 2,000,000 0.007 14,300
10 Dec 2010 exercise of PRRO Options ii) (71,242) 0.002 (142)
23 Dec 2010 exercise of PRRO Options ii) (100,000) 0.002 (200)
31 Dec 2010 SpringTree Convertible Loan – T17 i) – – 27,336
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2011 Details Note Number Issue Price Total
$ $
04 Jan 2011 SpringTree Convertible Loan – T17 Options exercisable at $0.1874 i) 1,473,684 0.185 244,773
04/01/2016
04 Jan 2011 exercise of PRRO Options ii) (2,500,000) 0.002 (5,000)
10 Jan 2011 exercise of PRRO Options ii) (600,000) 0.002 (1,200)
13 Jan 2011 exercise of PRRO Options ii) (2,038,333) 0.002 (4,077)
19 Jan 2011 exercise of PRRO Options ii) (4,461,473) 0.002 (8,923)
27 Jan 2011 exercise of PRRO Options ii) (2,118,407) 0.002 (4,237)
11 Jan 2011 Take-up of commitment options (15 m) based on valuation at each iv) – – 1,347,214
drawdown date
31 Jan 2011 To expense eSOP options v) – – 26,215
01 Feb 2011 exercise of eSOP options ii) (100,000) (0.008) 757
01 Feb 2011 SpringTree Convertible Loan – T18 Options exercisable at $ 0.3390 i) 740,741 0.242 179,491
1/02/2016
03 Feb 2011 exercise of PRRO Options ii) (85,160) (0.002) (170)
14 Feb 2011 exercise of PRRO Options ii) (200,000) (0.002) (400)
17 Feb 2011 exercise of PRRaI options ii) (5,000,000) – –
17 Feb 2011 exercise of PRRO Options ii) (200,000) (0.002) (400)
28 Feb 2011 exercise of PRRO Options ii) (210,553) (0.002) (421)
04 Mar 2011 Take-up of commitment options (15 m) based on valuation at each iv) – – 722,362
drawdown date
10 Mar 2011 exercise of PRRO Options ii) (1,112,929) (0.002) (2,226)
17 Mar 2011 exercise of PRRO Options ii) (39,000) (0.002) (78)
24 Mar 2011 exercise of PRRaI options ii) (5,000,000) - -
30 Mar 2011 exercise of PRRO Options ii) (3,035,000) (0.002) (6,070)
08 apr 2011 exercise of PRRO Options ii) (893,466) (0.002) (1,787)
14 apr 2011 exercise of PRRO Options ii) (946,468) (0.002) (1,893)
14 apr 2011 exercise of PRRaI options ii) (5,000,000) – –
21 apr 2011 exercise of PRRaF options ii) (1,722,017) – –
21 apr 2011 exercise of PRRaK options ii) (1,694,915) – –
21 apr 2011 exercise of PRRag options ii) (1,741,294) – –
21 apr 2011 exercise of PRRO Options ii) (384,176) (0.002) (768)
29 apr 2011 exercise of PRRO Options ii) (1,348,685) (0.002) (2,697)
06 May 2011 exercise of PRRaH options ii) (1,540,154) – –
06 May 2011 exercise of PRRaJ options ii) (1,315,789) – –
06 May 2011 exercise of PRRaL options ii) (1,473,684) – –
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2011 Details Note Number Issue Price Total
$ $
06 May 2011 exercise of PRRO Options ii) (65,000) (0.002) (130)
13 May 2011 exercise of PRRO Options ii) (125,000) (0.002) (250)
23 May 2011 exercise of PRRO Options ii) (817,000) (0.002) (1,634)
24 May 2011 exercise of PRRO Options ii) (2,225,505) (0.002) (4,451)
24 May 2011 exercise of PRRaC options ii) (2,000,000) – –
31 May 2011 exercise of PRRO Options ii) (404,050) (0.002) (808)
02 Jun 2011 exercise of PRRaM options ii) (1,547,988) – –
02 Jun 2011 exercise of PRRaQ options ii) (1,766,784) – –
02 Jun 2011 exercise of PRRaO options ii) (1,884,253) – –
02 Jun 2011 exercise of PRRaa options ii) (1,076,095) – –
02 Jun 2011 exercise of PRRae options ii) (1,144,726) – –
02 Jun 2011 exercise of PRRO Options ii) (368,765) (0.002) (738)
10 Jun 2011 exercise of PRRO Options ii) (292,303) (0.002) (585)
20 Jun 2011 exercise of PRRO Options ii) (1,700,876) (0.002) (3,402)
30 Jun 2011 exercise of PRRO Options ii) (4,221,750) (0.002) (8,444)
(24,647,634) 4,220,921
----- End of picture text -----

PRRO are tradeable listed options.

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2010 Details Note Number Issue Total $
Price $
17 Jul 2009 exercise of PRRO Options ii) (3,000,000) (0.002) (6,000)
21 Jul 2009 Commitment Options iv) 15,000,000 0.032 474,931
29 Jul 2009 exercise of PRRO Options ii) (2,233,363) (0.002) (4,467)
05 aug 2009 Issue of Shares as per Resolutions 1, 2 & 3 of gM i) 38,500,000 0.070 2,695,000
10 aug 2009 Convertible Loan – SpringTree – Tranche 1 i) 1,547,988 0.050 76,713
17 aug 2009 exercise of PRRO Options ii) (16,371,430) (0.002) (32,743)
02 Sep 2009 exercise of PRRO Options ii) (3,704,800) (0.002) (7,410)
09 Sep 2009 Convertible Loan – SpringTree – Tranche 2 i) 1,766,784 0.074 130,993
11 Sep 2009 exercise of PRRO Options ii) (1,525,000) (0.002) (3,050)
16 Sep 2009 exercise of PRRaO Options ii) (38,500,000) (0.002) (115,500)
24 Sep 2009 exercise of PRRO Options ii) (3,058,933) (0.002) (6,118)
09 Oct 2009 exercise of PRRae Options ii) (2,000,000) (0.002) (10,000)
09 Oct 2009 exercise of PRRO Options ii) (400,000) (0.002) (800)
09 Oct 2009 Convertible Loan – SpringTree – Tranche 3 i) 1,884,253 0.217 409,140
13 Oct 2009 exercise of PRRO Options ii) (2,232,178) (0.002) (4,464)
29 Oct 2009 exercise of PRRO Options ii) (1,900,000) (0.002) (3,800)
09 Nov 2009 Convertible Loan – SpringTree – Tranche 4 i) 1,884,253 0.143 268,578
13 Nov 2009 exercise of PRRO Options ii) (2,847,200) (0.002) (5,694)
27 Nov 2009 exercise of PRRO Options ii) (333,500) (0.002) (667)
10 Dec 2009 exercise of PRRO Options ii) (200,000) (0.002) (400)
14 Dec 2009 Convertible Loan – SpringTree – Tranche 5 i) 1,884,253 0.112 211,734
16 Dec 2009 exercise of PRRO Options ii) (120,000) (0.002) (240)
31 Dec 2009 Convertible Loan – SpringTree – Tranche 6 i) 1,061,411 0.148 28,217
05 Jan 2010 exercise of PRRO Options ii) (2,045,000) (0.002) (4,090)
11 Jan 2010 exercise of PRRO Options ii) (251,333) (0.002) (503)
12 Jan 2010 Convertible Loan – SpringTree – Tranche 6 i) – – 129,349
21 Jan 2010 exercise of PRRO Options ii) (170,000) (0.002) (340)
29 Jan 2010 exercise of PRRO Options ii) (266,666) (0.002) (533)
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2010 Details Note Number Issue Total $
Price $
09 Feb 2010 exercise of PRRO Options ii) (10,000) (0.002) (20)
23 Feb 2010 Convertible Loan – SpringTree – Tranche 7 i) 1,118,211 0.150 167,455
05 Mar 2010 exercise of PRRO Options ii) (1,475,000) (0.002) (2,950)
12 Mar 2010 exercise of PRRO Options ii) (225,000) (0.002) (450)
23 Feb 2010 exercise of PRRO Options ii) (40,000) (0.002) (80)
19 Mar 2010 Convertible Loan – SpringTree – Tranche 8 i) 1,075,269 0.178 191,665
01 apr 2010 exercise of PRRO Options ii) (252,500) (0.002) (505)
15 apr 2010 exercise of PRRO Options ii) (1,000,000) (0.002) (2,000)
20 apr 2010 Convertible Loan – SpringTree – Tranche 9 i) 1,076,095 0.124 133,394
28 apr 2010 exercise of PRRO Options ii) (676,567) (0.002) (1,353)
06 May 2010 eSOP – Matt – Resolution 4 of april 2010 gM v) 100,000 0.015 1,513
06 May 2010 april 2010 gM – Resol 5 in lieu cash for services i) 500,000 0.083 41,495
06 May 2010 Issued in lieu of cash payment for services rendered i) 2,000,000 0.083 165,980
19 May 2010 Convertible Loan – SpringTree – Tranche 10 i) 1,055,011 0.133 140,656
08 Jun 2010 exercise of PRRO Options ii) (250,000) (0.002) (500)
15 Jun 2010 exercise of PRRO Options ii) (250,000) (0.002) (500)
21 Jun 2010 Convertible Loan – SpringTree – Tranche 11 i) 1,144,726 0.112 127,762
30 Jun 2010 expensing of eSOP options issued v) – – (417)
(13,740,216) 5,178,981
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Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value.

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.

A class shares

A class shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held, with priority over ordinary shareholders.

A class shares do not have any voting rights.

Share buy-back

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

Capital risk management

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

In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current parent entity’s share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.

The consolidated entity is subject to certain fi nancing arrangements covenants and meeting these are given priority in all capital risk management decisions. There have been no events of default on the fi nancing arrangements during the fi nancial year.

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Note 24. eQuity – reserVes

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Consolidated
30 June 2011 30 June 2010
$ $
available-for-sale reserve – 19,397
–
Foreign currency reserve (1,157)
(1,157) 19,397
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Note 25. eQuity – NoN-CoNtrolliNG iNterest

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Consolidated
30 June 2011 30 June 2010
$ $
accumulated losses – (254)
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Note 26. eQuity – diVideNds

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

Note 27. fiNaNCial iNstrumeNts

financial risk management objectives

The consolidated entity’s activities expose it to a variety of fi nancial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management program focuses on the unpredictability of fi nancial markets and seeks to minimise potential adverse effects on the fi nancial performance of the consolidated entity. The consolidated entity uses derivative fi nancial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i. e. not as trading or other speculative instruments. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.

Risk management is carried out by senior fi nance executives (‘fi nance’) under policies approved by the Board of Directors (‘Board’). These policies include identifi cation and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. Finance identifi es, evaluates and hedges fi nancial risks within the consolidated entity’s operating units. Finance reports to the Board on a monthly basis.

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market risk

Foreign currency risk

The consolidated entity undertakes certain transactions denominated in foreign currency and are exposed to foreign currency risk through foreign exchange rate fl uctuations.

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

Steps to reduce risk may include the acquisition of foreign currency ahead of the anticipated due date of an invoice or may include negotiations with suppliers to make payment in our functional currency.

At 30 June 2011, the Consolidated Group had the following exposure to foreign currency risk that is not denominated in Australian dollars. All amounts have been converted to Australian dollars using applicable rates.

As from 1 July 2011, the Consolidated Group has entered into a hedging arrangement that covers 75% of the forecast foreign currency expenditure to 30 June 2012 and 50% of the forecast foreign currency expenditure for the following 12 month period to 30 June 2013.

The carrying amount of the consolidated entity’s foreign currency denominated fi nancial assets and fi nancial liabilities at the reporting date was as follows:

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Assets Liabilites
Consolidated 30 June 2011 30 June 2010 30 June 2011 30 June 2010
$ $ $ $
US Dollars 1,079,130 656,413
–
euros 205,232
Swiss Francs – 45,731
– – 1,284,362 702,144
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The consolidated entity had liabilities denominated in $ US dollars of $ 1,079,130 (2010: $ 656,413). Based on this exposure, had the Australian dollar weakened by 5 % / strengthened by 5 % (2010: weakened by 5 % / strengthened by 5 %) against this foreign currency with all other variables held constant, the consolidated entity’s profi t before tax for the year would have been $ 53,957 lower/ $ 53,957 higher (2010: $ 32,821 lower / $ 32,821 higher) and equity would have been $ 53,957 lower / $ 53,957 higher (2010: $ 32,821 lower / $ 32,821 higher).

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The consolidated entity had assets denominated in Canadian dollars of $ nil (2010: $ 574,504). Based on this exposure, had the Australian dollar weakened by 5 % / strengthened by 5 % (2010: weakened by 5 % / strengthened by 5 %) against this foreign currency with all other variables held constant, the consolidated entity’s profi t before tax for the year would have been $ nil lower / $ nil higher (2010: $ 28,725 lower / $ 28,725 higher) and equity would have been $ nil lower / $ nil higher (2010: $ 28,725 lower / $ 28,725 higher).

The consolidated entity had liabilities denominated in Swiss francs of $ nil (2010: $ 45,731). Based on this exposure, had the Australian dollar weakened by 5 % / strengthened by 5 % (2010: weakened by 5 % / strengthened by 5 %) against this foreign currency with all other variables held constant, the consolidated entity’s profi t before tax for the year would have been $ nil lower / $ nil higher (2010: $ 2,287 lower / $ 2,287 higher) and equity would have been $ nil lower / $ nil higher (2010: $ 2,287 lower / $ 2,287 higher).

The consolidated entity had liabilities denominated in Euros of $ 205,232 (2010: $ nil). Based on this exposure, had the Australian dollar weakened by 5 % / strengthened by 5 % (2010: weakened by 5 % / strengthened by 5 %) against this foreign currency with all other variables held constant, the consolidated entity’s profi t before tax for the year would have been $ 10,261 lower / $10,261 higher (2010: $ nil lower / $ nil higher) and equity would have been $ 10,261 lower / $ 10,261 higher (2010: $ nil lower / $ nil higher).

Price risk

The consolidated entity is not exposed to any signifi cant price risk.

Interest rate risk

At 30 June 2011, the consolidated entity did not have any interest bearing liabilities and is not exposed to interest rate risk.

Credit risk

Credit risk is managed on a consolidated entity basis. Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in fi nancial loss to the consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confi rming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised fi nancial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of fi nancial position and notes to the fi nancial statements. The consolidated entity does not hold any collateral.

Historically the Consolidated Group has had minimal trade and other receivables, with the majority of its funding being provided via shareholder investment. Traditionally the Company’s trade and other receivables relate to recovery of expenses from third parties and GST refunds due to the Group from the Australian Tax Offi ce. The Board believe that the Consolidated Group does not have signifi cant credit risk at this time in respect of its trade and other receivables.

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liquidity risk

Vigilant liquidity risk management requires the consolidated entity to maintain suffi cient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash fl ows and matching the maturity profi les of fi nancial assets and liabilities.

At 30 June 2011, the consolidated entity had current assets of $ 57,062,802 and current liabilities of $ 2,537,091. Based on this the directors are confi dent that the consolidated entity will be able to pay its debts as and when they fall due.

Remaining contractual maturities

The following tables detail the consolidated entity’s remaining contractual maturity for its fi nancial instrument liabilities. The tables have been drawn up based on the undiscounted cash fl ows of fi nancial liabilities based on the earliest date on which the fi nancial liabilities are required to be paid. The tables include both interest and principal cash fl ows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of fi nancial position.

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Consolidated Weighted average 1 year or less Between 1 Between 2 Over 5 years Remaining contractual
30 June 2011 interest rate and 2 years and 5 years maturities
% $ $ $ $ $
Non-derivatives
Non-interest bearing
- – – –
Trade payables 2,471,212 2,471,212
- – –
Employee benefi ts 65,879 4,440 70,319
Total non-derivatives 2,537,091 – – 4,440 2,541,531
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Consolidated Weighted average 1 year or less Between 1 Between 2 Over 5 years Remaining contractual
30 June 2010 interest rate and 2 years and 5 years maturities
% $ $ $ $ $
Non-derivatives
Non-interest bearing
– – – –
Trade payables 1,499,091 1,499,091
Employee benefi ts – 23,692 – – 887 24,579
Convertible loan – 603,062 – – – 603,062
Total non-derivatives 2,125,845 – – 887 2,126,732
Derivatives
– – –
Derivative fi nancial 83,620 83,620
instruments
Total derivatives 83,620 – – – 83,620
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The cash fl ows in the maturity analysis above are not expected to occur signifi cantly earlier than disclosed.

Unless otherwise stated, the carrying amounts of fi nancial instruments refl ect their fair value. The carrying amounts of trade receivables and trade payables are assumed to approximate their fair values due to their short-term nature. The fair value of fi nancial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar fi nancial instruments.

Note 28. Key maNaGemeNt persoNNel disClosures

Compensation

The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:

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Consolidated
30 June 2011 30 June 2010
$ $
Short-term employee benefi ts 1,501,781 1,167,313
Post-employment benefi ts 42,602 680
Share-based payments 1,307,814 2,738,513
2,852,197 3,906,506
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Shareholding

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

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30 June 2011 Balance at start Received as part of Additions Disposals / other Balance at end of
of the year renumeration the year
Ordinary shares
– – –
Ms Lucy Turnbull, aO 4,347,076 4,347,076
– – –
Mr ata gokyildirim 13,734,000 13,734,000
–
Mr albert Wong 1,600,000 1,250,000 400,000 3,250,000
– – –
Mr Martin Rogers 20,821,500 20,821,500
Dr Richard Hammel 5,000,000 – – – 5,000,000
–
Mr Phillip Hains 3,061,429 40,000 (600,000) 2,501,429
Mr Matt Lehman – – 100,000 - 100,000
48,564,005 1,250,000 540,000 (600,000) 49,754,005
30 June 2010 Balance at start Received as part of Additions Disposals / other alance at end of
of the year renumeration the year
Ordinary shares
Mr ata gokyildirim 234,000 – 13,500,000 – 13,734,000
– – –
Mr albert Wong 1,600,000 1,600,000
Dr Richard Hammel – – 5,000,000 – 5,000,000
–
Mr Martin Rogers 497,500 20,000,000 324,000 20,821,500
–
Mr Phillip Hains 2,000,000 990,000 71,429 3,061,429
2,731,500 990,000 38,500,000 1,995,429 44,216,929
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Option holding

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

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30 June 2011 Balance at start Granted Exercised Expired / forfeited / Balance at end of
of the year other the year
Options over ordinary
shares
– – –
Ms Lucy Turnbull, aO 10,000,000 10,000,000
– – –
Mr ata gokyildirim 9,964,285 9,964,285
–
Mr albert Wong 400,000 7,500,000 (400,000) 7,500,000
Dr Richard Hammel 7,619,047 5,000,000 – – 12,619,047
– –
Mr Martin Rogers 12,345,238 10,000,000 22,345,238
Mr Matt Lehman 100,000 – (100,000) – –
Dr Neil Frazer – 2,000,000 – – 2,000,000
30,428,570 34,500,000 (500,000) – 64,428,570
30 June 2010 Balance at start Granted Exercised Expired / forfeited / Balance at end of
of the year other the year
Options over ordinary
shares
Mr ata gokyildirim 18,000,000 13,500,000 (13,500,000) (8,035,715) 9,964,285
– – –
Mr albert Wong 400,000 400,000
Dr Richard Hammel 10,000,000 5,000,000 (5,000,000) (2,380,953) 7,619,047
Mr Martin Rogers 18,000,000 20,000,000 (20,000,000) (5,654,762) 12,345,238
Mr Matt Lehman – 100,000 – – 100,000
46,000,000 38,600,000 (38,500,000) (15,671,430) 30,428,570
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Related party transactions

Related party transactions are set out in note 32.

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Note 29. remuNeratioN of auditors

During the fi nancial year the following fees were paid or payable for services provided by MDHC Audit Assurance Pty Ltd, the auditor of the company, and its related practices:

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Consolidated
30 June 2011 30 June 2010
$ $
Audit services – MDHC Audit Assurance Pty Ltd
Audit or review of the fi nancial report 45,000 42,500
Other services – MDHC Audit Assurance Pty Ltd
Preparation of the tax return and assistance with NaSDaQ listing 148,346 24,147
193,346 66,647
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The Board of Directors, in accordance with advice from the Audit, Risk & Compliance committee, is satisfi ed 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 satisfi ed that the provision of non-audit services by the Auditor, as set out below, did not compromise the external Auditor’s independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services are reviewed by the Audit, Risk & Compliance committee to ensure they do not impact the impartiality and objectivity of the Auditor; and
none of the services undermine the general principles relating to Auditor independence as set out in APES 10 Code of Ethics for Professional Accountants.

Note 30. CoNtiNGeNt liaBilities

There were no material contingent liabilities in existence at 30 June 2011 and 30 June 2010.

Note 31. CommitmeNts for eXpeNditure

There were no material capital or leasing commitments at 30 June 2011 and 30 June 2010.

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Note 32. related party traNsaCtioNs

Parent entity

Prima BioMed Ltd is the parent entity.

Subsidiaries

Interests in subsidiaries are set out in note 34.

Key management personnel

Disclosures relating to key management personnel are set out in note 28 and the remuneration report in the directors’ report.

Transactions with related parties

There were no transactions with related parties during the fi nancial year.

Receivable from and payable to related parties

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

Loans to/from related parties

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

Note 33. pareNt eNtity iNformatioN

Set out below is the supplementary information about the parent entity.

Statement of comprehensive income

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Parent
30 June 2011 30 June 2010
$ $
Loss after income tax (20,200,362) (10,875,565)
Total comprehensive income (20,200,362) (10,875,565)
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Note 33. pareNt eNtity iNformatioN (CoNtiNued)

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Parent
30 June 2011 30 June 2010
$ $
Total current assets 56,651,114 16,459,344
Total assets 69,035,131 29,357,766
Total current liabilities 1,960,450 2,200,897
Total liabilities 1,964,890 2,201,784
equity
— Contributed equity 134,895,021 74,534,413
— Reserves – 19,397
— accumulated losses (67,824,780) (47,397,828)
Total equity 67,070,241 27,155,982
----- End of picture text -----

Contingent liabilities

The parent entity had no contingent liabilities as at 30 June 2011 and 30 June 2010.

In the current or previous fi nancial year, the debts of its controlled entities were inter-company loans from Parent Entity only. Prima BioMed Ltd has not entered into any guarantees, in relation to the debts of its subsidiaries.

Capital commitments - Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment at as 30 June 2011 and 30 June 2010.

Signifi cant accounting policies

The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following:

— Investments in subsidiaries are accounted for at cost, less any impairment.

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Note 34. suBsidiaries

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

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Name of entity Country of incorporation Equity holding
30 June 2011 30 June 2010
% %
arthron Pty Ltd australia 100.00 99.99
Cancer Vac Pty Ltd australia 100.00 100.00
Oncomab Pty Ltd australia 100.00 100.00
Panvax Pty Ltd australia 100.00 100.00
Prima BioMed USa Inc United States of america 100.00 100.00
Prima BioMed europe Ltd United Kingdom 100.00 100.00
PRR Middle east FZ-LC United arab emirates 100.00 –
Prima BioMed gmbH germany 100.00 –
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acquisition of subsidiaries

In October 2009, Prima BioMed Europe Limited, a 100 % owned subsidiary of Prima BioMed Ltd was incorporated in the United Kingdom. The initial issued capital was 1 share of 1 British pound, which remains unchanged. This subsidiary is inactive.

In April 2010, Prima BioMed USA Inc, a 100 % owned subsidiary of Prima BioMed Ltd, was incorporated in the United States. The initial issued capital was 1,500 shares of no par value, which remains unchanged.

In May 2011, Prima BioMed GmbH, a 100 % owned subsidiary of Prima BioMed Ltd, was incorporated in Germany. The initial issued capital was 25,000 shares of 1 Euro per share, which remains unchanged.

Also in May 2011, Prima BioMed Middle East FZLLC, a 100 % owned subsidiary of Prima BioMed Ltd, was incorporated in the United Arab Emirates. The initial issued capital was 300 shares of 1,000 Dirhams per share, which remains unchanged.

The Middle East and German subsidiaries were established to allow Prima to conduct commercial and clinical operations in Europe, the United States, and the UAE.

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Note 35. eVeNts oCCurriNG after the reportiNG date

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Date Detail
01/07/2011 Change of registered address to Level 7, 151 Macquarie Street, Sydney, NSW 2000
Mr. Phillip Hains resigns as a joint Company Secretary of the Company
14/07/2011 appendix 3B – 1,368,185 PRR shares issued following exercise of PRRO options
15/07/2011 appendix 3B – 19,964,285 PRR shares issued following exercise of PRRO options
19/07/2011 appendix 3Y – Change of Director’s interest notice for Mr. Martin Rogers
appendix 3Y – Change of Director’s interest notice for Dr. Richard Hammel
appendix 3B – 113,000 PRR shares issued following exercise of PRRO options
28/07/2011 appendix 3B – 654,123 PRR shares issued following exercise of PRRO options
05/08/2011 The Company receives aUD $ 5.35 million grant to support CVaC clinical program
08/08/2011 appendix 3B – 155,500 PRR shares issued following exercise of PRRO options
appendix 3Y – Change of Director’s interest notice for Mr. albert Wong
appendix 3Y – Change of Director’s interest notice for Ms Lucy Turnbull, aO
appendix 3Y – Change of Director’s interest notice for Dr. Neil Frazer
appendix 3Y – Change of Director’s interest notice for Dr. Richard Hammel
appendix 3Y – Change of Director’s interest notice for Mr. Martin Rogers
22/08/2011 appendix 3B – 3,792,217 PRR shares issued following exercise of PRRO options
31/08/2011 appendix 4e – Preliminary Final Report
Diversity Policy issued
appendix 3B – 250,000 PRR shares issued following exercise of PRRO options
– 2,000,000 Unlisted Options (PRRaL) issued exercisable at $ 0.10 per option on
or before 6 December 2014
02/09/2011 Prima BioMed Ltd included in S&P australian 300 Index
05/09/2011 appendix 3B – 30,000 PRR shares issued following exercise of PRRO options
12/09/2011 Prima completes patient enrolment for CVac [TM ] Phase IIB trial complete
13/09/2011 appendix 3B – 1,253,266 PRR shares issued following exercise of PRRO options
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No other matter or circumstance has arisen since 30 June 2011 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations or the consolidated entity’s state of affairs in future financial years.

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Notes to the fiNaNCial statemeNts CoNtiNued

Note 36. reCoNCiliatioN of loss after iNCome taX to Net Cash used iN operatiNG aCtiVities

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Consolidated
30 June 2011 30 June 2010
$ $
Loss after income tax expense for the year (21,081,167) (17,960,587)
adjustments for:
Depreciation and amortisation 64,220 53,039
–
Net fair value loss on available-for-sale fi nancial assets 555,107
add back doubtful debts – 10,832
add back share based payments 10,581,933 3,256,988
–
Add back fi nance costs on convertible loans 6,946,628
–
add back loss on disposal of assets 4,232
–
Unrealised loss on fi nancial liability at fair value through the profi t and loss 528,846
Change in operating assets and liabilities:
Decrease in trade and other receivables 40,995 279,578
Increase in inventories (214,346) –
Increase in other operating assets (30,071) (786,542)
Increase in trade and other payables 972,121 1,182,377
Increase in employee benefi ts 42,187 887
Increase/(decrease) in other operating liabilities (686,682) 22,042
Net cash used in operating activities (9,755,703) (6,461,680)
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Notes to the fiNaNCial statemeNts CoNtiNued

Note 37. earNiNGs per share

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Consolidated
30 June 2011 30 June 2010
$ $
Loss after income tax (21,081,167) (17,960,587)
Non-controlling interest 72 267
Loss after income tax attributable to the owners of Prima BioMed Ltd (21,081,095) (17,960,320)
Number Number
Weighted average number of ordinary shares used in calculating basic earnings per share 563,696,560 499,567,326
Weighted average number of ordinary shares used in calculating diluted earnings per share 563,696,560 499,567,326
Cents Cents
Basic earnings per share (3.740) (3.600)
Diluted earnings per share (3.740) (3.600)
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Investing into research
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>> direCtors’ deClaratioN

in the directors’ opinion:

the attached fi nancial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached fi nancial statements and notes thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the fi nancial statements;
the attached fi nancial statements and notes thereto give a true and fair view of the consolidated entity’s fi nancial position as at 30 June 2011 and of its performance for the fi nancial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors made pursuant to section 295(5) of the Corporations Act 2001.

On behalf of the directors

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Lucy Turnbull, AO Chairman

27 September 2011, Sydney

Page 98

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Progress and information go together. And we like to be leading with both.

Page 99

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>> iNdepeNdeNt auditor‘s report to the memBers of prima Biomed ltd

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

Report on the Financial Report

We have audited the accompanying consolidated financial report of Prima Biomed Ltd (the consolidated entity), which comprises the statement of financial position as at 30 June 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards (IFRS).

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

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>> iNdepeNdeNt auditor‘s report to the memBers of prima Biomed ltd

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s Opinion

In our opinion:

(a) the consolidated financial report of Prima Biomed Ltd is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the company and consolidated entity’s financial position as at 30 June 2011 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the remuneration report included in pages 28 to 33 of the directors’ report for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with s 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.

Auditor’s Opinion

In our opinion the remuneration report of Prima Biomed Ltd for the year ended 30 June 2011, complies with s 300A of the Corporations Act 2001.

MDHC Audit Assurance Pty Ltd

Kevin P Adams Hawthorn Director 27 September 2011

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>> shareholder iNformatioN

The shareholder information set out below was applicable as at 13 September 2011.

distribution of equitable securities

Analysis of number of equitable security holders by size of holding:

	Number of holders of ordinary shares
1 – 1,000 272
1,001 – 5,000 2,306
5,001 – 10,000 2,484
10,001 – 100,000 7,599
100,001 – and over 1,870
14,531
Holding less than a marketable parcel 1,021

	Number of holders of options over ordinary shares
	40
1,001 – 5,000 2,306	92
5,001 – 10,000 2,484	40
10,001 – 100,000 7,599	165
100,001 – and over 1,870	91
14,531	428
Holding less than a marketable parcel 1,021	–

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shareholder iNformatioN CoNtiNued

equity security holders

Twenty largest quoted equity security holders

The names of the twenty largest security holders of quoted equity securities are listed below:

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Ordinary shares
Number held % of total shares
issued
Structure Investments Pty Ltd (Rogers Family a/c) 30,521,679 3.11
Citicorp Nomnees Pty Ltd 11,608,446 1.18
Richard J Hammel International Business Consultants 10,202,487 1.04
Cogent Nominees Pty Ltd 7,051,713 0.72
a Di Bella Pty Ltd 6,512,142 0.66
JP Morgan Nominees australia Ltd 5,813,524 0.59
aBN amro Clearing Sydney Nominees Pty Ltd 5,421,258 0.55
Mr antolik Tscherepko 5,300,000 0.54
HSBC Custody Nominees Pty Ltd 5,200,248 0.53
Comsec Nominees Pty Ltd 5,116,027 0.52
UBS Wealth Management australia Nominees Pty Ltd 5,027,709 0.51
Narrabri Pharmacy Wholesale Pty Ltd 4,976,334 0.51
Ms Lucy Turnbull, aO 4,622,076 0.46
Mr goh geok Kim 4,000,000 0.41
Mr Claudio Marcolongo & Mrs Diane Marcolongo 3,890,535 0.40
TJe Super Pty Ltd 3,827,000 0.39
Mr Dimce Spaseski & Mrs Maja Spaseska 3,777,500 0.39
JP Morgan Nominees australia Ltd 3,777,441 0.39
Mr C Barbagiovanni & Mr R gaudagino 3,053,572 0.31
Mr gregory & Mrs Diane Roberts 3,000,100 0.31
132,699,791 13.52
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shareholder iNformatioN CoNtiNued

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Options over ordinary shares
Number held % of total shares
issued
Rapney Pty Ltd 9,934,349 17.46
Mindean Investments Pty Ltd 2,890,000 5.08
Fortis Corporate advisory Pty Ltd 2,300,000 4.04
Mr Peter andrew Proksa 2,000,000 3.51
Mr David austin & Mrs Christina austin 2,000,000 3.51
The Industrial group Pty Ltd 1,830,000 3.22
Stanhope Property & Sharpe Pty Ltd 1,160,000 2.04
Citicorp Nominees Pty Ltd 1,113,654 1.96
Tadea Pty Ltd 1,100,000 1.93
acewin Pty Ltd 1,030,000 1.81
Mr Benjamin Cranstoun Dark 1,026,782 1.80
Mr John Habib 1,005,000 1.77
a Di Bella Pty Ltd 1,000,000 1.76
Mr Alfio Bi Bella & Mr Lorraine Palmer 1,000,000 1.76
Duck Holding Pty Ltd 815,000 1.43
Mr Peter Barta 726,950 1.28
Mr Michael De Leo & Mrs Jill ann De Leo 711,632 1.25
Ms Heather Lynette Dean 580,614 1.02
31 May Pty Ltd 553,162 0.97
Mrs Kylie Marilyn Checkley 524,770 0.92
33,301,913 58.52
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Unquoted equity securities There are no unquoted equity securities.

substantial holders

There are no substantial holders in the company.

Voting rights

The voting rights attached to ordinary shares are set out below:

Ordinary shares

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

There are no other classes of equity securities.

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You can’t engineer quality of life.
But you can research and
draw the right conclusions for incubating
a better patient response.
Page 105
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Prima BioMed Ltd
Level 7, 151 Macquarie St Sydney NSW 2000
Telephone: +61 (0)2 9276 1224
Facsimile: +61 (0)2 9276 1284
www.primabiomed.com.au
ABN: 90 009 237 889
The cutting-edge of the fight against cancer.
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AI assistant

IMMUTEP LIMITED — Annual Report 2011

65122_rns_2011-09-29_e2f8ca3c-5750-4c76-84a9-42fdd39d3ef4.pdf

>> CoNteNts

>> Corporate direCtory

>> ChairmaN’s letter

dear shareholder

ChairmaN’s letter CoNtiNued

>> reVieW of operatioNs

Key achievements for fy 2010 / 2011

a$ 41.3 million raised in successful Capital raising

potency assay for CVac[tm] ovarian cancer vaccine successfully developed

reVieW of operatioNs CoNtiNued

CVac[tm] commercialisation plans commenced in the middle east – CVac[tm] at dubai healthcare City

[tm] phase iii CaNVas trial

reVieW of operatioNs CoNtiNued

New board and management appointments

reVieW of operatioNs CoNtiNued

reVieW of operatioNs CoNtiNued

other activity

>> iNtelleCtual property report

>> Corporate GoVerNaNCe report

structure the board to add value

performance evaluation

Corporate GoVerNaNCe report CoNtiNued

audit Committee

Nomination Committee

share trading policy

recognised and manage risk

Corporate GoVerNaNCe report CoNtiNued

remunerate fairly and responsibly

>> direCtors’ report

Directors

principal activities

dividends

review of operations

likely developments and expected results of operations

environmental regulation

direCtors’ report CoNtiNued

information on directors

direCtors’ report CoNtiNued

direCtors’ report CoNtiNued

direCtors’ report CoNtiNued

direCtors’ report CoNtiNued

Company secretary

meetings of directors

>> maNaGemeNt direCtory

mr matthew lehman,

mr ian Bangs,

maNaGemeNt direCtory CoNtiNued

dr sharron Gargosky,

dr hind al saadi,

maNaGemeNt direCtory CoNtiNued

mr marc Voigt,

ms Vanessa Waddell,

maNaGemeNt direCtory CoNtiNued

ms larisa Chisholm,

direCtors’ report CoNtiNued

remuNeratioN report (audited)

A Principles used to determine the nature and amount of remuneration

remuneration policy

performance based remuneration

direCtors’ report CoNtiNued

B Details of remuneration

amounts of remuneration

direCtors’ report CoNtiNued

performance income as a proportion of total remuneration

direCtors’ report CoNtiNued

C Service agreements

D Share-based compensation

issue of shares

direCtors’ report CoNtiNued

options

direCtors’ report CoNtiNued

This concludes the remuneration report, which has been audited.

shares under option issued to third parties excluding directors and executives

direCtors’ report CoNtiNued

shares issued on the exercise of options for reporting period

indemnity and insurance of auditor

direCtors’ report CoNtiNued

IMMUTEP LIMITED Annual Report 2011