Full Press Release Details
Interim Financial Report
For the nine and three months periods ended
corresponding periods: nine and three months periods ended 31 March 2016)
To be read in conjunction with the 30 June 2016 Form
| Contents | ||||
| Unaudited Consolidated Statement of Comprehensive Income | 2 | |||
| Unaudited Consolidated Balance Sheet | 4 | |||
| Unaudited Consolidated Statement of Changes in Equity | 5 | |||
| Unaudited Consolidated Statement of Cash Flows | 6 | |||
| Notes to the Unaudited Consolidated Financial Statements | 7 |
Unaudited Consolidated Statement of Comprehensive Income
For the nine-months to 31 March 2017
| Note | 31 March 2017 | 31 March 2016 | ||||||||||
| $ | $ | |||||||||||
| REVENUE | ||||||||||||
| License revenue | 175,424 | |||||||||||
| OTHER INCOME | ||||||||||||
| Miscellaneous income | 242,309 | 507,850 | ||||||||||
| Grant and research and development incentive income | 3,054,125 | 888,065 | ||||||||||
| Interest income | 84,921 | 217,968 | ||||||||||
| Total revenue and other income | 3,381,355 | 1,789,307 | ||||||||||
| EXPENSES | ||||||||||||
| Depreciation and amortisation | (1,272,511 | ) | (1,496,325 | ) | ||||||||
| Research and development and intellectual property | (4,524,554 | ) | (5,508,809 | ) | ||||||||
| Corporate administrative expenses | (3,382,182 | ) | (5,168,553 | ) | ||||||||
| Share based payment to strategic investor | 8 | (47,468,071 | ) | |||||||||
| Loss on foreign exchange | (627,990 | ) | (487,459 | ) | ||||||||
| Finance costs | (8,199 | ) | ||||||||||
| Changes in fair value of comparability milestone | 10 | (542,075 | ) | |||||||||
| Net change in fair value of financial liability | (561,782 | ) | (442,842 | ) | ||||||||
| Loss before income tax | (6,987,664 | ) | (59,333,026 | ) | ||||||||
| Income tax benefit | 695,738 | 836,375 | ||||||||||
| Loss for the period | (6,291,926 | ) | (58,496,651 | ) | ||||||||
| Other Comprehensive Income / (loss) | ||||||||||||
| Exchange differences on the translation of foreign operations | (1,270,432 | ) | 40,230 | |||||||||
| Other comprehensive income / (loss) for the period, net of income tax | (1,270,432 | ) | 40,230 | |||||||||
| Total comprehensive loss for the period | (7,562,358 | ) | (58,456,421 | ) | ||||||||
| Loss is attributable to: | ||||||||||||
| Owners of Prima BioMed Ltd | (6,291,926 | ) | (58,496,651 | ) | ||||||||
| Total comprehensive loss is attributable to: | ||||||||||||
| Owners of Prima BioMed Ltd | (7,562,358 | ) | (58,496,651 | ) | ||||||||
| Loss per share attributable to the ordinary equity holders of the company: | ||||||||||||
| Basic and diluted loss per share (cents) | 16 | (0.30 | ) | (2.94 | ) |
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Unaudited Consolidated Statement of Comprehensive Income
For the three-months to 31 March 2017
| Note | 31 March 2017 | 31 March 2016 | ||||||||||
| $ | $ | |||||||||||
| REVENUE | ||||||||||||
| License revenue | ||||||||||||
| OTHER INCOME | ||||||||||||
| Miscellaneous income | 17,107 | 306,344 | ||||||||||
| Grant and research and development incentive income | 1,689,488 | 338 | ||||||||||
| Interest income | 21,210 | 53,311 | ||||||||||
| Total revenue and other income | 1,727,805 | 359,993 | ||||||||||
| EXPENSES | ||||||||||||
| Depreciation and amortisation | (407,316 | ) | (469,958 | ) | ||||||||
| Research and development and intellectual property | (1,815,329 | ) | (1,497,447 | ) | ||||||||
| Corporate administrative expenses | (1,265,542 | ) | (987,887 | ) | ||||||||
| Share Based Payment to strategic investor | ||||||||||||
| Loss on foreign exchange | (424,825 | ) | 10,252 | |||||||||
| Finance costs | ||||||||||||
| Changes in fair value of comparability milestone | ||||||||||||
| Net change in fair value of financial liability | (187,946 | ) | (163,938 | ) | ||||||||
| Loss before income tax | (2,373,153 | ) | (2,748,985 | ) | ||||||||
| Income tax benefit | 143,882 | 274,199 | ||||||||||
| Loss for the period | (2,229,271 | ) | (2,474,786 | ) | ||||||||
| Other Comprehensive Loss | ||||||||||||
| Exchange differences on the translation of foreign operations | (778,528 | ) | (228,783 | ) | ||||||||
| Other comprehensive loss for the period, net of income tax | (778,528 | ) | (228,783 | ) | ||||||||
| Total comprehensive loss for the period | (3,007,799 | ) | (2,703,569 | ) | ||||||||
| Loss is attributable to: | ||||||||||||
| Owners of Prima BioMed Ltd | (2,229,271 | ) | (2,474,786 | ) | ||||||||
| Total comprehensive loss is attributable to: | ||||||||||||
| Owners of Prima BioMed Ltd | (3,007,799 | ) | (2,703,569 | ) | ||||||||
| Loss per share attributable to the ordinary equity holders of the company: | ||||||||||||
| Basic and diluted loss per share (cents) | 16 | (0.11 | ) | (0.12 | ) |
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Unaudited Consolidated Balance Sheet
| Note | 31 March 2017 | 30 June 2016 | ||||||||||
| $ | $ | |||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 13,878,247 | 20,879,548 | ||||||||||
| Current receivables | 4 | 2,336,325 | 168,300 | |||||||||
| Other current assets | 7 | 825,843 | 623,020 | |||||||||
| Total current assets | 17,040,415 | 21,670,868 | ||||||||||
| Non-current assets | ||||||||||||
| Plant and equipment | 5 | 25,603 | 31,500 | |||||||||
| Intangibles | 6 | 18,289,364 | 20,851,699 | |||||||||
| Total non-current assets | 18,314,967 | 20,883,199 | ||||||||||
| Total assets | 35,355,382 | 42,554,067 | ||||||||||
| LIABILITIES | ||||||||||||
| Current liabilities | ||||||||||||
| Trade and other payables | 1,217,843 | 1,422,798 | ||||||||||
| Current tax payable | 21,549 | |||||||||||
| Employee benefits | 37,894 | 27,694 | ||||||||||
| Total current liabilities | 1,255,737 | 1,472,041 | ||||||||||
| Non-current liabilities | ||||||||||||
| Convertible note liability | 8 | 5,588,950 | 5,027,168 | |||||||||
| Deferred tax liabilities | 694,194 | |||||||||||
| Employee benefits | 52,530 | 43,151 | ||||||||||
| Total non-current liabilities | 5,641,480 | 5,764,513 | ||||||||||
| Total liabilities | 6,897,217 | 7,236,554 | ||||||||||
| Net assets | 28,458,165 | 35,317,513 | ||||||||||
| EQUITY | ||||||||||||
| Contributed equity | 9 | 195,352,544 | 194,530,932 | |||||||||
| Reserves | 61,869,153 | 63,258,187 | ||||||||||
| Accumulated losses | (228,763,532 | ) | (222,471,606 | ) | ||||||||
| Equity attributable to the owners of Prima BioMed Ltd | 28,458,165 | 35,317,513 | ||||||||||
| Total equity | 28,458,165 | 35,317,513 |
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Unaudited Consolidated Statement of Changes in Equity
For the nine-month period ended 31 March 2017
| Note | Issued Capital | Reserves | Accumulated Losses | Total | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||
| Balance at 1 July 2015 | 179,878,436 | 5,267,729 | (160,456,422 | ) | 24,689,743 | |||||||||||||||
| Loss for the period | (58,496,651 | ) | (58,496,651 | ) | ||||||||||||||||
| Other comprehensive income | 40,230 | 40,230 | ||||||||||||||||||
| Total comprehensive income (loss) for the period | 40,230 | (58,496,651 | ) | (58,456,421 | ) | |||||||||||||||
| Transactions with owners in their capacity as owners: | ||||||||||||||||||||
| Contribution of equity, net of transaction cost | 13,477,930 | 13,477,930 | ||||||||||||||||||
| Issue of convertible notes | 9,331,297 | 9,331,297 | ||||||||||||||||||
| Share based payment | 42,527 | 42,527 | ||||||||||||||||||
| Share based payment to strategic investor | 8 | 47,468,071 | 47,468,071 | |||||||||||||||||
| Employee share based payment | 1,406,354 | 1,406,354 | ||||||||||||||||||
| Exercise of vested performance rights | 1,174,566 | (1,174,566 | ) | |||||||||||||||||
| Balance at 31 March 2016 | 194,530,932 | 62,381,642 | (218,556,675 | ) | 37,959,501 | |||||||||||||||
| Balance at 1 July 2016 | 194,530,932 | 63,258,187 | (222,471,606 | ) | 35,317,513 | |||||||||||||||
| Loss for the period | (6,291,926 | ) | (6,291,926 | ) | ||||||||||||||||
| Other comprehensive loss | (1,270,432 | ) | (1,270,432 | ) | ||||||||||||||||
| Total comprehensive loss for the period | (1,270,432 | ) | (6,291,926 | ) | (7,562,358 | ) | ||||||||||||||
| Transactions with owners in their capacity as owners: | ||||||||||||||||||||
| Contribution of equity, net of transaction costs | (8,533 | ) | (8,533 | ) | ||||||||||||||||
| Employee share based payments | 711,543 | 711,543 | ||||||||||||||||||
| Exercise of vested performance rights | 830,145 | (830,145 | ) | |||||||||||||||||
| Balance at 31 March 2017 | 195,352,544 | 61,869,153 | (228,763,532 | ) | 28,458,165 |
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Unaudited Consolidated Statement of Cash Flows
For the nine-month period ended 31 March 2017
| 31 March 2017 | 31 March 2016 | |||||||
| $ | $ | |||||||
| CASH FLOWS RELATED TO OPERATING ACTIVITIES | ||||||||
| Payments to suppliers and employees (inclusive of Goods and Service Tax) | (7,606,226 | ) | (9,705,378 | ) | ||||
| Interest received | 83,623 | 220,742 | ||||||
| Miscellaneous income | 310,135 | 690,250 | ||||||
| Tax refund / (paid) | 20,137 | |||||||
| Grant income | 863,437 | 832,345 | ||||||
| Royalty payment | (1,365,972 | ) | ||||||
| NET CASH (OUTFLOWS) FROM OPERATING ACTIVITIES | (6,328,894 | ) | (9,328,013 | ) | ||||
| CASH FLOWS RELATED TO INVESTING ACTIVITIES | ||||||||
| Payments for plant and equipment | (2,649 | ) | (6,902 | ) | ||||
| Proceeds from disposal of plant and equipment | 173,700 | |||||||
| NET CASH (OUTFLOWS) / INFLOWS IN INVESTING ACTIVITIES | (2,649 | ) | 166,798 | |||||
| CASH FLOWS RELATED TO FINANCING ACTIVITIES | ||||||||
| Repayment of borrowings | (1,639,377 | ) | ||||||
| Proceeds from borrowings | 13,750,828 | |||||||
| Proceeds from issues of shares and options | 13,706,525 | |||||||
| Share issue transaction costs | (6,398 | ) | (365,695 | ) | ||||
| NET CASH (OUTFLOWS) / INFLOWS FROM FINANCING ACTIVITIES | (6,398 | ) | 25,452,281 | |||||
| NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS | (6,337,941 | ) | 16,291,066 | |||||
| Effect on exchange rate on cash and cash equivalents | (663,360 | ) | (295,066 | ) | ||||
| Cash and cash equivalents at the beginning of the period | 20,879,548 | 6,759,615 | ||||||
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 13,878,247 | 22,755,615 |
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Notes to the Unaudited Financial Statements
1. Summary of Significant Accounting Policies
The consolidated financial statements as at 31 March 2017 and for the three and nine month periods ended 31 March 2017 are a
general purpose financial report prepared in accordance with the requirements of Australian Accounting Standard AASB 134: Interim Financial Reporting, Australian Accounting Interpretations and other authoritative pronouncements of the Australian
Accounting Standards Board.
The report does not include full disclosures of the type normally included in an annual report and therefore cannot be
expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of Prima as the annual report.
It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2016 and any public
announcements made by Prima BioMed Ltd and its controlled entities ( the Group ) during the period.
International Financial Reporting Standards
form the basis of Australian Accounting Standards adopted by the AASB. The financial report complies with International Accounting Standards ( IAS ) 34 Interim Financial Reporting as issued by the International Accounting Standards
The accounting policies adopted are consistent with those of the previous financial year and corresponding period reporting
The interim financial report is presented in Australian dollars ( $ ).
The financial report of Prima BioMed Ltd and its controlled entities as at 31 March 2017 and for the three and nine month periods ended 31 March
2017 was authorised for issue in accordance with a resolution of the directors on 29 June 2017.
The company resolved not to declare any dividends in the nine-month period ended 31 March 2017.
3. Segment Reporting
Identification of reportable
Operating segments are reported in a manner consistent with internal reports which are reviewed and used by Management and the
Board of Directors (who are identified as the Chief Operating Decision Makers ( CODM )). The Group operates in one operating segment, being Cancer Immunotherapy.
Notes to the Unaudited Financial Statements (Continued)
3. Segment Reporting (Continued)
Operating segment information
| Nine-month period ended 31 March 2017 | Cancer Immunotherapy $ | Unallocated $ | Consolidated $ | |||||||||
| Revenue | ||||||||||||
| License revenue | ||||||||||||
| Other Income | ||||||||||||
| Grant income | 3,054,125 | 3,054,125 | ||||||||||
| Interest income | 84,921 | 84,921 | ||||||||||
| Miscellaneous income | 242,309 | 242,309 | ||||||||||
| Total revenue and other income | 3,296,434 | 84,921 | 3,381,355 | |||||||||
| Result | ||||||||||||
| Segment result | (7,072,585 | ) | 84,921 | (6,987,664 | ) | |||||||
| Loss before income tax expense | (7,072,585 | ) | 84,921 | (6,987,664 | ) | |||||||
| Income tax benefit | 695,738 | |||||||||||
| Loss after income tax expense | (6,291,926 | ) | ||||||||||
| Total segment assets as at 31 March 2017 | 35,355,382 | 35,355,382 | ||||||||||
| Total segment liabilities as at 31 March 2017 | 6,897,217 | 6,897,217 |
| Nine-month period ended 31 March 2016 | Cancer Immunotherapy $ | Unallocated $ | Consolidated $ | |||||||||
| Revenue | ||||||||||||
| License revenue | 175,424 | 175,424 | ||||||||||
| Other Income | ||||||||||||
| Grant income | 888,065 | 888,065 | ||||||||||
| Interest income | 217,968 | 217,968 | ||||||||||
| Miscellaneous income | 507,850 | 507,850 | ||||||||||
| Total revenue and other income | 1,571,339 | 217,968 | 1,789,307 | |||||||||
| Result | ||||||||||||
| Segment result | (59,550,994 | ) | 217,968 | (59,333,026 | ) | |||||||
| Loss before income tax expense | (59,550,994 | ) | 217,968 | (59,333,026 | ) | |||||||
| Income tax expense | 836,375 | |||||||||||
| Loss after income tax expense | (58,496,651 | ) | ||||||||||
| Total segment assets as at 31 March 2016 | 44,887,124 | 44,887,124 | ||||||||||
| Total segment liabilities as at 31 March 2016 | 6,927,623 | 6,927,623 |
Notes to the Unaudited Financial Statements (Continued)
3. Segment Reporting (Continued)
| Three-month period ended 31 March 2017 | Cancer Immunotherapy $ | Unallocated $ | Consolidated $ | |||||||||
| Revenue | ||||||||||||
| License revenue | ||||||||||||
| Other Income | ||||||||||||
| Grant income | 1,689,488 | 1,689,488 | ||||||||||
| Interest income | 21,210 | 21,210 | ||||||||||
| Miscellaneous income | 17,107 | 17,107 | ||||||||||
| Total revenue and other income | 1,706,595 | 21,210 | 1,727,805 | |||||||||
| Result | ||||||||||||
| Segment result | (2,394,363 | ) | 21,210 | (2,373,153 | ) | |||||||
| Loss before income tax expense | (2,394,363 | ) | 21,210 | (2,373,153 | ) | |||||||
| Income tax benefit | 143,882 | |||||||||||
| Loss after income tax expense | (2,229,271 | ) | ||||||||||
| Total segment assets as at 31 March 2017 | 35,355,382 | 35,355,382 | ||||||||||
| Total segment liabilities as at 31 March 2017 | 6,897,217 | 6,897,217 |
| Three-month period ended 31 March 2016 | Cancer Immunotherapy $ | Unallocated $ | Consolidated $ | |||||||||
| Revenue | ||||||||||||
| License revenue | ||||||||||||
| Other Income | ||||||||||||
| Grant income | 338 | 338 | ||||||||||
| Interest income | 53,311 | 53,311 | ||||||||||
| Miscellaneous income | 306,344 | 306,344 | ||||||||||
| Total revenue and other income | 306,682 | 53,311 | 359,993 | |||||||||
| Result | ||||||||||||
| Segment result | (2,802,296 | ) | 53,311 | (2,748,985 | ) | |||||||
| Loss before income tax expense | (2,802,296 | ) | 53,311 | (2,748,985 | ) | |||||||
| Income tax benefit | 274,199 | |||||||||||
| Loss after income tax expense | (2,474,786 | ) | ||||||||||
| Total segment assets as at 31 March 2016 | 44,887,124 | 44,887,124 | ||||||||||
| Total segment liabilities as at 31 March 2016 | 6,927,623 | 6,927,623 |
Notes to the Unaudited Financial Statements (Continued)
4. Current Receivables
| 31 March 2017 | 30 June 2016 | |||||||
| $ | $ | |||||||
| Other receivables | 33,799 | 94,660 | ||||||
| R&D incentives receivable | 2,165,000 | |||||||
| GST receivable | 137,526 | 73,640 | ||||||
| 2,336,325 | 168,300 |
Due to the short term nature of these receivables, the carrying value is assumed to be their fair value as at 31 March
5. Plant and Equipment
| Plant and Equipment | Computers | Furniture and fittings | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| At 1 July 2015 | ||||||||||||||||
| Cost or fair value | 605,648 | 28,016 | 7,172 | 640,836 | ||||||||||||
| Accumulated depreciation | (322,831 | ) | (17,419 | ) | (2,629 | ) | (342,879 | ) | ||||||||
| Net book amount | 282,817 | 10,597 | 4,543 | 297,957 | ||||||||||||
| Year ended 30 June 2016 | ||||||||||||||||
| Opening net book amount | 282,817 | 10,597 | 4,543 | 297,957 | ||||||||||||
| Exchange differences | 10,518 | 391 | 168 | 11,077 | ||||||||||||
| Additions | 12,969 | 13,447 | 714 | 27,130 | ||||||||||||
| Disposal | (122,289 | ) | (122,289 | ) | ||||||||||||
| Depreciation charge | (168,924 | ) | (10,676 | ) | (2,775 | ) | (182,375 | ) | ||||||||
| Closing net book amount | 15,091 | 13,759 | 2,650 | 31,500 |
| Plant and Equipment | Computers | Furniture and fittings | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| At 1 July 2016 | ||||||||||||||||
| Cost or fair value | 511,195 | 41,971 | 8,064 | 561,230 | ||||||||||||
| Accumulated depreciation | (496,104 | ) | (28,212 | ) | (5,414 | ) | (529,730 | ) | ||||||||
| Net book amount | 15,091 | 13,759 | 2,650 | 31,500 | ||||||||||||
| Period ended 31 March 2017 | ||||||||||||||||
| Opening net book amount | 15,091 | 13,759 | 2,650 | 31,500 | ||||||||||||
| Exchange differences | (874 | ) | (482 | ) | (104 | ) | (1,460 | ) | ||||||||
| Additions | 6,864 | 6,864 | ||||||||||||||
| Depreciation charge | (3,202 | ) | (7,035 | ) | (1,064 | ) | (11,301 | ) | ||||||||
| Closing net book amount | 11,015 | 13,106 | 1,482 | 25,603 | ||||||||||||
| At 31 March 2017 | ||||||||||||||||
| Cost or fair value | 497,086 | 46,857 | 7,590 | 551,533 | ||||||||||||
| Accumulated depreciation | (486,071 | ) | (33,751 | ) | (6,108 | ) | (525,930 | ) | ||||||||
| Net book amount | 11,015 | 13,106 | 1,482 | 25,603 |
Notes to the Unaudited Financial Statements (Continued)
6. Non-current assets intangibles
| Patents | Intellectual Property | Goodwill | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| At 1 July 2015 | ||||||||||||||||
| Cost | 1,915,671 | 23,451,000 | 109,962 | 25,476,633 | ||||||||||||
| Accumulated amortisation | (1,853,790 | ) | (960,426 | ) | (2,814,216 | ) | ||||||||||
| Net book amount | 61,881 | 22,490,574 | 109,962 | 22,662,417 | ||||||||||||
| Year ended 30 June 2016 | ||||||||||||||||
| Opening net book amount | 61,881 | 22,490,574 | 109,962 | 22,662,417 | ||||||||||||
| Amortisation charge | (61,881 | ) | (1,748,837 | ) | (1,810,718 | ) | ||||||||||
| Closing net book amount | 20,741,737 | 109,962 | 20,851,699 | |||||||||||||
| At 1 July 2016 | ||||||||||||||||
| Cost or fair value | 23,451,000 | 109,962 | 23,560,962 | |||||||||||||
| Accumulated amortisation | (2,709,263 | ) | (2,709,263 | ) | ||||||||||||
| Net book amount | 20,741,737 | 109,962 | 20,851,699 | |||||||||||||
| Period ended 31 March 2017 | ||||||||||||||||
| Opening net book amount | 20,741,737 | 109,962 | 20,851,699 | |||||||||||||
| Exchange differences | (1,301,125 | ) | (1,301,125 | ) | ||||||||||||
| Amortisation charge | (1,261,210 | ) | (1,261,210 | ) | ||||||||||||
| Closing net book amount | 18,179,402 | 109,962 | 18,289,364 | |||||||||||||
| At 31 March 2017 | ||||||||||||||||
| Cost or fair value | 21,938,770 | 109,962 | 22,048,732 | |||||||||||||
| Accumulated amortisation | (3,759,369 | ) | (3,759,369 | ) | ||||||||||||
| Net book amount | 18,179,402 | 109,962 | 18,289,364 |
(i) Amortisation methods and useful lives
The Group amortises intangible assets with a limited useful life using the straight-line method over the following periods:
Notes to the Unaudited Financial Statements (Continued)
| Note | 31 March 2017 | 30 June 2016 | ||||||||||
| $ | $ | |||||||||||
| Current | ||||||||||||
| Prepayments | (a) | 795,122 | 591,926 | |||||||||
| Security deposits | 30,624 | 30,890 | ||||||||||
| Accrued interest | 97 | 204 | ||||||||||
| 825,843 | 623,020 |
(a) Prepayments relate predominantly to advance payments for clinical trial expenditure.
8. Non-Current financial liability
| 31 March 2017 | 30 June 2016 | |||||||
| $ | $ | |||||||
| Convertible note at fair value | 5,588,950 | 5,027,168 | ||||||
| 5,588,950 | 5,027,168 |
On 14 May 2015 the Company entered into a subscription agreement with Ridgeback Capital Investments (Ridgeback) to invest
in Convertible Notes and Warrants of the Company for cash consideration totaling $13,750,828, which was subject to shareholder approval at an Extraordinary General Meeting. Shareholder approval was received on 31 July 2015.
The 13,750,828 Convertible Notes issued have a face value of $1.00 per note, mature on 4 August 2025 and accrue interest at a rate of 3% per annum
which may also be converted into shares. Conversions may occur during the period (i) at least 3 months after the Issue Date and (ii) at least 15 business days prior to the maturity date into 50 ordinary shares of the Company per note
(subject to customary adjustments for rights or bonus issues, off market buybacks, issues at less than current market price, share purchase plan, dividend reinvestment plan at a discount, return of capital or dividend or other adjustment). If a
change of control event, delisting event or event of default has occurred, Ridgeback may elect to convert the notes into shares or repayment of principal and interest. The Convertible Notes rank at least equal with all present and future
unsubordinated and unsecured debt obligations of the Company and contain customary negative pledges regarding financial indebtedness, dividend payments, related party transaction and others.
Notes to the Unaudited Financial Statements (Continued)
8. Non-Current financial liability (Continued)
8,475,995 Warrants were granted which are exercisable at a price of $0.025 per share on or before
4 August 2025. 371,445,231 Warrants were granted which are exercisable at a price of $0.0237 per share on or before 4 August 2020. All warrants may be settled on a gross or net basis and the number of warrants or exercise price may be
adjusted for a pro rata issue of shares, a bonus issue or capital reorganisation. The Warrants do not confer any rights to dividends or a right to participate in a new issue without exercising the warrant.
In addition to the above cash financing from Ridgeback, it was disclosed in the Extraordinary General Meeting explanatory memorandum that Ridgeback also
provides the company with additional benefits, including:
As a result of the above, the additional benefits provided to Prima determine that the financing transaction, including the issue of warrants, is to be
accounted for as a Share-Based Payment and are expensed on the grant date in accordance with AASB 2. The value of the share-based payment to the strategic investor was calculated by determining the fair value of the convertible note and warrants at
the time of EGM approval and deducting the net cash proceeds from Ridgeback.
| Fair value of Convertible Note | $ | 45,851,305 | ||
| Fair value of Warrants | $ | 15,367,594 | ||
| Less cash received | $ | (13,750,828 | ) | |
| Share based payment to strategic investor | $ | 47,468,071 |
(i) Fair value of convertible notes
The fair value of the convertible notes has been estimated by an external valuation specialist using a combination of the Black-Scholes methodology for the
conversion option component of the notes and a discounted cashflow valuation for the debt component of the note. Key terms of the note are included above. The following assumptions which were based on market conditions that existed at the grant
| Assumption | Convertible notes | Rationale | ||
| Historic volatility | 85.0% | Based on the Company s historical volatility data | ||
| Share price | $0.051 | Closing market share price on 31 July 2015 | ||
| Risk free interest rate | 2.734% | Based on Australian Government securities yields which match the term of the convertible note | ||
| Risk adjusted interest rate | 15.0% | An estimate of the expected interest rate of a similar non-convertible note issued by the company | ||
| Dividend yield | 0.0% | Based on the Company s nil dividend history |
The fair value of the convertible note is allocated between a financial liability for the traditional note component of the
convertible note and into equity which represents the conversion feature. The traditional note component of the convertible note was initially recorded at fair value of $4.4 million, based on the present value of the contractual cash flows of the
note discounted at 15%. After initial recognition, the note will be measured at fair value as required by AASB 2. The remaining value of the convertible note was allocated to the conversion feature and recognised as equity.
Notes to the Unaudited Financial Statements (Continued)
8. Non-Current financial liability (Continued)
| Note - Liability | Conversion feature - Equity | |||||||
| Fair value at issuance | 4,419,531 | 41,431,774 | ||||||
| Fair value movements | 1,169,419 | |||||||
| Balance at 31 March 2017 | 5,588,950 | 41,431,774 |
(ii) Fair value of warrants
The fair value of each warrant granted is not traded in an active market and instead has been estimated by an external valuation specialist using the