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Immuron Limited ABN 80 063 114 045 Interim financial report for the half-year 31 December 2018 Immuron Limited ABN 80 063 114 045 Interim financial report - 31 December 2018 Contents Page Corporate directory 1 Financial

Key Takeaway: Interim financial report for the half-year 31 Limited ABN 80 063 114 045 Interim financial report - 31 December 2018 Contents Page Corporate directory 1 Financial statements 3 Notes to the condensed consolidated financial statements 7 This interim financial report does not

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Interim financial report
for the half-year 31
Limited ABN 80 063 114 045
Interim financial report - 31 December 2018
Contents
Page
Corporate directory 1
Financial statements 3
Notes to the condensed consolidated financial statements 7
This interim financial report does not include
all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction
with the annual report for the year ended 30 June 2018 and any public announcements made by Immuron Limited.
Directors Dr. Roger Aston
Independent Non-executive chairman
Mr. Peter Anastasiou
Executive vice chairman
Mr. Daniel Pollock
Independent non-executive director
Mr. Stephen Anastasiou
Independent non-executive director
Prof. Ravi Savarirayan
Independent non-executive director
Mr. Richard Berman (appointed 1 July 2018)
Independent non-executive director
Secretary Mr. Phillip Hains
Chief Executive Officer Dr. Gary S Jacob (appointed 16 November 2018)
Registered Office Level 3, 62 Lygon Street
Carlton VIC 3053
Australia
Telephone: +61(0)3 9824 5254
Facsimile: +61(0)3 9824 5254
Principal Place of Business Unit 10, 25 - 37 Chapman Street
Blackburn North VIC 3130
Australia
Telephone: +61 (0)3 9824 5254
Facsimile: +61 (0)3 9822 7735
Share Registry - United States Bank of New York
225 Liberty Street
New York, NY 102286
United States of America
Telephone: +1 212 495 1784
Share Registry - Australia Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
Australia
Telephone: +61 (0)8 9315 2333
Facsimile: +61 (08) 9315 2233
Auditor - Australia and United States Grant Thornton Audit Pty Ltd
Collins Square, Tower 5 727 Collins Street
Melbourne VIC 3008
Australia
Telephone: +61 (0)3 8320 2222
Solicitors - Australia Francis Abourizk Lightowlers (FAL)
Level 14, 114 William Street
Melbourne VIC 3000
Australia
Telephone: +61 (0)3 9642 2252
Solicitors - United States Carter Ledyard and Milburn LLP
2 Wall Street
New York NY 10005
United States of America
Telephone: +1 212 238 8605
Sheppard Mullin
30 Rockefeller Plaza
New York NY 10112-0015
United States of America
Telephone: +1 212 653 8700
Bankers National Australia Bank (NAB)
330 Collins Street
Melbourne VIC 3000
Australia
Securities exchange listings Australian Securities Exchange (Code: IMC)
NASDAQ Exchange (Code: IMRN)
Websites www.immuron.com.au
www.travelan.com.au
consolidated statement of comprehensive income
the half-year 31 December 2018
Consolidated entity
Notes 31 December 2018 $ 31 December 2017 $
Revenue from continuing operations
Sales of goods 7 978,233 919,138
Total operating revenue 978,233 919,138
Cost of goods sold (231,479 ) (195,356 )
Gross profit 746,754 723,782
Direct selling costs
Sales and marketing costs (198,652 ) (145,150 )
Freight costs (133,659 ) (89,125 )
414,443 489,507
Other income 7 310,436 1,387,039
Expenses
Research and development (514,388 ) (1,540,436 )
Marketing and promotion (246,520 ) (238,192 )
Consulting, employee and director (1,068,378 ) (815,232 )
Other corporate administrative (385,455 ) (829,999 )
Travel and entertainment expenses (89,391 ) (174,987 )
Depreciation (2,646 ) (2,277 )
Finance fee costs - (3,767 )
Impairment of inventory - (163,600 )
Loss before income tax (1,581,899 ) (1,891,944 )
Income tax expense - -
Loss from continuing operations (1,581,899 ) (1,891,944 )
Other comprehensive income
Item that may be reclassified to profit or loss
Exchange differences on translation of foreign operations 2 (b) (112,270 ) 28,281
Total comprehensive loss for the period (112,270 ) 28,281
Total comprehensive income for the period is attributable to:
Owners of Immuron Limited (1,694,169 ) (1,863,663 )
Cents Cents
Earnings per share for profit attributable to the ordinary equity holders of the Company:
Basic loss per share 9 (1.2 ) (1.5 )
Diluted loss per share 9 (1.2 ) (1.5 )
above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
consolidated balance sheet
As at 31 December 2018
Consolidated entity
Notes 31 December 2018 (unaudited) $ 30 June 2018 $
ASSETS
Current assets
Cash and cash equivalents 4,190,259 4,727,430
Trade and other receivables 643,206 1,683,305
Inventories 8 530,495 497,902
Other current assets 239,695 141,800
Total current assets 5,603,655 7,050,437
Non-current assets
Property, plant and equipment 17,737 20,384
Inventories 8 2,075,683 2,171,867
Total non-current assets 2,093,420 2,192,251
Total assets 7,697,075 9,242,688
LIABILITIES
Current liabilities
Trade and other payables 403,521 689,326
Employee benefit obligations 117,713 114,012
Total current liabilities 521,234 803,338
Total liabilities 521,234 803,338
Net assets 7,175,841 8,439,350
EQUITY
Issued capital 2 (a) 58,442,043 58,372,043
Reserves 2 (b) 2,756,727 2,606,722
Accumulated losses (54,022,929 ) (52,539,415 )
Total equity 7,175,841 8,439,350
above condensed consolidated balance sheet should be read in conjunction with the accompanying notes.
consolidated statement of changes in equity
the half-year 31 December 2018
Attributable to owners of Immuron Limited
Consolidated entity Issued capital $ Reserves $ Accumulated losses $ Total equity $
Balance at 1 July 2017 53,632,995 2,470,417 (49,528,486 ) 6,574,926
Loss for the period - - (1,891,944 ) (1,891,944 )
Other comprehensive income - 28,281 - 28,281
Total comprehensive income for the half-year - 28,281 (1,891,944 ) (1,863,663 )
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs 213,396 - - 213,396
Options and warrants issued/expensed - 59,512 - 59,512
213,396 59,512 - 272,908
Balance at 31 December 2017 53,846,391 2,558,210 (51,420,430 ) 4,984,171
Balance at 1 July 2018 as originally presented 58,372,043 2,606,722 (52,539,415 ) 8,439,350
Loss for the period - - (1,581,899 ) (1,581,899 )
Other comprehensive income - (112,270 ) - (112,270 )
Total comprehensive income for the half-year - (112,270 ) (1,581,899 ) (1,694,169 )
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs 70,000 - - 70,000
Options and warrants issued/expensed - 360,660 - 360,660
Lapse of unexercised options - (98,385 ) 98,385 -
70,000 262,275 98,385 430,660
Balance at 31 December 2018 58,442,043 2,756,727 (54,022,929 ) 7,175,841
condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
consolidated statement of cash flows
the half-year 31 December 2018
Condensed consolidated
statement of cash flows
Consolidated entity
Notes 31 December 2018 $ 31 December 2017 $
Cash flows from operating activities
Receipts from customers (inclusive of GST) 1,138,524 1,184,856
Payments to suppliers and employees (inclusive of GST) (2,753,669 ) (4,367,410 )
Interest received 39 43
Other - R&D tax concession refund and other government grants 1,190,205 -
Interest and other costs of finance paid - (3,767 )
Net cash outflow from operating activities (424,901 ) (3,186,278 )
Cash flows from investing activities
Payments for property, plant and equipment - (2,180 )
Net cash outflow from investing activities - (2,180 )
Cash flows from financing activities
Repayment of borrowings - (243,950 )
Capital raising costs - (1,934 )
Net cash outflow from financing activities - (245,884 )
Net (decrease) in cash and cash equivalents (424,901 ) (3,434,342 )
Cash and cash equivalents at the beginning of the financial year 4,727,430 3,994,924
Effects of exchange rate changes on cash and cash equivalents (112,270 ) 28,281
Cash and cash equivalents at end of the half-year 4,190,259 588,863
above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.
to the condensed consolidated financial statements
entity has identified its operating segments based on the internal reports that are reviewed and used by the executive management
team in assessing performance and determining the allocation of resources.
executive management team considers the business from both a product and a geographic perspective and has identified three reportable
Research and Development (R&D) Income and expenses directly attributable to the Company's research and development projects performed in Australia, Israel and United States.
HyperImmune Products Income and expenses directly attributable to Travelan activities which occur in Australia, New Zealand, US and Canada. In 2018, the Company earned 67%, 1% and 32% of its revenues from customers located in Australia, Canada and US, respectively. In 2017, the Company earned 66%, 0% and 34% of its revenues from customers located in Australia, Canada and US, respectively.
Research & Development HyperImmune Products Unallocated Corporate Total
Consolidated entity 31 December 2018 (unaudited)
$ $ $ $
Segment revenue and other income
Revenue from external customers - 978,233 - 978,233
R&D tax concession refund 310,166 - - 310,166
Interest income - - 270 270
Segment revenue and other income 310,166 978,233 270 1,288,669
Segment expenses
Depreciation and amortisation - - (5,047 ) (5,047 )
Share-based payments - - (360,660 ) (360,660 )
Other operating expenses (403,521 ) (563,790 ) (1,537,550 ) (2,504,861 )
Segment expenses (403,521 ) (563,790 ) (1,903,257 ) (2,870,568 )
Income tax expense - - - -
(Loss)/Profit for the period (93,355 ) 414,443 (1,902,987 ) (1,581,899 )
Segment assets 310,990 2,718,889 4,667,196 7,697,075
Total assets 310,990 2,718,889 4,667,196 7,697,075
Segment liabilities (71,903 ) (11,974 ) (437,357 ) (521,234 )
Total liabilities (71,903 ) (11,974 ) (437,357 ) (521,234 )
to the condensed consolidated financial statements
Segment results (continued)
Research & Development HyperImmune Products Unallocated Corporate Total
Consolidated entity 31 December 2017 (unaudited)
$ $ $ $
Segment revenue and other income
Revenue from external customers - 919,138 - 919,138
R&D tax concession refund 1,386,790 - - 1,386,790
Interest income - - 43 43
Other income - 206 - 206
Total segment revenue and other income 1,386,790 919,344 43 2,306,177
Segment expenses
Depreciation and amortisation - - (2,277 ) (2,277 )
Finance costs - - (3,767 ) (3,767 )
Share-based payments - - (59,512 ) (59,512 )
Other operating expenses (1,540,436 ) (429,631 ) (2,162,498 ) (4,132,565 )
Total segment expenses (1,540,436 ) (429,631 ) (2,228,054 ) (4,198,121 )
Income tax expense - - - -
(Loss)/Profit for the period (153,646 ) 489,713 (2,228,011 ) (1,891,944 )
Segment assets 2,884,901 2,536,093 736,997 6,157,991
Total assets 2,884,901 2,536,093 736,997 6,157,991
Segment liabilities (481,023 ) (154,886 ) (537,911 ) (1,173,820 )
Total liabilities (481,023 ) (154,886 ) (537,911 ) (1,173,820 )
31 December 2018 (unaudited) No. 31 December 2018 (unaudited) $ 30 June 2018 No. 30 June 2018 $
Fully paid 143,215,706 58,442,043 142,778,206 58,372,043
Movements in ordinary shares:
Note Number of shares Total $
Details
Opening balance 1 July 2018 142,778,206 58,372,043
Shares issued during the year 437,500 70,000
Balance 31 December 2018 (unaudited) 143,215,706 58,442,043
Rights of each type of share
shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number
of shares held. On a show of hands every holder of ordinary shares present at a meeting or by proxy, is entitled to one vote.
upon a poll every holder is entitled to one vote per share held. The ordinary shares have no par value.
to the condensed consolidated financial statements
following table shows a breakdown of the balance sheet line item other reserves' and the movements in these reserves
during the period. A description of the nature and purpose of each reserve is provided below the table.
Consolidated entity No. of Options Qty Amount $ Foreign currency translation $ Total other reserves $
At 1 July 2018 71,349,180 2,650,039 (43,317 ) 2,606,722
Options/warrants issued during the year 3,300,000 360,660 - 360,660
Lapse of unexcercised options (50,000 ) (98,385 ) - (98,385 )
Other comprehensive loss for the period - - (112,270 ) (112,270 )
At 31 December 2018 (unaudited) 74,599,180 2,912,314 (155,587 ) 2,756,727
following share-based payment arrangements were entered into during the half-year 31 December 2018 due to new options granted
Grant date Expiry date Balance at start of year Exercise price ($) Granted Exercised Vested Balance at end of year
02-Jul-2018 01-Jul-2021 - 0.50 1,300,000 - 1,300,000 1,300,000
19-Nov-2018 30-Jun-2020 - 0.50 2,000,000 - 2,000,000 2,000,000
the options granted during the half-year 31 December 2018, the valuation model inputs used to determine the fair value at the
grant date are outlined below:
Grant date Expiry date Share price at grant date ($) Exercise price ($) Expected volatility Dividend yield Risk-free interest rate Fair value at grant date ($)
02-Jul-2018 01-Jul-2021 0.32 0.50 92 % 0 % 2.09 % 204,100
19-Nov-2018 30-Jun-2020 0.28 0.50 92 % 0 % 2.02 % 164,400
Company had no contingent liabilities and at 31 December 2018 (2017: nil).
No other matter or circumstances
has arisen since 31 December 2018 that has significantly affected, or may significantly affect the Group's operations, the results
of those operations, or the Group's state of affairs in future financial years.
Notes to the condensed consolidated financial statements
Transactions with other related parties
following transactions occurred with related parties:
Premises rental services received from Wattle Laboratories Pty Ltd to Immuron Limited: 31 December 2018 (unaudited) 31 December 2017 (unaudited)
Wattle Laboratories Pty Ltd (Wattle) is an entity part-owned and operated by Immuron Directors Peter and Stephen Anastasiou. Commencing on 1 January 2016, Immuron executed a Lease Agreement with Wattle whereby Immuron will lease part of their Blackburn office facilities for Immuron's operations at an arms-length commercial rental rate of $38,940 per annum, payable in monthly instalments. The rental agreement is subject to annual rental increases, and effective 1 January 2017, the annual rent was increased to $39,525. The lease is for a 3 year term with an additional 3 year option period. The lease is cancellable by either party upon 6 months written notice of termination of the agreement.
Rental fees paid to Wattle Laboratories Pty Ltd during the year through the issue of equity: $ Nil $ Nil
Total paid by the Company to Wattle Laboratories Pty Ltd during the year: $ 22,151 $ 9,881
At the period end the Company owed Wattle Laboratories Pty Ltd: $ 17,374 $ Nil
Notes to the condensed consolidated financial statements
Transactions with other related parties (continued)
Service rendered by Grandlodge Capital Pty Ltd to Immuron Ltd: 31 December 2018 (unaudited) 31 December 2017 (unaudited)
Grandlodge Capital Pty Ltd (Grandlodge) is an entity part-owned and operated by Immuron Directors Peter and Stephen Anastasiou. Mr David Plush is also an owner of Grandlodge, and its associated entities. Grandlodge, and its associated entities, are marketing, warehousing and distribution logistics companies. Commencing on 1 June 2013, Grandlodge was contracted on commercial market arms-length terms to provide warehousing, distribution and invoicing services for Immuron's products for $70,000 per annum. These fees will be payable in new fully paid ordinary shares in Immuron Limited at a set price of $0.16 per share representing Immuron Limited's share price at the commencement of the agreement. The shares to be issued to Grandlodge, or its associated entities, as compensation in lieu of cash payment for the services rendered under this agreement have been subject to the approval of Immuron shareholders at Company shareholder meetings held over the past 18 months. Grandlodge will also be reimbursed in cash for all reasonable costs and expenses incurred in accordance with their scope of works under the agreement, unless both parties agree to an alternative method of payment. The agreement is cancellable by either party upon providing the other party with 30 days written notice of the termination of the agreement.
Service fees paid to Grandlodge Pty Ltd during the year through the issue of equity: $ 70,000 $ 140,000
Total paid by the Company to Grandlodge Pty Ltd during the year: $ 70,000 $ Nil
At the period end the Company owed Grandlodge Pty Ltd: $ Nil $ Nil
The Company derives the following types of revenue:
Consolidated entity (unaudited)
31 December 31 December
2018 2017
$ $
Revenue from operating activities
Sales of good 1,083,805 1,010,919
Less: discounts and rebates (105,572 ) (91,781 )
Total revenue from operating activities 978,233 919,138
Other income
Interest on financial assets held as investments 39 43
Other items 231 207
R&D tax concession refund 310,166 1,386,789
Total other income 310,436 1,387,039
Notes to the condensed consolidated financial statements
Consolidated entity
31 December 30 June
2018 (unaudited) 2018
$ $
Raw materials - Colostrum 294,769 198,585
Work in progress - 33,625
Finished goods - Travelan and Protectyn 235,726 265,692
Total of inventories classified under current asset 530,495 497,902
Consolidated entity
31 December 30 June
2018 (unaudited) 2018
$ $
Colostrum Inventory - Non Current 2,075,683 2,171,867
Total of inventories classified under non-current asset 2,075,683 2,171,867
was no impairment of inventories recognised during financial year 2018 (2017: $163,600 for stock obsolescence in the Statement
of Profit or Loss and Other Comprehensive Income.
the current financial period, management have performed an assessment on its raw materials and its utilisation within 12 months
from reporting date and have determined $294,769 of raw materials relating to Colostrum will be consumed within 12 months and
remaining balance of $2,075,683 will be consumed after 12 months from reporting date.
Consolidated entity
(unaudited)
31 December 31 December
2018 2017
Cents Cents
From continuing operations attributable to the ordinary equity holders of the company (1.2 ) (1.5 )
Consolidated entity (unaudited)
31 December 31 December
2018 2017
$ $
Basic/diluted loss per share
Loss attributable to the ordinary equity holders of the Company used in calculating basic/diluted earnings per share:
From continuing operations (1,581,899 ) (1,891,944 )
Notes to the condensed consolidated financial statements
Consolidated entity (unaudited)
2018 2017
Number Number
Weighted average number of ordinary shares used as the denominator in calculating basic/diluted loss per share 136,365,586 130,086,505
Company is currently in a loss making position and thus the impact of any potential shares is concluded as anti-dilutive which
includes the Company's options and Convertible Note payable and warrants. Treasury shares are excluded from the calculation of
weighted average number of ordinary shares.
condensed consolidated interim financial report for the half-year reporting period ended 31 December 2018 have been prepared in
accordance with Accounting Standard AASB 134 Interim Financial Reporting.
interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report
is to be read in conjunction with the annual report for the year ended 30 June 2018 and any public announcements made by Immuron.
accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period
and the adoption of the new and amended standards as set out below.
consolidated financial statements of Immuron Limited also comply with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
number of new or amended standards became applicable for the current reporting period and the Company had to change its accounting
policies and applying the modified retrospective method where required as a result of adopting the following standards:
impact of the adoption of these standards and the new accounting policies are disclosed in note below. The other standards did
not have any impact on the Company's accounting policies and did not require retrospective adjustments.
9 Financial Instruments replaces AASB 139 Financial Instruments: recognition and measurement requirements. It makes major changes
to the previous guidance on the classification and measurement of financial assets and introduces an expected credit loss' model
for impairment of financial assets.
this represents significant new guidance, the implementation of the new guidance did not have a material impact on trade receivables.
As such, the Company has elected not to restate prior periods and have not recognised differences in opening retained earnings
Company has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018 which did not result in changes in the
accounting policies and adjustments to the amounts recognised in the financial statements.
Last updated: Apr 8, 2019