Market Update and Release of Annual Report
NZX RELEASE
10 Birch Street
PO Box 5804
Dunedin 9058
New Zealand
Telephone: 03 474 1338
Fax: 03 474 9050
Email: info@blis.co.nz
Website: www.blis.co.nz
18
th
May 2018
Blis Technologies Limited Market Update and Release of
Annual Report
Price Sensitive: Yes
Annual Report: Attached
Market Update
BLIS announces its audited annual result for the year to 31 March 2018.
In line with the revised full year guidance issued in January 2018, FY18 revenues
totalled $5.28m providing an EBITDA Loss of $0.42m and a Net Deficit of $1.04m.
The Company experienced a recovery in the second half of the financial year ended
31 March 2018 with 19% growth in trading revenue compared with the same period
last year, and returned a profit in the last two quarters. This recovery was not sufficient
to offset the disappointing start to the year, resulting from one-off market impacts as
previously signalled to the market.
It has been a year of two halves with a disappointing first half year (1HY18) followed
by a recovery in 2HY18 in line with real in-market dynamics within the Company's
offshore territories. Monitoring of in-market dynamics gives us confidence that the
recovery we have seen will be sustained into the new financial year and along with
new market opportunities, help us return to solid revenue growth.
Tony Offen
Chair
Contact: 021 463 336
---
3493496
NZX APPENDIX 1 RELEASE
BLIS TECHNOLOGIES LIMITED
For the Year Ended 31 March 2018
The information contained in this release should be read in conjunction with the Annual Report of the
Company for the year ended 31 March 2018 (" 2018 Annual Report"), which has been released
together with this NZX Appendix 1 Release.
The information below relates to the preliminary announcement required under Listing Rule 10.3.2 and
Appendix 1 of the NZX Main Board Listing Rules:
1.1 Details of the reporting period and previous reporting period
Reporting Period 12 months to 31 March 2018
Previous Reporting Period 12 months to 31 March 2017
1.2 Information prescribed by NZX
RESULTS FOR ANNOUNCEMENT TO THE MARKET
For the year ended 31 March 2018
Amount (000s) Percentage change
Revenue from ordinary
activities
$5,288 19% decrease
Profit (loss) from ordinary
activities after tax attributable
to security holders
($1,042) 4,242% increase
Net profit (loss) attributable to
security holders
($1,042) 4,242% increase
Interim/Final Dividend: The Company does not propose to pay dividends to its shareholders.
1.3 The following information:
(a) Statement of Financial Performance
Refer to the 2018 Annual Report.
(b) Statement of Financial Position
Refer to the 2018 Annual Report.
(c) Statement of Cash Flows
Refer to the 2018 Annual Report.
(d) Details of dividends or distributions
The Company does not propose to pay dividends to shareholders.
(e) Details of any dividend or distribution reinvestment plans in operation
The Company has no dividend reinvestment plan.
(f) Statement of Movements in Equity
Refer to the 2018 Annual Report.
3493496
Page 2 of 3
(g) Net tangible assets per security
(h) Details of entities over which control has been gained or lost during the period
Nil
(i) Details of associates and joint venture entities
Nil
(j) Any other significant information
Nil
(k) Commentary on the results for the period
Refer to the Operations Report contained in the 2018 Annual Report
(l) Audited Financial Statements
The Financial Statements for the year ended 31 March 2018 have been audited. The
auditor's report is included at the end of the 2018 Annual Report.
(m) Any major changes or trends in the Company's business
BLIS announces its audited annual result for the year to 31 March 2018.
In line with the revised full year guidance issued in January 2018, FY18 revenues
totalled $5.28m providing an EBITDA Loss of $0.42m and a Net Deficit of $1.04m.
The Company experienced a recovery in the second half of the financial year ended
31 March 2018 with 19% growth in trading revenue compared with the same period
last year, and returned a profit in the last two quarters. This recovery was not
sufficient to offset the disappointing start to the year, resulting from one-off market
impacts as previously signalled to the market.
It has been a year of two halves with a disappointing first half year (1HY18) followed
by a recovery in 2HY18 in line with real in-market dynamics within the Company's
offshore territories. Monitoring of in-market dynamics gives us confidence that the
recovery we have seen will be sustained into the new financial year and along with
new market opportunities, help us return to solid revenue growth.
3493496
Page 3 of 3
(n) Unrealised gains
There are no unrealised gains resulting from the revaluation of assets of the Company or
its subsidiaries, or any unrealised net changes in values or development margins of
investment assets included as separate items after profit before extraordinary items.
---
BLIS TECHNOLOGIES LIMITED
Annual Report
For the Year Ended 31 March 2018
1
BLIS TECHNOLOGIES LIMITED
ANNUAL FINANCIAL REPORT
For the Year Ended 31 March 2018
CONTENTS
COMPANY DIRECTORY ................................................................................................................. 2
OPERATIONS REPORT .................................................................................................................. 3
OVERVIEW
DIRECTORS' REPORT................................................................................................9
DIRECTORS’ RESPONSIBILITY STATEMENT ............................................................................ 13
STATEMENT OF CORPORATE GOVERNANCE ......................................................................... 14
CONSOLIDATED INCOME STATEMENT ..................................................................................... 17
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME .............................................. 18
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ........................................................ 19
CONSOLIDATED BALANCE SHEET ............................................................................................ 20
CONSOLIDATED STATEMENT OF CASHFLOWS ...................................................................... 21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .................................................. 22
ADDITIONAL STOCK EXCHANGE INFORMATION ..................................................................... 48
INDEPENDENT AUDITOR’S REPORT ......................................................................................... 52
2
BLIS TECHNOLOGIES LIMITED
COMPANY DIRECTORY
As at 31 March 2018
Company Number 1042367
Issued Capital 1,107,653,565 Ordinary Shares
Registered Office Blis Technologies Limited
10 Birch Street
Dunedin 9016
Shareholders Listed on the NZX Main Board
Share Registrar Link Market Services Limited
P O Box 384
Ashburton
Directors A P Offen (Chair, appointed 1 August 2017, previously Deputy Chair)
P F Fennessy (Deputy Chair, appointed 1 August 2017, previously Chair)
V M Aris
G S Boyd
A J McKenzie
G Plunket (appointed 4 May 2018)
B H Wallace (resigned 19 May 2017)
Chief Executive: B D Watson
Auditors Deloitte Limited
P O Box 1245
Dunedin
Bankers Bank of New Zealand
Dunedin
Solicitors Anderson Lloyd
Private Bag 1959
Dunedin 9054
Downie Stewart Lawyers
P O Box 1345
Dunedin
Website www.blis.co.nz
Facebook https://www.facebook.com/BLISTechnologiesLtd
Blis Technologies Limited
3
BLIS TECHNOLOGIES LIMITED
OPERATIONS REPORT
For the Year Ended 31 March 2018
OVERVIEW
FY18 FY17 Change
$000 $000 $000
Revenue
Australasia 873 1,092 (219)
Asia (incl. China) 680 1,322 (642)
Europe 2,817 2,316 501
North America 834 1,682 (848)
Other 81 124 (43)
Trading Revenue 5,285 6,536 (1,251)
Other Revenue 3 11 (8)
Total Revenue 5,288 6,547 (1,259)
Net Surplus / (Deficit) before interest expense, tax, depreciation and amortisation
(EBITDA)
(422) 585
(1,007)
Depreciation and amortisation of assets (612) (609) (3)
Interest Expense (8) - (8)
Net Surplus/ (Deficit) (1,042) (24) (1,018)
The Blis Technologies Group (made up of Blis Technologies Limited (the "Company" or “Blis Technologies”) and its
subsidiary, Blis Functional Foods Limited) reports a net deficit for the financial year ended 31 March 2018 (“FY18”) of
$1,042k (FY17: $24k deficit) and net deficit before interest expense, tax, depreciation and amortisation of $422k (FY17:
$585k surplus) on total revenue of $5,288k (FY17:$6,547k)
Trading revenue for the full year decreased by 19% ($1,251k) compared with the previous financial year (FY18: $5,285k
FY17: $6,536k) and $176k was due to discontinued non-core activities. However, the trading revenue for the second
half of FY18 (“2HY18”) increased by 19% ($509k) compared with the same period last year (2HY18: $3,216k and 2HY17
$2,707k).
In the half year report for the six months ended 30 September 2017 (“1HY18”), we overviewed several one-off impacts
on our revenue for that period including changes in buying patterns by some of our customers, a run-down in their
inventories and the extended period it took for Maspex Group to complete the acquisition of BLIS K12® containing
brands from Sequoia Pharma.
As expected we saw a recovery in the 2
nd
half year but not sufficient to fully offset the disappointing start to the year.
Key Challenges for FY18 include:
Several customers choosing to run down stock levels through the first half of FY18;
Long lead times with new customer initiatives;
Delays in new regulatory approvals; and
Limited resources for targeting accelerated growth opportunities.
Key Highlights for FY18 include:
2HY18 recovery in revenue with 19% growth over the same period last year and a profit in the last two quarters.
Change in distributor relationship for the New Zealand Pharmacy market to Radiant Healthcare including
expanded promotion to medical health professionals.
Approval by the Australia Therapeutic Goods Administration for Blis K12
®
as a complementary medicine.
Finalising a clear range portfolio of Blis-branded BLIS K12
®
and BLIS M18
®
finished products differentiated for
specific health targets within the NZ market, and in preparation for similar launches into overseas markets;
Blis-branded BLIS K12
®
Throat Lozenges sales grew by 6% in value in the NZ Pharmacy Throat Lozenge category
(12 month moving annual total compared with previous year);
o Year to date calendar 2018, ThroatGuard Pro
®
is the number 1 throat lozenge in NZ Pharmacy
4
o HoneyBlis
®
sales grew by 72% over the previous year
Maspex Group, a leading food and supplements company taking over the Poland product range containing BLIS
K12
®;
and launching a BLIS M18
®
based brand for dental health;
BLIS ElitePro
®
approved for the High-Performance Sport Nutrition NZ supplements programme;
European/ Middle East expansion with Bluestone Pharma, signing several new partner agreements for new
launch activity;
Purchase and commissioning of a new tablet press for lozenge production ensuring improvement in consistent
quality and ensuring capacity requirements are met.
FINANCIAL
The Company reports a consolidated net deficit for the twelve months to 31 March 2018 of $1,042k (FY17: $24k deficit).
This includes interest income of $3k received for the period (FY17: $4k).
Reporting a further annual net deficit is disappointing and reflects the 1HY18 result which saw a deficit of $1,246k. The
results in 2HY18 were an improvement with a return to revenue growth and recording a net surplus of $204k.
Regional performance:
Europe/ Middle East:
Europe was our best performing territory in FY18 with a 22% increase in trading revenue. Our distributor Bluestone
Pharma has created a strong growth business based on consistent value propositions within multiple markets across
both Europe and the Middle East regions. Key contributors to this strong performance were the recovery of the Poland
business, continued growth across existing markets including Italy, Switzerland, Germany, Czech Republic, Slovakia,
Romania and Israel as well as new product registrations and advanced launch plans into new countries.
In Poland the Maspex Group has completed the acquisition of two brands, ENTitis™ and ENTitis baby™ (both of
which contain BLIS K12
®
) from Sequoia Pharma. Following this change in ownership we have experienced a return to
strong ordering to support the Maspex Group business along with the launch of a new brand for dental health
containing BLIS M18
®
.
North America:
In 1HY18 our distributor changed its’ ordering patterns and ran down their stock levels which resulted in a significant
reduction in ordering from the Company. This resulted in a 50% decline in trading revenue for the region in FY18
compared with last year. However, reporting on in-market sales from our distributor to their customer base shows a 19%
growth FY18 when compared with the FY17 financial year. This in-market growth underpins confidence that the recovery
in ordering we have seen in the 2HY18 year will be sustained.
Asia:
The Company recorded a 49% decrease in FY18 trading revenue for Asia, with most of this decline due to a run down
by our distributors of their stock levels in Japan in 1HY18. During the 2HY18 ordering from Japan recovered significantly
with our two key customers forecasting steady ordering moving forward. Japan remains a large and attractive market
for us and we are looking to broaden our customer base to drive future growth.
China remains an emerging opportunity for the Company with further test market initiatives underway which we will build
upon in the coming year.
Australasia:
NZ Pharmacy retail sales grew by 26%. However, there was a decline in Australian sales as we move to reposition our
selling model in the Australian market following the TGA (Therapeutic Goods Administration) approval of BLIS K12
®
.
Overheads:
Overall expenses were down $241k compared with last financial year (FY18: $6,330k FY17: $6,571k) reflecting lower
sales. During FY18 we continued investment in marketing and pipeline development. However, these were constrained
by cost containment measures taken in line with the 1HY18 trading revenue performance. Salaries increased by $191k
compared with FY17. However, in the final quarter of FY18 the Company underwent a staffing review resulting in two
roles being disestablished which will result in meaningful savings in the next financial year.
5
Cash Flows
FY18 FY17 Change
$000 $000 $000
Operating Activities
Trading Income and Other Revenue Received 5,737 6,574 (837)
Payments to Suppliers, Employees and Finance Costs (5,619) (6,330) 711
Net Cash Inflow/(Outflow) from Operating Activities 118 244 (126)
Investing Activities
Capital Expenditure (476) (315) (161)
Net Cash Inflow/ (Outflow) from Investing Activities (476) (315) (161)
Financing Activities
Borrowings 290 - 290
Share Option repayment 32 - 32
Net Cash Inflows from Financing Activities 322 - 322
Bank Balance Year End 1,134 1,140 (6)
The Company recorded positive net cash flow from operating activities in FY18 of $118k (FY17: $244k inflow). Capital
expenditure for FY18 totalled $476k (FY17: $315k) reflecting the ongoing investment in the manufacturing process and
the purchase of a new tablet press and capitalisation of patent costs.
Aggregate cash flows for FY18 resulted in a decrease in bank balance of $6k (FY17: a decrease of $69k). The bank
balance held as at 31 March 2018 was $1,134k (31 March 2017: $1,140k).
No tax was payable and no dividend will be paid on ordinary shares.
At 31 March 2018, the Company held a net working capital position of $1,548k (FY17: $2,253k). The budget prepared
by the Company shows that existing cash resources and cash generated from operations should be sufficient to meet
commitments as they fall due. By their nature, budgets are based on assumptions as to customer demand, pricing,
costs and exchange rates and actual results may vary from expectations. The Company is investing in upgrading plant
to a fully accredited “Good Manufacturing Practice” (GMP) status, regulatory approvals and new product launches.
Depending on progress, the Company may consider options to fund its growth.
GENERAL COMMENTARY
It has been a year of two halves with a disappointing 1HY18 followed by a recovery in 2HY18 more in line with real in-
market dynamics within the Company’s offshore territories. Monitoring of in-market dynamics gives us confidence that
the recovery we have seen will be sustained into the new financial year along with new market opportunities helping us
return to solid revenue growth.
We continue to invest in growth and pipeline initiatives. New distribution relationships have been progressed both in NZ
and offshore. New market opportunities have been established in the US, Australia and Europe. We have also
progressed plans to position the Company with a strong on-line sales presence. We are revising our plans in China
given the slow progress to date. We continue to advance our international regulatory and clinical credentials for opening
new markets and growing consumer education and awareness around the science and benefits of Blis products. These
developments are active initiatives designed to set us up for sustainable profitable growth into the future.
BUSINESS STRATEGY
Management and the Board continue to review the Company’s strategy and ensure clarity regarding the commercial
focus of the Company. We remain committed to our stated purpose, our value proposition and our strategic priorities.
Our purpose:
“Leadership in the commercial applications of bacteriocin–producing microbes“
6
Our value proposition:
Blis Technologies is a leader in the manufacture of advanced probiotic strains that go beyond the gut. We combine
innovation with a strong evidence base and the highest quality controls to deliver probiotic solutions for specific health
targets.
Our objective
Blis Technologies will
become an integrated company, controlling our intellectual property and ensuring the highest
quality standards throughout the supply chain.
Our current core internal functions include:
• Probiotic strain development (discovery work)
• Manufacturing of finished good solutions for selected markets
• Scientific and technical product support
• Marketing and sales channel development
Our addressable markets
Probiotics for Human health beyond the gut, targeting a leadership position in:
• ENT (Ear, nose and throat)
• Oral (Teeth, gums, halitosis)
• Dermatology (future focus)
Our focus will be on human health supplements based on our strengths today. However, we recognise the potential for
licensing opportunities beyond this including:
• Realising untapped therapeutic potential
• BLIS
®
-containing functional food solutions
• BLIS
®
-containing pet applications and animal health solutions
Our strategic priorities:
1. Positioning – consistency of value proposition and development of the BLIS
®
brand
We are moving our focus towards being a supplier of BLIS
®
-branded finished goods (including prominent co-
branding) to help ensure that Blis Technologies is recognized as the source; this is a means of future-proofing the
business by developing a closer relationship with customers and consumers.
Progress:
Completion of a product portfolio update around key value propositions which are uniquely placed to
provide global sales growth.
Building a stronger on-line sales presence
Expanded distributor relationships in New Zealand
o New distributor relationships with Radiant Health including promotion to medical professionals
as well as pharmacy staff.
Broadening customer base internationally
o EU/ Middle East – Seven new partner agreements established
o USA – new customer launches across a range of channels including retail, direct selling and
on-line.
o China – further test market launches underway
7
2. Supply chain – ensuring quality, capacity and IP protection within our supply chain
We are the core source of knowledge about our BLIS
®
products, so that we will have the internal expertise and
processes all through our supply chain (from the organism to fermentation to formulation to end-products, including
regulatory and clinical efficacy right through to the consumer).
Progress:
Updating of our plant including the purchase of a new tablet press to expand our capacity
Packaging updates to ensure the highest quality of finished products
Continuous improvement initiatives within manufacturing focused on quality and efficiency
Establishment of new relationships for future offshore raw ingredient manufacturing to meet capacity
and logistical needs
Investment in equipment and development of plans to upgrade our manufacturing plant to GMP status
IP portfolio management and protection through on-going R&D, patent filings, development and
protection of trade secrets, regulatory approvals and trademark registrations towards building a stronger
Blis brand
3. Pipeline – optimising value from our IP
Our library of defined organisms provides the core resource that underpins the future of the Company. Along with
this we continue to progress new product and formulation initiatives to meet the needs of consumers.
Progress:
R&D:
o Ongoing investment in scientific services to accelerate R&D activity:
o Approval received in April 2018 for of a Growth Grant from Callaghan Innovation of 20% rebate
on qualifying Research and Development spend over three years.
o Initiation of joint Blis-Callaghan Innovation supported research projects including:
Master’s project at the University of Otago understanding immunological responses to
BLIS
®
probiotics
PhD project at the University of Otago assessing food formats for oral probiotics
New strain development:
o Along with progress in the development of BLIS Q24
TM
for skin applications the company has
been reviewing the extensive library of strains for candidates and has a number progressing
through the assessment pipeline.
New Product Development:
o Work assessing new flavour formats on HoneyBlis
®
was carried out
o Assessment of new formats and formulations containing BLIS K12
®
Clinical trials:
o Publications on the efficacy of both BLIS K12
®
and BLIS M18
®
included:
Further studies continue to validate the taking of BLIS K12
®
to reduce recurrent sore
throats and ear infections in children
.1,2
A Systematic review of BLIS K12
®
use in supporting ear and oral cavity health was
published.
3
1
Di Pierro et al Use of Streptococcus salivarius K12 to reduce the incidence pharyngo-tonsillitis and acute otitis media in children: a retrospective
analysis in not-recurrent pediatric Subjects. Minerva Pediatrica 2018 Jan 11
2
Taylan et al Clinical evaluation of the therapeutic use of oral probiotic Streptococcus salivarius K12 for recurrent pharyngitis and/or tonsillitis.
Indian Journal of Research 6(9) September 2017
3
Zupancic et al. Influence of Oral Probiotic Streptococcus salivarius
K12 on Ear and Oral Cavity Health in Humans: Systematic Review Probiotics
and Antimicrobial Proteins. 2017 Jun 9(2): 102-110
8
Regulatory updates – New approvals, applications submitted
o Approval of BLIS K12
®
as a Complementary Listed Medicine by the Australian Therapeutic
Goods Administration (TGA approval).
o Regulatory approval for both BLIS K12
®
and BLIS M18
®
in UAE
o Good progress has been made with BLIS M18
®
regulatory status in Australia, USA (Self affirmed
GRAS), India and Canada.
OUTLOOK
Our review of in market sales along with the prospects from new customer relationships and regulatory approvals
provide good indicators that we will see a sustained recovery and a return to revenue growth in FY19.
We remain focused on building a pipeline of growth opportunities whether they be new markets, new product
development or new strain opportunities.
Along with this we are prioritising finished goods opportunities that have a consistent value proposition with our
distributors and customers along with developing our online sales under the BLIS
®
brand.
Thank you for your ongoing support.
Tony Offen Brian Watson
Chair Chief Executive
9
BLIS TECHNOLOGIES LIMITED
DIRECTORS’ REPORT
For the Year Ended 31 March 2018
Statement of Affairs of the Company
The results of operations for the year and the financial position of the Company are detailed in the accompanying
financial statements.
Principal Activities
The principal activities of the Company are research, development and commercialisation of healthcare products
based on strains of bacteria that produce bacteriocins used for the supply of healthcare ingredients and the
manufacture of part and finished goods and other food products for sale in domestic and international markets.
Dividend
The Directors recommend that no dividend be paid.
Auditors
It is proposed that the auditors, Deloitte Limited, continue in office in accordance with Section 207T of the Companies
Act 1993.
Particulars of Notices or Statements Given to or Approved By the Board
Interests Register
Directors and officers (as that term is defined in the Companies Act 1993) have declared interest in the following
transactions with the Group during FY18:
- Mr P F Fennessy disclosed his interests in providing professional consulting services to the Company through
AbacusBio Limited, the terms of which the other Directors considered fair and reasonable to the Company and
its existing shareholders.
- All of the Directors have the benefit of a directors and officers insurance policy approved by the Board under the
Companies Act 1993, and the terms of which the Board consider are fair and reasonable to the Company and
its existing shareholders.
- All of the Directors have the benefit of a Deed of Indemnity approved by the Board under the Companies Act
1993, the terms of which the Board consider are fair and reasonable to the Company and its existing
shareholders.
Directors’ Remuneration for FY18
Position Fees (Per Annum)
Board of directors Chair $40,000
Deputy Chair $25,000
Member $20,000
Audit Committee Chair $5,000
Member -
Remuneration Committee Chair $4,000
Member -
10
BLIS TECHNOLOGIES LIMITED
DIRECTORS’ REPORT cont.
For the Year Ended 31 March 2018
Director Remuneration received in FY18
Name of Director Board Fees
Audit
Committee
Remuneration
Committee
Total
Remuneration
Board
Meetings
Attended
PF Fennessy* $30,000
$30,000 13
(Deputy Chair)
A P Offen* $35,000 $35,000 13
(Chair)
V M Aris $20,000 $2,667 $22,667 11
(Chair)
G S Boyd $20,000
$20,000 13
A J McKenzie $20,000
$4,583
(Chair) $24,583 12
B H Wallace $2,213 $417 $2,630 1
TOTAL $127,213 $5,000 $2,667 $134,880
* Note that the fees payable to Mr Offen (as Chair) and Mr Fennessy (as Deputy Chair) differ from those shown in the
Director Remuneration Table for FY18 on the previous page due to Mr Offen taking over as Chair from Mr Fennessy
on 1 August 2017 (part way through FY18).
Directors’ Loans
There were no loans from the Company to Directors.
Use of Company Information
The Board received no notices during the year from Directors requesting to use the Company Information received in
their capacity as Directors which would not have been otherwise available to them.
11
BLIS TECHNOLOGIES LIMITED
DIRECTORS’ REPORT cont.
For the Year Ended 31 March 2018
Employees’ Remuneration
Employees receiving remuneration or benefits exceeding $100,000 were as follows:
Year Ended Year Ended
Remuneration 31 March 2018 31 March 2017
$100,000 – 110,000 0 1
$110,001 – 120,000 2 0
$120,001 – 130,000 1 1
$140,000 – 150,000 1 1
$150,001 – 160,000 0 1
$170,001 – 180,000 1 0
$180,001 – 190,000 0 2
$270,000 – 280,000 1 1
Donations
There were no donated products during the year ended 31 March 2018 (2017: $4,914) nor any other donations made
by the Company.
Directors
The persons holding office as Directors of the Company as at 31 March 2018 are set out below:
A P Offen (Chair)
Tony Offen has been a Director and shareholder of Blis Technologies Limited since May 2009 and is the current
Chair. Through his Dunedin-based investment company, Edinburgh Securities Limited, Tony has been a director and
shareholder of private companies involved in commercial property, FMCG business sectors nationally and
internationally and with investment interests requiring venture and start-up capital. Tony holds professional
memberships with the Chartered Accountants Australia and New Zealand and is a Chartered Member of the Institute
of Directors. He is an elected member of the National Council for the Neurological Foundation of NZ, is the Council
Deputy Chair and current Chair of its Audit and Risk Management Committee. Tony is also an independent member
of the Governance Board of Brain Research New Zealand, Centre of Research Excellence (CoRE) and holds a
B.Com. (Accounting) and B.A. (Philosophy) from University of Otago.
P F Fennessy (Deputy Chair)
Peter Fennessy is a consulting partner with AbacusBio Limited, a privately-held Dunedin technical and scientific
consultancy and venture development business with its major focus in the agricultural sector. Peter has been a
Director of Blis Technologies Limited since November 2000 and is the current deputy chair. He is also chair of
Anagenix Limited, a director of Taylor Pass Honey Company Ltd, and a member of the governance board of the Food
Industry Enabling Technologies (FIET). Peter is a Chartered Member of the Institute of Directors.
12
BLIS TECHNOLOGIES LIMITED
DIRECTORS’ REPORT cont.
For the Year Ended 31 March 2018
V M Aris
Veronica Aris has over 17 years of sales and marketing experience in senior management level positions across
many industry sectors, including primary care consumables, pharmaceutical, natural health care supplements,
consumer products, DRTV and industrial products for companies such as Sanofi-Synthelabo, Pfizer, Abbott
Laboratories, EBOS, Brand Developers and Wesfarmers, within UK, Australia and New Zealand. Her expertise is in
the area of pharma product launches, brand management, marketing, sales and regulatory affairs, as well as social
media and web strategies. Veronica has been a director of Blis Technologies Limited since July 2014 and was elected
Chair of the Remuneration Committee in April 2017. Veronica is passionate about expanding this business into the
global market and providing health and wellbeing solutions to a range of communities.
Veronica holds a number of board positions instilling robust governance practices to enable listed companies,
community groups and sporting associations to achieve their long-term goals and vision. She is a Board Member of
CASA (working with agencies and communities to help them best manage suicide risk) and Northern Auckland
Kindergarten Association, and holds a Chartered Marketer status from the Chartered Institute of Marketers and is a
Chartered Member of the Institute of Directors, holds a BSc in Chemistry and French and a DipM in Marketing.
Veronica is a keen yachtswoman and has competed in the Clipper Round the World Yacht race (1st place) and the
Sydney to Hobart Yacht Race. She continues to sail and coach others in the sport. Veronica is also a trained marine
medic with Project Jonah.
G S Boyd
Graeme Boyd joined ICI New Zealand Limited in 1971 and for over 26 years held a variety of positions across the
business, including management of the Pharmaceuticals Division, culminating in the role of NZ General Manager from
1990 to 1997. He was appointed CEO of Comvita in 1998 and developed the company from a small privately-owned
company to a publicly-listed company centred on marketing natural health products internationally. Graeme left
Comvita in 2005 and formed a management consulting business specialising in company turnarounds, growth
strategies and international marketing. Graeme has been a director of Blis Technologies Limited since July 2014.
Graeme is a professional director, a Chartered Member of the Institute of Directors and holds an MSc (Chemistry)
from University of Canterbury.
A J McKenzie
Alan McKenzie is a Dunedin-based business adviser with over 40 years’ experience as a Chartered Accountant
working in New Zealand and overseas, in both public practice and industry. Alan has been a director of Blis
Technologies Limited since August 2012 and is currently Chair of the Audit Committee. He has worked with numerous
businesses ranging from new ventures requiring day to day input, to substantial multi-national companies. His focus is
advising clients regarding structuring business investment, financing, and related taxation issues. He is a Fellow
Chartered Director of the Institute of Directors, a Fellow of the Institute of Chartered Secretaries and a director of
several client-owned businesses and investment groups operating within New Zealand and internationally. He is a
Trustee for several private family groups and local charitable organisations.
Share Dealing
During the year, no Directors (or associated entities in which the Directors have relevant interests)
acquired/(disposed) of equity securities in the Group.
Blis Functional Foods Limited
The Company has a wholly owned subsidiary called Blis Functional Foods Limited which was incorporated on 28
February 2011. The status of the subsidiary since March 2013 is that it is non-trading. The director of this subsidiary
as at 31 March 2018 is Tony Offen. Mr Offen does not receive separate remuneration in relation to his directorship of
the subsidiary.
13
BLIS TECHNOLOGIES LIMITED
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors of Blis Technologies Limited are pleased to present to shareholders the financial statements for the
Group for the year ended 31 March 2018.
The Directors are responsible for presenting financial statements in accordance with New Zealand law and generally
accepted accounting practice, which fairly presents the financial position of the Group as at 31 March 2018 and the
results of its operations and cash flows for the year ended on that date.
The Directors consider the financial statements of the Group have been prepared using accounting policies which
have been consistently applied and supported by reasonable judgements and estimates and that all relevant financial
reporting and accounting standards have been followed.
The Directors believe that proper accounting records have been kept which enable with reasonable accuracy, the
determination of the financial position of the Group and facilitate compliance of the financial statements with the
Financial Reporting Act 2013 and the Financial Markets Conduct Act 2013.
The Directors consider that they have taken adequate steps to safeguard the assets of the Group, and to prevent and
detect fraud and other irregularities. Internal control procedures are also considered to be sufficient to provide a
reasonable assurance as to the integrity and reliability of the financial statements.
The Financial Statements are signed on behalf of the Board by:
Anthony Offen Peter Fennessy
Director Director
17th of May 2018
14
BLIS TECHNOLOGIES LIMITED
STATEMENT OF CORPORATE GOVERNANCE
For the Year Ended 31 March 2018
The Board and Management of the Company are committed to ensuring that the Company maintains Corporate
Governance structures which ensure that the Company operates efficiently and effectively in the best interests of the
Company, but at the same time recognises that certain elements of international “best practice” corporate governance
are not appropriate for a small company.
This statement of Corporate Governance provides a summary of the Company’s Corporate Governance processes,
and the Code of Conduct contained in the Directors' Operations Manual.
The Company’s Corporate Governance policies are based on the principles set out in the NZX Corporate Governance
Best Practice Code, as follows:
Code of Ethical Behaviour
Board Composition and Performance
Board Committees
Reporting & Disclosure
Remuneration
Risk Management
Auditors
Shareholder Rights & Relations
Financial Statements
The Directors are responsible for ensuring that the Company’s financial statements fairly present the financial position
of the Company and its financial performance and cash flows for the year. The external auditors are responsible for
expressing an opinion on the financial statements, based on their review and assessment of the conclusions drawn
from evidence obtained in the course of the audit.
The Directors believe that proper accounting records have been kept which enable, with reasonable accuracy, the
determination of the financial position of the Company and facilitate compliance of the financial statements with the
Financial Markets Conduct Act 2013 and Financial Reporting Act 2013.
Role of the Board of Directors
Directors are elected by the shareholders to govern the Company in the Company’s best interests. The Board is the
overall and final body of responsibility for all decision making within the Company.
The Directors have a diverse range of expertise and experience, and are committed to use this to benefit the Company.
The Board is responsible to shareholders for charting the direction of the Company by participating in the setting of
objectives, strategy and key policy areas. The Board is then responsible for monitoring management’s running of the
business to ensure implementation is in accordance with the agreed framework. The Board delegates the conduct of the
day-to-day affairs of the Company to the Chief Executive Officer within this framework.
The primary responsibilities of the Board include:
establishing the long-term goals of the Company and strategic plans to achieve those goals;
succession planning for the Chief Executive Officer and the Board;
risk management in order to protect its employees, assets, earnings and reputation;
reviewing and adopting a plan and operating budget produced annually;
monitoring environmental, social and financial performance;
ensuring that the Company has implemented adequate systems of internal controls including internal financial
controls together with appropriate monitoring of compliance activities;
appointing and monitoring the Chief Executive Officer and other executive managers and determining their
remunerations;
communicating with shareholders and other stakeholders;
approving the annual and half-year financial statements; and
providing the necessary leadership and responsibility for the major decisions that influence health and safety:
including the strategic direction, securing and allocating resources and ensuring the Company has appropriate
people, systems and equipment.
15
BLIS TECHNOLOGIES LIMITED
STATEMENT OF CORPORATE GOVERNANCE cont.
For the Year Ended 31 March 2018
The Directors appoint a Chair from amongst their members. The Board supports separation of the role of Chair and
Chief Executive Officer. The Chair’s role is to provide leadership and to manage the Board effectively.
The Chief Executive Officer is not a Director, the Board will meet without the Chief Executive Officer being present; in
this respect, the Board has a practice of Director only meetings either prior to or following each Board meeting.
The Board receives reports from management and has access to all of the information necessary for it to effectively
discharge its duties.
Board Membership & Independence
The Constitution currently sets the size of the Board at a minimum of three and at least two Directors must be resident
in New Zealand. As at the date of the report the Board comprises six Directors, comprising the Chair, Deputy Chair
and four Directors appointed for their mix of commercial and technical skills. The Board aims to meet in person on at
least eight occasions in the financial year plus up to four scheduled teleconferences.
All six Directors are non-executive members and Independent members. A Director is “Independent” when they are
not an executive officer of the Company and do not have a ‘Disqualifying Relationship’ (as defined in the NZX Main
Board Listing Rules) where for instance he or she has any direct or indirect interest or relationship with the Company
which could reasonably influence, in a material way, that Director’s decisions relating to the Company. The Board will
consider all relevant circumstances when determining independence.
The Company has no requirement for Directors to hold shares in the Company but actively encourages them to do so.
The Board as a whole is involved with recommending candidates to act as Directors to shareholders. When
considering candidates for nomination, the Board will consider, amongst other things, the individual’s experience,
qualifications and skills in comparison to the experience, qualifications and skills of other Directors, whether that
individual is “Independent” and whether that individual would be able to work effectively with other Directors. The
Board has the ability to appoint an individual to fill a casual vacancy on the Board until the Company’s next Annual
General Meeting.
The procedures for the appointment and removal of Directors are governed by the Company’s Constitution and the
NZX Main Board Listing Rules. One third of the Company’s Directors (rounded, if necessary, to the nearest number)
are required to retire and may stand for re-election at every Annual Meeting, with those Directors to retire being those
who have been in office longest since they were elected or deemed to be elected.
The total aggregate Directors’ remuneration is fixed and may only be increased by shareholders at the Company’s
Annual Meeting, upon the recommendation of the Board as a whole. The Board is responsible for determining the
remuneration paid to each Director.
Code of Conduct
As part of the Board’s commitment to the highest standard of conduct, the Company has adopted a code of conduct
as part of a Directors’ Operations Manual to guide Directors and management in carrying out their duties and
responsibilities. The Directors’ Operations Manual covers such matters as:
Corporate governance matters;
Role of the Board and composition of the Board;
Director responsibilities;
Appointment of, responsibilities of and remuneration of a Chief Executive Officer;
Confidentiality and the safeguarding of company information;
Compliance with laws and regulations;
Shareholder participation; and
Code of ethics.
16
BLIS TECHNOLOGIES LIMITED
STATEMENT OF CORPORATE GOVERNANCE cont.
For the Year Ended 31 March 2018
Newly-elected Directors are required to familiarise themselves with and comply with the Directors’ Operations Manual.
Some training is also provided to new and existing Directors where this is required to enable Directors to fulfil their
responsibilities.
Conflicts of Interest
As part of the Code of Ethics contained in the Directors' Operations Manual there is a procedure to be followed where
Directors are faced with a conflict of interest. At all times, a Director must be able to act in the interests of the
organisation as a whole and in accordance with all relevant laws, including the NZX Main Board Listing Rules. The
interests and associates, individual shareholders and the personal interests of the Director and their family must not
be allowed to prevail over those of the Company and its shareholders generally.
Audit, Risk Management and Internal Financial Control
The Board has overall responsibility for risk management and the Company’s system of internal financial control, for
liaising with the Company’s external auditors, and for ensuring the integrity of the Company’s financial reporting. The
Board constantly monitors the operational and financial aspects of the Company’s activities and has established
procedures and policies that are designed to provide effective internal financial control. Annual budgets and business
plans are prepared, and agreed by the Board. Monthly management accounts are prepared and reviewed by the
Board throughout the year to monitor performance against budget.
The Board has established an Audit Committee to assist the Board in discharging its responsibilities relative to
financial reporting, related regulatory conformance and liaising with the external auditors. The terms of reference for
the audit committee are set out in the Directors' Operations Manual. Membership of the audit committee must
comprise three Directors, the majority of whom are to be independent and the chair of the Board shall not be the chair
of the audit committee. The current members of the audit committee are Alan McKenzie (Independent Chair), Tony
Offen (Independent) and Graeme Boyd (Independent).
The Board considers the recommendations of the audit committee and advice of external auditors and other external
advisors on the operational and financial risks that face the Company. The Board ensures that recommendations
made by the audit committee, external auditors and other external advisers are investigated and, where considered
necessary, action is taken to ensure that the Company has an appropriate internal control environment in place to
manage the key risks identified.
In addition, the Board investigates ways of enhancing existing risk management strategies, including appropriate
segregation of duties and the employment and training of suitably qualified and experienced personnel.
Given the size of the Company, an internal audit function is not considered necessary.
Remuneration Committee
The Board has established a remuneration committee to assist the Board in discharging its responsibility for setting
the remuneration policy for all members of the senior management team with regard to pay and employment
conditions across the Company, especially when determining salary increases.
The terms of reference for this committee are set out in the Directors' Operations Manual.
The committee must comprise three Directors, the majority of whom shall be independent. The Chair of the Board
may serve on the committee. Members of the remuneration committee are Veronica Aris (Independent Chair), Peter
Fennessy (Independent) and Tony Offen (Independent).
The Board ensures that the recommendations made by the committee are considered and acted on accordingly.
NZX Corporate Best Practice Code
Given the size and composition of the Board, directors believe that there are no significant benefits in delegating
matters in relation to Board nominations.
Other than on this point, the Company’s Corporate Governance processes do not materially differ from the principles
set out in the NZX Corporate Governance Best Practice Code.
17
BLIS TECHNOLOGIES LIMITED
CONSOLIDATED INCOME STATEMENT
For The Year Ended 31 March 2018
Notes 2018 2017
$’000 $’000
REVENUES
Revenue 2a 5,285 6,543
Interest received 3 4
─────── ───────
5,288 6,547
LESS
Distribution expenses 87 64
Marketing expenses 402 94
Occupancy expenses 156 161
Operating expenses 2b 5,677 6,252
Finance expenses 8 -
─────── ───────
6,330 6,571
─────── ───────
SURPLUS / (DEFICIT) BEFORE TAX 2b, 4, 5 (1,042) (24)
Income tax expense 3 - -
─────── ───────
SURPLUS/ (DEFICIT) FOR THE YEAR (1,042) (24)
═══════ ═══════
Surplus / (deficit) for the year is attributable to:
Equity holders of the parent (1,042) (24)
─────── ───────
(1,042) (24)
═══════ ═══════
Earnings (Deficit) per Share:
Basic (cents per share) 14 (0.09) (0.00)
Diluted (cents per share) 14 (0.09) (0.00)
The accompanying notes form part of these financial statements.
18
BLIS TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For The Year Ended 31 March 2018
2018 2017
$’000 $’000
Surplus/(deficit) for the year (1,042) (24)
Other comprehensive income - -
─────── ───────
TOTAL COMPREHENSIVE INCOME/
(DEFICIT) FOR THE YEAR (1,042) (24)
═══════ ═══════
The accompanying notes form part of these financial statements.
19
BLIS TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2018
Notes Share
capital
Retained
earnings
/(Deficit)
Share Option
Equity
Reserve
Total
attributable
to Group
$’000 $’000 $’000 $’000
OPENING EQUITY - 1 APRIL 2016
37,298
(33,311) -
3,987
Surplus/ (deficit) for the year
- (24) -
(24)
Other comprehensive income
- - -
-
Total comprehensive income
- (24) -
(24)
Equity contributions and distributions
Share Option Equity Reserve
14 - - 54 54
CLOSING EQUITY - 31 MARCH 2017
37,298
(33,335) 54
4,017
Surplus/ (deficit) for the year
- (1,042) - (1,042)
Other comprehensive income
- - -
-
Total comprehensive income
- (1,042) - (1,042)
Equity contributions and distributions
Share Option Equity Reserve
14 40 - (8) 32
CLOSING EQUITY - 31 MARCH 2018
37,338 (34,377) 46 3,007
The accompanying notes form part of these financial statements.
20
BLIS TECHNOLOGIES LIMITED
CONSOLIDATED BALANCE SHEET
As At 31 March 2018
Notes 2018 2017
$’000 $’000
ASSETS
CURRENT ASSETS
Cash and short term deposits 6 1,134 1,140
Accounts receivable 7 694 1,150
Prepayments 89 97
Inventory 8 343 349
────── ───────
2,260 2,736
LESS CURRENT LIABILITIES
Accounts payable 11 581 476
Current Borrowings 12 121 -
Foreign exchange contracts 20(e) 10 7
─────── ───────
712 483
WORKING CAPITAL 1,548 2,253
NON CURRENT ASSETS
Property, plant and equipment 9 785 646
Finite life intangible assets 10 843 1,118
──────── ────────
1,628 1,764
──────── ────────
NON CURRENT LIABILITIES
Non-Current Borrowings 12 169 -
──────── ────────
NET ASSETS 3,007 4,017
════════ ════════
OWNERS EQUITY
Share capital 14 37,338 37,298
Share option equity reserve 15 46 54
Retained earnings/ (deficits) (34,377) (33,335)
──────── ────────
──────── ────────
TOTAL EQUITY 3,007 4,017
════════ ════════
The accompanying notes form part of these financial statements.
21
BLIS TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENT OF CASHFLOWS
For The Year Ended 31 March 2018
Notes 2018 2017
$’000 $’000
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash was provided from/ (applied to):
Receipts from customers 5,734 6,570
Interest received 3 4
Payments to suppliers and employees (5,611) (6,330)
Finance costs (8) -
─────── ───────
Net cash inflow/ (outflow) from
operating activities 19 118 244
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was provided from /(applied to):
Capitalised Intangible costs 10 (121) (179)
Purchase of Property, plant and equipment 9 (355) (136)
─────── ───────
Net cash inflow (outflow) from investing
activities (476) (315)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was provided from/ (applied to):
Drawdown of Borrowings 290 -
Repayment of Share Option 32 -
─────── ───────
Net cash inflow/ (outflow) from financing activities 322 -
─────── ───────
Net increase/(decrease) in cash held (36) (71)
Add cash and short term deposits at start of year 1,140 1,209
Foreign exchange differences 30 2
─────── ───────
Balance at end of year 1,134 1,140
═══════ ═══════
COMPRISED OF:
Cash and short term deposits 1,134 1,140
─────── ───────
1,134 1,140
═══════ ═══════
The accompanying notes form part of these financial statements.
22
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended 31 March 2018
1. BASIS OF REPORTING
Reporting Entity
Blis Technologies Limited (the “Company”) is a profit-oriented entity incorporated and domiciled in New Zealand and is
registered under the Companies Act 1993. The principal activity of the Company is developing healthcare products
based on strains of bacteria that produce Bacteriocin activity.
The financial statements represented are those for the Company together with Blis Functional Foods Limited (together
referred to as the "Group").
The Company is a FMC Reporting Entity under the Financial Markets Conduct Act 2013 and the Financial Reporting
Act 2013 and its financial statements comply with these Acts. The Company is listed on the NZX Main Board.
The Financial Statements were approved by the Board of Directors on 17
th
May 2018.
Statement of Compliance
The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New
Zealand (“NZ GAAP”). They comply with the New Zealand Equivalents to International Financial Reporting Standards
(“NZ IFRS”) and other applicable financial reporting standards as appropriate for profit-oriented entities. The financial
statements comply with International Financial Reporting Standards (“IFRS”).
The Group is a Tier 1 for profit entity in terms of the External Reporting Board Standard A1: Application of the
Accounting Standard Framework.
Basis of Preparation
The financial statements have been prepared on the basis of historical cost except for derivative financial instruments
that are measured at fair value at the end of each reporting period as explained in the relevant accounting policies.
Historical cost is based on the fair values of the consideration given in exchange for assets.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information
satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions
or other events is reported.
The financial statements are presented in thousands of New Zealand dollars. The New Zealand dollar is the Group’s
functional currency.
Critical Judgements in Applying Accounting Policies
In the application of NZ IFRS, the Directors are required to make judgements, estimates and assumptions about
carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstance, the results of which form the basis of making the judgements. Actual results may
differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if the revision affects both current and future periods.
Key Sources of Estimation Uncertainty and Key Judgements
Judgements made by management in the application of NZ IFRS that have significant effects on the financial
statements and estimates with a significant risk of material adjustments in the next year are disclosed, where
applicable, in the relevant notes to the financial statements.
23
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
1. BASIS OF REPORTING Cont.
Key Sources of Estimation Uncertainty and key judgements include:
If the product groupings to which the development expenditure relate are not economically viable in the future
the development expenditure asset could be overstated.
The group determines whether finite life intangibles are impaired at least on an annual basis. Where there is an
indication of impairment then an estimation of the recoverable amount of the finite life intangible assets is
required. Determining the recoverable amounts of intangible assets requires judgement in relation to the effects
of uncertain future events at balance date. Assumptions are required with respect to future cash flows and
discount rates used. Refer Note 10 for sensitivities and assumptions used.
Tax Losses - The recognition of a deferred tax asset arising from current and prior year tax losses is dependent
on generating future taxable profits. No deferred tax asset has been recognised as at 31 March 2018 as a
result of the fact the Group made a loss for the year. The uncertainty relating to the Group’s ability to utilise tax
losses is explained in Note 3.
The Directors have considered the validity of the going concern assumption. Refer to “Going Concern” at the
end of Note 1 for judgements relating to this assessment.
During the prior year, the Company entered a scheme covered by NZ IFRS 2 Share Based Payments. The
application of the accounting standard involved judgement in respect of the nature of the arrangement and
complexity in valuation judgements. Refer to Note 15 for further information.
Significant Accounting Policies
The principal accounting policies applied in the preparation and presentation of the financial statements are set out
below or in the notes with the item to which they relate, where policies are specific to certain transactions or balances.
These policies have been consistently applied unless otherwise stated.
Basis of Consolidation
The Group financial statements incorporate the financial statements of the Company and all entities controlled by the
Company (its subsidiaries) that comprise the Group, being Blis Technologies Limited (the parent entity) and its
subsidiary Blis Functional Foods Limited. Control is obtained when the Company has power over the investee, is
exposed to or has rights to variable returns from its investment, and has the ability to use its power to affect returns.
Consistent accounting policies are employed in the preparation and presentation of the group financial statements.
The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement
from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Foreign Exchange
In the course of normal trading activities, the Group undertakes transactions denominated in foreign currencies, hence
exposures to exchange rate fluctuations arise. Accounts receivable, Accounts payable, the Euro denominated bank
account and the United States Dollar (USD) denominated bank account balances are translated at the exchange rates
prevailing at the end of each reporting period as sourced from the Reserve Bank of New Zealand. Exchange
differences are recognised in the income statement in the period in which they occur.
24
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
1. BASIS OF REPORTING Cont.
Goods and Services Tax (GST)
All items in the balance sheet are stated exclusive of GST, with the exception of receivables and payables, which
include GST. All items in the income statement are stated exclusive of GST.
The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable
to, the taxation authority is classified as operating cash flows.
New Financial Reporting Standards Effective in the Reporting Period
The accounting policies adopted are consistent with those of the previous financial year. The Group has applied the
Disclosure Initiative (Amendments to NZ IAS 1) which became effective for the first time in the prior year. All other
mandatory new or amended accounting standards were adopted in the current year. None had a material impact on
these financial statements.
New NZ IFRS Standards and Interpretations Issued but not yet adopted
At the date of authorisation of these financial statements, certain new standards and interpretations to existing
standards have been published but are not yet effective, and have not been adopted early by the Group.
Management anticipates that all pronouncements will be adopted in the first accounting period beginning on or after the
effective date of the new standard. Information on new standards, amendments and interpretations that are expected
to be relevant to the Group financial statements is provided below. Other new standards and interpretations issued but
not yet effective, that are not expected to have a material impact on the Group’s financial statements have not been
disclosed.
NZ IFRS 9 – Financial instruments (effective for annual reporting periods beginning on or after 1 January
2018)
NZ IFRS 9 Financial Instruments replaces NZ IAS 39 Financial Instruments: Recognition and Measurement.
The new standard includes a new classification and measurement regime for financial instruments, amendments to
hedge accounting and changes in determining and measuring impairment of financial assets.
Management has completed an initial high level impact assessment of NZ IFRS 9 on the Group and do not anticipate
the new standard will have a material impact on the Group’s financial statements. The areas most impacted are the
classification of financial assets and recognition of expected credit losses on financial assets.
Classification of financial assets: The Group’s financial assets are all currently classified as loans and
receivables. Based on the Group’s business model and the cash flow characteristics of these financial assets, they will
be classified as financial assets at amortised cost. The measurement of financial assets will be unchanged.
Recognition of expected credit losses: Based on the Group’s customer’s strong credit records, any recognition of
expected credit losses on adoption of NZ IFRS 9 are expected to be immaterial.
25
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
NZ IFRS 15 – Revenue from Contracts with Customers (effective for annual reporting periods beginning on or
after 1 January 2018)
The new standard establishes principles for reporting about the nature, amount, timing and uncertainty of revenue
arising from an entity's contracts with customers. It prescribes when an entity will recognise revenue, how much revenue
to recognise, and what disclosures to make about revenue.
The core principle of the Standard is to recognise revenue for the amount of consideration due to an entity in exchange
for the goods and services provided to the customer. This is done by following a 5 step process:
Step 1: Identify the contract with the customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation by transferring control of an asset
to a customer. This may be at a point in time (typically for goods), or over time (typically for services).
Management has completed an initial high level impact assessment of NZ IFRS 15, and has also reviewed it’s more
significant contracts covering approximately 80% of revenues earned for the 2018 financial year. Management has
determined that the standard is not expected to have a material impact on the timing of revenue recognition nor financial
performance of the Group.
NZ IFRS 16 – Leases (effective for annual reporting periods beginning on or after 1 January 2019)
NZ IAS 16: Leases removes the distinction between operating and finance leases for lessees and requires a lessee to
recognise all leases on balance sheet through:
an asset representing its right to use the leased item for the lease term;
a liability for its obligation to pay rentals.
NZ IFRS 16 contains guidance on identification, recognition, measurement, presentation, and disclosure of leases by
lessees and lessors.
Management has completed an initial high-level impact assessment of NZ IFRS 16 on the Group. The new standard
will result in recognition of right-of-use assets and lease liabilities for those leases disclosed in note 16 (b) and other
leases not included in this disclosure due to not meeting the ‘non-cancellable operating lease commitments’ threshold.
This includes carpark leases.
The lease payments are currently recognised in operating expenses. In future the expense will be recorded as
depreciation on the right to use asset and interest cost on the lease liability. The impact on surplus / (deficit) before tax
is expected to be immaterial.
Management has not fully quantified the impact of NZ IFRS 16 on the amounts presented in these financial
statements, which a more detailed analysis will provide.
Going Concern
The financial statements have been prepared based on an assumption of going concern.
The Group has recorded a net deficit of $1,041,958 (2017: deficit $24,582) for the year ended 31 March 2018.
The Directors believe the going concern assumption is valid, reaching such a conclusion after having regard to the
circumstances which they consider reasonably likely to affect the Group during the period of one year from the date
these financials statements are approved.
26
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
Specifically, the Group held cash reserves of $1,133,900 as at 31 March 2018 which is considered sufficient to meet
its working capital requirements for at least 12 months from the date these financial statements are approved. The
Company is investing in upgrading plant to a fully accredited “Good Manufacturing Practice” (GMP) status, regulatory
approvals and new product launches as part of the Company’s growth strategy. Depending on progress, the Company
may consider options to fund its growth.
Based on management budgets and plans, the Group will be able to meet financial obligations for at least 12 months
from the date of approval of the financial statements.
The Directors believe that there is no material uncertainty in respect of the Group ability to continue as a going
concern for the period assessed above due to the level of its current cash holdings and ability to generate operating
cash flows. Nevertheless, in the event it fails to achieve planned profitability the Group may not be able to continue
as a going concern.
If the Group were unable to continue as a going concern, and pay debts as, and when, they become due and payable,
adjustments to the carrying value of assets would have to be made to reflect the situation. In such circumstances,
assets may need to be realised and liabilities extinguished, other than in the normal course of business and at
amounts which could differ significantly from the amounts at which they are currently recorded in the balance sheet.
This situation would likely impact, in particular, on the carrying value of plant and equipment and Intangible assets.
These financial statements do not include any adjustments relating to the classification and recoverability of recorded
asset amounts or to the amounts and classification of liabilities that may be necessary should the Group be unable to
continue as a going concern.
2. SURPLUS / (DEFICIT) FROM OPERATIONS
Policy
Sale of Goods
Revenue is measured at the fair value of the consideration received or receivable. Revenue from the sale of goods is
recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods.
Grant Revenue
Grant revenue is recognised when the Group has met all of the requirements established by the grant. Grant revenue
that is receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate
financial support to the entity with no future required costs are recognised as revenue of the period in which it
becomes receivable.
Income in Advance
Revenue is recognised when all associated obligations have been met. Where income has been received but the
associated obligations have not been met, for instance goods have not yet been provided, it will be recognised as
Income in Advance on the balance sheet.
Foreign Exchange
In the course of normal trading activities, the Group undertakes transactions denominated in foreign currencies.
Hence exposures to exchange rate fluctuations arise. Accounts receivable, Accounts payable, the Euro denominated
bank account and the United States Dollar (USD) denominated bank account balances are translated at the exchange
rates prevailing at the end of each reporting period as sourced from the Reserve Bank of New Zealand. Exchange
differences are recognised in the income statement in the period in which they occur.
Interest Revenue
Interest revenue is accrued on a time basis, by reference to the principal outstanding and the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
27
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
2018 2017
$’000 $’000
(a) Revenue
Revenue consists of the following items:
Sale of goods – domestic sales 814 970
Sale of goods – export sales 4,471 5,566
Grant revenue - 7
─────── ───────
5,285 6,543
═══════ ═══════
(b) Operating Expenses
2018 2017
$’000 $’000
This includes the following specific expenses:
Employee benefits 2,251 2,024
Directors’ fees 135 150
Raw materials and consumables 1,354 1,688
Other operating expenses 1,218 1,614
Amortisation of finite life intangible assets (Note 10) 395 404
Operating leases - minimum lease payments (i) 109 107
Depreciation of property, plant and equipment (Note 9) 215 204
CEO Share plan (Note 15) - 54
Loss of fair value Foreign Exchange Contracts - 7
─────── ───────
5,677 6,252
═══════ ═══════
(i) Operating lease rentals include rental streams associated with the laboratory utilised by the development team
and administration and buildings leased at Glasgow Street and the Birch Street production facility.
3. INCOME TAXES
Policy
Current Tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable
profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively
enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent
it is unpaid (or refundable).
Deferred Tax
Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary
differences arising from differences between the carrying amount of assets and liabilities in the financial statements
and the corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible
temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and
liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets
and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting
profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the
liability is settled or the asset is realised based on tax rates that have been enacted or substantively enacted at
reporting date. Deferred tax is charged or credited in the Income Statement, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt with in equity.
28
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
(a) Income tax recognised in profit or loss
The prima facie income tax expense on pre-tax accounting profit reconciles to the income tax expense in the financial
statements as follows:
2018 2017
$’000 $’000
Net deficit before tax (1,042) (24)
Income tax benefit calculated at 28% (292) (7)
Non-deductible items 74 130
Temporary differences excluding tax losses not recognised (36) (23)
Tax losses (recognised)/not recognised 254 (100)
─────── ───────
Income Tax Expense - -
═══════ ═══════
(b) Income Tax Recognised Directly In Equity
There was no current or deferred tax charged/ (credited) directly to equity during the period.
(c) Deferred tax balances
The Group has unrecognised deferred income tax assets in relation to temporary differences of $359,593 (2017
$395,835). Furthermore, the Group has unrecognised deferred income tax assets of $4,984,681 (2017 $4,730,384) in
respect of tax losses amounting to $17,802,431 (2017 $16,894,230) that may be able to be carried forward and offset
against future taxable income (subject to meeting the requirements of the Income Tax Act 2007). The availability of
these tax losses to apply against future income is contingent upon maintaining a minimum level of shareholder
continuity and is therefore highly uncertain.
4. REMUNERATION OF AUDITORS
2018 2017
$’000 $’000
Audit of the financial statements 60 43
Additional fees relating to the 2017 audit 20 -
─────── ───────
80 43
═══════ ═══════
The auditor of Blis Technologies Limited is Deloitte Limited.
5. KEY MANAGEMENT PERSONNEL COMPENSATION
The compensation of the Chief Executive Officer and other senior management, being the key management
personnel of the entity, is set out below:
2018 2017
$’000 $’000
Short-term employee and contractor benefits 1,228 1,162
Share based option - 54
─────── ───────
1,228 1,216
═══════ ═══════
29
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
6. CASH AND SHORT TERM DEPOSITS
Policy
Financial Instruments
Financial assets and financial liabilities are recognised on the Group’s Balance Sheet when the Group becomes a
party to the contractual provisions of the instrument.
Cash & Short Term Deposits
Cash and short term deposits comprise cash on hand, demand deposits, and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes
in value.
2018 2017
$’000 $’000
Cash 1,059 1,065
Short term deposits (i) 75 75
─────── ───────
1,134 1,140
═══════ ════════
(i) Short Term Deposits
Short term deposits include $75,000 held in a bank account as a bond for the NZX. These funds are held as security
and restricted. The carrying amount of cash and cash equivalents approximates their fair value.
7. ACCOUNTS RECEIVABLE
Policy
Accounts Receivable
Accounts receivable are measured at initial recognition at fair value and are subsequently measured at amortised cost
using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised
in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as
the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at
the effective interest rate computed at initial recognition.
2018 2017
$’000 $’000
Accounts receivable 678 1,120
Goods and services tax (GST) receivable 16 30
──────── ────────
694 1,150
════════ ════════
Trade debtors and other receivables are non-interest bearing and receipt is normally on 30 to 60 day terms.
Therefore, the carrying value of trade debtors and other receivables approximates its fair value.
30
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
8. INVENTORIES
Policy
Inventories are valued at the lower of cost and net realisable value. Cost is determined using average cost. Net
realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred
in marketing, selling and distribution.
2018 2017
Inventories $’000 $’000
Raw Materials 283 309
Finished Goods 60 40
──────── ────────
343 349
════════ ════════
9. PROPERTY, PLANT AND EQUIPMENT
Policy
All items of Property, Plant and Equipment are stated at cost less accumulated depreciation, and impairment . Cost
includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part
of a purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their
present value as at the date of acquisition.
Depreciation is provided on property, plant and equipment.
Depreciation is calculated on a straight line basis so as to write off the net cost of the asset over its expected useful
life to its estimated residual value. The following estimates of useful lives are used in the calculation of depreciation:
Leasehold improvements 1 - 10 years
Furniture and fittings 2 - 15 years
Plant and equipment 3 - 12 years
31
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
Property, Plant and Equipment
2018
Cost
1 April 2017
Additions/
Transfers Disposals
Cost
31 March
2018
Accumulated
depreciation
1 April 2017
Depreciation
expense
Accumulated
depreciation
reversed on
disposal Transfer
Accumulated
depreciation
31 March
2018
Book Value
31 March
2018
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $000 $’000 $’000
Leasehold Improvements 342 1 - 343 (244) (60) - - (304) 38
Furniture and Fittings 90 2 - 92 (70) (3) - - (73) 19
Plant and Equipment 1,270 352 - 1,622 (742) (152) - - (894) 728
Total Property, Plant and Equipment 1,702 355 - 2,057 (1,056) (215) - - (1,271) 785
2017
Cost
1 April 2016
Additions/
Transfers Disposals
Cost
31 March
2017
Accumulated
depreciation
1 April 2016
Depreciation
expense
Accumulated
depreciation
reversed on
disposal Transfer
Accumulated
depreciation
31 March
2017
Book Value
31 March
2017
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $000 $’000 $’000
Leasehold Improvements 318 24 - 342 (178) (66) - - (244) 98
Furniture and Fittings 84 8 (2) 90 (67) (3) - - (70) 20
Plant and Equipment 1,166 104 - 1,270 (606) (135) - - (742) 528
Total Property, Plant and Equipment 1,568 136 (2) 1,702 (851) (204) - - (1,056) 646
32
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
10. FINITE LIFE INTANGIBLE ASSETS
Policy
Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated
impairment losses. Amortisations are charged on a straight-line basis over their estimated useful lives. The
estimated useful lives, residual values and amortisation method are reviewed at the end of each reporting period,
with the effect of any changes in estimate being accounted for on a prospective basis.
Intellectual Property
The cost of intellectual property is written off until such time as it becomes clear that future economic benefits
attributable to that expenditure will flow to the Group and there is sufficient evidence to support the probability of
the expenditure generating sufficient future economic benefits.
Intellectual property including patents, trademarks and licenses are considered finite life intangibles and are
recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis
over the estimated useful life of the intangible asset being 8 to 20 years. The estimated useful life and
amortisation method is reviewed at the end of each annual reporting period.
Website
Following the initial investment, which is recorded at cost and amortised over 3 years, the cost of further website
development is expensed as incurred.
Internally-generated Intangible Assets – Capitalised Product Development Expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal
project) is recognised if, and only if, all of the following have been demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits
the availability of adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-
generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in
which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.
The useful life of internally-generated intangible assets is 8 years.
Impairment of Assets
At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset
does not generate cash flows that are independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
33
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
reflects current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised in profit or loss immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years.
The group has determined that it is inappropriate to capitalise any further development costs on products that are
now in commercial production or website development costs.
Capitalised IT, Website
Patents Development Development
and Software Total
$’000 $’000 $’000 $’000
Gross Carrying Amount
Balance at 1 April 2017 966 3,115 159 4,240
Additions 98 - 23 121
──────── ──────── ──────── ────────
Balance at 31 March 2018 1,064 3,115 182 4,361
Accumulated amortisation and impairment
Balance at 1 April 2017 444 2,607 70 3,123
Amortisation expense 109 242 45 395
──────── ──────── ──────── ───────
Balance at 31 March 2018 553 2,849 115 3,519
Net Book Value at 31 March 2018 511 266 67 843
════════ ════════ ════════ ════════
$’000 $’000 $’000 $’000
Gross Carrying Amount
Balance at 1 April 2016 877 3,115 69 4,061
Additions 89 - 90 179
──────── ──────── ──────── ────────
Balance at 31 March 2017 966 3,115 159 4,240
Accumulated amortisation and impairment
Balance at 1 April 2016 353 2,294 69 2,718
Amortisation expense 91 313 1 405
──────── ──────── ──────── ───────
Balance at 31 March 2017 444 2,607 70 3,123
Net Book Value at 31 March 2017 522 508 89 1,118
════════ ════════ ════════ ════════
34
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
No impairment losses have been recorded in the current year (2017:Nil).
Capitalised product development expenditure relates to costs incurred in relation to the development of ingredient,
intermediate and food products containing BLIS, and the associated regulatory approval processes.
For the purposes of preparing these accounts, the Board reviewed the intangible assets and have determined that
there is no impairment of any intangible assets.
The calculation of the recoverable amounts has been determined based on a value in use calculation that uses
cash flow projections based on the financial forecasts prepared by management covering a five year period.
The recoverable amount calculations are most sensitive to assumptions regarding growth rate, contribution
margins and the required rate of return. Annual sales growth rate of between 0% - 31% (2017: 21% - 30%), and
contribution margins pre-personnel costs of 77% (2017; 67%-70%) and a post-tax discount rate of 12.5% (2017:
12.5%) have been applied in these projections. Cash flows beyond the five year period have been extrapolated
using a steady 2.5% (2017: 2.5%) growth rate. The recoverable amount is very sensitive to each of these
assumptions. If sales growth and/or contribution margins fall short of projections, it is likely that the recoverable
amount of the capitalised product development and patent expenditure will be less than the carrying value.
11. ACCOUNTS PAYABLE
Policy
Accounts Payable
Accounts payable are initially measured at fair value and subsequently measured at amortised cost using the
effective interest rate method
Employee Benefits
Provision is made for benefits accruing to employees in respects of wages and salaries, annual leave, and sick
leave when it is probable that settlement will be required and they are capable of being measured reliably.
Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their
nominal values using the remuneration rate expected to apply at the time of settlement.
Provisions made in respect of employee benefits which are not expected to be settled within 12 months are
measured at the present value of the estimated future cash outflows to be made by the Group in respect of
services provided by employees up to reporting date
2018 2017
$’000 $’000
Accounts payable 429 316
Employee entitlements 152 160
──────── ────────
581 476
═════════ ════════
35
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
12. BORROWINGS
2018 2017
$’000 $’000
Current 121 -
Non-Current 169 -
──────── ────────
290 -
═════════ ════════
Included in the above balance is a loan of $208,760 from the Bank of New Zealand with an effective interest rate
of 6.04%. This is secured over the Natoli Tablet Press asset purchased for $293,479. The term of this loan is over
60 months with the final payment due December 2022.
Other borrowings comprise insurance premium funding of $81,240 with effective interest rates ranging from
3.93%-13.58%. The final payments of the funding are due in October 2018.
13. INVESTMENT IN SUBSIDIARY
Subsidiary Percentage Held Balance Date Principal Activity
2018 2017
Blis Functional Foods Limited 100%
100%
31 March Non-trading
14. SHARE CAPITAL
2018 2018 2017 2017
No. of Shares $’000 No. of Shares $’000
Balance at the beginning of the year (fully paid) 1,107,653,565 37,298 1,102,153,565 37,298
Shares issued pursuant to CEO Share plan - 40 5,500,000 -
─────────── ────── ────────── ──────
Balance at the end of the year 1,107,653,565 37,338 1,107,653,565 37,298
═══════════ ══════ ═══════════ ══════
All 1,107,653,565 ordinary shares are issued and carry equal voting rights. All issued shares participate equally in
any dividend distribution or any surplus on winding up of the Company.
On 2 June 2016, 5,500,000 shares were issued to Mr Brian Watson, Chief Executive of the Company. The shares
were issued at a price of $0.0299 per share. Details of this transaction is shown in note 15.
Policy
Equity Instruments
Equity instruments issued by the Group are recorded at the proceeds received other than in respect to the CEO
share plan refer Note 15.
36
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
14. SHARE CAPITAL Cont.
2018 2017
Cents per Cents per
Share Share
Basic earnings (deficit) per share (0.09) (0.00)
The earnings and weighted average number of ordinary outstanding shares used in the calculation of basic
earnings per share are as follows:
$’000 $’000
Net earnings (deficit) (1,042) (24)
═════════ ═════════
No. No.
Weighted average number of ordinary shares for the
purpose of basic earnings per share 1,107,653,565 1,106,704,250
═══════════ ══════════
2018 2017
Cents per Cents per
Share Share
Diluted earnings (deficit) per share (0.09) (0.00)
The earnings and weighted average number of outstanding ordinary shares used in the calculation of diluted
earnings per share are as follows:
$’000 $’000
Net earnings (deficit) (1,042) (24)
════════ ════════
No No
Weighted average number of ordinary shares for the
purpose of diluted earnings per share 1,107,653,565 1,106,704,250
═══════════ ══════════
2018 2017
Cents per Cents per
Share Share
Net tangible assets/(liabilities) per share at year end 0.20 0.26
The net tangible assets and number of outstanding ordinary shares used in the calculation of net tangible assets
per share are as follows:
$’000 $’000
Net tangible assets 2,164 2,899
════════ ════════
No No
Number of ordinary shares held at 31 March 2018 1,107,653,565 1,107,653,565
══════════ ══════════
37
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
14. SHARE CAPITAL Cont.
Net tangible assets
As at 31 March 2018 the net tangible asset per share was 0.20 cents (2017: 0.26 cents).
2018 2017
$’000 $’000
Total assets 3,888 4,500
Less intangible assets (843) (1,118)
Less total liabilities (881) (483)
──────── ────────
Net tangible assets 2,164 2,899
──────── ────────
Number of shares outstanding (‘000) 1,107,654 1,107,654
──────── ────────
Net tangible assets per share (cents) 0.20 0.26
═════════ ════════
15. RELATED PARTY TRANSACTIONS
During the period the following transactions were entered into with related parties:
During FY18 Mr A P Offen did not provide any services to the Group through Edinburgh Securities Ltd. Payments
for executive director services amounted to $23,728 in FY17.
Mr P F Fennessy provided professional consulting services to the Group through AbacusBio Ltd during the year.
Payments for these services amounted to $5,500 (2017: $31,200). There was $Nil owing at 31 March 2018 (2017:
$5,000).
Mr T J Mepham, the Chief Financial Officer of the Group until October 2017, provided professional consulting
services to the Group through Rautaki Advisory during the year. Payments for these services amounted to
$28,624 (2017: $15,802).
During the year, BLIS products were sold to the following related parties (excluding web sales):
Associated Entity Director 2018 2017
P F Fennessy P F Fennessy $1,089 $78
Edinburgh Securities Ltd A P Offen $104 $609
B H Wallace B H Wallace $0 $824
A J McKenzie A J McKenzie $141 $126
G S Boyd G S Boyd $0 $49
V M Aris V M Aris $0 $58
Product samples are also made available to the staff and Board members for personal use.
38
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
15. RELATED PARTY TRANSACTIONS contd.
CEO share option and Issue of Shares to the CEO
The Company entered into a Subscription Agreement and issued 5,500,000 new ordinary shares to Brian Watson,
the Chief Executive Officer (CEO) on 2 June 2016. The shares were issued for cash consideration of 2.99 cents
per share being an aggregate $164,500, which was satisfied by way of a contemporaneous interest free loan
provided by the Company to the CEO for an aggregate amount equivalent to the subscription price for the shares.
The loan is secured by a lien on the issued shares and repayable in equal annual instalments commencing on the
1st of December 2017 with the final instalment due on 1 December 2021. The 1
st
December 2017 payment was
made.
The shares were issued at 90% of the volume weighted average share price for the 5 trading days prior to 1 June
2016. The issue price was considered by the Directors of the Company to be equivalent to the price that the
tranche of shares would have been issued to an independent third party at the time of issue.
The Subscription Agreement provides security against the loan through a charge on the shares. For accounting
treatment only, the Directors have accepted that the appropriate approach consistent with the relevant accounting
standard is to treat the entire arrangement as a share option.
Accordingly, the Company took independent professional advice and received an opinion as to the quantum of the
expense to bring to bear. The Company was advised that using the Black Scholes option pricing model for the
CEO Share Plan at an implied volatility of 32% and referenced to the prevailing share price of 3.32 cents on 2
June 2016 yielded an aggregate option value of $54,517. This amount was treated as an expense as required
under NZ IFRS 2.
As a result of the charge to the Income Statement, a CEO Share Option Reserve was created in the Balance
Sheet. Accordingly there is no effect on total equity, in treating the option value as an expense. Upon receipt of
each of the scheduled loan repayments the notional option value associated with each tranche will be transferred
from the CEO Share Plan Reserve to Share Capital and the amount of each loan repayment will be recorded to
equity to represent the consideration received for each tranche of shares issued to the CEO.
Consideration of $32,900 was received from the CEO for the first tranche of shares in November 2017.
39
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
Fair Value of Share Options
The fair value of the share options granted during the 2017 financial year was $54,517. Options were priced using
the Black-Scholes option pricing model. Expected volatility is based on the historical share price over the past 5
years, consistent with the options lives, factoring in a step change in the 9 months prior to grant date.
No allowance for early exercise was incorporated into the fair value calculation as it was assumed that the CEO
would exercise the options at the latest exercise date.
There are no market or service conditions.
The fair value model is most susceptible to changes in the expected volatility. Had an expected volatility of 45%
been utilised, the fair value of the share options would have been $69,000.
Inputs to the model
Options series
1 2 3 4 5
Grant Date
Weighted
Average
Share Price
$0.0322 $0.0322 $0.0322 $0.0322 $0.0322
Exercise
Price
$0.0299 $0.0299 $0.0299 $0.0299 $0.0299
Expected
Volatility
31.93% 31.93% 31.93% 31.93% 31.93%
Option life 1.5 years 2.5 years 3.5 years 4.5 years 5.5 years
Dividend
yield
0% 0% 0% 0% 0%
Risk-free
interest rate
2.07% 2.01% 2.00% 2.06% 2.02%
Final
exercise
date
1/12/17 1/12/18 1/12/19 1/12/20 1/12/21
40
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
16. COMMITMENTS FOR EXPENDITURE
(a) Capital Expenditure Commitments
As at 31 March 2018 there is $38,510 of capital expenditure commitments (2017: $23,000).
(b) Lease Commitments
Non-cancellable operating lease commitments are as follows:
2018 2017
$’000 $’000
Less than 1 year 89 83
1 - 5 years 273 328
Longer than 5 years 183 208
17. CONTINGENT ASSETS AND CONTINGENT LIABILITIES
There were no material contingent assets or contingent liabilities at 31 March 2018 (2017: $Nil).
18. SEGMENTAL REPORTING
18.1 Operating Segments
The Group is internally reported as a single operating segment to the chief operating decision-maker.
18.2 Revenue from major products and services
2018 2017
$’000 $’000
The Group’s revenues from its major products and services were as follows:
BLIS products 5,242 6,325
Non-core business 46 222
──────── ────────
Total Revenue 5,288 6,547
════════ ════════
Non-core revenues mainly include interest received and contract manufacturing revenue of non BLIS branded
products.
41
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
18. SEGMENTAL REPORTING Cont.
18.3 Information about geographical areas
The Group operates in 4 principal geographical areas; Australasia, Asia (incl. China), Europe and North America.
The Group’s revenue from external customers and information about its assets by geographical location (of the
customer) are detailed below:
2018 2017 2018 2017
Trading Revenue $’000 $’000 $’000 $’000
Revenue from
External Customers Non-current Assets
Australasia 873 1,092 1,628 1,764
Asia (incl. China) 680 1,322 - -
Europe 2,817 2,316 - -
North America 834 1,682 - -
Rest of the World 81 124 - -
──────── ──────── ──────── ────────
Total Trading Revenue 5,285 6,536 1,628 1,764
Interest received 3 4 - -
Grant revenue - 7
──────── ──────── ──────── ────────
Total Revenue 5,288 6,547 1,628 1,764
════════ ════════ ════════ ════════
Included in revenue are revenues of $2,796,626, $834,266 and $588,556 (2017: $2,285,423, $1,670,629 and
$1,152,604) which arose from sales to the Group’s three largest customers.
Web sales are allocated to region where the end consumer is based.
42
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
19. RECONCILIATION OF NET DEFICIT WITH CASH FLOWS FROM OPERATING ACTIVITIES
Policy
For the purpose of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and
investments in money market instruments net of outstanding bank overdrafts.
The cash flow statement is prepared exclusive of GST, which is consistent with the method used in the income
statement.
Definition of terms used in the cash flow statement:
Operating activities include all transactions and other events that are not investing or financing activities.
Investing activities are those activities relating to the acquisition and disposal of current and non-current
investments and any other non-current assets.
Financing activities are those activities relating to changes in the equity and debt capital structure of the Group and
those activities relating to the cost of servicing the Group’s equity.
2018 2017
$’000 $’000
Net Surplus /(Deficit) for the year (1,042) (24)
Adjustments for non-cash items:
Amortisation of capitalised product development costs 242 313
Amortisation of patents 109 91
Amortisation of website development 45 1
CEO share plan costs - 54
Depreciation 215 204
Foreign exchange loss/(gain) (30) (2)
Loss /(Gain) on fair value of Foreign Exchange Contracts - 7
Loss/(Gain) on disposal of fixed asset - 2
──────── ────────
(461) 646
Movements in working capital
Accounts receivable 456 57
Prepayments 8 (41)
Inventories 6 (21)
Accounts payable and income in advance 109 (397)
──────── ────────
579 (402)
──────── ────────
Net cash inflow/ (outflow) from operating activities 118 244
════════ ════════
43
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
20. FINANCIAL INSTRUMENTS
All of the Group’s financial assets are recognised as loans and receivables measured at amortised cost. The
Group does not have any financial assets recognised as held to maturity, designated at fair value or available for
sale. Foreign exchange contract liabilities are measured at fair value, all of the Group’s other financial liabilities
are measured at amortised cost.
(a) Financial Risk Management Objectives
Exposure to credit, interest rate, foreign currency and liquidity risks arises in the normal course of the Group’s
business.
The Group does not enter into derivative financial instruments for speculative purposes. The Group utilises
forward cover on confirmed foreign currency transactions. Specific risk management objectives and policies are
set out below.
(b) Capital Risk Management
The Group manages its capital to ensure that the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of debt and equity.
The capital structure of the Group comprises issued capital reserves, share option equity reserve and retained
earnings as disclosed in the Statement of Changes in Equity.
The Group’s Board of Directors reviews the capital structure on a regular basis.
The Group is not subject to externally imposed capital requirements.
The Group’s overall strategy remains unchanged from FY 2017.
(c) Market Risk
Market risk is the potential for change in the value of financial instruments caused by a change in the value,
volatility or relationship between market risks and prices. Market risk arises from the mismatch between assets
and liabilities. The Group’s activities expose it primarily to market risk associated with changes in foreign currency
rates and interest rates as set out below. These risks are measured using sensitivity analysis. The mechanisms
for managing these risks are set out below. The Group enters into foreign exchange contracts to manage its
exposure to foreign currency transactions, there have been no changes during the year to the Group’s exposure to
such risks or the manner in which the risks are measured and managed.
(d) Interest Rate Risk
The Group is exposed to interest rate risk as from time to time it borrows funds at floating interest rates and also
invests cash in short term deposits at fixed interest rates. Fair value interest rate risk is the risk that the value of a
financial instrument will fluctuate due to changes in market interest rates. Investments and borrowings at fixed
interest rates expose the Group to fair value interest rate risk. The Group does not hedge this risk. Cash flow
interest rate risk is the risk that the cash flows from a financial instrument will fluctuate because of changes in
market interest rates. Borrowings issued at variable interest rates expose the Group to cash flow interest rate risk.
The Group does not hedge this risk.
44
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
20. FINANCIAL INSTRUMENTS Cont.
(e) Foreign Exchange Risk
In the course of normal trading activities, the Group undertakes transactions denominated in foreign currencies;
hence exposures to exchange rate fluctuations arise. The Group enters into foreign exchange contacts on certain
sales in denominated in foreign currencies to economically hedge the foreign exchange risk associated with the
timing between the date of sale and receipt of payment. The Group has not adopted hedge accounting.
The carrying amount of the Group’s foreign currency denominated monetary assets are as follows:
2018 2017
$’000 $’000
Euro 61 117
Australian Dollar 27 -
United States Dollar 357 1,091
The table below details the notional principal amounts and remaining terms of foreign exchange contracts
outstanding at reporting date:
Average contract rate Foreign Currency
Nominal contract
value
Fair value Asset/
(Liability)
2018 2017 2018 2017 2018 2017 2018 2017
$’000 $’000 $’000 $’000 $’000 $’000
Euro
Less than 1
year
0.5850 0.6540 510 13 512 13 (2) 0
USD
Less than 1
year
0.7203 0.6983 1,381 778 1,389 784 (8) (7)
1,891 791 1,901 797 (10) (7)
The tables above express foreign currency amounts in New Zealand dollar equivalents using the exchange rates
at 31 March 2018 and 31 March 2017. The rates applied at 31 March 2018 were:
NZ$1:0.9409 AU$ (2017: AU$0.9142)
NZ$1:0.5850 EU$ (2017: EU$0.6543)
NZ$1:0.7203 US$ (2017: US$0.6991)
The fair value of the foreign exchange contracts is based on a discounted cash flow analysis using observable
market data and is a level 2 fair value measurement.
(f) Other Price Risk
The Group is not exposed to substantial other price risk arising from financial instruments.
45
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
20. FINANCIAL INSTRUMENTS Cont.
(g) Credit Risk
Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss
to the Group. Financial instruments which potentially subject the Group to credit risk, principally consist of bank
balances and Accounts receivable. The Board monitors and manages the exposure to credit risk.
The maximum exposures to credit risk at balance date are:
2018 2017
$’000 $’000
Cash and short term deposits 1,134 1,140
Accounts receivable 678 1,120
GST Receivable 16 30
─────── ───────
1,828 2,290
═══════ ═══════
Ageing Receivables Breakdown
2018 Gross amounts Impairment Net Balance
Ageing analysis of trade receivables receivable
$’000 $’000 $’000
Current 636 - 636
0 - 30 days (past due) 28 - 28
31 - 60 days (past due) 0 - 0
Greater than 60 days (past due) 14 - 14
Total past due 42 - 42
Total of Accounts Receivable 678 - 678
2017 Gross amounts Impairment Net Balance
Ageing analysis of trade receivables receivable
$’000 $’000 $’000
Current 981 - 981
0 - 30 days (past due) 6 - 6
31 - 60 days (past due) 1 - 1
Greater than 60 days (past due) 132 - 132
Total past due 139 - 139
Total of Accounts Receivable 1,120 - 1,120
At 31 March 2018, accounts receivable include an amount of $237,810 (2017: $590,787) due from one customer
and $151,270 from another customer (2017: $250,015 from another customer). All of the Group’s bank accounts
are held with Bank of New Zealand. Otherwise the Group does not have any other concentrations of credit risk.
The Group does not require any collateral or security to support financial instruments.
46
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
20. FINANCIAL INSTRUMENTS Cont.
(h) Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an
appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term
funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate
reserves by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities. The Group also has approved trade funding facilities up to $750,000 which are linked to
customer specific limits. Whilst being used during the period the funding facility was not utilised at 31 March 2018.
The maturity profiles of the Group’s interest bearing investments and borrowings are disclosed later in this note.
Liquidity and Interest Risk Tables
The following tables detail the Group’s remaining contractual maturity for non-derivative financial assets and
financial liabilities. The tables have been drawn up based on the undiscounted contractual maturities of the
financial assets and financial liabilities including interest that will accrue to those assets or liabilities.
Weighted
Average
Total
31 March 2018
Effective
Interest
Rate
%
Less than
1 year
$’000
1-2
Years
$’000
2-3
Years
$’000
3-4
Years
$’000
4-5
Years
$’000
5+
Years
$’000
Interest
$‘000
Financial assets:
Cash and short term
deposits
0.26 1,134
- - - - - - 1,134
Accounts receivable - 678 - - - - - - 678
GST receivable - 16 - - - - - - 16
Total 1,828 1,828
Financial liabilities:
Accounts payable - 581 - - - - - - 581
Borrowings 7.11 121 42 44 47 37 41 332
Total 702 42 44 47 37 - 41 913
Weighted
Average
Total
31 March 2017
Effective
Interest
Rate
%
Less
than 1
year
$’000
1-2
Years
$’000
2-3
Years
$’000
3-4
Years
$’000
4-5
Years
$’000
5+
Years
$’000
Interest
$‘000
Financial assets:
Cash and short term
deposits
1.11 1,140
- - - - - - 1,140
Accounts receivable - 1,120 - - - - - - 1,120
GST Receivable - 30 - - - - - - 30
Total 2,290 2,290
Financial liabilities:
Accounts payable - 476 - - - - - - 476
Total 476 - - - - - - 476
47
BLIS TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont.
For the Year Ended 31 March 2018
20. FINANCIAL INSTRUMENTS Cont.
(i) Sensitivity Analysis
The Group is exposed to foreign currency risk arising from sales denominated in currencies other than the Group’s
functional currency, arising from normal trading activities.
The majority of foreign currency related exposures relate to accounts receivable. The Group is mainly exposed to
the Australian Dollar, the Euro and the United States Dollar.
Exposures to movements in these foreign currency rates are not considered material at balance date. The year-
end exposure (and sensitivity to foreign currency rate movements at this time) does not reflect the risk and
exposure during the course of the year. The Group’s sensitivity to foreign currency rate movements increased
during the year due to an increased proportion of export sales.
Exposure to movement in floating interest rates in respect of cash on deposit and borrowings is not considered
material at balance date.
(j) Fair Value of Financial Instruments
The fair values of financial assets and financial liabilities are determined as follows:
the fair value of financial assets and financial liabilities with standard terms and conditions and traded on
active liquid markets are determined with reference to quoted market prices; and
The fair value of other financial assets and financial liabilities (excluding derivative instruments) are
determined in accordance with generally accepted pricing models based on discounted cash flow analysis
using prices from observable current market transactions and dealer quotes for similar instruments.
The Directors consider that the carrying amount of financial assets and financial liabilities recorded at amortised
cost in the financial statements approximates their fair values.
21. EVENTS AFTER BALANCE DATE
There were no significant events after balance date (2017:Nil).
48
BLIS TECHNOLOGIES LIMITED
ADDITIONAL STOCK EXCHANGE INFORMATION
For the Year Ended 31 March 2018
The Company’s ordinary shares are listed on the NZX Limited Main Board (NZSX).
As at 31 March 2018 the total number of issued ordinary shares in the Company was 1,107,653,565
1. Substantial Product Holders
The following substantial product holder information is given pursuant to section 293 of the Financial Markets
Conduct Act 2013. These substantial product holders are shareholders that have a relevant interest in 5% or more
of the ordinary shares in the Company. As at 31 March 2018 details of the substantial product holders of the
Company and their relevant interests in the ordinary shares of the Company are as follows:
Name of Substantial Product Holder Number of Voting Securities
Ordinary Shares
As at 31 March 2018
Leveraged Equities Finance Limited 172,155,529
Wen Yi (UOB Kay Hian Limited) 75,670,169
2. Spread of Security Holders at 31 March 2018 - Ordinary Shares
Number of
security
holders
Percentage
of security
holders
Percentage
of shares
held
1 - 50,000 642 37.53% 1.62%
50,001 - 100,000 347 20.28% 2.42%
100,001 - 150,000 136 7.95% 1.57%
150,001 - 200,000 119 6.95% 1.94%
200,001 - 300,000 106 6.20% 2.49%
300,001-500,000 132 7.71% 4.84%
500,001 - 1,000,000 108 6.31% 7.20%
1,000,001 - 5,000,000 95 5.55% 18.80%
5,000,001 and above 26 1.52% 59.12%
1,711 100.00% 100.00%
.
49
BLIS TECHNOLOGIES LIMITED
ADDITIONAL STOCK EXCHANGE INFORMATION cont.
For the Year Ended 31 March 2018
3. Twenty Largest Equity Security Holders
The names of the 20 largest holders of each class of quoted equity security as at 31 March 2018 are listed below.
Top 20 Shareholders Number of Issued Ordinary Shares Percentage Issued
Leveraged Equities Finance Limited 172,155,529 15.54%
Wen Yi (UOB Kay Hian Limited) 75,670,169 6.83%
Xu Qi Wu & Yao Hong Shen 46,370,689 4.19%
New Zealand Central Securities Depository
Limited 44,228,660 3.99%
Mingchun Qiu 39,000,000 3.52%
Edinburgh Equity Limited 31,157,388 2.81%
Hui Ai Adriana Tong & Morlan Tong 29,000,000 2.62%
Michael Herbert Bird 28,000,000 2.53%
Stephen Patrick Ward, Julie Patricia Ward &
James Michael Ward 25,174,672 2.27%
Mark Alexander Stevens & Wendy Joanne
Stevens 24,094,577 2.18%
Asia Pacific Partners Limited 21,850,878 1.97%
Custodial Services Limited 20,599,074 1.86%
Custodial Services Limited 17,126,189 1.55%
Richard Mark Keenan 10,590,000 0.96%
Lisa Cherie Van Kampen 7,500,000 0.68%
Graeme Alan Hoy 6,698,181 0.60%
Colin John Wilson & Glenys Ann Wilson 6,400,000 0.58%
Vivienne Louise Cowan 6,000,263 0.54%
Peter Francis Fennessy & Mary Elizabeth
Fennessy 5,798,182 0.52%
Kirkland Properties Limited 5,745,377 0.52%
TOTAL
623,159,828 56.26%
50
BLIS TECHNOLOGIES LIMITED
ADDITIONAL STOCK EXCHANGE INFORMATION cont.
For the Year Ended 31 March 2018
4. Directors’ Shareholdings
The following table sets out, for the purposes of the disclosures required under Listing Rule 10.4.5 (c) of the NZX
Main Board Listing Rules, the relevant interests of Directors and associated persons of the Directors in equity
securities of the Company as at 31 March 2018:
Name of Director Number of Equity Securities
in which a relevant interest
is held by the Director
P F Fennessy Ordinary 5,798,182 (1)
A P Offen Ordinary 31,157,388 (2)
A J McKenzie Ordinary 29,789,774 (3)
G S Boyd Ordinary 800,000 (4)
Note that particular shareholdings can appear under more than one director.
1) The number of equity securities in which Mr P F Fennessy holds a relevant interest includes 5,798,182
ordinary shares, in which the trustees of the PF & ME Fennessy Family Trust have a relevant interest.
2) The number of equity securities in which Mr A P Offen holds a relevant interest includes 31,157,388
ordinary shares, held by Edinburgh Equity Limited. Mr Offen is a director and beneficial shareholder of
Edinburgh Equity Limited.
3) The number of equity securities in which Mr A J McKenzie holds a relevant interest includes:
- 1,599,346 ordinary shares, held by A J McKenzie & Co Limited. Mr McKenzie is a director and
shareholder of A J McKenzie & Co Limited.
- 5,100,000 ordinary shares held by the trustee of the Pinot Trust. Mr McKenzie is a non-beneficial
Trustee of the Pinot Trust.
- 22,928,571 ordinary shares held by Leveraged Equities Finance Limited on nominee account for SIL
Long Term Holdings Limited. Mr McKenzie is a non-beneficial Director of SIL Long Term Holdings
Limited.
- 161,857 ordinary shares held by Mr McKenzie personally.
4) The number of equity securities in which Mr G S Boyd holds a relevant interest includes 800,000 ordinary
shares held by Mr Boyd personally.
5. Credit Rating
The Company does not currently have a credit rating.
6. NZX matters
No waivers were granted by NZX (or relied upon) with respect to the Company during the period 1 April 2017 to 31
March 2018.
51
BLIS TECHNOLOGIES LIMITED
ADDITIONAL STOCK EXCHANGE INFORMATION cont.
For the Year Ended 31 March 2018
6. Diversity Policy
Current Year (31 March 2018) Previous Year (31 March 2017)
Male Female Male Female
Number of Directors 4 1 5 1
Percentage of Directors 80% 20% 83.3% 16.7%
Number of Officers 3 1 3 1
Percentage of Officers 75% 25% 75% 25%
The Company has a Diversity and Inclusion Policy for the Board and Management as at 31 March 2018.
7. Independence of Directors
As at 31 March 2018, the following Directors are considered by the Board to be Independent (as defined by the
NZX Main Board Listing Rules): Dr P F Fennessy, Ms V Aris, Mr G S Boyd, Mr A J McKenzie, and Mr A P Offen
---
52
Independent Auditor’s Report
To the Shareholders of Blis Technologies Limited
Opinion We have audited the consolidated financial statements of Blis Technologies Limited (the
‘Company’) and its subsidiaries (the ‘Group’), which comprise the consolidated balance
sheet as at 31 March 2018, and the consolidated income statement, statement of
comprehensive income, statement of changes in equity and statement of cashflows for the
year then ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies.
In our opinion, the accompanying consolidated financial statements, on pages 17 to 47,
present fairly, in all material respects, the consolidated financial position of the Group as
at 31 March 2018, and its consolidated financial performance and cash flows for the year
then ended in accordance with New Zealand Equivalents to International Financial
Reporting Standards (‘NZ IFRS’) and International Financial Reporting Standards (‘IFRS’).
Basis for opinion We conducted our audit in accordance with International Standards on Auditing (‘ISAs’)
and International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1
(Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing
and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
Other than in our capacity as auditor, we have no relationship with or interests in the
Company or any of its subsidiaries, except that partners and employees of our firm deal
with the Company and its subsidiaries on normal terms within the ordinary course of
trading activities of the business of the Company and its subsidiaries.
Audit materiality We consider materiality primarily in terms of the magnitude of misstatement in the
financial statements of the Group that in our judgement would make it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced
(the ‘quantitative’ materiality). In addition, we also assess whether other matters that
come to our attention during the audit would in our judgement change or influence the
decisions of such a person (the ‘qualitative’ materiality). We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
We determined materiality for the Group financial statements as a whole to be $80,000
(2017 : $95,000).
Key audit matters Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Impairment of intangible assets
The Group’s ability to generate revenue is linked to
capitalised development costs and patents in respect of
ingredients for the Group’s products. These are included in
the balance sheet as intangible assets.
The total carrying value of intangible assets at 31 March
2018 is $0.843m as shown in the Consolidated Balance
Sheet and note 10, of which $0.776m relates to capitalised
development costs and patents.
The carrying value of intangible assets is particularly
judgemental given its dependency on forecasts of revenue
Our procedures focused on evaluating the appropriateness
of the revenue forecasts and operating cash flows included
in the impairment model.
Our procedures included, amongst others:
Obtaining the Group’s impairment model and gaining
an understanding of key assumptions and judgements
underlying the model.
Assessing the impairment model for consistency with
the prior year and determining whether any
53
growth, contribution margins and required rate of return.
We included impairment of intangible assets as a key audit
matter because if the Group is unable to generate revenue
growth and produce sustainable operating cashflows, this
affects the carrying value of its key intangible assets.
significant changes to the model were appropriate.
Challenging the reasonableness of the key
assumptions including those driving the cash flows
underpinning the analysis, by:
o Comparing historical budget forecasts against
actual results.
o Comparing forecast growth to business plans
approved by the Board.
o Engaging an internal valuation expert to
benchmark the discount rate against companies of
a similar nature.
Performing sensitivity analysis on revenue growth
assumptions to assess the impact on forecasted
cashflows.
Going Concern
The financial statements have been prepared on a going
concern basis as discussed in note 1.
Historically, the Group has been loss making, and has raised
capital and taken out borrowings to fund costs during an
extended growth phase.
Accumulated losses shown in the Consolidated Balance
Sheet totalled $34.4m as at 31 March 2018.
We included the going concern assumption as a key audit
matter as it relies on existing cash reserves and revenue
growth generating sufficient cashflows to cover necessary
expenditure.
In assessing the appropriateness of the going concern
assumption used in preparing the financial statements, our
procedures included, amongst others:
Assessing the cash flow requirements of the Group
over 14 months from 31 March 2018 based on budgets
and forecasts.
Understanding what forecast expenditure is committed
and what could be considered discretionary.
Considering the liquidity of existing assets on the
balance sheet.
Considering the terms of the bank loan and trade
finance facilities and the amount available for
drawdown.
Considering potential downside scenarios and the
resultant impact on available funds.
The prior year audit report included one other key audit matter which is not included in our report this year: Fair Value of
Share Options under Subscription Agreement and Related Accounting Treatment. The share options were valued on grant
date in June 2016 with the full fair value expensed at that time due to the share options vesting immediately at grant
date. There are no further judgements to be applied in relation to these share options and the Group has not entered into
any new share option arrangements during the current year.
Other information
The directors are responsible on behalf of the Group for the other information. The other
information comprises the information in the Annual Report that accompanies the
consolidated financial statements and the audit report.
Our opinion on the consolidated financial statements does not cover the other information and
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and consider whether it is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If so, we are required to report that fact. We
have nothing to report in this regard.
Directors’ responsibilities
for the consolidated
financial statements
The directors are responsible on behalf of the Group for the preparation and fair presentation
of the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such
internal control as the directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, the directors are responsible on behalf of
the Group for assessing the Group’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no
realistic alternative but to do so.
54
Auditor’s responsibilities
for the audit of the
consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
and ISAs (NZ) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis
of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial
statements is located on the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-
responsibilities/audit-report-1
This description forms part of our auditor’s report.
Restriction on use
This report is made solely to the Company’s shareholders, as a body. Our audit has been
undertaken so that we might state to the Company’s shareholders those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the
Company’s shareholders as a body, for our audit work, for this report, or for the opinions we
have formed.
Heidi Rautjoki, Partner
for Deloitte Limited
Dunedin, New Zealand
17 May 2018
This audit report relates to the consolidated financial statements of Blis Technologies Limited (the ‘Company’) for the year ended
31 March 2018 included on the Company’s website. The Directors are responsible for the maintenance and integrity of the
Company’s website. We have not been engaged to report on the integrity of the Company’s website. We accept no responsibility
for any changes that may have occurred to the consolidated financial statements since they were initially presented on the
website. The audit report refers only to the consolidated financial statements named above. It does not provide an opinion on any
other information which may have been hyperlinked to/from these consolidated financial statements. If readers of this report are
concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the
audited consolidated financial statements and related audit report dated 17 May 2018 to confirm the information included in the
audited consolidated financial statements presented on this website.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.