Notice of Meeting
Blis Technologies Limited
Notice of Annual Meeting
Notice is hereby given that the annual meeting of shareholders of Blis Technologies Limited (Company)
will be held at the Dunedin Public Art Gallery, 30 The Octagon, Dunedin on Friday 27 July 2018 at 11:00am
(registrations will open at 10:30am).
Business
The business of the meeting will be:
1 Financial Statements and Reports
To receive and consider the annual report including the financial statements and the audit report
for the year ended 31 March 2018.
2 Election of Mr Geoffrey Plunket as a director (Resolution 1)
To consider, and if thought fit, to elect Mr Geoffrey Plunket as a director of the Company by passing
the following Ordinary Resolution:
“That Mr Geoffrey Plunket be elected as a director of the Company.”
See Explanatory Notes
3 Election of Mr Barry Richardson as a director (Resolution 2)
To consider, and if thought fit, to elect Mr Barry Richardson as a director of the Company by passing
the following Ordinary Resolution:
“That Mr Barry Richardson be elected as a director of the Company.”
See Explanatory Notes
4 Auditors (Resolution 3)
To record that Deloitte are reappointed as auditors of the Company in accordance with section
207T of the Companies Act 1993 and if thought fit, to pass the following Ordinary Resolution:
“That the Directors be authorised to fix the remuneration of the auditors for the ensuing
year.”
5 Other business
To consider any other ordinary business which may properly be brought before the meeting.
Proxies
All shareholders are entitled to attend and vote at the meeting or to appoint a proxy to attend and vote in
their place.
A proxy need not be a shareholder of the Company. Enclosed with this notice of meeting is a
proxy/corporate representative form.
For the appointment of a proxy to be valid, the form must be lodged at Blis Technologies Limited, 81
Glasgow Street, South Dunedin, PO Box 2208, South Dunedin 9044 (Attn: Pamela Bedford) or sent by
email to pamela.bedford@blis.co.nz no later than 48 hours before the start of the meeting (that is, by
11:00am on Wednesday 25 July 2018). Postal voting is not permitted.
Corporate Representatives
A corporation which is a shareholder may appoint a person to attend the meeting on its behalf in the same
manner as that in which it could appoint a proxy. The form to appoint a proxy/corporate representative
must be signed on behalf of the corporation by a person acting under the corporation’s express or implied
authority.
Requisite majorities and voting
The resolutions are all ordinary resolutions (Ordinary Resolutions). In order for them to be passed, they
require the affirmative vote of a simple majority of more than 50% of the votes cast by those entitled to vote
and who vote in person or by proxy.
By order of the Board of Directors
Tony Offen
Chair
Explanatory Notes
In these explanatory notes, references to ‘Listing Rules’ are to the NZX Main Board Listing Rules.
1 ROTATION OF DIRECTORS
1.1 Under Listing Rule 3.3.11, at least one third of the Directors or the number nearest to one third, are
required to retire from office at the Annual Meeting each year. The Directors required to retire are
those who have been longest in office since they were last elected.
1.2 Accordingly, Mr Peter Fennessy and Mr Alan McKenzie both retire by rotation. Both Mr Fennessy
and Mr McKenzie have announced their intention to step down at the Annual Meeting and are
therefore not offering themselves for re-election.
1.3 While Mr Fennessy will cease to be a director with effect from the Annual Meeting, he has agreed
to stay on as a technical advisor to the Board for a period of up to six months whilst the Board looks
for a replacement director with a similar skill set.
1.4 The Board wishes to thank both Mr Fennessy and Mr McKenzie for their service to the Company.
2 RESOLUTION 1 (BUSINESS ITEM 2)
Selection and Appointment of Directors
2.1 The Board has a dedicated succession plan in place to search in advance for new capability on the
Board. The Board uses the professional services of Signium New Zealand to assist with broadening
the search to identify potential directors. 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 the current directors, whether that
individual is “Independent” and whether that individual would be able to work effectively with the
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 Meeting.
Election of Mr Geoffrey Plunket
2.2 Mr Geoff Plunkett was identified through the search process as providing a mix of capabilities being
sought and the Board fully supports the election of Mr Plunket. Mr Geoffrey Plunket was appointed
by the Board in accordance with clause 13.2 of the Constitution with effect from 4 May 2018.
2.3 Under Listing Rule 3.3.6, any Director appointed by the Board during the year shall hold office until
the commencement of the next annual meeting, when they will cease to hold office and, being
eligible, may put themselves forward for election at that meeting.
2.4 Accordingly, Mr Plunket both ceases to hold office at the Meeting and offers himself for election by
shareholders.
2.5 Further details in respect of Mr Plunket are set out below. These will also be available on the Blis
Technologies website: www.blis.co.nz
GEOFFREY PLUNKET
Geoff is currently a Dunedin based Professional Director and Consultant. Geoff is a Fellow of
Chartered Accountants Australia and New Zealand, and a Member of the Institute of Directors.
Geoff was invited to join the Blis Technologies Ltd Board in May 2018.
Geoff worked for Coopers & Lybrand (now PWC) and KPMG, in Dunedin and Birmingham, UK
through the 1980’s before joining Port Otago Ltd in 1988, as Chief Financial Officer. Geoff spent
the following 29 years with the Port Otago Group, before retiring in 2017. Geoff worked across the
business in a variety of roles, culminating in appointment as CEO in 2004, a position he held until
retirement.
Geoff brings significant experience in leading a large successful organisation with expertise in
logistics, managing international trading relationships, supply chain, human resource, health and
safety and risk management. Geoff believes success comes from a focus on quality and delivering
outstanding customer service.
2.6 The Board has determined that Mr Geoffrey Plunket is an Independent Director for the purposes of
the Listing Rules and supports his election as a director.
3 RESOLUTION 2 (BUSINESS ITEM 3)
Election of Mr Barry Richardson
3.1 The Company has received a nomination from a shareholder for the appointment of Mr Barry
Richardson as a director.
3.2 The Board does not believe that the appointment of Mr Richardson will sufficiently add to the
Board’s capability and does not support the election of Mr Richardson.
3.3 Further details in respect of Mr Richardson are set out below. These will also be available on the
Blis Technologies website: www.blis.co.nz
BARRY RICHARDSON
3.4 The following information has been supplied to the Company by Mr Richardson by way of
background:
I offer myself as a candidate for the Board of Directors, having had more than 30 years of
management experience in several companies. This involved commercialising science and
undertaking business development roles in early stage biotechnology and nutritional
companies, and in the NZ Dairy Board prior to the formation of Fonterra. I held general
management positions within the manufacturing dairy industry in business and strategic
development to develop Tatua Biologics within the Tatua Co-Operative Dairy Ltd before being
appointed the CEO of Westland Milk Products Ltd and changing them from being a supplier to
Fonterra to a global dairy products and specialist ingredients company.
For the 10 years prior to 2016, I was the CEO of Blis Technologies Ltd, through what was
arguably the most difficult and challenging period in the history of the Company, which was
when it transitioned from a research company into a commercial entity. The Company went
through several capital funding rounds where I was successful in attracting significant
investment into Blis Technologies from several major investors. These funding rounds came
during critical times in the Company’s history while concurrently managing both growth and
control over operational expenses. This varied career has provided me with a wealth of relevant
business experience.
I hold a PhD from Massey University and had an early career in science before moving into
more commercial roles. A past fellow of the NZ Institute of Management and a fellow of the
NZ Institute of Food Science and Technology, I was awarded the prestigious JC Andrews
award for distinction in Food Science and Technology in 2003. My current professional roles
include being a Director of CertusBio, a Lincoln Agritech biosensor company linked to the dairy
industry and a director of CNS Biotechnology, which is an early stage nutraceutical company.
I am standing for the position of Director because I am deeply concerned about the current
share price, the limited working capital available, high overhead costs, the fluctuating sales
in many regions, in marked contrast to the European sector. Of concern also is the long-term
potential impact on the company after the expiry of the Blis K12 patent in 2 years. These are a
unique series of challenges, which the Company must address while maintaining a constant
focus on business growth and meeting the needs of its regular business operations.
I have remained apart from this Company for over two years now, allowing the new
management team to establish their own strategy. I am firmly committed to Blis Technologies and
to its products, but like many other shareholders, I am deeply concerned about the current
circumstances and the lack of commercial traction, when earlier the Company was on the
verge of being a profitable operation.
My extensive background in science, product and business development, when coupled with
the time spent as the CEO of Blis Technologies, means that I have an excellent understanding
of the science, the customers and the distribution channel. This enables me to support, and
when required, to challenge the Board and management on the strategic direction and therefore
help to guide the Company to a successful strategy.
Thank you for your support.
3.5 The Board has determined that Mr Barry Richardson would be an Independent Director if elected
for the purposes of the Listing Rules.
---
Blis Technologies 81 Glasgow Street, P O Box 2208, South Dunedin 9044, New Zealand
Telephone: +64 3 474 0988 Email: pamela.bedford@blis.co.nz www.blis.co.nz
SHAREHOLDERS’ PROXY FORM
If you do not propose to attend the annual meeting of shareholders to be held at the Dunedin Public Art
Gallery, 30 the Octagon, Dunedin on Friday 27 July 2018 at 11:00am, but wish to be represented by a
proxy/corporate representative, complete the form below and return it to Blis Technologies Limited
(Company) at the postal/email address supplied below.
To be completed by the holders of shares in Blis Technologies Limited.
I/We:
____________________________________________________________________________________
(full name of shareholder(s))
being a shareholder of Blis Technologies Limited hereby appoint:
____________________________________________________________________________________
(full name)
of:
____________________________________________________________________________________
(full address)
or failing him/her:
____________________________________________________________________________________
(full name)
of:
____________________________________________________________________________________
(full address)
as my/our proxy/corporate representative to vote for me/us on my/our behalf at the annual meeting of
shareholders of the Company to be held on Friday 27 July 2018 at 11:00am and at any adjournment
thereof.
I/We direct my/our proxy/corporate representative to vote in the manner set out overleaf.
Unless otherwise directed overleaf my/our proxy may vote as he/she thinks fit.
Please return completed proxy form to: Blis Technologies Limited, 81 Glasgow St, South Dunedin,
PO Box 2208, South Dunedin 9044 (Attn: Pamela Bedford) or by email to
pamela.bedford@blis.co.nz no later than 11:00am on Wednesday 25 July 2018.
Blis Technologies 81 Glasgow Street, P O Box 2208, South Dunedin 9044, New Zealand
Telephone: +64 3 474 0988 Email: pamela.bedford@blis.co.nz www.blis.co.nz
Vote
(Indicate with a tick or cross)
YES NO ABSTAIN
PROXY
DISCRETION
Resolution 1 (Business Item 2)
That Mr Geoffrey Plunket be elected as a director of the
Company.
Resolution 2 (Business Item 3)
That Mr Barry Richardson be elected as a director of the
Company.
Resolution 3 (Business Item 4)
That the Directors be authorised to fix the remuneration of
the auditors for the ensuing year.
Signature(s) of shareholder(s):
____________________________________________________________________________________
____________________________________________________________________________________
Date: ______________________________2018
Notes
1. As a shareholder you may attend the meeting and vote, or you may appoint a proxy to attend the meeting. A proxy need not be a
shareholder of the Company. The chairman or any other Director of the Company is willing to act as a proxy. If a shareholder
wishes to appoint the chairman or any other Director as proxy, they will vote in favour of all of the other resolutions put to the
meeting unless otherwise directed. To do so, please write their name or position clearly in the space marked (eg, "Chair of the
meeting").
2. If you are joint holders of shares each of you must sign this proxy form and the appointment made in this section is made on behalf
of each joint holder. If you are a company this proxy form must be signed on behalf of that company by a person acting under the
company’s express or implied authority.
3. For this proxy form to be valid you must complete it and send it to the Company at the above address so as to ensure that it is
received not less than 48 hours before the start of the meeting, being 11:00am on Wednesday 25 July 2018. If it has been signed
under a power of attorney please send a copy of the power of attorney (unless already deposited with the Company) and a signed
certificate of non-revocation of the power of attorney with this proxy form.
4. If you return this form without directing the proxy how to vote on any particular matter, the proxy will vote as he or she thinks fit.
---
ANNUAL REPORT 2018
www.blis.co.nz
CONTENTS
Company Directory 2
Operations Report 3
Directors’ Report 8
Directors’ Responsibility Statement 11
Statement of Corporate Governance 12
Consolidated Income Statement 15
Consolidated Statement of Comprehensive Income 16
Consolidated Statement of Changes in Equity 17
Consolidated Balance Sheet 18
Consolidated Statement of Cashflows 19
Notes to the Consolidated Financial Statements 20
Additional Stock Exchange Information 39
Independent Auditor’s Report 42
Key highlights for the year include:
2HY18 recovery in revenue
with 19% growth and a profit
in the last two quarters.
BLIS K12
®
approved by
Australia Therapeutic Goods
Administration as a listed
complementary medicine
2
BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
www.blis.co.nz
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 9054
Bankers Bank of New Zealand
Dunedin
Solicitors Anderson Lloyd
Private Bag 1959
Dunedin 9054
Downie Stewart Lawyers
P O Box 1345
Dunedin 9054
Website www.blis.co.nz
Facebook https://www.facebook.com/BLISTechnologiesLtd
Blis Technologies Limited
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
3
www.blis.co.nz
OPERATIONS REPORT
FOR THE YEAR ENDED 31 MARCH 2018
OVERVIEW FY18 FY17 CHANGE
$000 $000 $000
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 second 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);
– Year to date calendar 2018, ThroatGuard Pro
®
is the
number one throat lozenge in NZ pharmacies;
Revenue
Australasia 873 1,092 (219)
Asia, including 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)
4
BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
www.blis.co.nz
– 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
®
ElitePro approved as a preferred
supplier to the High Performance Sport NZ
supplement 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:
New Zealand 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.
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
5
www.blis.co.nz
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.”
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.
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)
6
BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
www.blis.co.nz
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:
– New distributor relationships with Radiant Health
including promotion to medical professionals as
well as pharmacy staff;
• Broadening customer base internationally:
– EU/ Middle East – seven new partner agreements
established;
– USA – new customer launches across a range
of channels including retail, direct selling and
on-line;
– China – further test market launches underway.
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:
– Ongoing investment in scientific services
to accelerate R&D activity;
– 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;
– 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:
– 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.
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
7
www.blis.co.nz
• New product development:
– Work assessing new flavour formats on
HoneyBlis
®
was carried out;
– Assessment of new formats and formulations
containing BLIS K12
®
.
• Clinical trials:
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
Regulatory updates – new approvals, applications
submitted
– Approval of BLIS K12
®
as a Complementary Listed
Medicine by the Australian Therapeutic Goods
Administration (TGA approval);
– Regulatory approval for both BLIS K12
®
and BLIS
M18
®
in UAE;
– 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.
Anthony Offen Brian Watson
Chair Chief Executive
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
BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
www.blis.co.nz
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 –
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
9
www.blis.co.nz
DIRECTOR REMUNERATION RECEIVED IN FY18
Name of Director Board Fees Audit Remuneration Total Board Meetings
Committee Committee Remuneration 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 $24,583 12
(Chair)
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.
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
10
BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
www.blis.co.nz
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.
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. She 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.
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
11
www.blis.co.nz
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 Fennessey
Director Director
17 May 2018
DIRECTORS’ RESPONSIBILITY STATEMENT
FOR THE YEAR ENDED 31 MARCH 2018
12
BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
www.blis.co.nz
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 and Disclosure
• Remuneration
• Risk Management
• Auditors
• Shareholder Rights and 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;
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
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• 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.
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 and 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.
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.
14
BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
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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.
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
15
www.blis.co.nz
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2018
The accompanying notes form part of these financial statements.
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)
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BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
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CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2018
Notes 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.
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
17
www.blis.co.nz
The accompanying notes form part of these financial statements.
Note Share Retained Share Total
capital earnings/ option attributable
(deficit) equity to Group
reserve
$’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
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2018
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BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
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The accompanying notes form part of these financial statements.
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
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
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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.
CONSOLIDATED STATEMENT
OF CASHFLOWS
FOR THE YEAR ENDED 31 MARCH 2018
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BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
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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 17th 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.
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.
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
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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.
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
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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.
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 five-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 its 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.
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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.
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.
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
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.
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2018 2017
$’000 $’000
(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:
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
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:
Short-term employee and contractor benefits 1,228 1,162
Share-based option – 54
1,228 1,216
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 and 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.
Cash 1,059 1,065
Short-term deposits (i) 75 75
1,134 1,140
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BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
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(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.
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.
Inventories
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
Property, plant and equipment
2018
Cost Additions/ Disposals Cost Accumulated Depreciation Accumulated Transfer Accoumulated Book value
1 April Transfers 31 March depreciation expense depreciation depreciation 31 March
2017 2018 1 April 2017 reversed on 31 March 2018
disposal 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 Additions/ Disposals Cost Accumulated Depreciation Accumulated Transfer Accoumulated Book value
1 April Transfers 31 March depreciation expense depreciation depreciation 31 March
2016 2017 1 April 2016 reversed on 31 March 2017
disposal 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
2018 ANNUAL REPORT BLIS TECHNOLOGIES LIMITED
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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
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BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
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• 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 eight 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 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.
Patents Capitalised IT, Website Total
Development Development
and Software
$’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
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Patents Capitalised IT, Website Total
Development Development
and Software
$’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
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
12. BORROWINGS
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.
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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
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
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
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BLIS TECHNOLOGIES LIMITED 2018 ANNUAL REPORT
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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
’000 ’000
Number of shares outstanding 1,107,654 1,107,654
Cents Cents
Net tangible assets per share 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.
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 1st 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
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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.
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
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).
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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.
18.3 Information about geographical areas
The Group operates in four 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
$’000 $’000 $’000 $’000
Revenue from Non-current Assets
External Customers
Trading revenue
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.
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
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.
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(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.
(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 Fair value
contract value asset/(liability)
2018 2017 2018 2017 2018 2017 2018 2017
$000’s $000’s $000’s $000’s $000’s $000’s
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.
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(f) Other price risk
The Group is not exposed to substantial other price risk arising from financial instruments.
(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 receivable Impairment Net balance
Ageing analysis of trade receivables $’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 receivable Impairment Net balance
Ageing analysis of trade receivables $’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.
(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.
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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 Less than 1-2 2-3 3-4 4-5 5+ Interest Total
effective interest rate 1 year years years years years years
% $’000 $’000 $’000 $’000 $’000 $’000 $’000
31 March 2018
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
31 March 2017
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
(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).
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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 Percentage of Percentage of
security holders security holders 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%
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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%
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;
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– 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.
7. Diversity policy
Current year Previous year
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.
8. 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.
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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
yea
r 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 ad
dition, 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 w
ork 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
15 to 38
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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 alterna
tive but to do so.
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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 consolida
ted 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.
Blis Technologies Limited
10 Birch Street
Dunedin 9016
PO Box 5804
Dunedin 9058
New Zealand
Email info@blis.co.nz
Telephone +64 3 474 0988
www.blis.co.nz
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.
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