Announcement PDF              APPENDIX4D AND 30JUNE2019HALF YEARREPORT  Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Appendix 4D Half-year report 1. Company details Name of entity: ABN: Reporting period: Previous period: Avecho Biotechnology Limited 32 056 482 403 For the period ended 30 June 2019 For the period ended 30 June 2018 2. Results for announcement to the market $ Revenues from ordinary activities up 409.4% to 4,176,196 Profit from ordinary activities after tax attributable to the owners of Avecho Biotechnology Limited up 225.0% to 2,305,152 Profit for the period attributable to the owners of Avecho Biotechnology Limited up 225.0% to 2,305,152 Explanation of profit from ordinary activities after tax Total revenue was increased by 409% for the period to $4,176,196 (2018: $819,892), largely due to the one-time licence fee from Ashland for the global exclusive manufacturing rights to Vital ET® and TPM® for use in personal care products. Other income was decreased by 68% to $285,013 (2018: $886,324), primarily nil (2018: $566,830) from termination and completion fees received from Terumo Corporation relating to TPM®/Oxymorphone and TPM®/Ropivacaine projects, and decrease in the R&D tax incentive credit to $197,513 (2018: $319,494) reflecting lower spend on R&D for the year. Expenses from continuing operations were considerably lower at $1,982,808 (2018: $3,206,026), consists of: ● ● ● lower legal fee $26,777 due to the arbitration settlement in prior year (2018: $133,947); lower employment costs $650,098 due to significant reduction in employee numbers (2018: $1,438,224); and lower spend on R&D of $122,069 (2018: $262,050). 3. Net tangible assets Reporting period Cents Net tangible assets per ordinary security 4. Control gained over entities Not applicable. 5. Loss of control over entities Not applicable. 0.32 Previous period Cents 0.17 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Appendix 4D Half-year report 6. Dividends Current period There were no dividends paid, recommended or declared during the current financial period. Previous period There were no dividends paid, recommended or declared during the previous financial period. 7. Dividend reinvestment plans Not applicable. 8. Details of associates and joint venture entities Not applicable. 9. Foreign entities Details of origin of accounting standards used in compiling the report: Not applicable. 10. Audit status The financial statements were subject to a review by the auditors and the review report is attached as part of the Half Year Report. 11. Attachments Details of attachments (if any): The 2019 half year report of Avecho Biotechnology Limited is attached. 12. Signed Signed Dr Greg Collier Chairman Date: 29 August 2019 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) ABN 32 056 482 403 Half Year Report - 30 June 2019 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Contents 30 June 2019 Corporate directory Directors' report Auditor's independence declaration Consolidated statement of profit or loss and other comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Directors' declaration Independent auditor's review report to the members of Avecho Biotechnology Limited 1 2 3 6 7 8 9 10 11 17 18 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Corporate directory 30 June 2019 Directors Dr Greg Collier (Executive Chairman) Dr Ross Murdoch (Non-Executive Director) Mr David Segal (Non-Executive Director) Company Secretary Ms Melanie Leydin Registered office Unit A8, 2A Westall Road Clayton VIC 3168 Australia Principal place of business Unit A8, 2A Westall Road Clayton VIC 3168 Australia Telephone: +61 3 9002 5000 Share register Computershare Investor Services Pty Limited Yarra Falls, 452 Johnston Street Abbotsford VIC 3067 Australia Telephone: +61 3 9415 5000 Fax: +61 3 9473 2500 Auditor Grant Thornton Audit Pty Ltd Collins Square Tower 5 727 Collins Street Melbourne VIC 3008 Stock exchange listing Avecho Biotechnology Limited securities are listed on the Australian Securities Exchange. (ASX code: AVE) Website www.avecho.com.au 2 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Directors' report 30 June 2019 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Avecho Biotechnology Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 30 June 2019. Directors The following persons were directors of Avecho Biotechnology Limited during the whole of the financial period and up to the date of this report, unless otherwise stated: Dr Greg Collier (Executive Chairman) (becoming Executive Chairman on 30 April 2019) Dr Ross Murdoch (Non-Executive Director) (resigned as CEO and Managing Director, and becoming Non-Executive Director on 30 April 2019) Mr David Segal (Non-Executive Director) Company secretaries Melanie Leydin (appointed 28 December 2018). Ms Leydin has 25 years’ experience in the accounting profession including 13 years in the Corporate Secretarial professions and is a company secretary and finance officer for a number of entities listed on the Australian Securities Exchange. She is a Chartered Accountant and a Registered Company Auditor. Since February 2000, she has been the principal of Leydin Freyer, specialising in outsourced company secretarial and financial duties. Mr Michael Sapountzis (appointed 28 December 2018, resigned 19 July 2019) Mr Sapountzis is a governance professional with extensive experience in providing executive support and managing the regulatory requirements for a variety of ASX listed companies. He holds degrees in Law and Commerce and a Graduate Diploma or Applied Corporate Governance. Principal activities The principal activities of the consolidated entity are the development, production, sale and licensing of products incorporating its patented platform technology TPM, for the pharmaceutical, skin care and animal health and nutrition industries. Review of operations Avecho’s core business strategy is to develop and commercialise its TPM® technology. Each of the business divisions, Human Health, Animal Health and Nutrition, and Production, have progressed with the common goal of advancing commercialisation of the Company’s TPM® technology. Human Health The final arbitration resolution cleared the way for management to return their focus to the operating activities of the business and advancing the commercialisation of TPM products. Avecho regained rights to develop TPM®/daptomycin and combined with the focused formulation development work, has resulted in Avecho now having a number of commercially attractive TPM® formulations in different stages of active development in its portfolio. In addition, following arbitration settlement Strides were granted: ● ● first right of refusal to “all Avecho human TPM® assets existing and not otherwise encumbered” at signing of the agreement, the terms of which will be negotiated in good faith at a later time; and a discount on the upfront, milestone and/or royalty payments associated with any/all deals which Strides completed with Avecho to a total accumulated value of the lesser of £5 million; or the costs claimed and submitted to SIAC as part of the SIAC Arbitration No. 001 of 2016 and SIAC Arbitration No. 002 of 2016. Discussions around suitable assets for joint development are well underway and should be completed soon. We believe Strides has the entrepreneurial capability and finances to accelerate development of any selected project or project(s). 3 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Directors' report 30 June 2019 Other human therapeutics initiatives include our partnership with Terumo which recently focussed on the TPM®-enhanced propofol injectable formulation, with formal toxicology studies recently completed and awaiting final report. In addition, our pre-IND meeting in December with the US Food and Drug Administration (FDA) obtained regulatory guidance and agreement on the preclinical, CMC and regulatory information to be included in an IND for Avecho’s three-day TPM®/oxymorphone patch. The FDA meeting marked a crucial point in the development of the TPM®/oxymorphone patch, helping us understand potential FDA concerns around a transdermal oxymorphone patch. We have initiated a new business development effort with this opportunity following FDA guidance. Animal Health portfolio The Animal Health business has a number of commercial partners evaluating the utility of TPM as a feed additive. They are undertaking performance studies in their own facilities as well as conducting new studies to assess TPM’s utility in various challenged environments. These studies have taken some time and we continue to be in discussions with interested parties. In parallel, we have progressed our European Food Safety Authority (EFSA) application for TPM to be utilised as a feed additive in the EU to the final stages, recently being advised the EU Reference Lab has accepted our validated analytical methods (analytical methods for detected TPM in animal eds and premixed), so we have ticked another important box that is part of the approval process. Production portfolio We recently announced that Ashland Global Holdings Inc. (NYSE: ASH), signed an agreement to acquire the global exclusive manufacturing rights to Vital ET® and TPM® for use in personal care products for a one-time licence fee of US$2.5M (approximately A$3.5 million). Under the agreement, Ashland became the exclusive developer, manufacturer and seller of Vital ET® and TPM® for use in the global personal care products market. Ashland acquired all Avecho’s interests in the Vital ET®, under the agreement. This provided Avecho an injection of non-dilutive capital and strengthening of our cash position. Based on historical revenues received from our partnership with Ashland, this payment locked in revenue that we may have expected to accrue over a four-plus year period, and based on our current cash burn of approximately A$1.5 million per year, and the associated reduction in manufacturing costs, this is a meaningful extension to our cash runway. Importantly, Avecho retained the rights to manufacture TPM® for human and animal health applications and has also granted Ashland a right of first refusal in relation to the relevant manufacturing patents, which allows Ashland to submit a matching offer in the event Avecho receives an offer from a third party to acquire the patents. The one-time payment to Avecho is consistent with the company’s stated strategy to move its focus to its core of human health business, while monetising non-core business units. Avecho retains the intellectual property and rights to manufacture TPM® for use outside of the personal care space including in the human and animal health markets. Review of financial results The profit for the consolidated entity after providing for income tax amounted to $2,305,152 (30 June 2018: loss of $1,844,097). Total revenue from continuing operations for the 6 months ended 30 June 2019 was $4,176,196 (2018: $819,892), with significantly increased royalties and licence fees of $3,595,706 (2018: $136,558). This was due to $3,571,429 (USD$2,500,000) licence fee received from Ashland for the global exclusive manufacturing rights for Vital ET® and TPM® for use in personal care products. Other income decreased by 68% to $285,013 (2018: $886,324), primarily from nil (2018: $566,830) termination and completion fees received from Terumo Corporation relating to TPM®/Oxymorphone and TPM®/Ropivacaine projects, and a decrease in the R&D tax incentive credit to $197,513 (2018: $319,494) reflecting lower spend on R&D for the half year. 4 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Directors' report 30 June 2019 Expenses from continuing operations were considerably lower at $1,982,808 (2018: $3,206,026), consists of: ● ● ● lower legal fees $26,777 due to the arbitration settlement in the prior year (2018: $133,947); lower employment costs $650,098 due to significant reduction in employee numbers (2018: $1,438,224); and lower spend on R&D of $122,069 (2018: $262,050) As at 30 June 2019, the consolidated entity held $4,689,777 in cash and cash equivalents (31 December 2018: $2,111,171). The net assets of the consolidated entity increased by $2,308,236 to $6,208,042 as at 30 June 2019 (31 December 2018: $3,899,806). Working capital, being current assets less current liabilities, was $4,960,823 (31 December 2018: $2,374,763). The net operating cash inflow for the period was $2,607,310 (2018: outflow $1,016,144). This is mainly due to $3,571,429 increase in licence fee from Ashland, offset by $1,252,095 decrease in R&D tax incentive receipts. Significant changes in the state of affairs On 24 May 2019, the Company changed its name from Phosphagenics Limited (ASX: POH) to Avecho Biotechnology Limited (ASX: AVE), effectively from 27 May 2019. On 20 June 2019, the company's distribution partner ISP Investments LLC, a subsidiary of Ashland Global Holdings Inc. (NYSE:ASH) (Ashland), signed an agreement to acquire the global exclusive manufacturing rights to Vital ET® and TPM® for use in personal care products for a one-time licence fee of US$2.5M (approximately A$3.5 million). There were no other significant changes in the state of affairs of the consolidated entity during the financial period. Matters subsequent to the end of the financial period No matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report. This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001. On behalf of the directors Dr Greg Collier Chairman 29 August 2019 5 Collins Square, Tower 5 727 Collins Street Melbourne VIC 3008 Correspondence to: GPO Box 4736 Melbourne VIC 3001 T +61 3 8320 2222 F +61 3 8320 2200 E info.vic@au.gt.com W www.grantthornton.com.au Auditor’s Independence Declaration To the Directors of Avecho Biotechnology Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Avecho Biotechnology Limited for the half year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and b no contraventions of any applicable code of professional conduct in relation to the review. Grant Thornton Audit Pty Ltd Chartered Accountants M A Cunningham Partner – Audit & Assurance Melbourne, 29 August 2019 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 6 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Consolidated statement of profit or loss and other comprehensive income For the period ended 30 June 2019 Consolidated Note 30 June 2019 30 June 2018 $ $ Revenue from contracts with customers Cost of sales Gross profit 5 4,176,196 (180,842) 3,995,354 819,892 (369,313) 450,579 7,593 285,013 292,606 25,026 886,324 911,350 (650,098) (26,777) (122,069) (295,518) (345,580) (539,741) (3,025) (1,438,224) (133,947) (262,050) (360,524) (348,294) (157,000) (505,987) - 2,305,152 (1,844,097) - - 2,305,152 (1,844,097) Items that may be reclassified subsequently to profit or loss Foreign currency translation 13 2,134 Other comprehensive income for the period, net of tax 13 2,134 2,305,165 (1,841,963) Cents Cents Interest revenue calculated using the effective interest method Other income Employee and directors benefits expenses Legal expenses Research expenses Consultancy and professional fees Amortisation and depreciation Impairment losses Other expenses Finance costs 6 7 Profit/(loss) before income tax expense Income tax expense Profit/(loss) after income tax expense for the period attributable to the owners of Avecho Biotechnology Limited Other comprehensive income Total comprehensive income for the period attributable to the owners of Avecho Biotechnology Limited Basic earnings per share Diluted earnings per share 0.15 0.15 (0.12) (0.12) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 7 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Consolidated statement of financial position As at 30 June 2019 Consolidated 31 December Note 30 June 2019 2018 $ $ Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Right-of-use assets Other current assets Total current assets 4,689,777 612,583 90,845 46,978 203,608 5,643,791 2,111,171 677,031 99,849 359,214 3,247,265 123,266 1,126,000 1,249,266 159,582 1,395,000 1,554,582 6,893,057 4,801,847 Current liabilities Trade and other payables Lease liabilities Provisions Total current liabilities 374,689 51,607 256,672 682,968 571,961 300,541 872,502 Non-current liabilities Provisions Total non-current liabilities 2,047 2,047 29,539 29,539 685,015 902,041 6,208,042 3,899,806 Non-current assets Plant and equipment Intangibles Total non-current assets 8 Total assets Liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses 232,632,424 232,632,424 28,271,821 30,415,923 (254,696,203) (259,148,541) Total equity 6,208,042 3,899,806 The above consolidated statement of financial position should be read in conjunction with the accompanying notes 8 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Consolidated statement of changes in equity For the period ended 30 June 2019 Issued capital $ Consolidated Balance at 1 January 2018 Accumulated losses Total equity $ $ Reserves $ 231,274,227 30,351,533 (255,157,521) 6,468,239 Loss after income tax expense for the period Other comprehensive income for the period, net of tax - 2,134 (1,844,097) - (1,844,097) 2,134 Total comprehensive income for the period - 2,134 (1,844,097) (1,841,963) 1,371,688 (13,491) - 38,709 - 1,371,688 (13,491) 38,709 30,392,376 (257,001,618) 6,023,182 Transactions with owners in their capacity as owners: Issue of share capital Transaction costs Employee equity settlement benefits Balance at 30 June 2018 232,632,424 Issued capital $ Consolidated Balance at 1 January 2019 232,632,424 Adjustment to opening accumulated losses for change in accounting standard (Note 2) - Balance at 1 January 2019 - restated Accumulated losses Total equity $ $ Reserves $ 232,632,424 30,415,923 (259,148,541) - 3,899,806 (7,115) (7,115) 30,415,923 (259,155,656) 3,892,691 Profit after income tax expense for the period Other comprehensive income for the period, net of tax - 13 2,305,152 - 2,305,152 13 Total comprehensive income for the period - 13 2,305,152 2,305,165 Transactions with owners in their capacity as owners: Transfer Employee equity settlement benefits - (2,154,301) 10,186 2,154,301 - 10,186 28,271,821 (254,696,203) 6,208,042 Balance at 30 June 2019 232,632,424 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 9 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Consolidated statement of cash flows For the period ended 30 June 2019 Consolidated 30 June 2019 30 June 2018 $ $ Cash flows from operating activities Receipts from customers (inclusive of GST) Receipt of recoveries Receipt of government grants Payments to suppliers and employees (inclusive of GST) 4,429,842 87,500 (1,910,032) 1,297,536 1,252,095 (3,565,775) Net cash from/(used in) operating activities 2,607,310 (1,016,144) Cash flows from investing activities Interest received 15,907 25,683 Net cash from investing activities 15,907 25,683 Cash flows from financing activities Proceeds from issue of shares Cost of issue of shares Principle element of lease payments (44,611) 1,371,688 (13,491) - Net cash from/(used in) financing activities (44,611) 1,358,197 Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period 2,578,606 2,111,171 367,736 2,898,596 Cash and cash equivalents at the end of the financial period 4,689,777 3,266,332 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 10 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Notes to the consolidated financial statements 30 June 2019 Note 1. General information The financial statements cover Avecho Biotechnology Limited (previously Phosphagenics Limited) as a consolidated entity consisting of Avecho Biotechnology Limited and the entities it controlled at the end of, or during, the period. The financial statements are presented in Australian dollars, which is Avecho Biotechnology Limited's functional and presentation currency. Avecho Biotechnology Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Unit A8, 2A Westall Road Clayton VIC 3168 Australia A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 29 August 2019. Note 2. Significant accounting policies These general purpose financial statements for the interim half-year reporting period ended 30 June 2019 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2019 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the policies stated below. New Accounting Standards and Interpretations adopted AASB 16: Leases The consolidated entity has adopted AASB 16 from 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. Impact on application The consolidated entity has adopted AASB 16 using the modified retrospective approach whereby the consolidated entity has recognised the cumulative effect of initially applying this standard as an adjustment to the opening balance of equity as at 1 January 2019. Accordingly, the consolidated entity has not restated comparative balances in this set of financial statements. 11 Avecho Biotechnology Limited (Formerly known as Phosphagenics Limited) Notes to the consolidated financial statements 30 June 2019 Note 2. Significant accounting policies (continued) On adoption of AASB 16, the consolidated entity recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of AASB 117 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted average incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 5.5%. The associated right-of-use assets for these leases were measured on a retrospective basis as if AASB 16 had always been applied, with the incremental borrowing rate applied as at each lease’s commencement date and the assets depreciated on a straight-line basis over the term of the lease. The provisions recognised in respect of onerous lease contracts were netted off against the associated right-of-use assets at the date of transition. Adjusted opening as at 1 January 2019 under AASB 16 Right-of-use assets Lease liabilities Accumulated losses 87,244 (94,359) 7,115 Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. Lease Liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the period ended 30 June