Annual Report 2022 53 41 SHARE BASED PAYMENTS Area of focus How our audit addressed it As disclosed in note 25, the Group currently has options issued to both employees and Directors. These options include both market and non-market vesting criteria, including: — Service (employment) conditions; and — Market-based conditions, tied to achieving share price milestones. The valuation of such options requires significant judgement and expertise, particularly in determining the likelihood of achieving the marketbased conditions and satisfying all nonvesting conditions. The Group engages independent specialists to appraise the fair value of its share-based payment arrangements that involve market-based conditions and assessment of satisfying nonvesting conditions. The Group recognises a vesting charge apportioned over the service condition, immediately if there is a market condition or based on management’s assessment of the likelihood of other non-market conditions. This matter was considered a Key Audit Matter due to the complexity of arrangements and judgement applied in valuing the share-based payments. Our audit procedures included: — Agreeing the material terms and conditions of any new share-based payment arrangement to plan documentation; — Examining the share-based payment arrangements to determine the appropriateness of identifying each share-based payment arrangement, including assessment of the grant date; — Examining the appropriateness of the amortisation model for accreting share-based payment expense to the profit or loss over the vesting period; — Assessing support for likely outcome of vesting conditions used to value share-based payments; — Assessing support for satisfaction of achieving non-vesting conditions which are not market conditions; and — Assessed the competence and qualification of management’s specialist. We also assessed the adequacy of disclosures in relation to the share options in the Remuneration Report and notes to the financial report. INVESTMENT IN NYRADA Area of focus How our audit addressed it During the period and as disclosed in note 10, the Group continue to hold an investment in Nyrada Inc. (Nyrada), a previous subsidiary of the Group prior to its listing on the ASX. During the prior year it was determined that the Group’s diluted shareholding in Nyrada had fallen below 20% and therefore begun accounting for the investment at fair value due to losing their significant influence. Prior to this, the investment was accounted for using the equity method of accounting. Our audit procedures included the following; — Assessing the appropriateness of the accounting treatment of the group’s shareholding; — Recalculating the diluted percentage shareholding on Noxopharm in Nyrada as at 30 June 2022 to appraise management’s assessment that continuing to account for the investment at fair value was appropriate; — Assessed the competence and qualifications of management’s expert;
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