Alternus Energy Group
Annual Report 2014

Plain-text annual report

Confidence through controlAnalytica Annual Report (cid:51) Addresses a well-known condition using proven treatment (cid:51) Massive market: 1 in 3 women experience condition (cid:51)Personally controlled eHealth product (cid:51)Consumer-level medical device – small, easy to use and clean, discreet (cid:51)Significant treatment and patient management benefits for clinicians (cid:51)Low risk product (cid:51) Direct to consumer model means we’re not reliant on multinationals or distributors (cid:51) Early clinician involvement and input means relevance and a channel into the market (cid:51)Clinician advising board (cid:51)Early market research - eyes wide open, continuing research (cid:51) Global marketing and sales strategy underway (cid:51)Subscription based revenue (cid:51) Data-centric product – easy upgrades and feature enhancements (cid:51) Integrated data mining to drive reimbursement strategy (cid:51)Approved for sale in Australia and Europe through TGA listing and CE Mark (cid:51)Production easily duplicated and scaled (cid:51)Dual operating systems - Android and iOS (cid:51)Low infrastructure, manufacturing and overhead costsA free smartphone app that manages data from the device and provides reminders and real time audio and visual feedback during exercises.A robust, discreet, and highly mobile recharging and storage case for the device.The DeviceWeb PortalThe AppCharging CaseSmall, discreet and easy to use. The device has patent-pending sensors to measure the pelvic floor muscle force directly. A secure website where the patients can access exercise history and news, generates alerts and encouragement.PeriCoach System - Patient ExperienceUrinary Incontinence E-Health systemAnalytica Limited ABN: 12 006 464 866 Financial Statements For the Year Ended 30 June 2014 Analytica Limited Contents For the Year Ended 30 June 2014 Financial Statements Directors' Report Corporate Governance Statement Auditors Independence Declaration under Section 307C of the Corporations Act 2001 Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Summary of Significant Accounting Policies Notes to the Financial Statements Directors' Declaration Independent Audit Report Additional Information for Listed Public Companies Page 1 13 21 22 23 24 25 26 35 61 62 64 Analytica Limited Directors' Report 30 June 2014 The directors present their report on Analytica Limited for the year ended 30 June 2014. 1. General information Information on directors The names, qualifications, experience and special responsibilities of each person who has been a director during the year and to the date of this report are: Dr Michael Monsour Qualifications Experience MBBS-HONS, FACRRM, FAICD Dr Michael Monsour is a Medical Practitioner with extensive interests in Queensland medical and dental centres. Michael Monsour graduated from the University of Queensland in 1977 in medicine with honours. He operates a medical management company, which provides management support to medical and dental practitioners. He is the principal of Godbar Software (established 1988) which is one of the leading software developers of Occupational Health, Safety and Medical Accounting software packages in Australia. Interest in shares and options Direct: Dr MP Monsour Director's interest in ordinary shares: 2,606,337 Indirect (ordinary shares): MPAMM Pty Ltd 38,484,118 Halonna Pty Ltd 47,984,118 MP Monsour Medical Practice Pty Ltd 11,880,611 Other related parties: 17,084,482 ordinary shares Special responsibilities Other directorships in listed entities held in the previous three years Unlisted Options 13,000,000 @3.24c Expire 29/10/2018 Dr Michael Monsour is a member of the Audit Committee and the Remuneration Committee. Dr Monsour was formerly a director of the listed entity Invion Limited (IVX) previously known as CBio Limited (January 2007 to November 2011). 1 Analytica Limited Directors' Report 30 June 2014 1. General information continued Information on directors continued Mr Ross Mangelsdorf Qualifications Experience B.Bus, FCA, CTA, MAICD Mr Mangelsdorf is a Director of a Queensland based land development Company and has been a Director/partner of a chartered accounting firm for 33 years. He works with SME production, manufacturing and retail firms assisting with business, taxation and management services. Interest in shares and options Direct: Ross Mangelsdorf Director's interest in ordinary shares: 14,222 Indirect: RM & JM Mangelsdorf: 14,222 ordinary shares Tambien Pty Ltd: 17,253,200 ordinary shares Other related parties: 3,190,758 ordinary shares. Special responsibilities Other directorships in listed entities held in the previous three years Mr Warren Brooks Qualifications Experience Interest in shares and options Special responsibilities Other directorships in listed entities held in the previous three years Unlisted Options 10,000,000 @ 3.24c Expire 29/10/18 Mr Mangelsdorf performs the function of Business Development Manager and is a member of the Audit and Risk Committee, and Remuneration Committee. Mr Mangelsdorf was formerly a director of the listed entity Invion Limited (IVX) previously known as CBio Limited (November 2011). Securities Institute Certificate, Diploma in Financial Planning Warren previously had 30 years experience working in Investment Banking and Stockbroking. Indirect director's interest: W Brooks Investments Pty Ltd 31,759,341 ordinary shares Unlisted Options 8,000,000 @ 3.24c Expire 29/10/18 Mr Brooks is a member of the Remuneration Committee. Mr Brooks was the Managing Director and Founder of boutique Financial Advisory firm Clime AFM Pty Ltd which was a wholly owned subsidiary of Clime Investment Management Ltd, an ASX listed Company. Warren founded Australian Financial Management (Investment) Pty Ltd in 1998 and sold the business to Clime Investment Management Ltd in 2006. Mr Brooks was formerly a director of the listed entity Invion Limited (IVX) previously known as CBio Limited (November 2011). 2 Analytica Limited Directors' Report 30 June 2014 1. General information continued Information on directors continued Mr Carl Stubbings Qualifications Experience Interest in shares and options Other current directorships in listed entities Appointed 13 January 2013 Bachelor or Science degree from the Queensland University of Technology Mr Stubbings’ experience in the sector spans over 30 years with a focus on medical diagnostics as well as biotechnology. He has specialised in sales with a particular emphasis on marketing across North America, Latin America, Asia Pacific and Europe as well as roles covering manufacturing and administration. Previously a board member of the Queensland North America Biotech Advisory Council. Indirect: C&K Stubbings Super Fund: 1,627,450 ordinary shares Currently focused on developing and executing the commercialisation strategy including licensing and partnership agreements, Mr Stubbings’ position as chief business officer at ASX-listed Benitec Biopharma Limited also sees him responsible for managing shareholder and investor relations. Mr Stubbings is also currently a non-executive director of unlisted public company Sienna Diagnostics, providing strategic direction for the company’s high performing cancer diagnostic test. Directors have been in office since the start of the year to the date of this report unless otherwise stated. Principal activities and significant changes in nature of activities The principal activities of Analytica Limited during the year were: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) The development of strategies on commercial sales of PeriCoach; The development of intellectual property of medical device and mobile health application in relation to patents and systems in the pelvic floor exercise field (PeriCoach); Development of intellectual property of medical device to assist neurologist and rehabilitatise treatment of muscular spasticity. (ELF-2). The development of intellectual property in the medical device field in relation to patents in the burette field (AutoStart Infusion System); The development of strategies for commercial sales of burette product; There were no significant changes in the nature of Analytica Limited's principal activities during the year. 3 Analytica Limited Directors' Report 30 June 2014 2. Operating results and review of operations for the year Operating results The loss of the Company amounted to $ (3,176,008), after providing for income tax. This represented an increase on the loss result reported for the year ended 30 June 2013 of (1,135,751). Significant expense increase for research and development of $2,195,794 (2013:$1,148,484) was largely due the increased development of the PeriCoach system . Marketing $396,620 (2013:145,367) increased with the release of the next phase of the PeriCoach system and an increase in administration $516,084 (2013:$302,785) and options expense $515,862 (2013: nil). Review of operations A review of the operations of the Company during the financial year and the results of those operations are as follows: PeriCoach® The PeriCoach system is a sensor device, mobile medical application and cloud database mobile health application that has been developed in association with leading specialist physiotherapists, midwives and urologists, to address female stress urinary incontinence, bladder leakage, most commonly caused by a weak pelvic floor. This is estimated to impact 4.2 million Australians and a total financial cost to Australia of $42.9 billion. Performing exercises to engage and train the pelvic floor muscle group is one of the most effective ways to treat and even reverse stress urinary incontinence. Correct technique is vital but difficult to achieve due to the hidden nature of the muscles. The PeriCoach system provides biofeedback to the patient when performing exercises, and uses wireless bluetooth communication to provide provide a compact, discreet and portable solution backed by powerful data analysis and clinician support. Clinical advisory boards in Australia and the United States of America have provided valuable guidance to address the needs of both markets, supported by useability trials. The PeriCoach has been in development for 4 years and is on schedule for public release in the Australian domestic market in October this year. The PeriCoach sensor arrangement patent is in PCT National phases and Analytica is progressing applications in Europe, Brazil, Australia, US, India, China, and Japan. Trademarks and Design Registrations have been applied for, and in many cases have already been granted in these jurisdictions. Registration on the Australian Register of Therapeutic Goods was achieved in Nov 2013, permitting sales in Australia with applications expected to be lodged for CE and FDA approvals for the European and United States markets in the first half of the 2014/15 financial year. Controlled market release was commenced in June 2014 utilising units from the first production run at the end of May 2014. This controlled market release permits the testing of production, logistic support and sales systems before public market release. Regional sales representatives are progressively being recruited to develop a network of Pericoach certified clinicians. The Australian, (and the US government) recognise bladder leakage as a chronic disease and have funding models in place to financially assist patients access professional help from their GP’s and clinicians. ELF2 Analytica continues the development of this medical device for treatment of muscular spasticity. The ELF2 device delivers a low-frequency voltage used by neurologists to locate nerve endings during Botulinum neurotoxin A injection treatment. Analytica’s development of this device, licenced from Gorman ProMed Ltd in 2012, is to enhance usability features of a device currently in use and respected by the market. Analytica has in the last few months applied for a patent for simultaneous low-frequency stimulation and electromyography functionality for the ELF2 product currently in early development. AutoStart Infusion System Analytica’s product in the market is the AutoStart Infusion System. This product, despite overwhelming evidence of cost effectiveness and safety has struggled for a foothold in the small Australian market. The board commissioned South South Capital Partners to source partners in other countries to commercialise this outstanding product, resulting in a distribution agreement signed with Taiwan Allied Dragon Inc (TAD). TAD Chairman Mr Cotch Liao, indicated that Taiwan has a market roughly the size of Australia, with a good health system backed by the Government and Insurance companies. The regulatory process for permitting the AutoStart Infusion System to be used in Taiwan has 4 Analytica Limited Directors' Report 30 June 2014 2. Operating results and review of operations for the year continued Review of operations continued taken much longer than expected. The comprehensive regulatory requirements and research from the Taiwanese market has resulted in a review of features of the burette in order to target a lower cost. Negotiations in Brazil are on hold pending a possible lower cost model. Analytica continues to develop and protect trademarks and design registrations. Analytica's licensed burette patents (1995) are maintained for the North American, Australian, and European markets and more recent (2006) patent-pending embodiments are extended in these regions and China until 2026 its Intellectual Property through patents, Analytica's Flush feature developed in 2008 is currently in the Patent Cooperation Treaty (PCT) national phase, and has been granted patents in China, with US, Australia and Germany pending. A novel 2012 improvement in the AutoStart burette that will dramatically simplify usability has also progressed to PCT and is currently entering the national phase of the PCT process. Analytica has lodged (2013) a patent for simultaneous low frequency electrical stimulation and electromyography device, and this is currently in PCT. Analytica also has patents pending in the PCT national phase for the PeriCoach patents lodged in 2011. These cover Australia, US, Japan, Brazil, China, India, Germany, and France - jurisdictions where most of the world's medical device expenditure occurs. Design registrations have also been granted in these jurisdictions with US and European remaining pending. Analytica's R&D team has developed a number of novel ideas for future products and product enhancement during the PeriCoach product development process. Analytica aims to investigate these ideas and assess their patentability and commercial viability in the coming year. Analytica also maintains a number of registered trademarks in the various jurisdictions above, and owns the top-level (.com) internet domains with these trademarks and other relevant keywords. 3. Financial review Financial position The net assets of Analytica Limited have increased by $ 2,207,775 from 30 June 2013 to $ 2,374,522 at 30 June 2014. This increase is largely due to the following factors: (cid:120) (cid:120) (cid:120) (cid:120) Cash proceeds from revenue raising, Recognition of prepaid creditors, Recognition of inventory on hand, and Capitalised software. The directors have secured capital from the recent share issue, to secure the company’s financial position to complete the development of the PeriCoach, continue developing the ELF2 and support marketing of the AutoStart Infusion System and the PeriCoach launch. 4. Other items Significant changes in state of affairs Other than the imminent release of the Pericoach and the increased expenditure to achieve that release, there have been no significant changes in the state of affairs of the Company during the year. 5 Analytica Limited Directors' Report 30 June 2014 4. Other items continued Events after the reporting date No matters or circumstances have arisen since the end of the year which significantly affected or could significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in future financial years. Future developments and results With the recent Australian controlled market release of the PeriCoach system, the next step is the general release of the product for sale with a public market campaign in the last quarter 2014. With an established base of local accredited clinicians and informed GPs, the PeriCoach public campaign is designed to raise awareness among women that there is a solution to this hidden issue. The primary aim is to encourage women to discuss their pelvic floor fitness with their GPs and partner with PeriCoach-accredited clinicians. The general release will incorporate additional features including iOS-capable (Apple) functionality to the existing android device. The company is preparing for international expansions in 2015, concentrating on marketing, sales and regulatory affairs, and scaling the manufacturing and IT systems to cope with larger numbers and different jurisdictions. Environmental issues The Company's operations are not regulated by any significant environmental regulations under a law of Commonwealth or of a state or territory of Australia. the Company secretary The following person held the position of Company secretary at the end of the year: Bryan Dulhunty (COSA Pty Ltd) has been the company secretary since 15 October 2012. CoSA provides specialised Company Secretarial and CFO services to Life Science Companies. Bryan has extensive experience in the biotech industry having held roles covering Chairman, Managing Director, Company Secretary, CFO, and Non Executive Director of listed and non listed biotech companies. Meetings of directors During the year, 10 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows: Directors' Meetings Audit Committee Remuneration Committee Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend Number attended Dr Michael Monsour Mr Ross Mangelsdorf Mr Warren Brooks Mr Carl Stubbings 13 13 13 9 13 13 13 9 2 2 - - 2 2 - - 1 1 1 - 1 1 1 - 6 Analytica Limited Directors' Report 30 June 2014 Indemnification and insurance of officers and auditors No indemnities have been given or insurance premiums paid, during or since the end of the year, for any person who is or has been an officer or auditor of Analytica Limited. Options At the date of this report, the unissued ordinary shares of Analytica Limited under option are as follows: Unlisted options Grant Date 30 October 2013 12 February 2014 22 May 2014 Date of Expiry 29 October 2018 12 February 2019 22 May 2019 Exercise Price $ 0.0324 $ 0.0444 $ 0.0738 Number under Option 44,500,000 5,000,000 4,375,000 53,875,000 Option holders do not have any rights to participate in any issues of shares or other interests in the Company. For details of options issued to directors and other key management personnel as remuneration, refer to the remuneration report. Non-audit services The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor's independence for the following reasons: (cid:120) (cid:120) all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. The following fees were paid or payable to the external auditors for non-audit services provided during the year ended 30 June 2014: (2013 nil): Other review Auditor's independence declaration 2014 $ 2013 $ 1,500 - The auditor's independence declaration in accordance with section 307C of the Corporations Act 2001 for the year ended 30 June 2014 has been received and can be found on page 21 of the financial report. 7 Analytica Limited Directors' Report 30 June 2014 Remuneration report (audited) Remuneration policy The remuneration policy of Analytica Limited has been designed to align key management personnel (KMP) objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting Analytica Limited's financial results. The Board of Analytica Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage Analytica Limited, as well as create goal congruence between directors, executives and shareholders. The Board's policy for determining the nature and amount of remuneration for key management personnel of Analytica Limited is as follows: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) The remuneration policy has been developed by the Remuneration Committee and approved by the Board following professional advice from independent external consultants. All key management personnel receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits, and performance incentives. Performance incentives are based on predetermined key performance indicators. Incentives paid in the form of options or rights are intended to align the interests of the KMP and Company with those of the shareholders. In this regard, key management personnel are prohibited from limiting risk attached to those instruments by use of derivatives or other means. The Remuneration Committee reviews key management personnel packages annually by reference to Analytica Limited’s performance, executive performance and comparable information from industry sectors. The performance of key management personnel is measured against criteria agreed bi-annually with each executive and is based predominantly on the forecast growth of Analytica Limited’s profits and shareholders’ value. All bonuses and incentives must be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can recommend changes to the Committee’s recommendations. Any changes must be justified by reference to measurable performance criteria. The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. Key management personnel receive a superannuation guarantee contribution required by the law, which is currently 9.25% (2013: 9%), and do not receive any other retirement benefits. Some individuals, however, have chosen to sacrifice part of their salary to increase payments towards superannuation. Upon retirement, key management personnel are paid employee benefit entitlements accrued to the date of retirement. Key management personnel are paid a percentage of between 5-10% of their salary in the event of redundancy. Any options not exercised before or on the date of termination will lapse. All remuneration paid to key management personnel is valued at the cost to the Company and expensed. The Board's policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Remuneration Committee determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting, the current maximum is $ 550,000 which was approved at the 2011 AGM. In November 2004 the Board set individual directors fees at $50,000 per annum plus statutory superannuation and the chairman's fee at $75,000 plus statutory superannuation. Based on the current board structure total fees paid on a yearly basis will be $225,000 (2013:$175,000) plus statutory superannuation. Entities associated with Mr Ross Mangelsdorf were paid consulting, accounting and taxation services fees during the year of $73,600 (2013:$52,500) plus preparation fee for the annual tax return of $8,545 (2013:$13,500). 8 Analytica Limited Directors' Report 30 June 2014 Remuneration report (audited) continued Remuneration policy continued Key management personnel employed by the Company during the year, in addition to the Company’s Directors, is the Company’s Operations Manager, Mr Geoff Daly (appointed on the 7 November 2005) and accepted the position of CEO on the 12 February 2014. Mr Daly has extensive experience in the design of medical devices, prototyping and manufacturing. Mr Daly is employed by the Company under the terms and conditions set out in an employment contract. Due to the size of the company and the nature of its operations, the contract is open- ended and not for a specific time frame. Mr Daly’s contract can be terminated by either party giving notice commensurate with the period of employment, which varies from 1 to 4 weeks. There is no provision in the employment contract for the payment of any termination payments other than accrued statutory entitlements. Key management personnel are also entitled and encouraged to participate in the employee share and option arrangements to align their interests with shareholders' interests. Options granted under these arrangements do not carry dividend or voting rights. Each option is entitled to be converted into one ordinary share and is valued using the Black-Scholes methodology. Key management personnel who are subject to these arrangements are subject to a policy governing the use of i.e. put external hedging arrangements. Such personnel are prohibited from entering into hedge arrangements, options, on unvested shares and options which form part of their remuneration package. Relationship between remuneration policy and company performance The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. Two methods have been applied to achieve this aim, the first being a performance-based bonus based on key performance indicators, and the second being the issue of options to directors and executives to encourage the alignment of personal and shareholder interests. The Company believes this policy has been effective in increasing shareholder wealth over the past 5 years. The following table shows the gross revenue, profits and dividends for the last five years for the Company, as well as the share prices at the end of the respective financial years. 2014 2013 2012 2011 2010 Revenue Net Profit Share Price at Year-end Dividends Paid (cents) Performance conditions linked to remuneration $ 587,483 $ $ 194,705 541,262 (3,176,008) (1,135,752) (2,222,009) 0.02 - 0.02 - 0.04 - $ $ 272,878 290,548 (203,176) (1,287,837) 0.02 - 0.03 - Company executive fees are not linked to the performance of the Company. However, to align executives' interests with shareholder interests, the executives are encouraged to hold shares in the Company. Employment details of members of key management personnel The following table provides employment details of persons who were, during the year, members of key management personnel of Analytica Limited. The table also illustrates the proportion of remuneration that was performance based and the proportion of remuneration received in the form of options. 9 Analytica Limited Directors' Report 30 June 2014 Remuneration report (audited) continued Directors Dr Michael Monsour Mr Ross Mangelsdorf Mr Warren Brooks KMP Geoffrey Daly Geoffrey Daly Position Director Director Director CEO CEO Service Agreements Performance based remuneration Options Value $ Options (Number) Unlisted Options @ 3.24c Expire 19/10/18 118,910 13,000,000 @ 3.24c Expire 19/10/18 91,469 10,000,000 @ 3.24c Expire 19/10/18 73,175 8,000,000 @ 3.24c Expire 19/10/18 @ 4.50c Expire 12/02/19 54,882 45,735 6,000,000 5,000,000 On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of director. The remuneration and other terms of employment for the Managing Director and senior executives are set out in formal service agreements as summarised below. All service agreements are for an unlimited duration. The agreements for executives may be terminated by giving six weeks notice (except in cases of termination for cause where termination is immediate). In cases of resignation, no separation payment is made to the executive, except for amounts due and payable up to the date of ceasing employment, including accrued leave entitlements. 10 Analytica Limited Directors' Report 30 June 2014 Remuneration report (audited) continued Remuneration details for the year ended 30 June 2014 The following table of benefits and payment details, in respect to the year, the components of remuneration for each member of the key management personnel of Analytica Limited. Table of benefits and payments short term cash salary fees bonus non monetary other short-term post employment pension and superannuation other post employment long term employee benefits termination share based payments options and rights shares and units cash-settled $ $ $ $ $ $ $ $ $ $ $ $ 2014 Directors Dr Michael Monsour Mr Ross Mangelsdorf Mr Warren Brooks Mr Carl Stubbings KMP Geoffrey Daly 2013 Directors Dr Michael Monsour Mr Ross Mangelsdorf Mr Warren Brooks KMP Geoffrey Daly - - - - - - - - - - - - 75,000 50,000 50,000 23,718 210,000 408,718 6,937 4,625 4,625 2,194 19,425 37,806 75,000 50,000 50,000 23,718 210,000 408,718 - - - - - - short term post employment pension and superannuation other post employment cash salary fees bonus non monetary other short-term $ $ $ $ $ $ $ 75,000 50,000 50,000 210,000 385,000 - - - - - - - - - - - - - - - 75,000 50,000 50,000 210,000 385,000 6,750 4,500 4,500 18,900 34,650 118,910 91,469 73,175 - 100,617 384,171 - - - - - - share based payments options and rights $ shares and units cash-settled $ - - - - - - - - - - - - - - - - - - - - - 200,847 146,094 127,800 25,912 335,519 836,172 $ 81,750 54,500 54,500 228,900 419,650 - - - - - - - - - - - - - - - - - - - - - - - - - - 5,477 5,477 long term employee benefits termination $ $ - - - - - 11 Analytica Limited Corporate Governance Statement 30 June 2014 The Board is committed to achieving and demonstrating the highest standards of corporate governance. The Board continues to refine and improve the governance framework and practices in place to ensure they meet the interests of shareholders. The Company complies with the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations (the Principles). Copies of Analytica Limited's Board and Board committee charters and key corporate governance policies or summaries are available in the Corporate Governance section of the website at www.analyticamedical.com. Principle 1: Lay solid foundations for management and oversight Role of the Board and Management The Board of Directors is responsible for the corporate governance of the Company. The Board provides strategic guidance for the Company, and effective oversight of management. The Board guides and monitors the business and affairs of Analytica Limited on behalf of the shareholders by whom they are elected and to whom they are accountable. The Board has adopted a Charter that details its roles and responsibilities, which is available on our website. The Board has delegated responsibility for day-to-day management of the Company to the CEO and there is a formal delegations structure in place which sets out the powers delegated to the CEO and those specifically retained by the Board, these delegations are reviewed on a regular basis. Responsibilities of the Board The Board is responsible for: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) Overseeing the company, including its control and accountability systems; Appointing and removing the CEO; Where appropriate, ratifying the appointment and removal of senior executives; Providing input into and final approval of management’s development of corporate strategy and performance objectives; Reviewing, ratifying and monitoring systems of risk management and internal controls, codes of conduct and legal compliance; Monitoring senior executives performance and implementation of strategy; Ensuring appropriate resources are available to senior executives; Approving and monitoring the progress of major capital expenditure, capital management and acquisitions and divestures; and Approving and monitoring financial and other reporting. 13 Analytica Limited Corporate Governance Statement 30 June 2014 Allocation of individual responsibilities Formal letters of appointment are provided to all new Directors setting out key terms and conditions of their appointment. Induction All new Directors participate in a formal induction process co-ordinated by the Company Secretary. This induction process includes briefings on the Company’s financial, strategic, operational and risk management position, the Company’s governance framework and key developments in the Company and the industry and environment in which it operates. Evaluation of Directors in compliance with the A performance evaluation for Directors and Senior Executives take place at established evaluation process. The Company’s policy for Directors and Senior Executive evaluation is available on the Company’s website. least annually, Principle 2: Structure the Board to add Value The Board’s policy is that the Board needs to have an appropriate mix of skills, experience, expertise and diversity to be well equipped to help the Company navigate the range of challenges faced by the Company. The names of the members of the Board as at the date of this report are set out below: Executive Director: (cid:120) Dr M. Monsour Non-Executive/Independent Directors: (cid:120) (cid:120) (cid:120) Mr R. Mangelsdorf Mr W. Brooks Mr C. Stubbings Details of the Board member’s experience, expertise, qualifications, term of office and independence status, are set out in the directors' report. Composition of the Board The Board’s composition is determined based on criteria set out in the Company’s constitution and the Board Charter. The Board seeks to ensure that: (cid:120) (cid:120) (cid:120) At any point in time, its membership represents an appropriate balance between directors with experience and knowledge of the Company and directors with an external or fresh perspective; There is a sufficient number of directors to serve on Board committees without overburdening the directors or making it difficult for them to fully discharge their responsibilities; and The size of the Board is appropriate to facilitate effective discussion and efficient decision making. In accordance with the ASX Listing Rules, the Company must hold an election of Directors each year. 14 Analytica Limited Corporate Governance Statement 30 June 2014 Board committees To ensure that the responsibilities of the Board are upheld and executed to the highest level, the Board has established the following Board committees: (cid:120) (cid:120) Audit Committee Remuneration Committee Each of these committees has established charters and operating procedures in place, which are reviewed on a regular basis. The Board may establish other committees from time to time to deal with matters of special importance. The Committees have access to the Company’s executives and senior management as well as independent advice. Copies of the minutes of each Committee meeting are made available to the full Board, and the Chairman of each Committee provides an update on the outcomes at the Board meeting that immediately follows the Committee meeting. The Board has formed the view that given the size and operations of the Company, that issues falling ordinarily within the scope of the Nominations Committee are better considered by the Board as a whole. Independent decision making The Board recognises the important contribution independent Directors make to good corporate governance. All Directors, whether independent or not, are required to act in the best interests of the Company and to exercise unfettered and independent judgment. The Board has adopted specific principles in relation to directors’ annually, when determining if a Director is independent: independence and considers the following, at least Whether the Director: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) Is a substantial shareholder of the company or an officer of, or otherwise associated directly with, a substantial shareholder of the company. Is employed, or has previously been employed in an executive capacity by the company or another group member, and there has not been a period of at least three years between ceasing such employment and serving on the Board. Has within the last three years been a principal of a material professional adviser or a material consultant to the company or another group member, or an employee materially associated with the service provided. Is a material supplier or customer of the company or other group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer. Has a material contractual relationship with the company or another group member other than as a director. Role of the Chair The Chair of the Board is responsible for leadership of the Board and for the efficient organisation and conduct of the Board’s functioning. The Chair facilitates the effective contribution of all directors and promotes constructive and respectful relations between directors and between Board and management. 15 Analytica Limited Corporate Governance Statement 30 June 2014 Access to information The Board is provided with the information it needs to discharge its responsibilities effectively and all Directors have complete access to senior management through the Chairman, CEO or Company Secretary at any time. In certain circumstances, each Director has the right to seek independent professional advice at the Company’s expense, within specified limits, or with the prior approval of the Chairman. Principle 3: Promote ethical and responsible decision-making Code of conduct The Board acknowledges and emphasises the importance of all directors and employees maintaining the highest standards of corporate governance practice and ethical conduct. A code of conduct has been established requiring directors and employees to: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) Act honestly and in good faith; Exercise due care and diligence in fulfilling the functions of office; Avoid conflicts and make full disclosure of any possible conflicts of interest; Comply with the law; Encourage the reporting and investigating of unlawful and unethical behaviour; and Comply with the share trading policy outlined in the Code of Conduct. A copy of the Code of Conduct is available from the company’s website. Diversity policy In respect of diversity, the Board considers that diversity includes differences that relate to gender, age, ethnicity and cultural background. It also includes differences in background and life experience, communication styles, interpersonal skills, education and problem solving skills. The Board seeks to develop a culture of diversity within the Company whereby a mix of skills and diverse backgrounds are employed by the Company at all levels. The Company strives to: 1. 2. 3. 4. develop and maintain a diverse and skilled workforce through transparent recruitment processes. promote an inclusive workplace culture that values and utilises the contributions of all employees backgrounds, experiences and perspective though improved awareness of the benefits of workforce diversity. facilitate diversity in the workplace by developing programs that promote growth for all employees, so each employee may reach their full potential, and providing maximum benefit for the Company. set measurable objectives to encourage diversity within the Company. 16 Analytica Limited Corporate Governance Statement 30 June 2014 Proportion of: Women employees in the whole organisation Women in senior executive positions Women on the board Target % Actual % 30 15 71 67 15 - Analytica Limited considers the key management personnel, excluding Directors, to be the senior executives of the company. Principle 4: Safeguard integrity in financial reporting Audit Committee The audit committee assists the Board in fulfilling its corporate governance responsibilities in regard to: (cid:120) (cid:120) (cid:120) (cid:120) the integrity of the financial reporting compliance with legal and regulatory obligations the effectiveness of the company’s risk management and internal control framework oversight of the independence of the external auditors The composition of the audit committee is not in accordance with the ASX CGC Recommendations, however it is deemed to be appropriate due to the size of the company and new members will be recruited onto the committee if deemed necessary. The names and qualifications of those appointed to the audit committee and their attendance at meetings of the committee are included in the directors' report. The audit committee reports to the full Board after every meeting on all matters relevant to the committee’s roles and responsibilities. External auditor The Audit Committee oversees the relationship with the external auditor. lead Audit Partner on the audit is required to rotate at the completion of a 5 year term. In accordance with the Corporations Act 2001, the The external auditor attends the AGM and is available to answer your shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report. Principle 5: Make timely and balanced disclosure Analytica Limited has established policies and procedures to ensure timely and balanced disclosures of all material matters investors have access to information on the Company’s financial concerning the Company, and to ensure that all performance. These policies and procedures include a comprehensive disclosure policy that includes identification of matters that may have a material effect on the price on the Company’s securities, notifying them to the ASX, posting relevant information on the Company’s website and issuing media releases. The Annual Report includes relevant information about the operations of the company during the year, key financial information, changes in the state of affairs and indications of future developments. The Annual Reports for the current year 17 Analytica Limited Corporate Governance Statement 30 June 2014 and for previous years are available under the Investor Relations section of the company website. The half year and full year financial results are announced to the ASX and are available to shareholders via the company and ASX websites. All announcements made to the market, and related information (including presentations to investors and information provided to analysts or the media during briefings) are made available to all shareholders under the investor relations section of the company website after they are released to the ASX. All ASX announcements, media releases and financial information are available on Company website within one day of public release. Principle 6: Respect the rights of shareholders The Company Secretary has been nominated as the person responsible for communications with the ASX. All Executive Management have an ongoing obligation to advise the Company Secretary of any material non-public information which may need to be communicated to the market. The Company has a Shareholder Communications Policy which promotes effective communication with shareholders and encourages participation at general meetings. The company makes all ASX announcements available via its website. receive email notification of announcements. In addition, shareholders who are registered The Notice of Annual General Meeting (AGM) will be provided to all shareholders and posted on the company’s website. Notices for general meetings and other communications with shareholders are drafted to ensure that they are honest, accurate and not misleading and that the nature of the business of the meeting is clearly stated and explained where necessary. The Board encourages full participation by shareholders at the Annual General Meeting to ensure a high level of Director accountability to shareholders and shareholder identification with the Company’s strategy and goals. For shareholders unable to attend, an AGM question form will accompany the Notice of Meeting, giving shareholders the opportunity to forward questions and comments to the company or the external auditor prior to the AGM. Principle 7: Recognise and manage risk The Board considers identification and management of key risks associated with the business as vital to maximise shareholder wealth. A yearly assessment of the business's risk profile is undertaken and reviewed by the Board, covering all aspects of the business from the operational level through to strategic level risks. The CEO has been delegated the task of implementing internal controls to identify and manage risks for which the Board provides oversight. The effectiveness of these controls is monitored and reviewed regularly. The recent economic environment has emphasised the importance of managing and reassessing its key business risks. The Board is responsible for reviewing the company’s policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control. The Board requires management to design and implement the risk management and internal control system to manage the company's material business risks and report to it on whether those risks are being managed effectively. The Board has received a report from management as to the effectiveness of the company's management of its material business risks. A summary of the Company’s risk related policies can be found with other corporate governance policies under the Corporate Governance section of the company’s website. 18 Analytica Limited Corporate Governance Statement 30 June 2014 Internal control The Board is responsible for reviewing the company’s policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control. The Board has received assurance from the Chief Executive Officer and the Chief Financial Officer that the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. Principle 8: Remunerate fairly and responsibly The company’s remuneration policy is designed in such as way that it: (cid:120) (cid:120) motivates senior executives to pursue the long-term growth and success of the company demonstrates a clear relationship between senior executives’ performance and remuneration. The remuneration policy, which sets the terms and conditions for the key management personnel (KMP) was developed by the remuneration committee after seeking professional advice from independent consultants and was approved by the Board. All executives receive a base salary, superannuation, performance incentives and retirement benefits. The remuneration committee reviews executive packages annually by reference to company performance, executive performance, comparable information from industry sectors and other listed corporations and independent advice. The performance of executives is measured against criteria agreed half yearly which are based on the forecast growth of the company’s profits and shareholder value. The policy is designed to attract the highest calibre executives and reward them for performance which results in long-term growth in shareholder value. The Board expects that the remuneration structure implemented will result in the company being able to attract and retain the best executives. It will also provide executives with the necessary incentives to work to grow long-term growth in shareholder value. The payment of bonuses, options and other incentive payments are reviewed by the remuneration committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses, options and incentives must be linked to predetermined performance criteria. The Board can exercise its discretion in relation to approving incentives, bonuses and options and can recommend changes to the committee’s recommendations. Any changes must be justified by reference to measurable performance criteria. Further information about the company’s remuneration strategy and policies and their relationship to company performance can be found in the Remuneration Report which forms part of the directors' report, together with details of the remuneration paid to key management personnel. 19 Analytica Limited Corporate Governance Statement 30 June 2014 Remuneration committee The responsibilities of the remuneration committee include a review of and recommendation to the Board on: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) the company’s remuneration, executives recruitment, retention and termination policies and procedures for senior senior executives’ remuneration and incentives superannuation arrangements the remuneration framework for directors remuneration by gender. Each member of the remuneration committee: (cid:120) (cid:120) is familiar with the legal and regulatory disclosure requirements in relation to remuneration has adequate knowledge of executive remuneration issues, including executive remuneration issues, including executive retention and termination policies and short term and long term incentive arrangements. 20 Analytica Limited Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2014 Grant revenue Royalty revenue Investment revenue Administrative expenses Depreciation, amortisation and impairments Fair value adjustment Finance costs Investor relation costs Marketing expenses Occupancy costs Option expenses Other currency gains (losses) Patent maintenance Research and development Sundry expenses Profit before income tax Income tax expense Profit for the year Other comprehensive income, net of income tax Total comprehensive income for the year Earnings per share Basic/diluted earnings per share (dollars) Note 2 3 3 3 3 3 4 2014 2013 $ 559,668 5,506 22,309 (516,084) (16,908) 39,699 (3,104) - (396,620) (5,784) (515,862) (2,271) (150,763) (2,195,794) - $ 498,081 10,368 32,813 (302,785) (15,395) (29,252) (229) (30,000) (145,367) (5,221) - - - (1,148,484) (280) (3,176,008) - (1,135,751) - (3,176,008) (1,135,751) (3,176,008) (1,135,751) (0.0048) (0.0021) The accompanying notes form part of these financial statements. 22 Analytica Limited Statement of Financial Position As At 30 June 2014 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other financial assets Property, plant and equipment Intangible assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Borrowings Trade and other payables Short-term provisions Employee benefits TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Employee benefits TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained earnings TOTAL EQUITY Note 2014 $ 2013 $ 8 9 10 14 11 12 13 15 16 17 18 18 20 19 1,957,868 36,652 177,170 381,638 349,416 13,588 - 7,688 2,553,328 370,692 73,130 21,647 176,816 271,593 33,431 6,403 12,274 52,108 2,824,921 422,800 10,342 279,679 42,755 86,841 - 138,532 30,300 65,473 419,617 234,305 30,782 30,782 450,399 2,374,522 21,751 21,751 256,056 166,744 88,792,648 534,737 (86,952,863) 83,943,597 - (83,776,853) 2,374,522 166,744 The accompanying notes form part of these financial statements. 23 Analytica Limited Statement of Changes in Equity For the Year Ended 30 June 2014 2014 Balance at 1 July 2013 Profit or loss attributable to members of the parent entity Transaction costs Issue of shares Ordinary Shares Retained Earnings Note $ $ Option Reserve $ Total $ 83,943,597 (83,776,853) - 166,744 - (374,022) 5,223,073 (3,176,008) - - - - 534,737 (3,176,008) (374,022) 5,757,810 Balance at 30 June 2014 88,792,648 (86,952,863) 534,737 2,374,522 2013 Balance at 1 July 2012 Profit or loss attributable to members of the parent entity Issue of shares Transfers to retained earnings from option reserve Ordinary Shares Retained Earnings Note $ $ Option Reserve $ Total $ 83,939,012 (85,271,610) 2,630,508 1,297,910 - 4,585 (1,135,751) - - - (1,135,751) 4,585 - 2,630,508 (2,630,508) - Balance at 30 June 2013 83,943,597 (83,776,853) - 166,744 The accompanying notes form part of these financial statements. 24 Analytica Limited Statement of Cash Flows For the Year Ended 30 June 2014 CASH FLOWS FROM OPERATING ACTIVITIES: Receipt from grants Receipt from royalty income Payments to suppliers and employees Interest received Finance costs Interest paid Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Payment for intangible asset Purchase of property, plant and equipment Net cash used by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issue of shares Repayment of directors' loan accounts Proceeds from directors' loan accounts Costs of fund raising Net cash used by financing activities Net increase (decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of year Cash and cash equivalents at end of financial year Note 2014 $ 2013 $ 559,668 5,506 655,653 10,368 (3,633,248) 22,309 (3,104) (5,376) (1,561,467) 32,813 (229) - 23 (3,054,245) (862,862) (8,771) - (187,924) (196,695) (6,192) (6,192) 5,080,101 4,585 (213,000) (11,910) 213,000 (231,051) 4,849,050 12,000 - 4,675 1,598,110 (864,379) 349,416 1,213,795 8 1,947,526 349,416 The accompanying notes form part of these financial statements. 25 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies This financial report covers the financial statements and notes of Analytica Limited. Analytica Limited is a for profit Company domiciled in Australia. The financial statements were authorised for issue by the Board of Directors on the date the directors report was signed . The financial statements are presented in Australian dollars which is the Company's functional and presentation currency. (a) Basis of Preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. These financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The significant accounting policies used in the preparation and presentation of these financial statements are provided below and are consistent with prior reporting periods unless otherwise stated. The financial statements are based on historical costs, except for the measurement at fair value of selected non-current assets, financial assets and financial liabilities. (b) Comparative Amounts Comparatives are consistent with prior years, unless otherwise stated. Where a change in comparatives has also affected the opening retained earnings previously presented in a comparative period, an opening statement of financial position at the earliest date of the comparative period has been presented. (c) Income Tax (i) Current income tax expense The tax expense recognised in the statement of profit or loss and other comprehensive income relates to current income tax expense plus deferred tax expense (being the movement in deferred tax assets and liabilities and unused tax losses during the year). Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for the year and is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. (ii) Deferred tax assets and liabilities Deferred tax is provided on temporary differences which are determined by comparing the carrying amounts of tax bases of assets and liabilities to the carrying amounts in the consolidated financial statements. Deferred tax is not provided for the following: (cid:120) (cid:120) The initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). Taxable temporary differences arising on the initial recognition of goodwill. 26 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies continued (c) Income Tax continued (ii) Deferred tax assets and liabilities continued Deferred tax assets are not recognised to the extent that it is not probable that taxable profit will available against which the unused tax losses or unused tax credits can be utilised. At the end of each reporting period, the company reassesses unrecognised deferred tax assets. The company recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. (d) Revenue and other income Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the entity and specific criteria relating to the type of revenue as noted below, has been satisfied. Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates. All revenue is stated net of the amount of goods and services tax (GST). Interest revenue Interest is recognised using the effective interest method. Royalty revenue Royalty revenue is recognised in the statement of profit or loss and other comprehensive income when , it is probable that the economic benefits gained from royalty will flow to the entity and the amount of the royalty can be measured reliably. Grant revenue The Company is eligible for Federal Government grants in respect of Research and Development expenditure. Such grants are accounted for when there is reasonable assurance that the Company will comply with the conditions attaching to the grant and the grant will be received. Other grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a straight- line basis. (e) Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. All other borrowing costs are recognised as an expense in the period in which they are incurred. 27 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies continued (f) Goods and Services Tax (GST) Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payable are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the statement of financial position. Cash flows in the statement of cash flows are included on a gross basis and 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. (g) Inventories Inventories are measured at the lower of cost and net realisable value. Cost of inventory is determined using the first-in-first-out basis and are net of any rebates and discounts received. (h) Property, Plant and Equipment Classes of property, plant and equipment are measured using the cost or revaluation model as specified below. is used, the asset is carried at its cost less any accumulated depreciation and any Where the cost model impairment losses. Costs include purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and restoring the asset, where applicable. Assets measured using the revaluation model are carried at the revaluation date less any subsequent accumulated depreciation and impairment losses. Revaluations are performed whenever there is a material movement in the value of an asset under the revaluation model. fair value at Plant and equipment Plant and equipment are measured using the cost model. Depreciation The depreciable amount of all property, plant and equipment, except for freehold land is depreciated on a straight-line method from the date that management determine that the asset is available for use. Assets held under a finance lease and leasehold improvements are depreciated over the shorter of the term of the lease and the assets useful life. The depreciation rates used for each class of depreciable asset are shown below: Fixed asset class Plant and Equipment Office Equipment Computer Equipment Depreciation rate 13.33% - 20% 33% - 66.67% 33% - 100% At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted for prospectively as a change in estimate. 28 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies continued (i) Financial instruments Financial becomes party to the contractual provisions of the instrument. instruments are recognised initially using trade date accounting, i.e. on the date that Company On initial recognition, all financial instruments measured at fair value through profit or loss where transaction costs are expensed as incurred). instruments are measured at fair value plus transaction costs (except for Financial Assets Financial assets are divided into the following categories which are described in detail below: (cid:120) (cid:120) (cid:120) (cid:120) loans and receivables; financial assets at fair value through profit or loss; available-for-sale financial assets; and held-to-maturity investments. Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the instrument and its purpose. A financial instrument’s category is relevant to the way it is measured and whether any resulting income and expenses are recognised in profit or loss or in other comprehensive income. All income and expenses relating to financial assets are recognised in the statement of profit or loss and other comprehensive income in the ‘finance income’ or ‘finance costs’ line item respectively. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers but also incorporate other types of contractual monetary assets. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value is recognised in profit or loss. The Company’s trade and most other receivables fall into this category of financial instruments. Discounting is omitted where the effect of discounting is considered immaterial. Significant receivables are considered for impairment on an individual asset basis when they are past due at the reporting date or when objective evidence is received that a specific counterparty will default. The amount of the impairment is the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets: (cid:120) acquired principally for the purpose of selling in the near future 29 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies continued (i) Financial instruments continued (cid:120) (cid:120) designated by the entity to be carried at fair value through profit or loss upon initial recognition or which are derivatives not qualifying for hedge accounting. The Company has some derivatives which are designated as financial assets at fair value through profit or loss. Assets included within this category are carried in the statement of financial position at fair value with changes in fair value recognised in finance income or expenses in profit or loss. Any gain or loss arising from derivative financial instruments is based on changes in fair value, which is determined by direct reference to active market transactions or using a valuation technique where no active market exists. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity. Investments are classified as held-to-maturity if it is the intention of the Company's management to hold them until maturity. Held-to-maturity investments are subsequently measured at amortised cost using the effective interest method, with revenue recognised on an effective yield basis. the investment has been impaired, the financial asset is measured at the present value of estimated cash flows. Any changes to the carrying amount of the investment are recognised in profit or loss. there is objective evidence that In addition, if Financial liabilities Financial liabilities are recognised when the Company becomes a party to the contractual agreements of the instrument. All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included in the income statement line items "finance costs" or "finance income". Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities depending on the purpose for which the liability was acquired. Although the Company uses derivative financial instruments in economic hedges of currency and interest rate risk, it does not hedge account for these transactions. The Company‘s financial liabilities), which are measured at amortised cost using the effective interest rate method. liabilities include borrowings, trade and other payables (including finance lease Impairment of financial assets At the end of the reporting period the Company assesses whether there is any objective evidence that a financial asset or group of financial assets is impaired. Financial assets at amortised cost If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial assets original effective interest rate. Impairment on loans and receivables is reduced through the use of an allowance accounts, all other impairment losses on financial assets at amortised cost are taken directly to the asset. 30 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies continued (i) Financial instruments continued Available-for-sale financial assets A significant or prolonged decline in value of an available-for-sale asset below its cost is objective evidence of impairment, in this case, the cumulative loss that has been recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. Any subsequent increase in the value of the asset is taken directly to other comprehensive income. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carry value of liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. the financial When available-for-sale investments are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. (j) Impairment of non-financial assets At the end of each reporting period the Company determines whether there is an evidence of an impairment indicator for non-financial assets. Where this indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets not yet available for use, the recoverable amount of the assets is estimated. Where assets do not operate independently of other assets, the recoverable amount of the relevant cash- generating unit (CGU) is estimated. The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash- generating unit. Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss. Reversal loss, except for goodwill. indicators are considered in subsequent periods for all assets which have suffered an impairment (k) Intangible Assets Patents and trademarks Patents and trademarks are recognised at cost of acquisition. Patents and trademarks have a finite life and are carried at cost less any accumulated amortisation and any impairment losses. Patents and trademarks are amortised over their useful life ranging from 0 to 3 years. 31 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies continued (k) Intangible Assets continued Amortisation Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. Amortisation methods, useful appropriate. Software lives and residual values are reviewed at each reporting date and adjusted if Software is recorded at cost. Software has a finite life and is carried at cost less any accumulated amortisation and impairment losses. It has an estimated useful life of between one and five years. (l) Cash and cash equivalents Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments (less than 3 months) which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Bank overdrafts also form part of cash equivalents for the purpose of the statement of cash flows and are presented within current liabilities on the statement of financial position. (m) Employee benefits Provision is made for the Company's liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits expected to be settled more than twelve months after the end of the reporting period have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Cashflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows. Changes in the measurement of the liability are recognised in profit or loss. Employee benefits are presented as current liabilities in the statement of financial position if the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date regardless of the classification of the liability for measurement purposes under AASB 119. (n) Provisions Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured at the present value of management's best estimate of the outflow required to settle the obligation at the end of the reporting period. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the unwinding of the discount is taken to finance costs in the statement of profit or loss and other comprehensive income. 32 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies continued (o) Earnings per share Analytica Limited presents basic and diluted earnings per share information for its ordinary shares. Basic earnings per share is calculated by dividing the profit attributable to owners of the company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share adjusts the basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. (p) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options which vest immediately are recognised as a deduction from equity, net of any tax effects. (q) Equity-settled compensation The Company operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black-Scholes pricing model which incorporates all market vesting conditions. The amount to be expensed is determined by reference to the fair value of the options or shares granted, this expense takes in account any market performance conditions and the impact of any non-vesting conditions but ignores the effect of any service and non-market performance vesting conditions. Non-market vesting conditions are taken into account when considering the number of options expected to vest. At the end of each reporting period, the Company revises its estimate of the number of options which are expected to vest based on the non-market vesting conditions. Revisions to the prior period estimate are recognised in profit or loss and equity. (r) Foreign currency transactions and balances Functional and presentation currency The functional currency of each of Analytica Limited's entities is measured using the currency of the primary economic environment in which that entity operates. The financial statements are presented in Australian dollars which is the entity's functional and presentation currency. Transaction and balances Foreign currency transactions are recorded at the spot rate on the date of the transaction. At the end of the reporting period: (cid:120) (cid:120) (cid:120) Foreign currency monetary items are translated using the closing rate; Non-monetary items that are measured at historical cost are translated using the exchange rate at the date of the transaction; and Non-monetary items that are measured at fair value are translated using the rate at the date when fair 33 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies continued (r) Foreign currency transactions and balances continued Transaction and balances continued value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates from those at which they were translated on initial recognition or in prior reporting periods are different recognised through profit or loss, except where they relate to an item of other comprehensive income or whether they are deferred in equity as qualifying hedges. (s) Critical accounting estimates and judgments The directors make estimates and judgements during the preparation of these interim financial statements regarding assumptions about current and future events affecting transactions and balances. These estimates and judgements are based on the best information available at the time of preparing the financial statements, however as additional information is known then the actual results may differ from the estimates. The significant estimates and judgements made have been described below. Key estimates - impairment The Company assesses impairment at the end of each reporting year by evaluating conditions specific to the Company that may be indicative of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. triggers. Recoverable amounts of impairment (t) Going concern The financial statements have been prepared on a going concern basis. This basis has been adopted as the company has sufficient cash at 30 June 2014 to conduct its affairs. The company has a guarantee of continuing financial support from Dr Monsour to allow the company to meets its liabilities and it is the belief that such financial support will continue to be made available. The company's forward cash flow projections currently indicate that the company will be required to raise additional funds to meet forecast needs. The Directors have considered this position and have assessed available funding options and believe should funding be required that sufficient funds could be sourced to satisfy creditors as and when they fall due. The company also expects to generate increased sales income during the 2015 year from the sales of its PeriCoach. However, if adequate capital raising is not achieved the company may be unable to continue as a going concern. No adjustments have been made relating to the recoverability and classification of recorded assets amounts and classification of liabilities that might be necessary should the company not continue as a going concern. (u) Adoption of new and revised accounting standards During the current year, the following standards became mandatory and have been adopted retrospectively by the Company: 34 Analytica Limited Summary of Significant Accounting Policies For the Year Ended 30 June 2014 1 Summary of Significant Accounting Policies continued (u) Adoption of new and revised accounting standards continued (cid:120) (cid:120) (cid:120) (cid:120) AASB 13 Fair Value Measurement AASB 119 Employee Benefits AASB 2012-9 Amendments to AASB 1048 arising from the Withdrawal of Australian Interpretation 1039 AASB 2012-2 Amendments to Australian Accounting Standards - Disclosures - Offsetting Financial Assets and Financial Liabilities The accounting policies have been updated to reflect changes in the recognition and measurement of assets, liabilities, income and expenses and the impact of adoption of these standards is discussed below. AASB 13 Fair Value Measurement does not change what and when assets or liabilities are recorded at fair value. It provides guidance on how to measure assets and liabilities at fair value, including the concept of highest and best use for non-financial assets. AASB 13 has not changed the fair value measurement basis for any assets or liabilities held at fair value, however additional disclosures on the methodology and fair value hierarchy have been included in the financial statements. AASB 119 Employee benefits changes the basis for determining the income or expense relating to defined benefit plans and introduces revised definitions for short-term employee benefits and termination benefits. The Company reviewed the annual leave liability to determine the level of annual leave which is expected to be paid more than 12 months after the end of the reporting period. Whilst this has been considered to be a long- term employee benefits for the purpose of measuring the leave under AASB 119, the effect of discounting was not considered to be material and therefore has not been performed. (v) New Accounting Standards and Interpretations The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. The Company has decided against early adoption of these Standards . The following table summarises those future requirements, and their impact on the Company: Standard Name AASB 9 Financial Instruments and amending standards AASB 2010-7 / AASB 2012-6 AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities [AASB 132] Effective date for entity Requirements 30 June 2016 Changes to the classification and measurement requirements for financial assets and financial liabilities. New rules relating to derecognition of financial instruments. 30 June 2015 This standard adds application guidance to AASB 132 to assist with applying some of the offset criteria of the standard. Impact The impact of AASB 9 has not yet been determined as the entire standard has not been released. There will be no impact to the entity as there are no offsetting arrangements currently in place. 35 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 2 Revenue and Other Income Revenue from continuing operations Finance income includes all interest-related income, other than those arising from financial assets at fair value through profit or loss. The following amounts have been included in the finance income line in the statement of profit or loss and other comprehensive income for the reporting periods presented: Finance income - other interest received Other revenue - royalty revenue - research & development grants - other grants Total Revenue 3 Result for the Year 2014 $ 2013 $ 22,309 32,813 5,506 520,745 38,923 10,368 498,081 - 587,483 541,262 Finance cost includes all interest-related expenses, other than those arising from financial assets at fair value through profit or loss. The following amounts have been included in the finance costs line in the statement of profit or loss and other comprehensive income for the reporting periods presented: Finance Costs Financial liabilities measured at amortised cost: - external - related entities - Total interest expense 2014 $ 2013 $ 59 3,045 3,104 13 216 229 36 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 The result for the year includes the following specific expenses: Other expenses: Administrative expenses - Administration - general - Compliance costs - Employee costs - Travel costs Depreciation and amortisation - Amortisation - Depreciation of property, plant and equipment Patent maintenance - AutoStart Burette - ELF 2 - PeriCoach Research and development costs - Auto Start Burette - Employee and labour - ELF 2 - Other - PeriCoach 2014 $ 2013 $ 24,002 311,791 180,291 - 41,840 171,608 85,483 3,854 516,084 302,785 7,394 6,669 9,514 16,908 58,294 17,731 74,738 150,763 34 616,245 46,294 74,212 1,459,009 8,727 15,396 - - - - 54,240 578,695 230,274 80,457 204,818 2,195,794 1,148,484 37 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 4 Income Tax Expense (a) Reconciliation of income tax to accounting profit: Prima facie tax payable on profit from ordinary activities before income tax at 30% (2013: 30%) Add: Tax effect of: - non-deductible expenses Less: Tax effect of: - non-assessable income Recoupment of prior year tax losses not previously brought to account 2014 $ 2013 $ (952,803) (340,725) 814,456 344,545 (138,347) 3,820 156,224 (149,424) 294,571 145,604 - - Carried forward tax losses of $9,725,879 (2013:$8,500,921) have not been brought to account as a deferred tax asset because it is not yet considered probable that they will reverse to the extent of being utilised in the future. 38 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 5 Key Management Personnel Disclosures Key management personnel options and rights holdings Details of options provided as remuneration and shares issued on the exercise of such options together with terms and conditions of the options can be found in the Remuneration Report within the Director's Report. Balance at beginning of year Granted as remun- eration Exercised Other changes Balance at the end of year Vested during the year Vested and exercis- able 30 June 2014 Directors Unlisted Options @ 3.24 cents Expire 29/10/18 Dr Michael Monsour Mr Ross Mangelsdorf Mr Warren Brooks Other KMP Unlisted Options @ 3.24 cents Expire 29/10/18 Geoffrey Daly Unlisted Options @ 4.50 cents Expire 12/2/19 Geoffrey Daly 30 June 2013 Directors Listed Options ALTO Options Expiring 06/09/12 at $0.04 Dr Michael Monsour MPAMM Pty Ltd MP Monsour Medical Practice Pty Ltd Mrs Anne Monsour Total: Dr Michael Monsour Mr Ross Mangelsdorf RM & JM Mangelsdorf Tambien Pty Ltd Other related parties Total: Mr Ross Mangelsdorf Mr Warren Brooks W Brooks Investments Pty Ltd Total: ALTO Options Expiring 06/09/12 at $0.04 - - - - - - - - - - 6,000,000 5,000,000 - 11,000,000 - - - - - - - 13,000,000 13,000,000 10,000,000 10,000,000 8,000,000 8,000,000 31,000,000 31,000,000 - - 6,000,000 5,000,000 31,000,000 42,000,000 - - - - - - - - - - - - - - Balance at beginning of year Granted as remun- eration Exercised Other changes Balance at the end of year Vested during the year Vested and exercis-able 185,022 25,743,827 2,563,930 3,889,759 32,382,538 3,333 3,333 6,570,627 1,060,332 7,637,625 - 16,983,505 57,003,668 - - - - - - - - - - - - - - - - - - - - - - - - - - (185,022) (25,743,827) (2,563,930) (3,889,759) (32,382,538) (3,333) (3,333) (6,570,627) (1,060,332) (7,637,625) - (16,983,505) (57,003,668) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 39 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 5 Key Management Personnel Disclosures continued Key management personnel options and rights holdings continued Balance at beginning of year Granted as remun- eration Exercised Other changes Balance at the end of year Vested during the year Vested and exercis-able 30 June 2013 ALTO Options Expiring 06/06/13 at $0.08 Dr Michael Monsour MPAMM Pty Ltd MP Monsour Medical Practice Pty Ltd Mrs Anne Monsour Total: Dr Michael Monsour Mr Ross Mangelsdorf RM & JM Mangelsdorf Tambien Pty Ltd Other related parties Total: Mr Ross Mangelsdorf Mr Warren Brooks W Brooks Investments Pty Ltd Total ALTOA Options Expiring 06/06/13 at $0.08 185,022 25,743,827 2,583,930 3,889,759 32,402,538 3,333 3,333 6,570,627 1,060,332 7,637,625 - 16,983,505 57,023,668 - - - - - - - - - - - - - - - - - - - - - - - - - - (185,022) (25,743,827) (2,583,930) (3,889,759) (32,402,538) (3,333) (3,333) (6,570,627) (1,060,332) (7,637,625) - (16,983,505) (57,023,668) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 40 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 Key Management Personnel Disclosures continued 5 Key management personnel shareholdings The number of ordinary shares in Analytica Limited held by each key management person of Analytica Limited during the year is as follows: Balance at beginning of year On exercise of options Other changes during the year Balance at end of year 30 June 2014 Directors Dr Michael Monsour MPAMM Pty Ltd MP Monsour Medical Practice Pty Ltd Halonna Pty Ltd Other related parties Total: Dr Michael Monsour Mr Ross Mangelsdorf RM & JM Mangelsdorf Tambien Pty Ltd Other related parties Total: Mr Ross Mangelsdorf Mr Warren Brooks W Brooks Investments Pty Ltd Total: Mr Warren Brooks Mr Carl Stubbings Cumberland Pty Ltd Total: Mr Carl Stubbings 740,088 35,644,799 10,255,720 - 16,035,036 62,675,643 13,333 13,333 12,918,994 1,841,332 14,786,992 - 30,456,989 30,456,989 - - - 107,919,624 - - - - - - - - - - - - - - - - - - 1,866,249 2,839,319 2,606,337 38,484,118 1,624,891 32,484,118 1,049,446 11,880,611 32,484,118 17,084,482 39,864,023 102,539,666 889 889 4,334,206 1,349,426 14,222 14,222 17,253,200 3,190,758 5,685,410 20,472,402 - 1,302,352 - 31,759,341 1,302,352 31,759,341 - 1,627,450 - 1,627,450 1,627,450 1,627,450 48,479,235 156,398,859 41 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 5 Key Management Personnel Disclosures continued Key management personnel shareholdings continued 30 June 2013 Directors Dr Michael Monsour MPAMM Pty Ltd MP Monsour Medical Practice Pty Ltd Other related parties Total: Dr Michael Monsour Mr Ross Mangelsdorf RM & JM Mangelsdorf Tambien Pty Ltd Other related parties Total:Mr Ross Mangelsdorf Mr Warren Brooks W Brooks Investments Pty Ltd Balance at beginning of year On exercise of options Other changes during the year Balance at end of year 740,088 31,144,799 10,255,720 15,559,036 57,699,643 13,333 13,333 11,168,994 1,091,332 12,286,992 - 39,206,989 39,206,989 109,193,624 - - - - - - - - - - - - - - - 4,500,000 740,088 35,644,799 - 476,000 10,255,720 16,035,036 4,976,000 62,675,643 - - 1,750,000 750,000 13,333 13,333 12,918,994 1,841,332 2,500,000 14,786,992 - (8,750,000) 30,456,989 - (8,750,000) 30,456,989 (1,274,000) 107,919,624 Other key management personnel transactions For details of other transactions with key management personnel, refer to Note 25: Related Party Transactions. 6 Remuneration of Auditors Remuneration of the auditor of the Company, Bentleys, for: - auditing or reviewing the financial report - other services Other services was in relation to the acquittal for the Commercialisation Australia project. 2014 $ 2013 $ 49,000 1,500 42,500 - 42 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 7 Earnings per Share (a) Reconciliation of earnings to profit or loss from continuing operations Profit (Loss) from continuing operations Earnings used to calculate basic EPS from continuing operations (b) Earnings used to calculate overall earnings per share Earnings used to calculate overall earnings per share 2014 $ 2013 $ (3,176,008) (1,135,751) (3,176,008) (1,135,751) 2014 $ 2013 $ (3,176,008) (1,135,751) (c) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS 8 Cash and cash equivalents Short-term bank deposits Reconciliation of cash 2014 No. 2013 No. 661,308,208 559,988,815 2014 $ 1,957,868 2013 $ 349,416 Cash and Cash equivalents reported in the statement of cash flows are reconciled to the equivalent items in the statement of financial position as follows: Cash and cash equivalents Bank overdrafts Balance as per statement of cash flows 15 2014 $ 1,957,868 (10,342) 2013 $ 349,416 - 1,947,526 349,416 43 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 9 Trade and other receivables CURRENT GST receivable Other receivables Total current trade and other receivables Credit risk 2014 $ 2013 $ 34,777 1,875 12,502 1,086 36,652 13,588 The Company has no significant concentration of credit risk with respect to any single counterparty or group of counterparties. The class of assets described as 'trade and other receivables' is considered to be the main source of credit risk related to the Company. The carrying value of trade and other receivables is considered a reasonable approximation of fair value due to the short-term nature of the balances. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable in the financial statements. 10 Inventories CURRENT At cost: Raw materials and consumables Work in progress Finished goods Rejects 11 Other financial assets 89,958 60,026 26,022 1,164 177,170 - - - - - (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are shares held for trading for the purpose of short-term profit taking. Changes in fair value are included in the statement of profit or loss and other comprehensive income. Listed investments, at fair value - Investments in Invion Financial assets at fair value through profit and loss - listed shares at cost - less fair value adjustment 73,130 33,431 522,356 (449,226) 522,356 (488,925) 73,130 33,431 Invion (IVX) previously known as CBio Limited (CBZ) listed on the Australian Securities Exchange in 2010. Analytica Limited holds 1,044,712 ordinary shares with a market value at 30 June 2014 of $73,130 ( 2013: $33,431). 44 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 12 Property, plant and equipment Plant and equipment At cost Accumulated depreciation Total plant and equipment Office equipment At cost Accumulated depreciation Total office equipment Computer equipment At cost Accumulated depreciation Total computer equipment Total property, plant and equipment Note 2014 $ 2013 $ 17,036 (17,036) 17,036 (14,089) - 2,947 9,989 (8,039) 1,950 72,127 (52,430) 19,697 7,211 (6,593) 618 50,147 (47,309) 2,838 21,647 6,403 (a) Movements in carrying amounts of property, plant and equipment Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current year: Year ended 30 June 2014 Balance at the beginning of year Additions Depreciation expense Balance at the end of the year Year ended 30 June 2013 Balance at the beginning of year Additions Depreciation expense Balance at the end of the year Plant and Equipment Office Equipment Computer Equipment $ $ $ Total $ 2,947 - (2,947) 618 2,778 (1,446) 2,838 21,980 (5,121) 6,403 24,758 (9,514) - 1,950 19,697 21,647 6,187 - (3,240) 2,947 507 726 (615) 618 2,243 5,466 (4,871) 2,838 8,937 6,192 (8,726) 6,403 45 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 13 Intangible Assets Patents, trademarks and other rights Cost Accumulated amortisation and impairment Net carrying value Licenses and franchises Cost Accumulated amortisation and impairment Net carrying value Software Cost Accumulated amortisation and impairment Net carrying value Total Intangibles (a) Reconciliation Detailed Table Year ended 30 June 2014 Balance at the beginning of the year Additions Internally generated Amortisation Closing value at 30 June 2014 Year ended 30 June 2013 Balance at the beginning of the year Amortisation Closing value at 30 June 2013 Note 2014 $ 2013 $ 243,771 235,000 (235,548) (235,000) 8,223 - 20,000 20,000 (14,393) 5,607 163,165 (179) 162,986 176,816 (7,726) 12,274 - - - 12,274 Patents, trademarks and other rights Licenses and franchises $ $ Software $ Total $ - - 8,771 (548) 8,223 12,274 - - (6,667) - 163,165 - (179) 12,274 163,165 8,771 (7,394) 5,607 162,986 176,816 - - - 18,943 (6,669) 12,274 - - - 18,943 (6,669) 12,274 Intangible assets, other than goodwill have finite useful lives. The current amortisation charges for intangible assets are included under depreciation and amortisation expense in the statement of profit or loss and other comprehensive income. Goodwill has an indefinite life and is not amortised. 46 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 14 Other assets CURRENT Prepayments 15 Borrowings CURRENT Unsecured liabilities: Bank overdraft Secured liabilities: 2014 $ 2013 $ 381,638 7,688 10,342 - Director loan facility from Dr Michael Monsour represents an unsecured loan facility from MPAMM Pty Ltd, a related entity associated with Dr Monsour. The loan facility is repayable on demand and bears interest at 8.13% (2013: 7.26%) per annum (annual variable rate per Westpac Banking Corporation for business loans, plus 2%). The interest charged for the year ended 30 June 2014 amounted to $3,045 (2013:nil). The maximum amount available under the loan agreement is $400,000. Therefore 100% of the facility was undrawn at 30 June 2014, (2013: 100%). 16 Trade and other payables CURRENT Unsecured liabilities Trade payables Other payables 2014 $ 2013 $ 230,282 49,397 122,151 16,381 279,679 138,532 All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value. 17 Provisions CURRENT Provisions - audit Provisions - taxation 2014 $ 2013 $ 33,800 8,955 42,755 24,300 6,000 30,300 47 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 17 Provisions continued Current Opening balance at 1 July 2013 Additional provisions Provisions used Balance at 30 June 2014 18 Employee Benefits Current liabilities Provision for employee benefits Non-current liabilities Long service leave (a) Provision for Long-term Employee Benefits Provisions audit Provisions taxation $ $ Total $ 24,300 49,000 (39,500) 33,800 6,000 11,500 (8,545) 30,300 60,500 (48,045) 8,955 42,755 2014 $ 2013 $ 86,841 65,473 30,782 21,751 Provision for employee benefits represents amounts accrued for annual leave and long service leave. The current portion of this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for long service leave entitlements that have vested due to employees having completed the required period of service. Based on past experience, the Company does not expect the full amount of annual leave or long service leave balances classified as current to be settled within the next 1 months. However, these amounts must be classified as current liabilities since the Company does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement. The non-current portion for this provision includes amounts accrued for long service leave entitlements that have not yet vested in relation to those employees who have not yet completed the required period of service. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits have been discussed in Note 1(m). 19 Reserves and retained surplus Option reserve Transfers in 2014 $ 2013 $ 534,737 - 48 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 19 Reserves and retained surplus continued (a) Share option reserve This reserve records the cumulative value of share based payments including employee service received for the issue of share options. When the option is exercised the amount in the share option reserve is transferred to share capital. 20 Issued Capital 815,361,809 (2013: 559,988,815) Ordinary shares 53,875,000 (2013: nil) Unlisted Options Total (a) Ordinary shares At the beginning of the reporting period Shares issued during the year - 12 September 2012 (Exercise ALTO options) - 11 November 2013 - 23 April 2014 - 22 May 2014 - 22 May 2014 At the end of the reporting period During the year, the company issued: 2014 $ 2013 $ 88,792,648 - 83,943,597 - 88,792,648 83,943,597 2014 No. 2013 No. 559,988,815 559,885,794 - 129,411,623 75,000,000 34,627,433 16,333,938 103,021 - - - - 815,361,809 559,988,815 (a) (b) (c) (d) (e) 105,882,212 ordinary shares at 1.7 cents each to shareholders under a share purchase plan on 11 November 2013, raising $1.8m; 23,529,411 ordinary shares at 1.7 cents each with directors as approved by shareholders on 30 October 2013, raising $400,000. 31,000,000 unlisted options issued to directors as approved by shareholders on 30 October 2013. These options have a 5 year term and an exercise price of 3.24 cents. 13,500,000 unlisted options issued under the Company's Employee Share Option plan on the same terms and conditions as options issued to directors. 5,000,000 unlisted options issued under the Company's Employee Share Option plan on 12 February 2014. These options have a 5 year term and an exercise price of 4.50 cents. 49 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 20 Issued Capital continued (a) Ordinary shares continued (f) (g) (h) 75,000,000 ordinary shares at 2.4 cents each to shareholders on 23 April 2014. 50,961,371 ordinary shares at 2.4 cents each for every 15 shares held on 22 May 2014. 4,375,000 unlisted options issued under the Company's Employee Share Option plan on 22 May 2014. These options have a 5 year term and an exercise price of 7.38 cents. The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of the Company. On a show of hands at meetings of the Company, each holder of ordinary shares has one vote in person or by proxy, and upon a poll each share is entitled to one vote. The Company does not have authorised capital or par value in respect of its shares. (b) Options (i) (ii) For information relating to the Analytica Limited employee option plan, including details of options issued, exercised and lapsed during the year and the options outstanding at year-end, refer to Note 24 Share-based payments. For information relating to share options issued to key management personnel during the year, refer to Note 24. (c) Capital Management Management controls the capital of Analytica Limited in order to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Capital consists of share capital, reserves and retained profit. There are no externally imposed capital requirements. Analytica Limited monitors capital through the gearing ratio, which is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is defined as equity per the statement of financial position plus net debt. The target for Analytica Limited's gearing ratio is between 0% and 50%. The gearing ratios at the current and prior years are shown below: Debt to equity gearing ratio for 2014 is 0% (2013: 0%) There have been no changes in the strategy adopted by management during the year. 21 Contingencies In the opinion of the Directors, the Company did not have any contingencies at 30 June 2014 (30 June 2013:None). 50 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 22 Operating Segments Segment information Identification of reportable segments The Company has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The Company is managed primarily on the basis of product category and service offerings as the diversification of Analytica Limited's operations inherently have notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis. Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) the products sold and/or services provided by the segment; the manufacturing process; the type or class of customer for the products or services; the distribution method; and any external regulatory requirements. Performance is measured based on segment profit before income tax as included in the internal financial reports. Types of products and services by reportable segment (i) Medical Devices - AutoStart Burette - Perineometer - ELF 2 Analytica's product, in market is the AutoStart Burette. The AutoStart Burette infusion set automatically restarts the delivery of intravenous fluid once the burette has dispensed its predetermined amount of liquid or drug. Automatic restart of the IV fluid, once the drug is dispensed can provide enormous savings in nursing time during and following a medication event, and reduces the risk of blood clots forming that may obstruct the intravenous canula. Analytica has licensed the AutoStart Burette and other burette intellectual property to Medical Australia (Formerly BMDI Tuta) for distribution in the Australian Market. The AutoStart Burette has a TGA ARTG entry, CE-marking, and USFDA 510(k) 'approval'. Distribution agreement has been signed with Taiwan Allied Dragon who are negotiating registration of the AutoStart Burette in Taiwan. Analytica is also developing an innovative Perineometer device branded PeriCoach to assist women and their clinicians in treatment of Stress Urinary Incontinence. The PeriCoach entered controlled market release in June 2014 and expect public release in last quarter 2014. 51 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 22 Operating Segments continued Types of products and services by reportable segment continued Analytica continues the development of this medical device for treatment of muscular spasticity. The ELF2 device delivers a low-frequency voltage used by neurologists to locate nerve endings during Botulinum neurotoxin A injection treatment. Analytica’s development of this device, licenced from Gorman ProMed Ltd in 2012, is to enhance usability features of a device currently in use and respected by the market. The device is scheduled for release in 2015. (ii) Corporate The corporate segment includes all other operations including the administration, and associated listed public company expenditure. Basis of accounting for purposes of reporting by operating segments (a) Accounting policies adopted Unless stated below, all amounts reported to the Board of Directors, being the chief operating decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of Analytica Limited. Income tax expense Income tax expense is calculated based on the segment operating net profit using a notional charge of 30%. The effect of taxable or deductible temporary difference is not included for internal reporting purposes. (b) Segment assets Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location. (c) Segment liabilities Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to Analytica Limited as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings. 52 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 22 (d) Operating Segments continued Segment performance Medical Devices Corporate Total 2014 $ 2013 $ 2014 $ 2013 $ 2014 $ 2013 $ REVENUE Grant revenue Royalty revenue Interest revenue Total segment revenue Depreciation and amortisation Interest expense Marketing Patent Maintenance Other expense - 5,506 - 5,506 (7,394) - (396,620) (150,763) - - 10,368 - 10,368 (6,669) - (145,367) - - 559,668 - 22,309 581,977 (9,514) (3,104) - - 498,081 - 32,813 530,894 (8,726) (229) - - (1,000,302) (367,538) Research and development (2,195,794) (1,148,484) - - 559,668 5,506 22,309 587,483 (16,908) (3,104) (396,620) (150,763) (1,000,302) (2,195,794) 498,081 10,368 32,813 541,262 (15,395) (229) (145,367) - (367,538) (1,148,484) Total segment expense (2,750,571) (1,300,520) (1,012,920) (376,493) (3,763,491) (1,677,013) Segment operating profit (loss) (e) Segment assets Segment assets Financial assets at fair value through profit and loss (f) Segment liabilities Segment liabilities (g) Geographical information (2,745,065) (1,290,152) (430,943) 154,401 (3,176,008) (1,135,751) 176,816 12,274 2,574,975 377,095 2,751,791 389,369 - - - - 73,130 33,431 73,130 33,431 (450,402) (234,306) (450,402) (234,306) In presenting information on the basis of geographical segments, segment geographical location of customers whereas segment assets are based on the location of the assets. revenue is based on the Australia 2014 2013 Revenue Non-current assets Revenue Non-current assets 587,483 271,593 541,262 18,677 53 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 23 Cash Flow Information (a) Reconciliation of result for the year to cashflows from operating activities Reconciliation of net income to net cash provided by operating activities: Profit for the year Cash flows excluded from profit attributable to operating activities Non-cash flows in profit: - amortisation - depreciation - fair value adjustment Invion Limited (previously CBio Limited) - share options expensed Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries: - (increase)/decrease in trade and other receivables - (increase)/decrease in prepayments - (increase)/decrease in inventories - increase/(decrease) in trade and other payables - increase/(decrease) in provisions - increase/(decrease) in employee benefits Cashflow from operations 2014 $ 2013 $ (3,176,008) (1,135,751) 7,215 9,693 (39,699) 534,737 (23,064) (373,950) (177,171) 141,148 12,455 6,669 8,726 29,252 - 148,775 11,978 - 39,945 4,202 30,399 23,342 (3,054,245) (862,862) 24 Share-based Payments At 30 June 2014 Analytica Limited has the following share-based payment schemes: The Analytica Limited Employee Options Plan is designed as an incentive for senior managers and above. Under the plan, participants are granted options which only vest if certain performance standards are met. Once granted the options have a vesting period of 5 years and employees may exercise the options for a further 5 years after the vesting date. There are no cash settlement alternatives. Where a participant ceases employment prior to the vesting of their share options, the share options are forfeited unless cessation of employment is due to death. No options were exercised during the current financial year. The Company established the Analytica Limited Employee Option Plan on 30 October 2013. A summary of the Company's unlisted options issued is as follows: 54 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 24 Share-based Payments continued 2014 Grant Date Expiry Date Exercise price (cents) Start of the year Granted during the year Exercised during the year Forfeited during the year Balance at the end of the year Vested and exercisable at the end of the year 30 October 2013 29 October 2018 12 February 2014 12 February 2019 22 May 2014 22 May 2019 3.24 4.50 7.38 - - - 13,500,000 5,000,000 4,375,000 - - - - - - 13,500,000 5,000,000 4,375,000 - - - (a) (b) (c) On 11 November 2013 the company issued 13,500,000 unlisted options under the Company's Employee Share Option plan. These options have a 5 year term and an exercise price of 3.24 cents. On 12 February 2014 the company issued 5,000,000 unlisted options under the Company's Employee Share Option plan, for the purpose of CEO appointment incentive. On 22 May 2014 the company issued 4,375,000 unlisted options. These have a 5 year term and an exercise price of 7.38 cents. 25 Related Parties (a) The Company's main related parties are as follows: (i) Key management personnel: Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel. For details of remuneration disclosures relating to key management personnel, refer to Note 5: Interests of Key Management Personnel (KMP) and the remuneration report in the Directors' Report. Other transactions with KMP and their related entities are shown below. Loan facility to the company up to $400,000 provided by Dr Monsour. Balance unused at reporting date (2013:nil). (b) Transactions with related parties Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The following transactions occurred with related parties: During the year accounting services were provided to the company by Avance Chartered Accountants, a firm which director Mr Ross Mangelsdorf is a partner. Fees of $73,600 (2013:$52,500) were charged for these services to 30 June 2014, plus preparation of the annual tax return of $8,545 (2013:$13,500). 26 Financial Risk Management The Company is exposed to a variety of financial risks through its use of financial instruments. This note discloses the Company‘s objectives, policies and processes for managing and measuring these risks. 55 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 26 Financial Risk Management continued The Company‘s overall risk management plan seeks to minimise potential adverse effects due to the unpredictability of financial markets. The Company does not speculate in financial assets. The most significant financial risks to which the Company is exposed to are described below: Specific risks (cid:120) (cid:120) (cid:120) Market risk - currency risk, cash flow interest rate risk and price risk Credit risk Liquidity risk Financial instruments used The principal categories of financial instrument used by the Company are: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) Trade receivables Cash at bank Bank overdraft Investments in listed shares Trade and other payables Objectives, policies and processes The CFO has primary responsibility for the development of relevant policies and procedures to mitigate the risk exposure of the Company, these policies and procedures are tabled at the board meeting following their approval. Reports are presented at each Board meeting regarding the implementation of these policies and any risk exposure which the Risk Management Committee believes the Board should be aware of. Specific information regarding the mitigation of each financial risk to which Company is exposed is provided below. Liquidity risk Liquidity risk arises from the Company’s management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due. The Company’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The Company maintains cash and marketable securities to meet its liquidity requirements for up to 30- day periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets. 56 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 26 Financial Risk Management continued Liquidity risk continued The Company manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash-outflows due in day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day period are identified monthly. At the reporting date, these reports indicate that the Company expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances and will not need to draw down any of the financing facilities. The Company‘s liabilities have contractual maturities which are summarised below: Bank overdrafts and loans Trade payables Total Market risk (i) Foreign currency sensitivity Within 1 Year 2014 $ 10,342 279,679 2013 $ - 138,533 290,021 138,533 Most of the Company transactions are carried out in Australian Dollars. Exposures to currency exchange rates arise from the Company's overseas sales and purchases, which are primarily denominated in USD and CHF. The Company did not actively reduce exposure of foreign currency risk by utilising forward exchange contracts for non- Australian Dollar cash flows during the 2014 year. Whilst these forward contracts are economic hedges of the cash flow risk, the Company does not apply hedge accounting to these transactions. The implications of this decision are that unrealised foreign exchange gains and losses are recognised in profit and loss in the period in which they occur. Generally, the Company‘s risk management procedures distinguish short-term foreign currency cash flows (due within 6 months) from longer-term cash flows. Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for significant long term foreign currency exposures that are not expected to be offset by other currency transactions. Foreign currency denominated assets translated into Australian Dollars at the closing rate are included in the inventory balance of $177,170 (2013:nil). Net currency gains/losses of $2,271 are disclosed in the statement of profit and loss. Any increase or decrease in exchange rates would not significantly impact users of the financial statements, as such no sensitivity analysis is disclosed. 57 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 Financial Risk Management continued 26 (ii) Cash flow interest rate sensitivity The Company is exposed to interest rate risk as funds are borrowed at floating and fixed rates. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. The Company's policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At the reporting date, the Company is exposed to changes in market interest rates through its bank borrowings, which are subject to variable interest rates. The following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible change in interest rates of +2.00% and -2.00% (2013: +2.00%/-2.00%), with effect from the beginning of the year. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on the financial constant. instruments held at each reporting date. All other variables are held Cash and cash equivalents Net results Equity Borrowings Net results Equity (iii) Other price risk 2014 2013 +2.00% -2.00% +2.00% -2.00% $ $ $ $ 39,157 39,157 (39,157) (39,157) 6,988 6,988 (6,988) (6,988) (207) (207) 207 207 - - - - The Company are exposed to equity securities price risk. This arises from listed and unlisted investments held by the Company and classified as available-for-sale on the statement of financial position. Equity instruments are held for strategic rather than trading purposes and the Company does not actively trade these investments. The Company is not exposed to commodity price risk. There is no profit impact, except for investments held at fair value through profit or loss. Equity would increase / decrease as a result of fair value movements through the investment reserve. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposure to wholesale and retail customers, including outstanding receivables and committed transactions. The Company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The utilisation of credit limits by customers is regularly monitored by line management. 58 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 26 Financial Risk Management continued Credit risk continued Customers who subsequently fail to meet their credit terms are required to make purchases on a prepayment basis until creditworthiness can be re-established. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The Board receives monthly reports summarising the turnover, trade receivables balance and aging profile of each of the key customers individually and the Company's other customers analysed by industry sector as well as a list of customers currently transacting on a prepayment basis or who have balances in excess of their credit limits. Management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due. The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. 27 Fair Value Measurement The Company measures the following assets and liabilities at fair value on a recurring basis: (cid:120) Financial assets Fair value hierarchy AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a level in the fair value hierarchy as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Unobservable inputs for the asset or liability. Level 2 Level 3 The table below shows the assigned level for each asset and liability held at fair value by the : 30 June 2014 Recurring fair value measurements Listed shares 30 June 2013 Recurring fair value measurements Listed shares 28 Events Occurring After the Reporting Date Level 1 Level 2 Level 3 $ $ $ Total $ 73,130 33,431 - - - - 73,130 33,431 No matters or circumstances have arisen since the end of the year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. 59 Analytica Limited Notes to the Financial Statements For the Year Ended 30 June 2014 29 Company Details The registered office of the company is: Analytica Limited c/o Avance Chartered Accountants 10 Torquay Road, Pialba Hervey Bay Qld 4655 Telephone: (07) 3278 1950 Share Registry Link Market Services Level 15, 324 Queen Street Brisbane, Queensland 4000 Telephone: +61 1300 554 474 Email: registrars@linkmarketservices.com.au The postal address for the registered office of the company is: Analytica Limited PO Box 438 Maryborough Qld 4650 The principal places of business is: 320 Adelaide Street Brisbane Qld 4000 Telephone: (07) 3278 1950 60 Analytica Limited Additional Information for Listed Public Companies For the Year Ended 30 June 2014 ASX Additional Information Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below. This information is effective as at 25 August 2014. Substantial shareholders The number of substantial shareholders and their associates are set out below: Shareholders MP Monsour and associates Voting rights Number of shares 102,539,666 Ordinary Shares On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Options No voting rights. Distribution of equity security holders Holding 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,000 and over There were 1,271 holders of less than a marketable parcel of ordinary shares. Ordinary shares 376,027 665,403 1,158,406 58,386,591 754,775,382 815,361,809 64 Analytica Limited Additional Information for Listed Public Companies For the Year Ended 30 June 2014 Twenty largest shareholders M P A M M PTY LTD HALONNA PTY LTD W BROOKS INVESTMENTS PTY LTD IGNATIUS LIP PTY LTD MRS ANNE MONSOUR M P MONSOUR MEDICAL PRACTICE PTY LTD WILK HOLDINGS PTY LTD TAMBIEN PTY LTD MR MARK OVERELL TAGG ARUNDEL + MRS SIGRID JO- ANNE ARUNDEL Number held % of issued shares 38,021,119 32,484,118 31,759,341 27,729,112 17,537,481 11,880,611 11,733,334 11,427,927 10,408,398 WILK HOLDINGS PTY LTD MRS SABINA LIP MR VICTOR PEREIRA DALROSE PTY LTD JAYEM PTY LTD BUSHY LANE PROJECTS PTY LTD TAMBIEN PTY LTD DALROSE PTY LTD MANOWE PTY LTD MRS JULIET SUZANNE PORTAS MRS MARGUERITE MARY GALLAGHER 7,500,000 6,487,843 6,177,546 6,003,113 5,947,476 5,472,826 5,148,651 4,690,194 4,656,309 4,384,269 4,266,667 Securities exchange The Company is listed on the Australian Securities Exchange. 4.66 3.98 3.90 3.40 2.15 1.46 1.44 1.40 1.28 0.92 0.80 0.76 0.74 0.73 0.67 0.63 0.58 0.57 0.54 0.52 65 PERICOACH AIMS TO ADDRESS THE UNDERLYING CAUSE OF INCONTINENCE, AND PROVIDE WOMEN WITH AN ONGOING, LONG TERM TREATMENT PLAN WHICH CAN REDUCE OR ERADICATE THE PROBLEM.The personal impact for these women is significant. They are less inclined to partake in social and athletic activities, and studies have cited associated depression as a consequence of incontinence. There is also a significant financial impact of this condition. In 2010, the total financial cost of incontinence (health system expenditure, productivity losses of sufferer and family/carers and dead weight losses [excluding burden of disease]) was estimated to be $42.9 billion, or approximately $9,014 per person with incontinence. As a component of that, personal expenditure on urinary incontinence management products and laundry costs was estimated to be $191.2 million (CONTINENCE FOUNDATION OF AUSTRALIA 2011).The global incontinence market (i.e. pads) was valued at $5.26 billion in 2010 and is estimated to reach $7.08 billion in 2017 with a compound annual growth rate (CAGR) of 3.8 per cent (FROST & SULLIVAN, 2012-04-02) In 2010, there were around 4.2 million Australians aged 15 years and over living in the community with urinary incontinence. Over 80% of these are women, and over half of these are under 50 years of age. It is projected that by 2030, the total number of people living in the community with urinary incontinence will rise to 5.6 million (Continence Foundation of Australia 2011). The risk factors are many, with pregnancy, childbirth and menopause being among the more prevalent. PREVALENCETREATMENTSIn 2010 the total financial cost of incontinence in Australia$42.9BillionPersonal expenditure on urinary incontinence management products$191.2MillionAustralians aged 15 years and over living with urinary incontinence4.2MillionGET IN TOUCHemail: pericoach@analyticamedical.com | investorrelations@analyticamedical.com | web: www.pericoach.comTHE STATUS QUOPublicity and advertising discussing female incontinence in the mainstream media is growing noticeably. Using terms such as slight or light bladder leakage, women are being told that this common issue can be easily managed using underwear protective products such as pads or panty liners. Treatment guidelines state that any woman seeking professional help for stress incontinence should try an exercise program first before resorting to other more invasive treatments such as surgery. For many women, pelvic floor exercise - undertaken in a sustained and regular program - can largely, or even entirely, overcome the symptoms of stress incontinence.Market Research commissioned by Analytica has identified that the key users of PeriCoach are likely to be women post childbirth (18yrs plus) and women during menopause (45-65 years). With over 5 million women in Australia who have had children, the potential market, even just for this group is significant. The key prescribers and influencers involved in the treatment and care of women facing incontinence include GPs, gynaecologist/obstetricians and women’s health physiotherapists. Pelvic Floor Exercises can also be done with assistance from a perineometer device – a medical device inserted into the vagina to measure the strength of intravaginal pressure and provide feedback to the user. While there are other perineometers currently on the market, these tend to be large, inaccurate, and indiscreet.WOMEN80%UNDER 5040%INCONTINENT5.6millionIN AUSTRALIACover it or control it. When I stopped using the PeriCoach regularly I started to decrease strength and noticed more episodes of leakage. pericoach@analyticamedical.com investorrelations@analyticamedical.com www.pericoach.com www.pericoach.com