Biotron Limited Annual Report 2007

FY2007 Annual Report · Biotron Limited

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Level 8, 261 George Street
Sydney NSW 2000
Tel: (61-2) 9247 8212
Fax: (61-2) 9247 3932
E-mail: pnightingale@biotron.com.au
Website: www.biotron.com.au

(45 pages by email)

13 September 2007

The Manager Companies
Australian Stock Exchange Limited
20 Bridge Street
SYDNEY NSW 2000

Dear Madam

RE: ANNUAL REPORT

In accordance with Listing Rule 4.7, I attach the Company's Annual Report for the year ended 30 June 2007.

I also attach a copy of the Company's Notice of Annual General Meeting to be held on 5 October 2007.

Yours sincerely

Peter J. Nightingale
Company Secretary

pjn4038

A n n u A l R e p o R t

2 0 0 7

I Level 8 • 261 Geroge Street • Sydney NSW 2000 • Australia

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Biotron Limited ABn 60 086 399 144

Contents

Chairman’s Report

Operating and Financial Review

Statement of Corporate Governance

Directors’ Report

Income Statement

Statement of Recognised Income and Expense

Balance Sheet

Statement of Cash Flows

Notes to The Financial Statements

Directors’ Declaration

Independent Audit Report

To The Members of Biotron Limited

Additional Stock Exchange Information

Corporate Directory

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Chairman’s Report

I am pleased to present Biotron Limited’s
Annual Report for 2 months to 30 June
2007. The last twelve months has seen the
maturing of Biotron from a research-based
company to an antiviral drug development
company with an exciting portfolio of
clinical development programs. Biotron’s
HIV and Hepatitis C virus (HCV) programs
are truly world-class, with a new first-in-
class drug, BIT225, offering the potential to
significantly advance treatments of both
these debilitating infections.

Over the last year we have successfully
progressed the Company’s lead antiviral
drug, BIT225, into a Phase I human clinical
trial, after completing a comprehensive
program of preclinical safety studies at the
start of 2007. Since the end of the financial
year, Biotron has announced the successful
completion of this human trial, which met
all the Company’s expectations in terms of
safety and blood drug levels.

Completion of this human trial is a major
milestone for the Company, and we are
now focused on progressing BIT225 into
Phase Ib/IIa clinical trials in both HIV
and HCV infected subjects. The recently
completed Phase I clinical trial in healthy
volunteers will support the trials in these
two patient populations, which significantly
reduces the costs and timelines of Biotron’s
clinical development program. Trial designs
and regulatory and ethics submissions are
in preparation for two trials, one in HIV
and one in HCV populations and, subject
to regulatory and ethics approvals, we
anticipate commencement of these trials
before the end of 2007.

BIT225 specifically targets HIV in the viral
reservoirs – immune cells where the virus
hides for long periods when the patient
otherwise seems to be carrying negligible
viral loads. Existing HIV drugs have no
effect on the underlying viral reservoir,
which contributes to production of drug-
resistant virus and long-term disease.

The finding, during the last twelve months,
that BIT225 has excellent antiviral activity
in various in vitro surrogate models of HCV
infection, has enabled Biotron to accelerate
its clinical development program for HCV.
Recently we have found that BIT225 is
highly synergistic with the two leading
HCV therapies. This is a major finding as
it further supports rapid progression of
BIT225 into trials in HCV positive patients.

The Company’s Board remains mindful of
the need to realise the value of its wider
antiviral drug portfolio. Biotron recently
announced that a number of its compounds
have shown high levels of potency and
specificity activity against Hepatitis B virus
(HBV). While the Company’s HIV and
HCV programs remain the major focus of
development activities, this finding further
deepens and strengthens Biotron’s antiviral
portfolio.

To reflect Biotron’s transition to an antiviral
drug development company, in December
2006 the Company renegotiated its
agreement with the Australian National
University (ANU), resulting in significant
benefit to the Company in the form of a
significant cash settlement and transfer of
ownership of key Virion patents. The

ANU will retain ownership of early-stage
research projects outside of Biotron’s key
area of interest, with Biotron receiving a
percentage of future royalties from the
commercialisation by the ANU of certain
of these projects. This new arrangement
benefits Biotron as it allows the Company
to focus on commercial development of
its antiviral portfolio while benefiting from
future developments of other projects with
no additional funding obligations.

On behalf of the shareholders and
Directors, I would like to thank the
dedicated team of Biotron staff for their
continued efforts during the year. The last
year was an eventful one and we all look
forward to 2008 with confidence.

Yours sincerely

Michael J. Hoy

Chairman

Biotron Limited Annual Report 2007 I

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Operating and Financial Review

OVERVIEW

The last twelve months has seen major
advances in Biotron’s antiviral drug
development program, with significant
value-adding milestones achieved in the
clinical development program for the
Company’s lead antiviral drug BIT225.
Significant events achieved during the last
year include:

•

Initiation of a Phase I human clinical
trial of BIT225 following ethics
and regulatory approvals, following
successful completion of a formal
preclinical safety program for BIT225 to
GLP standards with a leading European
contract research organisation and
manufacture of kilo-scale quantities of
the drug to GMP standards.

Successful completion of the Phase I
human clinical trial of BIT225, achieving
good plasma levels of the drug with no
dose-limiting toxicities.

• Demonstration of activity of Biotron
compounds, including BIT225, in
surrogate models of hepatitis C virus
(HCV). BIT225 also shown to be highly
synergistic with the two leading HCV
therapies in one of these assays.

•

Select compounds in Biotron’s
compound library shown to have high
levels of potency and specificity activity
against Hepatitis B virus (HBV), further
expanding Biotron’s antiviral portfolio.

Presentation of preclinical efficacy of
BIT225 at a number of international
HIV and HCV conferences in the USA,
Mexico and Australia.

• Agreement with the Australian

National University (ANU) generated a
benefit to the Company in the form a
significant cash settlement and transfer
of ownership of key Virion patents.

these trials in patient populations, which
significantly reduces the costs and timelines
of Biotron’s clinical development program.
Trial designs and regulatory and ethics
submissions are in preparation for the two
trials, and subject to regulatory and ethics
approvals, these trials should commence
before the end of 2007. The Company is
finalising sites for these trials, taking into
account the availability of relevant patient
populations and potential trial participant
numbers. It is anticipated that both the
HIV and the HCV studies will be performed
in patients not currently on antiviral drugs,
and that each study will involve dosing with
BIT225 over a period of 7 – 4 days. The
trials are expected to be completed within
4 – 6 months of their commencement.
These proposed Phase Ib/IIa trials will
determine dosing schedules for full Phase II
trials, and may give an indication of efficacy
against HIV and HCV in humans. The data
from these trials will be used to progress
BIT225 to full Phase II efficacy studies and
to seek fast-track approval through the US
Food and Drug Administration (FDA).

Background on BIT225

Biotron’s BIT225 specifically targets HIV in
the viral reservoirs – immune cells where
the virus hides for long periods when the
patient otherwise seems to be carrying
negligible viral loads. Existing HIV drugs
have no effect on the underlying reservoir,
which contributes to production of drug-
resistant virus and long-term disease.
BIT225 prevents these HIV-infected cells,
called macrophages, from producing virus.

Existing anti-HIV drugs target virus in the
T cells, which circulate in the blood and are
involved in keeping the body healthy and
disease-free. HIV binds to specific receptors
on the surface of these cells, enter and
sabotage the cells to make more virus. In
the process the infected cells die, leading
to reduced levels of T cells which make

Human Trial Update for BIT225

Over the last year Biotron successfully
progressed the Company’s lead antiviral
drug, BIT225, into a Phase I human clinical
trial, after completing a comprehensive
program of preclinical safety studies at the
start of 2007. Since the end of the financial
year, Biotron has announced the successful
completion of this human trial, which met
all the Company’s expectations in terms of
safety and blood drug levels.

Completion of this human trial was a major
milestone for the Company. The success
of this human trial, designed to determine
the safety and pharmacokinetics of BIT225
in healthy volunteers, reflects the extensive
preparation put into the preclinical
selection and testing of the drug during the
lead optimization and selection phase of
development. During this first human trial
no dose-limiting toxicities were observed,
nor were there any serious adverse events.
Importantly, good blood plasma levels of
BIT225 were achieved, reaching potentially
therapeutic levels of the drug.

The data from this Phase I trial support
progressing to clinical testing of BIT225 in
patient populations. Initially BIT225 was in
development solely as a new therapeutic
for HIV. However, during the last twelve
months BIT225 has demonstrated excellent
antiviral activity in various in vitro surrogate
models of HCV infection, and recently the
Company reported that BIT225 is highly
synergistic with the two leading HCV
therapies. These are major findings and
they have enabled Biotron to accelerate its
clinical development program of BIT226
into clinical trials in HCV-positive patients.

Biotron is now focused on progressing
BIT225 into two Phase Ib/IIa clinical trials
– one in HIV-positive and one in HCV-
positive patients. The data from the
completed Phase I clinical trial in healthy
volunteers will be used to support both of

Biotron Limited Annual Report 2007 I

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Operating and Financial review

the host susceptible to life-threatening
diseases. Existing drugs work by stopping
entry of HIV into T cells as well as inhibiting
replication of virus in those cells. A second
cell type also becomes infected with HIV
– the monocyte, which passes through the
wall of blood vessels and lodges in different
organs of the body, including liver, lung,
brain and gut, where it differentiates into
a macrophage and lives for many months
or years, producing virus which is released
into the blood stream and infects the T
cells. Existing drugs have minimal effect
on HIV in macrophage cells. Eventually
the virus mutates and becomes resistant
to existing drugs, resulting in massive
destruction of the T cell population which
leads to life-threatening disease and death.
It is therefore critical that the infection in
macrophages be controlled if not eradicated
if HIV is to be kept in check or cured.

During the last 2 months Biotron
scientists have demonstrated in cell
cultures of human cells infected with HIV
that BIT225 is able to stop transmission
of virus from infected macrophages to
uninfected T cells. This is an exciting finding
and suggests that BIT225 may be able to
stop the on-going cycle of infection and
re-infection in the body.

BIT225 also represents a first-in-class drug
for treatment of HCV, targeting the p7
protein of HCV. HCV causes inflammation
of the liver, which may lead to fibrosis and
cirrhosis, liver cancer and, ultimately, liver
failure. Existing drugs for HCV have limited
effectiveness and toxicity issues, leaving
a significant need for new therapies. It is
estimated that in the USA alone, some 4
million people have been infected with
Hepatitis C with 2.7 million suffering from
chronic infection. Worldwide, 70 million
people are infected. The worldwide market
is currently almost US$3.0 billion, but is
estimated that this market will expand
to over US$0.0 billion as safe, effective
therapies enter the market.

Figure 1. BIT225 prevents HIV production (measured by RT-ase activity) by chronically-
infected human macrophages in contrast to non-drug (DMSO) control.

Figure 2. Transmission cycle of HIV from monocyte-derived macrophages to T cells.
BIT225 blocks this process of infection.

Biotron Limited Annual Report 2007 I

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Operating and Financial review

Antiviral Activity of RBV and BIT-225 in MDBK Cells with BVDV NADL (10 IU/mL rlFNa-2b)

n
o
i
t
i
b
h
n

t
n
e
c
r
e
P

15-20
10-15

5-10

0-5

BIT-225 (µM)

RBV (µg/mL)

Figure 3. Synergy of BIT225 with IFN and ribavirin.
The raised area above the plane indicates that drugs are synergistic.

Biotron recently tested BIT225 in
combination with two of the most
common HCV therapies in use today
- ribavirin and interferon-alpha (IFN), using
the widely accepted surrogate model of
HCV, bovine viral diarrhea virus (BVDV).
BVDV is closely related to HCV and is an in
vitro predictor of the efficacy of anti-HCV
drugs in humans. During the second half
of 2006 Biotron reported that BIT225 is
a potent inhibitor of activity in this HCV
surrogate model system. BIT225 was highly
synergistic with the addition of BIT225 to
ribavirin and IFN, increasing the level of
inhibition of viral replication from 70%
with the two other drugs to 00%. The
potency of BIT225 was increased 0-fold
in this triple combination, compared to its
activity on its own.

These results are significant as they indicate
that BIT225 has the potential to be used
in combination therapy to achieve a higher
level of antiviral activity against HCV
than is currently possible, while improving
the potency of each of the drugs in the
combination.

Both of the existing approved drugs for
HCV are less than ideal, with IFN alone or
combination with ribavirin demonstrating
limited effectiveness. Use of these drugs
is often limited by frequent side effects,
injectable administration and poor patient
tolerance and adherence. BIT225 has
the potential to significantly increase the
antiviral efficacy of these drugs while
reducing the amounts of drugs required.
BIT225 has a different mode of action
to ribavirin and IFN, which may have the
added advantage of reducing development
of resistance by HCV to these drugs.

Update on other antiviral programs

While Biotron remains focused on clinical
development of BIT225 for treatment of
HIV and HCV, the Company continues to
progress development of its other antiviral
programs, which are at an earlier stage
of development. As the HIV and HCV
programs further develop, these other
programs will progress in their turn to
clinical development, creating a valuable
pipeline of clinical stage products targeting
diseases with very large markets and unmet
medical need.

Biotron recently announced that a number
of compounds from its proprietary
compound library had show high levels of
antiviral activity against Hepatitis B virus.
According to the World Health Organisation
(WHO), 350-400 million people are

Biotron Limited Annual Report 2007 I

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Operating and Financial review

Stage of Development

Figure 4. Biotron’s antiviral projects by stage of development.
The HIV and HCV projects are expected to progress through Phase IA/IIB and into Phase II over the next 12 months.

chronically infected with HBV. Chronic
Hepatitis B (CHB) is a serious global health
problem, with infection progressing to liver
cirrhosis and hepatocellular carcinoma,
resulting in up to .2 million deaths
worldwide each year. Up to 80% of the
world’s primary liver cancer, which is
currently the fifth most frequent cancer
worldwide, is attributable to chronic CHB.

This latest activity data against HBV
demonstrates the depth of Biotron’s
antiviral portfolio. The Company has
an impressive portfolio of clinical and
preclinical antiviral programs developing
drugs targeting HIV, Hepatitis C virus
(HCV), Dengue virus and Influenza virus.

During the last twelve months, Biotron has
continued discussions with international
pharmaceutical companies. Biotron’s aim
is to secure a suitable partner to progress
its antiviral programs through late-stage
clinical development and marketing but
remains flexible with its strategies. Whilst
keen to partner the programs, Biotron

can significantly increase the value of the
technology by undertaking clinical trials
through to Phase II before forming alliances.
This will translate into much higher returns
to the Company in the form of upfront
payments as well as increased milestone
and royalty payments in the future.

The level of interest by the international
community in Biotron’s antiviral programs
has been reflected by acceptance of several
paper for presentation at prestigious
international conferences over the last year.
In October 2006 Biotron was invited to
participate in a prestigious invitation-only
Hepatitis C virus conference in Boston,
USA. Biotron scientists presented data on
the preclinical efficacy of BIT225 at the
bi-annual HIV DART meeting in Cancun,
Mexico in December 2006 and again at
the 2007 International AIDS Society (IAS)
meeting on HIV Pathogenesis, Treatment
and Prevention in Sydney in July 2007.

In December 2006 the Company
renegotiated its agreement with the

Australian National University (ANU),
resulting in a benefit to the Company in
the form of a significant cash settlement
and transfer of ownership of key Virion
patents. Under the terms of this new
agreement, the ANU will retain ownership
of early-stage research projects outside of
Biotron’s key area of interest, with Biotron
receiving a percentage of future royalties
from the commercialisation by the ANU of
certain of these research projects. This new
arrangement benefits Biotron as it allows
the Company to focus on commercial
development of its antiviral portfolio while
benefiting from future developments of
other projects with no additional funding
obligations.

Biotron Limited Annual Report 2007 I

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Operating and Financial review

recognises that the key to establishment
of partnerships is the expansion and
continued strengthening of Biotron’s
intellectual property (IP) portfolio. Strong,
defensible, international patents are
essential to attract partners and to ensure a
competitive advantage for our products in
the marketplace. Biotron continues to build
a strong defensible wall of patents around
the Company’s intellectual property to
maximise the value of the technology and
to ensure Biotron’s competitive position.

During the past year, Biotron has filed
additional patents relating to its antiviral
portfolio of projects, and progressed
existing patents through the international
PCT system into national jurisdictions.

The agreement with the ANU reflects
Biotron’s transition to an antiviral drug
development company. Biotron has an
extensive antiviral drug development
portfolio of products, and is committed to
development of this asset to financially
benefit shareholders. The Company
can achieve this aim by focusing on
the projects that are most assured of a
strong commercial outcome. During the
renegotiation of the agreement with the
ANU the Company undertook an extensive
review of its existing patent portfolio.
Certain patents that are not relevant to
its antiviral program and that have limited
commercial potential were offered back
to the University. This has reduced the
size of Biotron’s patent portfolio, which
will result in significant cost savings. The
Company remains committed to building a
strong, defensible wall of patents around its
antiviral drug platform and to this end has
filed additional patent applications during
the year.

Biotron is currently undertaking a
commercial and strategic review of the
C-Test cancer diagnostic project. C-
Test is not related to the Virion antiviral
projects and at present is receiving minimal
resources. While good progress has
been made on using C-Test’s glycomics
approach for diagnosis of prostate and
colorectal cancers, the Company believes
that shareholders’ interests are best served
through commercial development of its
antiviral projects.

Patent Update

As discussed above, Biotron has undertaken
an extensive review of its patent portfolio,
and has offered a number of patents
relating to non-commercial, early stage
projects back to the ANU.

The Company is now focused on
progressing existing and future patents
relating to its antiviral programs
through international patents. Biotron

A summary of Biotron’s patent portfolio is set out in the table below.

TITLE

STATUS

PCT/AU99/00872
A method of modulating ion channel functional activity

Granted in Australia, New Zealand and China. Under
examination elsewhere.

PCT/AU97/00638
A method of determining ion channel activity of a substance

Granted in Australia and USA. Under examination
elsewhere.

PCT/AU2004/000866
Antiviral compounds and methods

PCT/AU2006/000800
Antiviral compounds and methods

Entered into PCT in all jurisdictions.

Entered into PCT in all jurisdictions

Hepatitis C antiviral compositions and methods

Provisional patent application filed August 2007

Biotron Limited Annual Report 2007 I

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Statement of
CorporateGovernance

This statement outlines the main Corporate
Governance practices that were in place
throughout the financial year, which
comply with the Australian Stock Exchange
(‘ASX’) Corporate Governance Council
recommendations, unless otherwise stated.

Board of Directors

The board of directors is responsible for
the overall corporate governance of the
Company including its strategic direction,
setting remuneration, establishing goals
for management and monitoring the
achievement of these goals and ensuring
the integrity of internal control and
management information systems. It
is also responsible for approving and
monitoring financial and other reporting.

The composition of the board has been
determined on the basis of providing the
Company with the benefit of a broad range
of technical, administrative and financial
skills, combined with an appropriate level of
experience at a senior corporate level. The
names and further information regarding
the skills, experience, qualifications and
relevant expertise of the directors are set
out in the Directors’ Report. The board is
composed of a minimum of three directors.

The composition of the board is monitored
constantly to ensure that it provides the
Company with the appropriate levels of
both expertise and experience. The board
comprises a majority of independent,
non-executive directors including the
Chairperson. The independence of directors
is based on their capacity to put the
best interests of the Company and its
shareholders ahead of all other interests.

When a board vacancy exists, through
whatever cause, or where it is considered
that the board would benefit from the
services of a new director with particular
skills, the board identifies a panel of
candidates with appropriate expertise and
experience. A selection procedure is then

completed and the board appoints the
most suitable candidate who must stand
for election at the next general meeting of
shareholders.

Directors, other than the Managing
Director, are subject to re-election by the
shareholders at least every three years.

Having regard to the current membership
of the board and the size, organisational
complexity and scope of operations of
the entity, a Nomination Committee, a
Remuneration Committee and an Audit
Committee have not been established.

Each director has the right to seek
independent professional advice at the
Company’s expense. Prior approval of the
Chairman is required, but such approval is
not unreasonably withheld. A copy of the
advice received by the director is made
available to all other members of the board.

In the event that a potential conflict of
interest may arise, involved directors must
withdraw from all deliberations concerning
the matter.

Remuneration

The remuneration of the directors is
determined by the board as a whole, with
the director to whom a particular decision
relates being absent from the meeting
during the time that the remuneration level
is discussed and decided upon.

For details on the amount of remuneration
for each director, refer to the Key
Management Personnel note to the
financial statements and the Remuneration
Report in the Directors’ Report.

Internal Controls

The board of directors acknowledges that
it is responsible for the overall internal
control framework, but recognises that no
cost effective internal control system will
preclude all errors and irregularities. The

Biotron Limited Annual Report 2007 I

system of internal control adopted by the
Company seeks to provide an appropriate
division of responsibility and careful
selection and training of personnel relative
to the level of activities and size of the
Company.

The full board takes responsibility for
reviewing financial reporting procedures,
internal controls and the performance
of the financial management. Selected
internal control mechanisms employed to
support the business include:

•

Investment appraisal – the Company
has documented guidelines for capital
expenditure and investment appraisals.
These include annual budgets,
expenditure review procedures and
appropriate levels of authority.

• Business planning, budgeting and

reporting – a comprehensive business
planning process includes evaluation of
strategies, objectives, and risks resulting
in an annual budget approved by the
board. Monthly actual performance is
reported against budget and revised
forecasts for the year are prepared
regularly.

• Quality and integrity of employees

– there are clearly defined
accountabilities, performance measures,
and reinforcement of values and ethics
by management.

The CEO and CFO state in writing to
the board that the Company’s financial
statements present a true and fair view,
in all material respects, of the Company’s
financial condition and operational results
and are in accordance with relevant
accounting standards.

External Auditors

Board nominees review the performance of
the external auditors and meet with them
during the half yearly review and annual

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Recommendations made by external
auditors and other external advisers are
investigated by the board and, where
necessary, appropriate action is taken to
ensure that the Company has the internal
control environment to manage the key
risks identified. Ways of enhancing existing
risk management strategies, including
segregation of duties, employment
and training of suitably qualified and
experienced personnel are investigated by
the board.

Performance

Given the size and nature of the Company
and the number of key executives, the
board has adopted an informal and
continuous performance evaluation process
of its key executives.

Statement OF cOrpOrate gOvernance

audit to discuss any issues that have arisen
with respect to accounting policies, any
significant operational issues and the level
of proposed audit fees.

yearly financial statements prepared
in accordance with the Corporations
Act are available to any shareholder on
request.

KPMG, the Company’s auditors, were
appointed on 20 November 200.

•

Ethical Standards

All directors, managers and employees are
expected to act with the utmost integrity
and objectivity, endeavouring at all times to
enhance the performance and reputation of
the Company. Every employee has direct
access to a director to whom they may
refer any ethical issues that may arise from
their employment.

Directors, officers and employees are
permitted to trade in the Company’s
securities only in accordance with the
provisions of the Corporations Act and ASX
Listing Rules. The directors are under an
obligation to report any dealings by them
in the Company’s securities.

The Role of Shareholders

The board ensures that the shareholders
are informed of all major developments
affecting the Company by the following
means:

• Distribution of the annual report to all

shareholders which contains relevant
information about the operations of the
Company during the year in addition to
disclosures required by the Corporations
Act 200.

•

Lodgement of quarterly reports with
the ASX which show summarised
financial information for the quarter.
Copies of these reports are available to
shareholders on request.

Lodgement of the half yearly
report with the ASX which contains
summarised and audit reviewed
financial information. Copies of half

Lodgement of the annual report with
the ASX which contains full audited
financial information prepared in
accordance with the Corporations Act.
The annual report is distributed to all
shareholders (unless a shareholder has
specifically requested not to receive the
document).

• Announcements to the ASX concerning
any significant development in the
Company’s operations, financing and
administration. All announcements are
immediately available to the general
public.

• Disclosure of all major announcements

to the ASX on the Company’s website.

•

The Annual General Meeting is the
main opportunity for the shareholders
to hear the Managing Director and
Chairman provide updates on the
Company’s performance, ask questions
of the board and to express views and
vote on various matters of business on
the agenda.

The shareholders are responsible for voting
on the appointment of directors.

Risk Management

Each director reviews the business
risks affecting his particular area of
expertise annually and reports to the
board. The board then determines the
appropriate actions to eliminate or
minimise the identified business risks. The
full board oversees the establishment,
implementation and ongoing review of the
Company’s risk management and internal
control system. The internal control
system covers financial, operational and
compliance risks.

Biotron Limited Annual Report 2007 I

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Directors’ Report

The directors present their report together
with the financial report of Biotron Limited
(‘the Company’) for the year ended 30 June
2007 and the auditor’s report thereon.

Directors

The names and particulars of the directors
of the Company at any time during or since
the end of the financial year are:

Mr Michael J. Hoy
Independent and Non-Executive Chairman

Mr Hoy has more than 30 years’ corporate
experience in Australia, the United
Kingdom, USA and Asia. He is Chairman of
CityPrint Holdings Pty Limited, a director
of Eiffel Technologies Limited and a former
director of John Fairfax Holdings Limited
and FXF Trust.

He has been a director since 7 February
2000 and Chairman since 6 March 2000.

Dr Michelle Miller, BSc, MSc, PhD,
GCertAppFin (Finsia)
Managing Director

Dr Miller has worked for over 20 years in
the bioscience industry, with extensive
experience in managing commercial
bioscience research. She completed her
PhD in the Faculty of Medicine at Sydney
University investigating molecular models
of cancer development. Her experience
includes a number of years at Johnson
and Johnson developing anti-HIV gene
therapeutics through preclinical research
to clinical trials. She has experience in
early-stage start-ups from time spent
as Investment Manager with a specialist
bioscience venture capital fund.

She was appointed as Managing Director on
2 June 2002.

Dr Michael S. Hirshorn, MBA, MB, BS
Independent and Non-Executive Director

Mr Peter G. Scott
Non-Executive Director

Mr Scott is a founding director of Biotron
Limited with more than 30 years of
commercial and entrepreneurial experience
in Australia.

He is a director of Scott’s Acorn Pty Ltd
and was formerly Chairman and Managing
Director of Scottcom Pty Ltd and Managing
Director of ICAM Pty Ltd, audio visual and
multimedia companies.

Mr Scott has been a director since 23
February 999.

Peter J. Nightingale
Company Secretary

Mr Nightingale graduated with a Bachelor
of Economics degree from the University of
Sydney and is a member of the Institute of
Chartered Accountants in Australia. He has
worked as a chartered accountant in both
Australia and the USA.

As a director or company secretary Mr
Nightingale has, for the past 20 years,
been responsible for the financial control,
administration, secretarial and in-house
legal functions of a number of private
and public listed companies in Australia,
the USA and Europe including Pangea
Resources Limited, Timberline Minerals
Inc., Perseverance Corporation Limited,
Valdora Minerals N.L. and ETT Limited.
Mr Nightingale is currently a director or
company secretary of Bolnisi Gold NL,
Cockatoo Coal Limited, IMD Group Limited,
Planet Gas Limited and Palmarejo Silver
and Gold Corporation.

Dr Hirshorn has over 20 years’ experience
in the commercialisation of Australian
Technology, particularly in the medical
device industry, and extensive experience
in collaboration with Australian research
institutes.

He played a major role in all commercial
aspects of Cochlear Limited’s development,
was a founding director of Resmed Inc., and
Chief Executive Marketing for Polartechnics
Limited.

He has served on numerous government
advisory committees, including the Start
IT and T Committee, the Start Grants
Biological Sciences Committee of the
Department of Industry, Science and
Resources and is currently an Investment
Manager with a venture capital firm,
Nanyang Ventures.

Dr Hirshorn was appointed as a director on
6 March 2000.

Mr Bruce Hundertmark
Independent and Non-Executive Director

Mr Hundertmark is an independent
businessman and company director
with a wide range of experience in high
technology based company start-up
operations and promoting the formation of
venture capital companies, including News
Datacom Limited in Israel and PT Indo Bio
Products in Indonesia.

He is a director of Eiffel Technologies
Limited and has been a director of News
International PLC, Prudential Cornhill
Insurance Limited and was Managing
Director of IMFC Limited, a merchant bank.

Mr Hundertmark was appointed as a
director on 6 March 2000.

Biotron Limited Annual Report 2007 I

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directOrS’ repOrt

Directors’ Meetings

The number of directors’ meetings held and number of meetings attended by each of the
directors of the Company, while they were a director, during the year are:

No. of Meetings Held

No. of Meetings Attended

Michael J. Hoy

Michelle Miller

Michael S. Hirshorn

Bruce Hundertmark

Peter G. Scott

Directors’ Interests

At the date of this report, the beneficial interests of each director of the Company in the
issued share capital of the Company and options, each exercisable to acquire one fully paid
ordinary share of the Company are:

Fully Paid
Ordinary Shares

Options

Option Terms
(Exercise Price and Term)

Michael J. Hoy

,36,34

500,000

Michelle Miller

Michael S. Hirshorn

Bruce Hundertmark

500,000

200,000

$0.35 at any time up to
30 September 200

$0.40 at any time from 30
September 2006 up to 30
September 200

$0.45 at any time from
30 September 2006 up to
30 September 200

$0.35 at any time up to
30 September 200

Peter G. Scott

8,895,04

Biotron Limited Annual Report 2007 I

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directOrS’ repOrt

Option holdings

The movement during the reporting period in the number of options over ordinary shares
in the Company held directly, indirectly or beneficially, by each specified director, including
their personally-related entities, is as follows

Held at
1 July
2006

Granted as
Remuneration

Expired

Held at
30 June
2007

Vested and
Exercisable
at 30 June
2007

Michael J. Hoy

500,000

Michelle Miller

2,750,000

Michael S. Hirshorn

200,000

Bruce Hundertmark

200,000

Peter G. Scott

Equity holdings and transactions

500,000

,500,000

,250,000

,500,000

200,000

The movement during the reporting period in the number of ordinary shares in the Company
held directly, indirectly or beneficially, by each specified director, including their personally-
related entities, is as follows

Held at
1 July
2006

Received on
Exercise of
Options

Purchased

Sales

Michael J. Hoy

,36,34

Michelle Miller

Michael S.
Hirshorn

Bruce
Hundertmark

Peter G. Scott

8,895,04

Held at
30 June
2007

,36,34

8,895,04

Biotron Limited Annual Report 2007 I

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directOrS’ repOrt

Remuneration Report

The policy of remuneration of directors
and senior executives is to ensure the
remuneration package properly reflects the
person’s duties and responsibilities, and that
remuneration is competitive in attracting,
retaining and motivating people of the
highest quality. The board is responsible
for reviewing its own performance. The
non-executive directors are responsible
for evaluating the performance of the

executive directors who, in turn, evaluate
the performance of all other senior
executives. The evaluation process is
intended to assess the Company’s business
performance, whether long term strategic
objectives are being achieved and the
achievement of individual performance
objectives

Remuneration generally comprises
salary and superannuation. Longer term
incentives are able to be provided through

the Company’s Incentive Option Plan
which acts to align the directors and senior
executives’ actions with the interests of the
shareholders. The remuneration disclosed
below represents the cost to the Company
for the services provided under these
arrangements.

No directors or senior executives receive
performance related remuneration. No
bonuses were paid during the year.

Details of director and senior executive remuneration and the nature and amount of each major element of the remuneration of each
director and senior executive of the Company are:

Directors

Non-executive

Michael J. Hoy
(Chairman)

Michael S. Hirshorn

Bruce Hundertmark

Peter G. Scott

Executive

Michelle Miller
(Managing Director)

Total, all specified directors

Executives

Peter J. Nightingale
(Company Secretary)

Total, all specified directors
and executives

Year

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

Primary
Salary
and Fees
$

Post-
Employment
Superannuation
Benefits
$

Equity
Compensation
Value of
Options
$

Options
as a % of
Remuneration

Total
$

60,000

30,000

5,000

200,000

55,000

325,000

280,000

60,848

60,000

385,848

345,000

5,400

2,700

27,700

33,385

25,873

71,885

64,373

71,885

64,373

24,06

9,606

15,068

46,36

15,068

89,589

9,606

15,068

99,95

65,400

89,46

32,700

42,306

32,700

42,306

32,700

248,453

227,234

411,953

433,962

60,848

69,606

472,801

503,568

27%

23%

20%

Biotron Limited Annual Report 2007 I

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directOrS’ repOrt

Options

State of Affairs

At the date of this report, unissued ordinary
shares of the Company under option are:

Number of
Options

Exercise
Price

4,850,000

$0.35

750,000

$0.40

500,000

$0.45

Expiry Date

30 September
200

The options do not entitle the holder
to participate in any share issue of the
Company or any other body corporate.

Principal Activities

The principal activities of the Company
during the financial year were the funding
and management of intermediate and
early applied biotechnology research and
development projects.

Financial Result and Review of
Operations

The operating loss of the Company for
the financial year after income tax was
$3,234,004 (2006 - $2,98,973).

A review of the Company’s operations for
the year is set out in the Operating and
Financial Review.

Impact of Legislation and Other
External Requirements

There were no changes in environmental or
other legislative requirements during the
year that have significantly impacted the
results or operations of the entity.

Dividends

In the opinion of the directors, there were
no significant changes in the state of affairs
of the Company that occurred during the
financial year under review.

Environmental Regulation

The Company’s operations are not subject
to significant environmental regulations
under Commonwealth or State legislation
in relation to its research projects.

Events Subsequent to Balance Date

There has not arisen in the interval between
the end of the financial year and the date
of this report any item, transaction or
event of a material and unusual nature
likely, in the opinion of the directors of
the Company, to affect significantly the
operations of the Company, the results of
those operations, or the state of affairs of
the Company, in future financial years.

Likely Developments

During the year ended 30 June 2007, the
Company continued to fund and manage
its research and development projects.
The success of these research projects,
which cannot be assessed on the same
fundamentals as trading and manufacturing
enterprises, will determine future likely
developments.

In the opinion of the directors, it would
prejudice the interests of the Company to
provide additional information, except as
reported in this Annual Report, relating to
likely developments in the operations of the
Company.

Indemnification of Officers and
Auditors

The directors recommend that no dividend
be paid by the Company. No dividend has
been paid or declared since the end of the
previous financial year.

During or since the end of the financial
year, the Company has not indemnified or
made a relevant agreement to indemnify an
officer or auditor of the Company against

Biotron Limited Annual Report 2007 I

a liability incurred by such an officer or
auditor. In addition, the Company has not
paid or agreed to pay, a premium in respect
of a contract insuring against a liability
incurred by an officer or auditor.

Non-audit Services

During the year KPMG, the Company’s
auditor, has performed certain other
services in addition to their statutory
duties.

The board has considered the non-audit
services provided during the year by the
auditor and is satisfied that the provision
of those non-audit services during the year
by the auditor is compatible with, and did
not compromise, the auditor independence
requirements of the Corporations Act 200
for the following reasons:

•

all non-audit services were subject to
the corporate governance procedures
adopted by the Company and have
been reviewed by the board to ensure
they do not impact the integrity and
objectivity of the auditor; and

the non-audit services provided do
not undermine the general principles
relating to auditor independence as
set out in APES 0 Code of Ethics
for Professional Accountants, as they
did not involve reviewing or auditing
the auditor’s own work, acting in
a management or decision making
capacity for the Company, acting as an
advocate for the Company or jointly
sharing risks and rewards.

A copy of the auditors’ independence
declaration as required under Section 307C
of the Corporations Act 200 is included in
the directors’ report.

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directOrS’ repOrt

Details of the amounts paid to the auditor of the Company, KPMG, and its related practices
for audit and non-audit services provided during the year are set out below.

2007
$

2006
$

Statutory audit

Auditors of the Company

- audit and review of financial reports (KPMG Australia)

25,783

7,782

Services other than statutory audit

- Grant audit (KPMG Australia)

1,000

4,750

Lead Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001

The lead auditor’s independence declaration is set out below and forms part of the directors’
report for the year ended 30 June 2007.

This report has been signed in accordance with a resolution of the directors and dated
28 August 2007:

Michael J. Hoy
Chairman

Michelle Miller
Managing Director

Lead Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001

To the Directors of Biotron Limited:

I declare that, to the best of my knowledge and belief, in relation to the audit for the
financial year ended 30 June 2007, there have been:

(i) no contraventions of the auditor independence requirements as set out in the

Corporations Act 200 in relation to the audit, and

(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

KPMG

28 August 2007

S.J. Board

Biotron Limited Annual Report 2007 I

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Income Statement FOR THE YEAR ENDED 30 JUNE 2007

Other income

Administration and consultants’ expenses

Depreciation

Employee and director expenses

Direct research and development expenses

Rent and outgoings expenses

Legal expenses

Refund of grant

Other expenses from ordinary activities

Operating loss before financing income

Interest income

Net financing income

Loss before tax

Income tax expense

Loss for the year

Basic loss per share attributable to ordinary
equity shareholders

Diluted loss per share attributable to ordinary
equity shareholders

Notes

2007
$

402,457

(373,287)

(51,492)

(455,440)

(2,412,418)

(44,320)

(73,939)

(127,177)

(254,351)

2006
$

794,862

(3,452)

(83,040)

(54,00)

(,875,449)

(44,649)

(6,584)

(248,559)

(3,389,967)

(2,298,872)

155,963

99,899

(3,234,004)

(2,98,973)

(3,234,004)

(2,98,973)

(3.60) cents

(3.00) cents

(3.60) cents

(3.00) cents

Biotron Limited Annual Report 2007 I

Biotron 07 inside.indd 15

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Statement of Recognised
Income and Expense FOR THE YEAR ENDED 30 JUNE 2007

Loss for the year

Total recognised income and expense for the year

2007
$

(3,234,004)

2006
$

(2,98,973)

Other movements in equity arising from transactions with owners as owners are set out in note 2.

Biotron Limited Annual Report 2007 I

Biotron 07 inside.indd 16

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Balance Sheet AS AT 30 JUNE 2007

Notes

2007
$

2006
$

Current assets

Cash and cash equivalents

Trade and other receivables

Inventories

Other

Total current assets

Non-current assets

Property, plant and equipment

Other

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Employee entitlements

Total current liabilities

Total liabilities

Net assets

Equity

Issued capital

Reserves

Accumulated losses

Total equity

1,378,722

4,623,586

41,051

6,000

4,824

21,538

19,040

1,425,773

4,668,988

93,265

1,519,038

117,618

45,405

163,023

1,356,015

16,865,134

296,497

(15,805,616)

1,356,015

142,565

2,403

144,968

4,813,956

270,788

47,320

318,108

4,495,848

16,865,134

251,076

(12,620,362)

4,495,848

Biotron Limited Annual Report 2007 I

Biotron 07 inside.indd 17

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Statement of
Cash Flows FOR THE YEAR ENDED 30 JUNE 2007

Notes

Cash flows from operating activities

Cash receipts in the course of operations

Payments for research and development

Cash payments in the course of operations

Cash generated from operations

Interest received

Net cash from operating activities

Cash flows from investing activities

Proceeds on sale of intellectual property

Payments for plant and equipment

Net cash from investing activities

Cash flows from financing activities

Proceeds from issue of shares

Net cash from financing activities

Net increase/(decrease) in cash and cash
equivalents held

Cash and cash equivalents at the beginning of
the financial year

Cash and cash equivalents at the end of the
financial year

2007
$

(2,629,535)

(1,167,288)

(3,796,823)

151,694

(3,645,129)

402,457

(2,192)

400,265

2006
$

874,347

(2,044,239)

(712,608)

(1,882,500)

95,076

(1,787,424)

(1,212)

4,299,426

(3,244,864)

2,510,790

4,623,586

2,112,796

1,378,722

4,623,586

Biotron Limited Annual Report 2007 I

Biotron 07 inside.indd 18

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Notes to the
Financial Statements FOR THE YEAR ENDED 30 JUNE 2007

1. REPORTING ENTITY

Biotron Limited (the ‘Company’) is a
company domiciled in Australia.

Basis of preparation

Statement of compliance

The financial report is a general purpose
financial report which has been prepared
in accordance with Australian Accounting
Standards (‘AASBs’) adopted by the
Australian Accounting Standards Board
(‘AASB’) and the Corporations Act 200.
The financial report of the Company also
complies with the IFRSs and interpretations
adopted by the International Accounting
Standards Board.

The financial report was authorised for
issue by the directors on 28 August 2007.

Basis of measurement

The financial statements have been
prepared on the historical cost basis.

Functional and presentation currency

These financial statements are presented in
Australian dollars, which is the Company’s
functional currency.

Use of estimates and judgements

The preparation of financial statements
requires management to make judgements,
estimates and assumptions that affect
the application of accounting policies and
the reported amounts of assets, liabilities,
income and expenses. Actual results may
differ from these estimates.

Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the
period in which the estimate is revised and
in any future periods affected.

In particular, information about significant
areas of estimation uncertainty and critical
judgements in applying accounting policies
that have the most significant effect on
the amount recognised in the financial
statements are described in the following
note:

•

Note – Going concern

Going Concern

The financial report has been prepared on
a going concern basis which contemplates
the realisation of assets and settlement of
liabilities in the ordinary course of business.

The ongoing operation of the Company is
dependent on:

•

The Company raising additional fund
from shareholders; and/or

The Company reducing expenditure in
line with available funding.

The directors have prepared cash flow
projections that support the ability of the
Company to continue as a going concern.
These cash flow projections assume the
Company obtaining additional funding
from shareholders. If such funding is
not achieved, the Company can reduce
expenditures significantly.

In the event that the Company does not
obtain additional funding and /or reduce
expenditure in line with available funding,
it will be unable to continue its operations
as a going concern and therefore may not
be able to realises its assets and extinguish
its liabilities in the ordinary courses of
operations and at the amounts stated in
the financial statements.

Significant Accounting policies

The accounting policies set out below have
been applied consistently to all periods
presented in the Company financial report
and have been applied consistently.

Biotron Limited Annual Report 2007 I

The entity has elected to early adopt
the following accounting standards and
amendments:

• AASB 0 Presentation of Financial

Statements (October 2006)

• 2007-4 Amendments to Australian

Accounting Standards arising from ED
5 and Other Amendments

New standards and interpretations
not yet adopted

The following standards, amendments to
standards and interpretations have been
identified as those which may impact the
entity in the period of initial application.
They are available for early adoption at 30
June 2007, but have not been applied in
preparing this financial report:

• AASB 7 Financial Instruments:

Disclosures (August 2005) replaces the
presentation requirements of financial
instruments in AASB 32. AASB 7 is
applicable for annual reporting periods
beginning on or after January 2007,
and will require extensive additional
disclosures with respect to the
Company’s financial instruments and
share capital.

• AASB 2005-0 Amendments to
Australian Accounting Standards
(September 2005) makes consequential
amendments to AASB 32 Financial
Instruments: Disclosure and
Presentation, AASB 0 Presentation
of Financial Statements, AASB 4
Segment Reporting, AASB 7 Leases,
AASB 33 Earnings Per Share, AASB
39 Financial Instruments: Recognition
and Measurement, AASB First time
Adoption of Australian Equivalents
to International Financial Reporting
Standards, AASB 4 Insurance Contracts,
AASB 023 General Insurance Contracts
and AASB 038 Life Insurance Contracts
arising from the release of AASB 7.

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

AASB 2005-0 is applicable for annual
reporting periods beginning on or after
January 2007 and is expected to only
impact disclosures contained within the
financial report.

• AASB 8 Operating Segments replaces
the presentation requirements of
segment reporting in AASB 4
Segment Reporting. AASB 8 is
applicable for annual reporting periods
beginning on or after January 2009
and is not expected to have an impact
on the financial results of the Company
as the standard is only concerned with
disclosures.

• AASB 2007-2 Amendments to

Australian Accounting Standards arising
from AASB Interpretation 2 makes
amendments to AASB First-time
Adoption of Australian Equivalents
to International Financial Reporting
Standards, AASB 7 Leases, AASB 8
Revenue, AASB 20 Accounting for
Government Grants and Disclosures of
Government Assistance, AASB 2 The
Effects of Changes in Foreign Exchange
Rates, AASB 27 Consolidated and
Separate Financial Statement, AASB
3 Interest in Joint Ventures, and AASB
39 Financial Instruments: Recognition
and Measurement. AASB 2007-2 is
applicable for annual reporting periods
beginning on or after January 2008
and must be applied at the same time
as Interpretation 2 Service Concession
Arrangements.

• AASB 2007-3 Amendments to

Australian Accounting Standards arising
from AASB 8 makes amendments to
AASB 5 Non-current Assets Held for
Sale and Discontinued Operations,
AASB 6 Exploration for and Evaluation
of Mineral Resources, AASB 07 Cash
Flow Statements, AASB 9 Employee
Benefits, AASB 27 Consolidated and

•

Separate Financial Statements, AASB
34 Interim Financial Reporting, AASB
36 Impairment Assets. AASB 2007-3 is
applicable for annual reporting periods
beginning on or after January 2009
and must be adopted in conjunction
with AASB 8 Operating Segments. This
standard is only expected to impact
disclosures contained within the
financial report.

Interpretation 0 Interim Financial
Reporting and Impairment prohibits
the reversal of an impairment loss
recognised in a previous interim period
in respect of goodwill, an investment
in an equity instrument or a financial
asset carried at cost. Interpretation
0 will become mandatory for the
Company’s 2008 financial statements,
and will apply to goodwill, investments
in equity instruments, and financial
assets carried at cost prospectively
from the date that the Company first
applied the measurement criteria of
AASB 36 and AASB 39 respectively
(i.e. July 2004 and July 2005,
respectively). The potential impact on
the Company financial report has not
yet been determined.

• AASB 2007-6 Amendments to

Australian Accounting Standards arising
from AASB 23 [AASB , AASB 0,
AASB 07, AASB , AASB 6 and
AASB 38 and Interpretations and
2]. AASB 2007-3 is applicable for
annual reporting periods beginning on
or after January 2009 and must be
adopted in conjunction with AASB 23
Borrowing Costs. The potential impact
on the Company financial report has
not yet been determined.

•

AASB 2007-7 Amendments to
Australian Accounting Standards [AASB
, AASB 2, AASB 4, AASB 5, AASB 07
and AASB 28] is applicable for annual

Biotron Limited Annual Report 2007 I

reporting periods beginning on or after
January 2009 and must be adopted in
conjunction with AASB 23 Borrowing
Costs. The potential impact on the
Company financial report has not yet
been determined.

• AASB 23 Borrowing Costs (revised

March 2007) requires the capitalisation
of all borrowing costs directly
attributable to the acquisition,
construction or production of a
qualifying asset. Qualifying assets
are assets that necessarily take a
substantial period of time to get
ready for their intended use. All other
borrowing costs are immediately
recognised as expenses. AASB 23 is
applicable for annual reporting periods
beginning on or after January 2009.
The potential impact on the Company
financial report has not yet been
determined.

Cash and cash equivalents

Cash and cash equivalents comprise cash
balances and call deposits.

Trade and other receivables

Trade and other receivables are stated at
their amortised cost less impairment losses.

Inventory

Inventory is carried at the lower of cost and
net realisable value.

Property, plat and equipment

Property plant and equipment are stated
at their historical cost less accumulated
depreciation and impairment loss.
Depreciation is recognised in profit or loss
using the reducing balance method from
the date of acquisition at rates between
3% and 40% per annum.

Biotron 07 inside.indd 20

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

Research and development

Grants

Where a grant is received relating to
research and development costs that have
been expensed, the grant is recognised as
revenue when there is reasonable assurance
it will be received.

Costs

Expenditure on research activities,
undertaken with the prospect of gaining
new scientific or technical knowledge and
understanding, is recognised in profit and
loss when incurred.

Development activities involve a plan
or design for the production of new or
substantially improved products and
processes. Development expenditure is
capitalised only if development costs can
be measured reliably, the product or process
is technically and commercially feasible,
future economic benefits are probable, and
the Group intends to and has sufficient
resources to complete development and
to use or sell the asset. The expenditure
capitalised includes the cost of materials,
direct labour and overhead costs that are
directly attributable to preparing the asset
for its intended use. Other development
expenditure is recognised in profit or loss
when incurred.

Capitalised development expenditure
is measured at cost less accumulated
amortisation and accumulated impairment
losses.

Trade and other payables

Trade and other payables are stated at their
amortised cost, are non-interest bearing
and are normally settled within 60 days.

wages, salaries, annual leave and sick leave
represent present obligations resulting from
employees’ services provided to reporting
date, calculated at undiscounted amounts
based on remuneration wages and salary
rates that the company expect to pay as
to reporting date including related on-cost,
such as workers compensation insurance
and superannuation.

Taxation

Income tax

Income tax on the profit or loss for the year
comprises current and deferred tax. Income
tax is recognised in the income statement
except to the extent that it relates to items
recognised directly in equity, in which case
it is recognised in equity.

Current tax is the expected tax payable on
the taxable income for the year, using tax
rates enacted or substantially enacted at
the balance sheet date, and any adjustment
to tax payable in respect of previous years.

Deferred tax is provided using the
balance sheet liability method, providing
for temporary differences between the
carrying amounts of assets and liabilities
for financial reporting purposes and the
amounts used for taxation purposes. The
initial recognition of assets or liabilities that
affect neither accounting nor taxable profit
and differences relating to investments in
subsidiaries to the extent that they will
probably not reverse in the foreseeable
future are temporary differences and are
not provided for. The amount of deferred
tax provided is based on the expected
manner of realisation or settlement of the
carrying amount of assets and liabilities,
using tax rates enacted or substantively
enacted at the balance sheet date.

Employee entitlements

Wages, salaries, annual leave and sick leave

Liabilities for employee entitlements for

A deferred tax asset is recognised only to
the extent that it is probable that future
taxable profits will be available against
which the asset can be utilised. Deferred

tax assets are reduced to the extent that it
is no longer probable that the related tax
benefit will be realised.

Goods and services tax

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 taxation authority. In these
circumstances, the GST is recognised as
part of the cost of acquisition of the asset
or as part of the expense.

Receivables and payables are stated
with the amount of GST included. The
net amount of GST recoverable from, or
payable to, the ATO is included as a current
asset or liability in the balance sheet.

Cash flows are included in the statement
of cash flows on a gross basis. The GST
components of cash flows arising from
investing and financing activities which are
recoverable from, or payable to, the ATO are
classified as operating cash flows.

Revenue recognition

Finance income

Interest revenue is recognised as it accrues
using the effective interest rate method.

Earnings per share

The Company presents basic and diluted
earnings per share (EPS) data for its
ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to
ordinary shareholders of the Company by
the weighted average number of ordinary
shares outstanding during the period.
Diluted EPS is determined by adjusting
the profit or loss attributable to ordinary
shareholders and the weighted average
number of ordinary shares outstanding for
the effects of all dilutive potential ordinary
shares, which comprise share options
granted to employees.

Biotron Limited Annual Report 2007 I

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

Incentive option plan

Impairment

The Incentive Option Plan allows the
Company’s employees or directors, or
individuals whom the Plan Committee
determine to be employees for the
purposes of the Plan, with the opportunity
to acquire options over unissued shares
in the Company. The fair value of options
granted is measured at grant date and
spread as an expense over the period
during which the employees or directors
become unconditionally entitled to the
options. The fair value of the options
granted is measured using Black-Scholes
formula, taking into account the terms and
conditions upon which the options were
granted. The amount recognised as an
expense is adjusted to reflect the actual
number of options that vest except where
forfeiture is only due to share prices not
achieving the threshold for vesting.

The carrying amounts of the Company’s
assets, other than deferred tax assets and
inventories, are reviewed at each balance
sheet date to determine whether there is
any indication of impairment. If any such
indication exists, the asset’s recoverable
amount is estimated.

An impairment loss is recognised whenever
the carrying amount of an asset or its cash-
generating unit exceeds its recoverable
amount. Impairment losses are recognised
in the income statement, unless an asset
has previously been revalued, in which
case the impairment loss is recognised as
a reversal to the extent of that previous
revaluation with any excess recognised
through the income statement.

The recoverable amount of assets is the
greater of their fair value less costs to sell

and value in use. In assessing value in
use, the estimated future cash flows are
discounted to their present value using a
pre-tax discount rate that reflects current
market assessments of the time value of
money and the risks specific to the asset.
For an asset that does not generate largely
independent cash inflows, the recoverable
amount is determined for the cash-
generating unit to which the asset belongs.

An impairment loss is reversed only to the
extent that the asset’s carrying amount
does not exceed the carrying amount
that would have been determined, net
of depreciation or amortisation, if no
impairment loss had been recognised.

2. OTHER INCOME

Research and development grants

Sale of Intellectual property

Total

3. LOSS FROM OPERATING ACTIVITIES

Loss from ordinary activities has been arrived at after charging the following items:

Auditors’ remuneration paid to KPMG

- Audit and review of financial reports

- Other audit services

Depreciation

- Office equipment

- Plant and equipment

Direct research and development expenditure

expensed as incurred

Provision for employee entitlements

Biotron Limited Annual Report 2007 I

2007
$

2006
$

794,862

402,457

794,862

25,783

1,000

4,586

46,906

17,782

4,750

6,212

76,828

2,412,418

(1,915)

1,875,449

15,882

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

4. LOSS PER SHARE

The calculation of basic loss per share at 30 June 2007 was based on the loss attributable to ordinary shareholders of $3,234,004
(2006 - $2,198,973 loss) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2007 of
89,743,565 (2006 - 73,242,769), calculated as follows:

Net loss for the year

Issued ordinary shares at 1 July

Effect of shares issued on 28 April 2006

Weighted average number of ordinary shares

2007
$

2006
$

3,234,004

2,198,973

2007
Number

2006
Number

89,743,565

69,800,550

3,442,219

89,743,565

73,242,769

Options disclosed in the Issued Capital note below are potential ordinary shares, but are not included in the calculation of diluted loss
per share as they are not dilutive.

5. INCOME TAX EXPENSE

Numerical reconciliation between tax expense and pre-tax net profit

Loss before tax - continuing operations

(3,234,004)

(2,198,973)

2007
$

2006
$

Income tax using the domestic corporation tax rate of 30%

(970,201)

(659,692)

Increase in income tax expense due to:

- Non-deductible expenses

- Unrecognised temporary differences

- Effect of tax losses not recognised

Income tax expense current and deferred

Deferred tax assets have not been recognised in respect of the following items:

Deductible temporary differences (net)

Tax losses

Net

501

(22,962)

992,662

105,203

5,200,350

5,305,553

1,093

658,599

106,218

4,203,171

4,309,389

The deductible temporary differences and tax losses do not expire under the current tax legislation. Deferred tax assets have not been recognised
in respect of these items because it is not probable that future taxable profit will be available against which the group can utilise the benefits
of the deferred tax asset.

Biotron Limited Annual Report 2007 I

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

6. RECEIVABLES

Current

Other debtors

GST receivable

Total

7. INVENTORIES

Stores - at cost

8. OTHER

Current prepayments

Non-current prepayments

9. PLANT AND EQUIPMENT

Office equipment - at cost

Accumulated depreciation

Plant and equipment - at cost

Accumulated depreciation

Total plant and equipment - net book value

Reconciliations

Reconciliations of the carrying amounts for each class of plant and equipment are set out below:

Office equipment

Balance at 1 July

Additions

Depreciation

Carrying amount at the end of the financial year

Plant and equipment

Balance at 1 July

Depreciation

Carrying amount at the end of the financial year

2007
$

4,270

36,781

41,051

2006
$

4,824

21,538

6,000

95,177

(85,021)

10,156

892,480

19,040

2,403

92,985

(80,435)

12,550

892,480

(809,371)

(762,465)

83,109

93,265

130,015

142,565

12,550

2,192

(4,586)

10,156

130,015

(46,906)

83,109

17,550

1,212

(6,212)

12,550

206,843

(76,828)

130,015

Biotron Limited Annual Report 2007 I

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

10. PAYABLES

Current

Other creditors and accruals

11. EMPLOYEE ENTITLEMENTS

Current

Employee annual leave provision

Number of employees at the end of the financial year

12. ISSUED CAPITAL

Issued and paid up capital

2007
$

2006
$

117,618

270,788

45,405

47,320

2007
Number

2006
Number

89,743,565 (2006 - 89,743,565) fully paid ordinary shares

16,865,134

Effective July 998, the Company Law
Review Act abolished the concept of par
value shares and the concept of authorised
capital. Accordingly, the Company does
not have authorised capital or par value in
respect of its issued shares.

Holders of ordinary shares are entitled to
receive dividends as declared from time to
time and are entitled to one vote per share
at shareholders’ meetings. In the event
of winding up of the Company, ordinary
shareholders rank after creditors and are
fully entitled to any proceeds of liquidation.

The following options were on issue at 30
June 2007, each exercisable to acquire one
fully paid ordinary share:

During the year ended 30 June 2007:

• ,250,000 options were issued, each

exercisable at 35 cents to acquire one
fully paid ordinary share at any time up
to 30 September 200.

• 250,000 options were issued, each

exercisable at 40 cents to acquire one
fully paid ordinary share at any time up
to 30 September 200.

These options were issued as part of the
Biotron employee incentive option plan.

The fair value of the options at grant date
was determined based on the Black-Scholes
formula. The model inputs were the
Company’s share price of $0.22 at the grant
date, a volatility factor of 50% based on
historic share price performance and a risk
free interest rate of 5.55% based on the 0
year government bond rate.

Biotron Limited Annual Report 2007 I

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

13. RESERVES

Equity compensation

Balance at the beginning of the financial year

Issue of options

Transfer to accumulated losses on lapse of options

Balance at the end of the financial year

This reserve represents the fair value, at the date of issue, of options issued as compensation.

14. ACCUMULATED LOSSES

Accumulated losses at the beginning of the financial year

Transfer from reserve

Net loss attributable to members of the Company

Accumulated losses at the end of the financial year

15. STATEMENT OF CASH FLOWS

Reconciliation of cash flows from operating activities

Loss for the period

Non-cash items

Depreciation of plant and equipment

Provisions

Equity compensation

Gains on sale of intellectual property

Changes in assets and liabilities

(Increase)/decrease in receivables

Decrease in inventories

Decrease in prepayments

Increase/(decrease) in payables

Net cash used in operating activities

Reconciliation of cash

2007
$

2006
$

251,076

94,171

(48,750)

296,497

0,850

202,326

(62,00)

25,076

12,620,361

0,483,488

(48,750)

3,234,004

(62,00)

2,98,973

15,805,615

2,620,36

(3,234,004)

(2,98,973)

51,492

(1,915)

109,239

(402,457)

(36,228)

21,538

376

83,040

5,882

99,95

40,906

2,936

7,243

(153,170)

52,347

(3,645,129)

(,787,424)

For the purposes of the Statement of Cash Flows, cash includes cash on hand and at bank and cash on deposit net of bank overdrafts and
excluding security deposits. Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items
in the Balance Sheet as follows:

Cash and cash equivalents in the statement of cash flows

1,378,722

4,623,586

Biotron Limited Annual Report 2007 I

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

16. KEY MANAGEMENT PERSONNEL DISCLOSURES

The following were key management personnel of the Company at any time during the reporting period:

Non-executive directors

Michael J. Hoy (Chairman)

Michael S. Hirshorn

Bruce Hundertmark

Peter G. Scott

Executive director

Michelle Miller (Managing Director)

Executive

Peter J. Nightingale (Company Secretary)

The following table provides the details of all key management personnel of the Company for the entire reporting period.

Directors

Non-executive

Michael J. Hoy (Chairman)

Michael S. Hirshorn

Bruce Hundertmark

Peter G. Scott

Executive

Michelle Miller
(Managing Director)

Total, all specified directors

Executives

Peter J. Nightingale
(Company Secretary)

Total, all specified directors
and executives

Year

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

Primary Salary
and Fees
$

Post- Employment
Superannuation Benefits
$

Equity Compensation
Value of Options
$

Total
$

60,000

30,000

5,000

200,000

55,000

325,000

280,000

60,848

60,000

385,848

340,000

5,400

2,700

27,700

33,385

25,873

71,885

64,373

71,885

64,373

24,06

9,606

65,400

89,46

32,700

42,306

32,700

42,306

32,700

15,068

248,453

46,36

227,234

15,068

411,953

89,589

433,962

9,606

60,848

69,606

15,068

472,801

99,95

503,568

Biotron Limited Annual Report 2007 I

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

16. KEY MANAGEMENT PERSONNEL (Con’t)

Options and rights over equity instruments granted as remuneration

Details of relevant interests of key management personnel of the Company and their related entities in shares and options of the Company
at year end are as follows:

Fully paid ordinary shareholdings and transactions - 2007

Held at
1 July 2006

Purchased

Received on
exercise of options

Sales

Held at
30 June 2007

Directors

Michael J. Hoy

Michelle Miller

Michael S. Hirshorn

Bruce Hundertmark

Peter G. Scott

Executives

,36,34

8,895,04

Peter J. Nightingale

,60,497

,36,34

8,895,04

,60,497

Fully paid ordinary shareholdings and transactions - 2006

Held at
1 July 2005

Purchased

Received on
exercise of options

Sales

Held at
30 June 2006

Directors

Michael J. Hoy

Michelle Miller

Michael S. Hirshorn

Bruce Hundertmark

Peter G. Scott

Executives

,023,800

292,54

8,573,800

32,24

Peter J. Nightingale

,000,000

60,497

Option holdings - 2007

Held at
1 July 2006

Granted as
remuneration

Directors

Michael J. Hoy

Michelle Miller

Michael S. Hirshorn

Bruce Hundertmark

Peter G. Scott

Executives

500,000

2,750,000

200,000

Peter J. Nightingale

200,000

,36,34

8,895,04

,60,497

Expired

,250,000

Held at
30 June 2007

Vested and exercisable at
30 June 2007

500,000

,500,000

200,000

500,000

,500,000

200,000

Biotron Limited Annual Report 2007 I

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

Option holdings - 2006

Directors

Michael J. Hoy

Michelle Miller

Michael S. Hirshorn

Bruce Hundertmark

Peter G. Scott

Executives

Peter J. Nightingale

Held at
1 July 2006

Granted as
remuneration

Expired

Held at
30 June 2007

Vested and exercisable at
30 June 2007

500,000

,250,000

200,000

500,000

(500,000)

,500,000

200,000

(200,000)

500,000

2,750,000

200,000

500,000

,750,000

200,000

During the year ended 30 June 2007,
Michael J. Hoy had an interest in an
entity, CityPrint Pty Limited, which
provided printing services to the Company.
Payments to CityPrint Pty Limited, which
were in the ordinary course of business and
on normal terms and conditions, amounted
to $23,480 (2006 - $29,909).
Outstanding amounts at 30 June 2007
total nil (2006 - nil).

During the year ended 30 June 2007, Peter
J. Nightingale had an interest in an entity,
Mining Services Trust, which provided full
administrative services, including rental
accommodation, administrative staff,
services and supplies, to the entity. Fees
paid to Mining Services Trust during the
year, which were in the ordinary course
of business and on normal terms and
conditions, amounted to $24,78 (2006
- $20,000). Outstanding amounts at
30 June 2007 total nil (2006 - nil).

During the year ended 30 June 2007, Peter
J. Nightingale, had an interest in an entity,
Rosignol Consultants Pty Limited, which
rendered financial and administrative
services to the Company. Fees paid to
Rosignol Consultants Pty Limited during the

year, which were in the ordinary course of
business and on normal commercial terms
and conditions, amounted to $60,848
(2006 - $69,606). Outstanding amounts at
30 June 2007 total $5,000 (2006 - $5,000).

17. EMPLOYEE AND DIRECTOR
INCENTIVE OPTION PLAN

At 30 June 2007, the Company had 8
employees (2006 – 8). All other personnel
are contracted by the Company on a
consultancy basis.

The Company has an Incentive Option Plan
to provide eligible persons, being employees
or directors, or individuals whom the Plan
Committee determine to be employees
for the purposes of the Plan, with the
opportunity to acquire options over
unissued ordinary shares in the Company.
The number of options granted or offered
under the Plan will not exceed 0% of the
Company’s issued share capital and the
exercise price of options will be the greater
of the market value of the Company’s
shares as at the date of grant of the option
or such amount as the Plan Committee
determines. Options have no voting or
dividend rights.

In the event that the employment or
office of the optionholder is terminated,
any options which have not reached their
exercise period will lapse and any options
which have reached their exercise period
may be exercised within three months of
the date of termination of employment.
Any options not exercised within this three
month period will lapse.

During the year ended 30 June 2007,
,500,000 options were granted to
employees. No ordinary shares have been
issued as a result of the exercise of any
option granted pursuant to the Incentive
Option Plan.

The fair value of the options at grant date,
$94,7, was determined based on Black-
Scholes formula. The model inputs were
the Company’s share price of $0.22 at the
grant date, a volatility factor of 50% based
on historic share price performance and a
risk free interest rate of 5.55% based on the
0 year government bond rate.

Biotron Limited Annual Report 2007 I

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

These options are not listed and accordingly have no market value at year end. The market value of the ordinary shares under option at
30 June 2007 was $0.250 (2006 - $0.95) each. The amount recognised in the financial statements in relation options issued during the
financial year was $09,239 (2006 - $99,95). Options issued are summarised below:

Grant Date

Exercise Date

Expiry Date

Exercise Price

4/0/05

23//06

4/0/05

30/09/06

30/09/07

23//06

30/09/0

$0.35

$0.40

$0.45

$0.35

$0.40

Number of Options

30 June 2006
On Issue

30 June 2007
On Issue

30 June 2007
Vested

,600,000

500,000

,250,000

250,000

18. FINANCIAL INSTRUMENTS DISCLOSURE

Interest rate risk

The Company’s exposure to interest rate risk and repricing periods are the effective weighted average interest rate for classes of financial
assets and financial liabilities as follows:

Note

Effective interest rate
%

Floating interest rate
6 months or less
$

Non-interest
bearing
$

Total
$

2007

Financial assets

Cash assets

Receivables

Financial liabilities

Payables and employee benefits

2006

Financial assets

Cash assets

Receivables

Financial liabilities

Payables and employee benefits

2.40

,378,722

4,05

63,023

3.39

4,623,586

4,824

4,623,586

4,824

38,08

Biotron Limited Annual Report 2007 I

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nOteS tO the Financial StatementS FOR THE YEAR ENDED 30 JUNE 2007

Credit risk exposure

The credit risk exposure on financial
assets of the Company which have been
recognised in the balance sheet is the
carrying amount, net of any impairment
loss.

Credit risk on cash assets is minimised by
dealing with Australian regulated banks.

Net fair values of financial assets and
liabilities

19. FINANCIAL REPORTING BY

SEGMENTS

The carrying amounts of financial assets
and liabilities approximate their net fair
values given the variable interest rates
and/or short term to maturity.

The Company operates in the
biotechnology industry in Australia.

Biotron Limited Annual Report 2007 I

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Directors’ Declaration

2. The directors have been given the declarations required by Section 295A of the

Corporations Act 200 from the chief executive officer and chief financial officer for
the financial year ended 30 June 2007.

This report has been signed in accordance with a resolution of the directors and is dated
28 August 2007:

Michael J. Hoy

Chairman

Michelle Miller

Managing Director

In the opinion of the directors of Biotron
Limited:

. a) the financial statements and notes
thereto, set out on pages 5 to 3,
are in accordance with the
Corporations Act 200, including:

(i) giving a true and fair view

of the financial position of the
Company as at 30 June 2007
and of its performance, as
represented by the results of its
operations and cash flows for
the year ended on that date;
and

(ii) complying with Australian

Accounting Standards and the
Corporations Regulations 200;
and

b) the financial report also complies
with International Financial
Reporting Standards; and

c) there are reasonable grounds to

believe that the Company will be
able to pay its debts as and when
they become due and payable.

Biotron Limited Annual Report 2007 I

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Independent
Audit Report TO THE MEMBERS OF BIOTRON LIMITED

Auditor’s opinion

In our opinion:

(a) the financial report of Biotron Limited
is in accordance with the Corporations
Act 200, including:

(i) giving a true and fair view of the
Company’s financial position
as at 30 June 2007 and of its
performance for the year ended on
that date; and

(ii) complying with Australian

Accounting Standards (including
the Australian Accounting
Interpretations) and the
Corporations Regulations 200.

(b) the financial report also complies

with International Financial Reporting
Standards as disclosed in note .

KPMG
28 August 2007

S.J. Board
Partner

Report on the financial report

We have audited the accompanying
financial report of Biotron Limited
(the Company), which comprises the
balance sheet as at 30 June 2007, and the
income statement, statement of recognised
income and expense and cash flow
statement for the year ended on that date,
a description of significant accounting
policies and other explanatory notes to
9 and the directors’ declaration.

Directors’ responsibility for the
financial report

The directors of Biotron Limited are
responsible for the preparation and fair
presentation of the financial report in
accordance with Australian Accounting
Standards (including the Australian
Accounting Interpretations) and the
Corporations Act 200. This responsibility
includes establishing and maintaining
internal control relevant to the preparation
and fair presentation of the financial report
that is free from material misstatement,
whether due to fraud or error; selecting and
applying appropriate accounting policies;
and making accounting estimates that are
reasonable in the circumstances.

In note , the directors also state, in
accordance with Australian Accounting
Standard AASB 0 Presentation of
Financial Statements, that the financial
report of the Company, comprising the
financial statements and notes, complies
with International Financial Reporting
Standards.

Auditor’s responsibility

Our responsibility is to express an opinion
on the financial report based on our audit.
We conducted our audit in accordance
with Australian Auditing Standards. These
Auditing Standards require that we comply
with relevant ethical requirements relating
to audit engagements and plan and perform
the audit to obtain reasonable assurance
whether the financial report is free from
material misstatement.

An audit involves performing procedures
to obtain audit evidence about the
amounts and disclosures in the financial
report. The procedures selected depend
on the auditor’s judgement, including
the assessment of the risks of material
misstatement of the financial report,
whether due to fraud or error. In making
those risk assessments, the auditor
considers internal control relevant to the
entity’s preparation and fair presentation
of the financial report in order to design
audit procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness
of the entity’s internal control. An audit
also includes evaluating the appropriateness
of accounting policies used and the
reasonableness of accounting estimates
made by the directors, as well as evaluating
the overall presentation of the financial
report.

We performed the procedures to
assess whether in all material respects
the financial report presents fairly, in
accordance with the Corporations Act
200 and Australian Accounting Standards
(including the Australia Accounting
Interpretations), a view which is consistent
with our understanding of the Company’s
financial position and of its performance.

We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our audit opinion.

Biotron Limited Annual Report 2007 I

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Additional Stock Exchange
Information

Home Exchange

The Company is listed on the Australian
Stock Exchange Limited. The home
exchange is Sydney.

Use of Cash and Assets

Since the Company’s listing on the
Australian Stock Exchange, the Company
has used its cash and assets in a way
consistent with its stated business
objectives.

Class of Shares and Voting Rights

There is only one class of shares in the
Company, fully paid ordinary shares.

The rights attaching to shares in the
Company are set out in the Company’s
Constitution. The following is a summary
of the principal rights of the holders of
shares in the Company.

Every holder of shares present in person
or by proxy, attorney or representative at
a meeting of shareholders has one vote
on a vote taken by a show of hands, and,
on a poll every holder of shares who is
present in person or by proxy, attorney or
representative has one vote for every fully
paid share registered in the shareholder’s
name on the Company’s share register.

A poll may be demanded by the
chairperson of the meeting, by at least
5 shareholders entitled to vote on the
resolution or shareholders with at least
5% of the votes that may be cast on the
resolution on a poll.

Substantial Shareholders

As at the date of the Directors’ Report,
the Register of Substantial Shareholders
showed the following:

Australian National University 4,573,733
fully paid ordinary shares

Distribution of Equity Securityholders

As at 3 July 2007, the distribution of each class of equity was as follows:

Range

Fully Paid Ordinary
Shares

14 January
2007 $0.60
Options

14 January
2007 $0.75
Options

14 January
2007 $1.00
Options

30 September
2010 $0.35
Options

- ,000

,00 - 5,000

5,00 - 0,000

0,00 - 00,000

00,00 and over

465

339

534

1,496

At 3 July 2007, 72 shareholders held less than a marketable parcel of 2,74 shares.

Biotron Limited Annual Report 2007 I

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additiOnal StOck exchange inFOrmatiOn

Twenty Largest Quoted Shareholders

At 3 July 2007 the twenty largest fully paid ordinary shareholders held 48.27% of fully paid
ordinary as follows:

Name

Dr Angela Fay Dulhunty

2 Scott’s A V Pty Ltd

3 Rigi Investments Pty Ltd

4 Australian National University

5 CBDF Pty Ltd

6 Angela Dulhunty

7 Philip and Marylyn Board

8 ANZ Nominees Limited Cash Income A/c

9 Chris and Bhama Parish

0 Gail Scott

Carrington Services Pty Ltd

2 Michael John Hoy

3 Peter Scott

Merrill Lynch (Australia) Nominees Pty Ltd
Berndale A/c

5 Peter James Nightingale

6 Darley Pty Ltd

7 Linkenholt Pty Ltd

8 Shano Developments Pty Ltd

9 Christopher David Hammer

20 Dr Angela Fay Dulhunty Burbong Super Fund

There are no current on-market buy-backs.

Fully Paid Ordinary
Shares

7,475,862

6,207,485

4,380,45

3,378,658

2,845,854

2,400,000

,799,950

,625,5

,600,000

,439,843

,400,000

,36,34

,247,868

,86,59

,75,74

,000,000

950,000

949,036

862,069

8.33

6.92

4.88

3.76

3.7

2.67

2.0

.78

.60

.56

.47

.39

.32

.06

0.96

Biotron Limited Annual Report 2007 I

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Corporate Directory

Auditors:

KPMG
Level 6, Riparian Plaza
7 Eagle Street
BRISBANE QLD 4000

Home Exchange:

Australian Stock Exchange Limited
20 Bridge Street
SYDNEY NSW 2000

Solicitors:

Minter Ellison
88 Phillip Street
SYDNEY NSW 2000

Directors:

Mr Michael J. Hoy (Chairman)

Dr Michelle Miller (Managing Director)

Dr Michael S. Hirshorn

Mr Bruce Hundertmark

Mr Peter G. Scott

Company Secretary:

Mr Peter J. Nightingale

Registered Office:

Level 8, 26 George Street
SYDNEY NSW 2000

Phone:
Fax:
E-mail:
Homepage: www.biotron.com.au

6-2 9247 822
6-2 9247 3932
enquiries@biotron.com.au

Share Registrar:

Computershare Investor Services Pty Limited
PO Box 523
BRISBANE QLD 400

Phone: 6-7 3237 200
6-7 3229 9860
Fax:

Biotron Limited, incorporated and domiciled in Australia, is a publicly listed company limited
by shares.

Biotron Limited Annual Report 2007 I

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Statement of Recognised Income and Expense

Contents

Chairman’s Report

Operating and Financial Review

Statement of Corporate Governance

Directors’ Report

Income Statement

Balance Sheet

Statement of Cash Flows

Notes to The Financial Statements

Directors’ Declaration

Independent Audit Report

To The Members of Biotron Limited

Additional Stock Exchange Information

Corporate Directory

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A n n u A l R e p o R t

2 0 0 7

I Level 8 • 261 Geroge Street • Sydney NSW 2000 • Australia

AR07 Biotron Cover.indd 1

29/8/07 11:04:28 AM

Biotron Limited ABn 60 086 399 144

Level 8, 261 George Street
Sydney NSW 2000
Tel: (61-2) 9247 8212
Fax: (61-2) 9247 3932
E-mail: pnightingale@biotron.com.au
Website: www.biotron.com.au

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of members is to be convened at Level 5, 207 Kent Street,
Sydney, NSW, 2000 on 5 October 2007 at 11.00 am.

AGENDA

ORDINARY BUSINESS

To receive and consider the Company's annual financial report, the directors' report and the auditors' report for the
year ended 30 June 2007.

To consider and, if thought fit, pass the following resolutions, with or without amendment:

Resolution 1.

'That the Remuneration Report for the year ended 30 June 2007 be and is hereby adopted.'

Resolution 2.

'That Mr Bruce Hundertmark be and is hereby re-elected as a Director.'

Resolution 3.

'That Mr Peter G. Scott be and is hereby re-elected as a Director.'

To transact any other business that may be brought forward in accordance with the Company's Constitution.

By order of the Board

Peter J. Nightingale
Company Secretary

3 September 2007

pjn3998

Level 8, 261 George Street
Sydney NSW 2000
Tel: (61-2) 9247 8212
Fax: (61-2) 9247 3932
E-mail: pnightingale@biotron.com.au
Website: www.biotron.com.au

EXPLANATORY MEMORANDUM

This is the Explanatory Memorandum Notice referred to in the Notice of Annual General Meeting of Biotron
Limited to be convened at Level 5, 207 Kent Street, Sydney, NSW, 2000 on 5 October 2007 at 11.00 am.

Resolution 1

Adoption of the Remuneration Report

The Remuneration Report, which can be found as part of the Directors’ Report in the Company's 2007 Annual
Report, contains certain prescribed details, sets out the policy adopted by the Board of Directors and discloses the
payments to key management personnel, Directors and senior executives.

In accordance with section 250R of the Corporations Act, a resolution that the Remuneration Report be adopted
must be put to the vote. The resolution is advisory only and does not bind Directors.

Resolution 2

Re-election of Bruce Hundertmark as a Director

In accordance with Article 58 of the Company's Constitution and the Corporations Law, Bruce Hundertmark retires
as a Director by rotation and, being eligible, offers himself for re-election.

Resolution 3

Re-election of Peter G. Scott as a Director

In accordance with Article 58 of the Company's Constitution and the Corporations Law, Peter G. Scott retires as a
Director by rotation and, being eligible, offers himself for re-election.

Level 8, 261 George Street
Sydney NSW 2000
Tel: (61-2) 9247 8212
Fax: (61-2) 9247 3932
E-mail: pnightingale@biotron.com.au
Website: www.biotron.com.au

FORM OF PROXY

I/we . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

being a member/members of Biotron Limited HEREBY APPOINT

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
or failing him, the Chairman of the Meeting, as my/our Proxy to vote for me/us and on my/our behalf at the Annual General
Meeting of Members of the Company to be held at 11.00 am on 5 October 2007 and at any adjournment thereof.

The Proxy is directed by me/us to vote as indicated by the marks in the appropriate boxes below:

RESOLUTION

1. Adoption of the Remuneration Report

2. Re-election of Bruce Hundertmark as a Director

3. Re-election of Peter G. Scott as a Director

FOR
□
□
□

AGAINST
□
□
□

ABSTAIN
□
□
□

If no directions are given, the Proxy may vote as the Proxy thinks fit or may abstain.

If you do not wish to direct your Proxy how to vote, please place a mark in the box:
By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of
the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest. The Chairman
intends to vote undirected proxies in favour of each item.

□

Dated this . . . . . . day of . . . . . . . . . . . . . . . . . . . . . . 2007

Signatures of Member(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE COMMON SEAL of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.C.N. . . . . . . . . . . . . . . . . . . . .

was hereunto affixed in accordance with

its Constitution in the presence of: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Director

Secretary

PROXY INSTRUCTIONS

A member entitled to attend and vote is entitled to appoint not more than 2 proxies.

1.
2. Where more than 1 proxy is appointed, each proxy must be appointment to represent a specified

3.
4.
5.
6.
7.

proportion of the member's voting rights.
A proxy need not be a member.
Companies must sign under seal.
All joint holders must sign.
All executors of deceased estates must sign.
The Company has determined, in accordance with regulation 7.11.37 of the Corporations Regulations
2001 (Cth), that the Company's shares quoted on the Australian Stock Exchange Limited at 7.00 pm
Sydney time on 3 October 2007 are taken, for the purposes of the Annual General Meeting to be held by
the persons who held them at that time. Accordingly, those persons are entitled to attend and vote (if not
excluded) at the meeting.
Proxy forms must be received at the Company's registered office, Level 8, 261 George Street, Sydney,
NSW, 2000, or by facsimile on (61-2) 9247 3932, not less than 48 hours before the time appointed for
holding the meeting.

pjn3998