Holista Colltech Annual Report 2017

FY2017 Annual Report · Holista Colltech

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ABN 24 094 515 992

ANNUAL REPORT
31 December 2017

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

ANNUAL REPORT
31 December 2017

About Us
“We all strive to be healthy. Yet sometimes, making the right choice is beyond our control. That's where Holista CollTech comes
in. We have devoted our time into researching and finding natural solutions to help you improve their health. After all, being
healthy is the best gift you can give your body.”

CORPORATE PROFILE

Holista CollTech Ltd (Holista) is research-driven biotech company and is the result of the merger of Holista Biotech Sdn. Bhd.
and CollTech Australia Ltd.

Headquartered in Perth with extensive operations in Malaysia, Holista is dedicated to delivering first-class natural ingredients
and wellness products, and leads in research on herbs and food ingredients.

Holista, listed on the Australian Securities Exchange (ASX:HCT), researches, develops, manufactures and markets “health-style”
products to address the unmet and growing needs of natural medicine.

Holista has a suite of food ingredients which does not compromise on taste, odour and mouth-feel. This includes low-Glycemic
Index (“GI”) baked products, low sodium salt, low fat fried foods and low calories sugar.

It is the only company to produce sheep (ovine) collagen using patented extraction methods from Australia, and is on track in
nano-nising and encapsulating liposomes for the ovine collagen.

Holista aims to build a world class company focused on providing consumers with scientifically enhanced, engineered and
tested natural health supplements and consumer products.

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

ANNUAL REPORT
31 December 2017

Corporate directory

Current Directors

Dr Rajen Manicka

Managing Director and Chief Executive Officer

Mr Daniel Joseph O’Connor Non-executive Director

Mr Chan Heng Fai

Non-executive Director

Joint Company Secretary

Mr Jay Stephenson

Mr Brett Fraser

Registered Office

Share Registry

Street + Postal: 283 Rokeby Road

Computershare Investor Services Pty Limited

SUBIACO WA 6008

Level 11, 172 St Georges Terrace

Telephone:

+61 (0)8 6141 3500

PERTH WA 6000

Facsimile:

Email:

+61 (0)8 6141 3599
enquiries@holistaco.com

Website:

www.holistaco.com

Telephone:

1300 850 505 (investors within Australia)

Telephone:

+61 (0)3 9415 4000

Email:

web.queries@computershare.com.au

Website:

www.investorcentre.com

Auditors

Stantons International

Securities Exchange

Australian Securities Exchange

Street:

Level 2, 1 Walker Avenue

Level 40, Central Park, 152-158 St Georges Terrace

WEST PERTH WA 6005, AUSTRALIA

Perth WA 6000

Telephone:

+61(0)8 9481 3188

Facsimile:

+61(0)8 9321 1204

Telephone:

131 ASX (131 279) (within Australia)

Telephone:

+61 (0)2 9338 0000

Facsimile:
Website:

ASX Code

+61 (0)2 9227 0885
www.asx.com.au
HCT

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Contents

ANNUAL REPORT
31 December 2017

 Managing Director’s Report ................................................................................................................................................... 1

 Key Milestones ....................................................................................................................................................................... 4

 Messages From Our Key Partners........................................................................................................................................... 5

 Directors' report ..................................................................................................................................................................... 7

 Auditor's independence declaration .................................................................................................................................... 19

 Consolidated statement of profit or loss and other comprehensive income ....................................................................... 20

 Consolidated statement of financial position ...................................................................................................................... 21

 Consolidated statement of changes in equity ...................................................................................................................... 22

 Consolidated statement of cash flows ................................................................................................................................. 23

 Notes to the consolidated financial statements ................................................................................................................... 24

 Directors' declaration ........................................................................................................................................................... 72



Independent auditor's report ............................................................................................................................................... 73

 Corporate governance statement ........................................................................................................................................ 77

 Additional Information for Listed Public Companies ............................................................................................................ 83

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Managing Director’s Report

Dear Shareholders,

ANNUAL REPORT
31 December 2017

On behalf of the Board of Directors (the Board), I am pleased to present the Annual Report and audited financial statements of
Holista CollTech Limited (Holista or the Group) for the 12 months ended 31 December 2017 (FY2017).

This report represents a scorecard of our performance for the period in review as well as a snapshot of our strategic direction,
taking into account significant developments subsequent to the financial year-end. In summary, after scientific validation and
extensive engagement with potential clients, we have finally broken through to the global mass market for healthier white-flour
based products, starting with noodles.

Low-GI Products To Address Global Healthcare Pandemic
As shareholders are aware, we have expended considerable efforts to develop our proprietary formula for clean-label low
glycemic index (GI) flour-based products. The global pandemic of obesity and diabetes, which is due largely to diet, represents a
major healthcare problem worldwide.

It also offers an exceptional opportunity for Holista. What we seek to achieve is simple and yet exciting – to develop solutions
which allow us to collaborate with major food manufacturers. The pandemic has to be fought with food economics – and our
response has been an affordable low-GI formula free of additives or chemicals (clean label) which does not change the taste or
texture of food products.

We announced on 12 January 2016 that the University of Sydney had successfully tested our formula of PANATURA®GI in white
bread, developed by Holista and our Swiss partner Veripan Ltd (Veripan). Clinical trials showed that white bread made with four
different blends of the formula scored readings of 49, 51 and 54 (twice), far lower than the average for normal white bread.

On 27 November 2017, we announced that Veripan will join an Australian consortium led by Food Innovation Australia Ltd.
(FIAL) to develop new GI screening methods that will help manufacturers meet rising consumer appetite for healthy food. The
consortium consists of several prominent Australian organisations: the Glycemic Index Foundation, the University of Sydney,
the NSW Department of Primary Industries, Logio Group Pty. Lte., Next Instruments Pty. Ltd. and SunRice/Ricegrowers Ltd.
Under the FIAL Programme EO 1, Holista and Veripan will work with the consortium to develop validated in-vitro (‘within the
glass’) using test tube methods for rapid mass screening of starch-based foods such as bread, potatoes, rice, pasta and cereal.

Currently, there are 5 ongoing trials with the formulas of leading bread manufactures in North America, Europe, Asia and
Australia. This should all be completed by June 2018.

Low-GI Noodles, A Market Breakthrough Starting In North America
On 19 October 2017, we announced a low-GI noodle formula developed by our U.S. subsidiary, HolistaFoods Inc.
(HolistaFoods). This significant breakthrough is a result of a research and development (R&D) collaboration between
HolistaFoods and Wing’s Food Products (Wing’s) – a major North American noodle manufacturer based in Canada – to develop
the world’s first low-GI noodles.

HolistaFoods, which is based in New York, was formed on 12 July 2016 following a partnership with Nadja Foods LLC (Nadja
Foods). On 17 October 2017, Litefood Inc. acquired an additional 25% of HolistaFoods, following which HolistaFoods became a
39%-owned subsidiary of Holista CollTech. HolistaFoods is now 74%-owned by LiteFood Inc. and 26% owned by Nadja Foods.
LiteFoods Inc. is 53%-owned by Holista.

The low-GI noodles recorded a GI reading of 38 in independent tests by Glycemic Index Laboratories, Inc., Toronto, Canada,
compared to the global average of 60. The noodles are endorsed by the Glycemic Index Foundation and follow the guidelines
and recommendations of Diabetes Canada. An 85-gram serving of noodles contains 11 grams of protein, three grams of fibre
and zero sugar, while being low in sodium and cholesterol and providing sustained energy. The noodles cook in just three
minutes. The low-GI formula comprises extracts of okra (ladies’ fingers), lentils, barley and fenugreek – all-natural clean label
ingredients, with no artificial ingredients or preservatives.

I am pleased to announce that subsequent to the year-end, HolistaFoods shipped the first 1,000 kg of our GI-reducer for
noodles to Wing’s. Our agreement with Wing’s, together with the maiden shipment, places us on course to record about US$6
million in sales in FY2018 for this noodle formula. While this first shipment was made from Malaysia, all future shipments will
be sourced from India and Canada. The final blending will be done in a Canadian facility approved and certified for food safety
and acceptance for consumption by Muslims (halal) and the Jewish community (kosher). Shareholders should note that Holista
will benefit in terms of direct royalty payments of all sales via HolistaFoods as well as a share of profits in the subsidiary
company.

This delivery marks HolistaFoods’ entry into the global noodle market. According to Grand View Research, the global pasta and
noodle market was valued at US$59.6 billion in 2016 and is expected to grow at a compounded annual rate of 3.6%. The noodle
market in the United States, the world’s sixth largest consumer of instant noodles, is itself worth US$270 million. In 2016, the
World Instant Noodles Association reported 97.5 billion servings consumed around the world. Noodles account for half the
world’s supply of wheat, compared to 25% for bread.

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31 December 2017

Managing Director’s Report

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

We are working towards significantly increasing the volume shipment to Wing’s from FY2018 and beyond. Under our
Memorandum of Understanding (MoU), sales to Wing’s are expected to be US$6 million for 2018 before increasing to US$12
million in 2019 and US$25 million in 2020. We are working very hard to achieve these targets.

Other Low-GI Products
The validation of our low-GI noodle formula is significant because i) it will help Holista to market in other parts of the world,
including the major noodle markets of China and Indonesia; ii) it has attracted interest and increased confidence from
breadmakers whom we are already engaging for our bread GI-reducer; and iii) improve opportunities for similar low-GI
formulas for other flour-based products which we are already developing, such as muffins, pancakes and pasta.

On 6 January 2017, we announced the collaboration with 2016 Nobel Prize Nominee Daryl Thompson to file a patent for the
low-GI sugar made from all-natural ingredients. Unlike other forms of low-GI sugar that are cane-based, our patented low-GI
sugar covers common natural sugars such as cane, palm, beetroot, corn and more. It can also be melted, baked and
caramelized for use in all cooking applications.

We are now moving into prototype making and low GI testing in North America.

Food-Grade Collagen
This area of business registered an increase during the year due to the seasonal nature of cosmetic collagen. We delivered
8,440 kg of collagen during the 12 months in review, compared to 1,520 kg in the previous reporting period.

On 3 April 2017, the Group announced that it will supply collagen sourced from Australian sheep – certified disease-free by the
U.S. Department of Agriculture – to units of Australia’s Keneric Medical Supplies Pty Ltd, which will develop products aimed at
the multibillion-U.S. dollar global medical collagen market, marking Holista’s entry into the sector.

According to U.K. biotechnology market research group Meticulous Research, the global collagen market is expected to grow at
a compounded annual rate of 6.3% from 2015 to reach US$3.97 billion by 2020. The world’s largest collagen market is China, as
collagen forms a critical component of Traditional Chinese Medicine. It is also popular with ethnic Chinese people elsewhere in
the world.

During the year under review, we commenced an A$1 million retrofit of our facility in Collie, Western Australia, to prepare for
production of halal-certified food-grade collagen. The retrofit is scheduled for completion by end-June 2018. Upon completion
of the retrofit and the securing of halal certification, the Collie plant’s capacity will be an additional 4 tonnes of food-grade
collagen per month, supplementing the 1-2 tonnes of cosmetic-grade collagen we currently produce.

The Group will sell food collagen via a unique collaboration with iGalen International Inc. (iGalen), a global network marketing
company headquartered in San Diego

iGalen
As announced on 21 September 2017, I sold a 47% stake in iGalen to Holista – of which I am CEO and single-largest shareholder
– for the nominal sum of US$1.

iGalen sources all bio-pharmaceutical and dietary supplement products exclusively from Holista. It currently has more than
8,000 independent distributors, with its main markets being North America, the Philippines, Malaysia, Australia and New
Zealand. iGalen currently distributes two main products – Emulin® (an all-natural refined carbohydrate manager which
improves weight loss and metabolic outcomes) and Klamax (a supplement which can enhance stem cell growth and promote
their release).

Sales of Supplements
Dietary supplements were the Group’s main source of income this year. While the Group has a strong distribution network
throughout Malaysia, market conditions in the country remain challenging as inflation (due to the relative weakness of the
Malaysian Ringgit against major world currencies) continues to impact customers’ purchasing power.

The Group has launched initiatives to increase its presence in the dietary supplements market. In the year under review, we
released a new dietary supplement product, PRISTIN® GOLD, in Malaysia. PRISTIN® GOLD contains Omega-3 benefits in fewer
servings. The fish oil is imported from EPAX AS, Norway, and is encapsulated in fish gelatin capsules by Eurocaps Ltd., UK. Sales
reached $566,000 in the first year of launch.

On 9 August 2017, the Group secured global rights to Emulin®, which has also proven successful in combating obesity and
diabetes.

On 14 November 2017, the Group secured global distribution rights for Klamax, which is sourced from algae found in pristine
conditions in a United States lake.

The Group is also exclusively supplying raw material to multi-level marketing companies and will continue to source for new
potential products in the coming financial year.

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Managing Director’s Report

ANNUAL REPORT
31 December 2017

Financial Performance
As announced on 9 January 2017, the Group changed its financial year-end to 31 December from 30 June previously. For
FY2017, we will be comparing the 12-month performance against the previous six-month performance for FY2016.

The Group recorded a net loss attributable to owners of the parent of $3,030,290 for FY2017. Included in the loss for the year
are share-based payments and share-based consulting fees amounting to $2,350,921. These are non-cash transactions and are
not part of the operating activities of the Group.

Outlook
Having secured our first significant order for the noodle GI-reducer in early 2018, the Group will focus on shipping the
deliverables as indicated in the MoU with Wing’s of Canada, so as to achieve the US$6 million in anticipated sales for 2018.
Assuming full delivery and constant foreign exchange rate – and barring unforeseen circumstances – sales to Wing’s alone could
even reach A$7.8 million in FY2018, slightly higher than the $7.6 million recorded in FY2017 when no revenue for the noodle GI-
reducer was recognised.

With the growing momentum of iGalen sales, the Group expects to record higher revenue from the supply of Emulin+ and
Klamax to the direct marketing company. The introduction of new products during FY2018, such as sheep collagen, will also
contribute to the Group’s financial performance. We also expect sheep collagen production to increase following completion of
the retrofitting at the Collie plant; the agreement with Keneric Healthcare to supply medical-grade collagen is the first step
towards higher demand for this particular product.

Appreciation
On behalf of the Board of Directors, I would like to express my deepest gratitude to all stakeholders for their support, as well as
our R&D collaborators, retailers, suppliers and customers. I am also very grateful to my fellow Board members, our
management team and our staff for all their hard work.

Holista is committed to providing healthier alternatives to empower consumers with better choices. Together, we will continue
to achieve excellence in the coming years. We look forward to another exciting year ahead with all of you.

Thank you.

DR RAJEN MANICKA

Managing Director

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ANNUAL REPORT
31 December 2017

Key Milestones

Date

Milestone

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

27 November 2017

Veripan joins an Australian consortium led by Food Innovation Australia Ltd. (FIAL) to develop new GI
screening methods

14 November 2017

Secured global distribution rights for Klamax

19 October 2017

Holista’s breakthrough fomula for noodles is certified to have a low GI score of 38 by the Glycemic
Index Laboratories, Inc., Toronto, Canada. The global average GI reading for noodles is 60.

17 October 2017

Litefood Inc acquired an additional 25% of Holista Foods, following which HolistaFoods became a 39%-
owned subsidiary of Holista CollTech. HolistaFoods is now 74% owned by LiteFood Inc of US and 26%
owned by Nadja Foods. LiteFoods Inc is 53% owned by Holista.

21 September 2017

Acquired 47% stake in iGalen for the nominal sum of US$1 (pending shareholders’ approval)

21 August 2017

Commenced a A$1 million retrofit of its facility in Collie, Western Australia, to prepare for production
of halal-certified food-grade collagen

9 August 2017

Secured global rights to distribute Emulin®

3 April 2017

Secured exclusive rights to supply medical grade collagen to Australia’s Keneric Medical Supplies Pty.
Ltd.

9 January 2017

Announced change of Financial year end to 31 December

6 January 2017

Announced collaboration with Nobel Prize nominee and emerging thought leader in carbohydrate
chemistry, Mr. Daryl Thompson, to file patent for the low Glycemic Index sugar made out of all-natural
ingredients.

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Messages From Our Key Partners

MS. NADJA PIATKA
CEO of Nadja Foods and CEO of Holista Foods

ANNUAL REPORT
31 December 2017

All over the world, cakes, cookies and other delicious desserts are part of the human diet. But there is a potential dark side to
this sweet-tooth craving – it is a major cause of obesity and diabetes.

As a bakery supplier to fast food chains for over 24 years, I have spent most of my career at Nadja Foods working to meet this
challenge. It began with the low-fat movement in the nineties when I first had great success with a line of muffins I created.
However, the science has moved on and it is increasingly clear that the new frontier is in lowering the sugar content of foods to
make them healthier.

The food and beverage industry is well aware of this. In North America, fast food chains are in a race to roll out healthier menu
items to win over customers. But how do we do it the natural way, without pricing products out of reach? This is why it was
important that we partnered with Holista. Dr Rajen and his team have laboured to develop and validate the science of lowering
the Glycemic Index, or GI, of common foods. Holista has set the gold standard for clean-label GI reduction for white flour
products.

Our joint venture aims to convince food manufacturers and fast food chains to accept a new and better way to make food
healthier. We will initially focus on North America where obesity and diabetes, linked to high glycemic foods, have become a
national emergency that has strained health care costs and negatively affected living standards.

After collaborating with Holista for the past few months, I’ve seen firsthand the potential to revolutionise the North American
food industry whilst meeting the concerns of food manufacturers. Given the market opportunity, it then made sense to cement
our partnership with Holista with our joint venture company, Holista Foods.

Holista has collaborated with Wing’s Food Products, a major noodle manufacturer across North America based in Canada, to
begin research and development on low-GI noodles. Once our product is independently tested and validated at GI-Labs, a
nutrition research organisation in Canada, we will enter a commercial agreement to manufacture and distribute it. In the
coming year, we will develop and market low-GI baked goods and mixes which can be distributed to fast food companies,
retailers, schools and hospitals.

I am very proud to be working with Dr Rajen and share his passion to improve the world’s health through better food. Holista’s
leading food innovation and science coupled with my experience and reputation has positioned us to become major food
industry leaders in North America.

Thank you!

Nadja Piatka

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31 December 2017

Messages From Our Key Partners

MR. MEIERT J. GROOTES
Chairman of VERIPAN AG, a partner of Holista CollTech

HOLISTA COLLTECH LIMITED
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ABN 24 094 515 992

Obesity is a social burden generated by human that is one of the greatest threats to the global economy. It is more serious than
climate change, smoking or air pollution. Currently, more than half of all people in Europe are directly affected by this social
burden and more than 30 % are on a global level. From 1980 to 2014 the prevalence of obesity more than doubled, with more
than 2 billion adults aged 18 years and older overweight today. Obesity is a chronic disease, growing in severity in both
developed and developing countries, and reaching through all age groups. The problem seems particularly acute in countries
such as Malaysia and Singapore which have the highest incidences of obesity in Southeast Asia (The Lancet, 2014).

In my opinion it was therefore clear from the beginning that the reformulation of food products should be one of the main
areas of our R&D program when it comes to battling the obesity crisis. This is why we at Veripan want to attack the crisis head
first and go after one of the biggest staple foods in the world: Our daily white bread. The global white bread market alone is
currently worth US$170 billion and it continues to grow. An increased consumption of white bread has been linked in multiple
studies to an increase in weight and especially in Asian countries with the westernization of diets the effects are more and more
visible.

With a Glycemic Index (GI) of 77, white bread is amongst the staple foods with the highest GI. Essentially, the Glycemic Index is
a simple way to measure the quality of the carbohydrates we consume on a daily basis. Foods with a low GI (below 55) raise the
blood sugar slower and sustain longer, making the person feel full for longer. A high GI number however, lets the blood sugar
spike, giving the person a sugar rush, which plummets shortly after causing a quicker feeling of hunger. Furthermore, other side
effects of the sugar low are decrease in mood, extreme tiredness and less productivity.

In our partnership with Holista we have worked on a significant reduction of the GI of products that are made from white flour
– such as breads, muffins and noodles – in a simple and cost-effective way. On 12 January 2016, we were able to announce a
global scientific breakthrough: world’s first clean-label low GI white bread. Our innovation is made of a combination of Holista’s
proprietary natural GI lowering ingredients (GILiTE®), combined with Veripan’s proprietary natural sourdough PANATURA®.
With GI readings between 49 and 53 white breads made with PANATURA® GI show the lowest GI reading ever achieved, and
only increases production costs marginally without compromising the taste or mouthfeel of the final product. Since the launch
of our low-GI solution beginning of 2016, I have received numerous positive responses and many enquiries from leading bread
manufacturers all over the world.

Today, there are more than 2 billion overweight people all over the world and 600 million of them are obese. Just as much as
there is not a single cause for today’s obesity crisis there is also not a single solution. However, in the midst of this crisis it is
vital not to forget that obesity is preventable and that every problem also holds an opportunity. Reformulation of food, such as
developing a healthier white bread, much like PANATURA® GI, is an opportunity for industries to produce healthier foods for
global consumers.

I have full confidence that our partnership with Holista will truly change the way we produce and consume white flour
products. And the implications for individuals seeking a healthier lifestyle and for government health planners will be
significant.

Thank you!

Meiert J. Grootes

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Directors' report

ANNUAL REPORT
31 December 2017

Your directors present their report on the consolidated entity, consisting of Holista CollTech Limited (Holista or the Company)
and its controlled entities (collectively the Group), for the financial year ended 31 December 2017.

Holista is listed on the Australian Securities Exchange.

1. Directors
The names of Directors in office at any time during or since the end of the year are:



Dr Rajen Manicka

Managing Director and Chief Executive Officer

 Mr Daniel Joseph O’Connor Non-executive Director
 Mr Chan Heng Fai

Non-executive Director

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. For
additional information of Directors including details of the qualifications of Directors please refer to paragraph 7 Information
relating to the directors of this Directors Report.

Company secretary

2.
The following people held the joint position of Company Secretary at the end of the financial year:

 Mr Jay Richard Stephenson

Qualifications

Experience

 Ms Julia Beckett

Qualifications

Experience



MBA, FCPA, CMA, FCIS, MAICD



Mr Stephenson has been involved in business development for over 25 years including
the past 20 years as Director, Chief Financial Officer and Company Secretary for various
listed and unlisted entities in resources, manufacturing, wine, hotels, and property. He
has been involved in business acquisitions, mergers, initial public offerings, capital
raisings, business restructuring as well managing all areas of finance for companies

(Resigned 16 January 2018)

Ms Beckett holds a Certificate in Governance Practice and Administration and is a
Certificated Member of the Governance Institute Australia.

Ms Beckett is currently Company Secretary on a number ASX Listed and non-ASX listed
companies. Julia has held non-executive director roles on a number of ASX listed
companies.

The following person was appointed to the position of Company Secretary subsequent to the end of the financial year:

 Mr Brett Francis Fraser

(Appointed 16 January 2018)

Qualifications

Experience



FCPA, F.Fin, B.Bus. FGIA



Mr Fraser has worked in the finance and securities industry for over 25 years’ and has
owned and operated businesses across wine, health, finance, media and mining.

In addition, Mr Fraser is a Fellow of Certified Practicing Accountants; Fellow of the
Financial Services Institute of Australasia; Fellow of the Governance Institute of
Australia and Grad Dip Finance, Securities Institute of Australia; Bachelor of Business
(Accounting). Mr Fraser also holds an International Marketing Institute - AGSM Sydney.

3. Dividends paid or recommended
There were no dividends paid or recommended during the financial year ended 31 December 2017.

Significant Changes in the state of affairs

4.
There have been no significant changes in the state of affairs of the Group during the financial year ended 31 December 2017
other than disclosed elsewhere in this Annual Report.

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Directors' report

HOLISTA COLLTECH LIMITED
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ABN 24 094 515 992

5. Operating and financial review

5.1. Nature of Operations Principal Activities

During the financial year, the Group remained focused on its three core areas:



Dietary Supplement

Healthy Food Ingredients (including PANATURA®GI)

Sheep Collagen (Ovine)

5.2. Operations Review

During the financial year, the Group remained focused on three core areas:

 Dietary Supplements

 Healthy Food Ingredients



Sheep (Ovine) Collagen

Dietary Supplements

Dietary Supplements were the Group’s main income contributor during the financial year. While the Group has a strong
distribution network throughout Malaysia, market conditions in Malaysia remain challenging as inflation (due to the
relative weakness of the Ringgit against major world currencies) continues to impact customers’ purchasing power.

Revenue for this segment increased by 104.8% to $7,176,607 for the 12 months ended 31 December 2017 (new financial
year end), compared to $3,503,976 from the previous 6 months ending 31 December 2016 (previous financial year
end).The Group has launched initiatives to increase its presence in the Dietary Supplements market. In the year under
review, the Group released a new dietary supplement product, PRISTIN® GOLD, in Malaysia. PRISTIN® GOLD contains
Omega-3 benefits in fewer servings. The fish oil is imported from EPAX AS, Norway, and is encapsulated in fish gelatin
capsules by Eurocaps Ltd, UK. Sales reached $566,000 in the first year of launch.

On 8 March 2017, the Group launched iNContro™ (iNContro) in Kuala Lumpur, an all-natural spinach extract which helps
reduce hunger and food cravings.

On 9 August 2017, the Group secured global rights to an all-natural carbohydrate manager developed by two Nobel Prize
nominees, which has proven successful in combating obesity and diabetes.

On 14 November 2017, the Group secured global distribution rights for a supplement sourced from algae found in
pristine conditions in a lake in the United States, which can enhance stem cell growth and promote their release.

The Group is also exclusively supplying raw material to multi-level marketing companies and will continue to source for
new potential products in the next financial year.

Healthy Foods Ingredients

b.
During the financial period, the Group focused on:

 Glycemic Index (GI) Reducer



Low-GI Sugar

In the year under review, the Group’s focus area within this segment was its GI reducer – a patented formula consisting
of barley, dhal, fenugreek and okra – which has been independently verified to have significant reduction of blood sugar
levels when added to white flour, without changing the taste or texture of the final product.

The Group has made significant progress with its GI reducer, which includes a partnership with Veripan Ingredients AG
(Veripan), the largest independent bakery supplier in Europe, to develop and market PANATURA®GI, an all-natural
sourdough. White bread made with PANATURA®GI has been proven to achieve a significantly low GI reading of 55.

On 3 March 2016, we began a partnership with Nadja Foods LLC (Nadja Foods) to co-develop clean-label low-GI muffins
for distribution in U.S. and Canada. On 6 April 2016, Holista extended this partnership with Nadja Foods to include bagels,
brownies and croutons.

On 12 July 2016, our U.S. subsidiary Litefood Inc (Litefood) announced the formation of a 51-49 joint venture company
(Holista Foods) with Nadja Foods to distribute our low-GI product in North America. Holista Foods has food
manufacturing operations in the U.S. and Canada, and will be helmed by Nadja Piatka, a celebrity chef who has pioneered
many healthy food products, as CEO.

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This is a landmark partnership as North America is widely known as the home of fast food chains, and entering this
market will present opportunities for the Group to generate income from this area in the near future. According to
research by global food research house Statista, baked goods account for over US$22.15 billion in retail sales across
North America.

On 21 October 2016, Holista Foods secured its first major collaboration following the announcement of a Research and
Development (R&D) collaboration with a leading North American noodle manufacturer, Wing’s Food Products (Wing’s),
to develop the world’s first low-GI noodles. Once validated, Wing’s and Holista Foods will enter a commercial agreement
to distribute the low-GI noodles to the North American market.

According to Statista, 50% of the world’s wheat is consumed as noodles, with the largest markets being China and
Indonesia. In the U.S. alone, the noodle market is worth US$270 million. In 2015, the global demand for instant noodles
amounted to 103.58 billion servings.

On 17 Oct 2017, Litefood acquired an additional 25% of Holista Foods, following which Holista Foods became a 39%-
owned subsidiary of Holista CollTech.

On 19 October 2017, Holista Foods announced it had developed a breakthrough low-GI noodle formula, opening a major
market for a healthier version of the staple, which will be vital in the global fight against diabetes and obesity. The
noodles recorded a GI reading of 38 in independent tests conducted by Glycemic Index Laboratories, Inc, Toronto,
Canada. The global average GI reading for noodles is 60.

On 14 February 2018, Holista Foods announced it had signed a three-year MOU to supply its low-GI mix to Wing’s.
Pursuant to the MOU, sales are expected to be US$6 million for the 2018 financial year. This is projected to increase to
US$12 million in 2019 and to US$25 million in 2020. In the month of February 2018, we delivered the first 1,000 kg of raw
material to Canada for the first batch of production of low-GI noodles.

Another focus area in this segment is Low-GI sugar.

On 6 January 2017, we announced a collaboration with 2016 Nobel Prize Nominee, Daryl Thompson, to file a patent for
low-GI sugar made from all-natural ingredients. Unlike most available alternatives on the market, our low-GI sugar can be
melted, baked and caramelized for use in cooking applications – potentially replacing standard sugar altogether, with
minimal formulation issues. Moreover, the product is made from all-natural ingredients and is therefore unlikely to face
regulatory hurdles.

Sheep (Ovine) Collagen

c.
This area of business registered an increase during the year due to the additional markets we have secured in China, USA
and some global. We delivered 8,440 kg of collagen during the 12 months in review, compared to 1,520 kg in the previous
reporting period.

On 3 April 2017, the Group announced that it will supply collagen sourced from Australian sheep – certified disease-free
by the U.S. Department of Agriculture – to the USA Division of Australia’s Keneric Medical Supplies Pty Ltd, which will
develop products targeted at the multibillion-U.S. dollar global medical collagen market, marking Holista’s entry to the
sector, through an exclusive partnership.

According to U.K. biotechnology market research group Meticulous Research, the global collagen market is expected to
grow at a compounded annual rate of 6.3% from 2015 to reach US$3.97 billion by 2020. The world’s largest collagen
market is China, as collagen forms a critical component of Traditional Chinese Medicine. It is also popular with ethnic
Chinese people elsewhere in the world.

On 21 August 2017, the Group announced that it has begun a $1 million retrofit of its facility in Collie, Western Australia,
to prepare for production of halal-certified food-grade collagen. The retrofit is scheduled for completion by end-March
2018. The halal certification is now secured, taking the Collie plant’s capacity to an additional 4 tonnes of food-grade
collagen per month, supplementing the expected 3-4 tonnes of cosmetic-grade collagen we will produce from the second
half of 2018.

The Group will carry out the sale of food collagen via a unique collaboration with iGalen, a global network marketing
company headquartered in San Diego. iGalen sources all its bio-pharmaceutical and dietary supplement products
exclusively from Holista. Beyond supplying to iGalen, Holista intends to market food collagen to the food supplement
industry.

Among sources of mammalian collagen (warm-blooded like human beings), sheep-derived collagen is not subject to
religious or cultural sensitivities, compared to collagen from cows or pigs. The use of ovine collagen also avoids the
potential of “mad cow” or avian diseases (the latter being associated with chickens).

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Directors' report

5.3. Financial Review

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

The comparative figures presented in this report are the 31 December 2016 Annual Report, which was a six month annual
report due to a change in financial year. Accordingly, changes from the comparative period have been effected by the
differing length of reporting period.

The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The
Group incurred a loss for the year of $3,174,268 (6 months to Dec 2016: $163,858 profit).

The Group’s revenue for the year ending 31 December 2017 was recorded at $7,569,007 as compared with the previous
six month period ending 31 December 2016 which recorded $3,716,876. This increase in revenue can mainly be
attributed to growth in sales to companies in the Multi-Level Marketing space.

The Group believes that its food grade collagen is expected to contribute better revenue as compared to its existing
cosmetic-based collagen. From scientific studies, the recommended minimum dosage for food grade collagen is 5 grams a
day (equivalent to 150 grams a month compared to 1 gram of cosmetic collagen per bottle). Food Grade Collagen offers
significantly greater opportunity.

We expect Collie facility retrofitting will be completed in June 2018. The Group is confident that this new source of
revenue from Collie will contribute positively to the Group’s revenue in the coming financial year as oral grade collagen is
a large and growing global market.

The Group’s healthy food ingredients is targeted to continue growing in the coming financial year with the launch of
Klamax, which is sourced from algae found in pristine conditions in a United States lake.

The positive development of both the healthy food ingredients in the U.S. and food grade collagen in Australia are
expected to contribute positively to the Group in this coming financial year.

The net assets of the Group have increased from 31 December 2016 by $374,134 to $3,483,512 at 31 December 2017
(2016: $3,109,378).

As at 31 December 2017, the Group's cash and cash equivalents increased from 31 December 2016 by $62,877 to
$120,982 at 31 December 2017 (2016: $58,105) and had working capital of $964,764 (2016: $1,181,394 working capital),
as noted in Note 1a.iii Statement of significant accounting policies: Going Concern on page 24.

5.4. Events Subsequent to Reporting Date

There are no other significant after balance date events that are not covered in this Directors' Report or within the
financial statements as disclosed in Note 25 Events subsequent to reporting date on page 69.

5.5. Future Developments, Prospects and Business Strategies

Likely developments, future prospects and business strategies of the operations of the Group and the expected results of
those operations, not otherwise disclosed in the this report, have not been included in this report as the Directors believe
that the inclusion of such information would be likely to result in unreasonable prejudice to the Group.

5.6. Environmental Regulations

Holista has operated under environmental licence L7998/2003/3 issued by the Western Australian Department of Water
and Environmental Regulation as prescribed under the Environmental Protection Act 1986. The licence relates to collagen
extraction and purification, waste water storage and wastewater disposal pipeline to the Collie Power Station marine
disposal outfall tank. During the financial year the Group's operations were materially conducted in accordance with the
guidelines of that licence.

The Group's operations are not subject to any other significant environmental regulations in the jurisdictions it operates
in, namely Australia, Malyasia, and the United States.

6. Risk Management
The Group takes risk management seriously and has put in place the following procedures:

 Oversight:

An Audit Committee has been established to direct, review and initiates corrective action
in matters of internal control and minimise risk exposures compatible with a group
company of this size and nature.

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ANNUAL REPORT
31 December 2017

Directors' report

 Risk Profile

 Risk Management

 Compliance and Control

An exercise has been performed to assess the various business risks that impinge upon the
Group. They have been categorised according to which part or parts of the business would
be effected, what controls might be put in place and whether the resulting levels of
exposure are acceptable.

The Group has taken decisions as to how it should manage the various categories of risk
exposure and they include the imposition of Standard Operating Procedures (SOP's) for
routine business transactions; mitigation policies to lessen or obviate risks such as
Insurance Policies and formal long term Agreements with critical suppliers; and hedging
arrangements if applicable.

Standard Operating Procedures have been drawn up, circulated and regularly monitored
to ensure adherence to company policy. They include the various cash, purchasing, sales,
and payment cycles, and payroll. Levels of Authority have been set, divisions of duty are
made and multiple signature approvals imposed. Regular checks are made by management
to ensure that these controls are indeed in place and complied with.

 Assessment of Effectiveness

The management in the first instance assesses the effectiveness of the risk management
policies and in conjunction with the Audit Committee and External Auditors, instructs
improvements to be put in place.

Information relating to the directors

 Dr Rajen Manicka



Managing Director and Chief Executive Officer (Appointed July 2009)

Qualifications

Experience

 B B Ph. (Hons)



Dr Rajen Manicka, began his career as an intern pharmacist at the Kuala Lumpur General
Hospital from 1986 - 1987. In 1987 he joined Lee Pharmacy as a community Pharmacist. Over
a period of 9 years, Dr Rajen worked for several reputable pharmaceutical companies
including Roche and CIBA Pharmaceuticals
including medical
representative, product manager and marketing manager. In 1995, he incorporated Total
Health Concept, which was restructured into Holista Biotech Sdn Bhd in January 2004 and has
been Managing Director and major shareholder from inception of this group until its merger
with Holista CollTech Limited in July 2009. He is a prominent figure in the Malaysian biotech
industry, an industry which receives significant support and encouragement from the
Malaysian government.

in various capacities

Dr Rajen has been a guest lecturer in alternative medicine at the University of Malaysia, the
National University of Malaysia and the International Medical University in Malaysia. He was
also a health columnist for the Sunday Times- Malaysia's second largest Sunday newspaper
and writes a monthly column on biotech and business for The Edge, Malaysia's largest
business weekly.
Dr Rajen Manicka is a member of the Malaysian Ministry of Health Standing Committee for
Traditional Medicine and until March 2009 was on the board of Malaysian Herbal Corporation
Sdn Bhd, a wholly owned subsidiary of the Malaysian Industry - Government Group for High
Technology.

Interest in Shares and
Options



73,914,400
3,600,000
2,700,000
1,800,000
900,000

Ordinary Shares
Class A Performance Rights
Class B Performance Rights
Class C Performance Rights
Class D Performance Rights

Directorships held in
other listed entities



None

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

 Mr Daniel Joseph



Non-Executive Director (Appointed November 2011)

O’Connor

Qualifications

Experience



B.Bus, MBA, FAICD (Dip) CPM, AIMM, MAIM, MAIeX.



Mr O’Conner has spent more than 30 years in the commercialisation of intellectual property
and has worked with R&D teams across Asia, North America, and Australia. He is a published
author, mentor, coach, commercialisation consultant, and Company Director. He is the
Consultant Principal of the on-line coaching and mentoring group Incubate IP. Mr O’Connor is
a member of the UN Task Force on Innovation and Competitiveness and works with Corporate
Leaders, inventors, and R&D team managers who need greater traction and focus with patent
portfolio management and driving their commercialisation projects (www.incub8IP.com). He
has been a Director of Holista for more than five years.

Interest in Shares and
Options

Directorships held in
other listed entities



3,500,000

Options



None

 Mr Chan Heng Fai



Non-Executive Director (Appointed 13 June 2013)

Qualifications



Mr Chan has restructured over 35 companies in different industries and countries in the past
40 years.

Experience



In 1987, Mr Chan acquired American Pacific Bank, a full service U.S. commercial bank, out of
bankruptcy. He recapitalised, refocused and grew the bank’s operations. Under his guidance,
American Pacific Bank became a US NASDAQ high asset quality bank, with zero loan losses for
over five consecutive years before it was ultimately bought and merged into Riverview
Bancorp Inc. Prior to its merger with Riverview Bancorp Inc., in June 2004, American Pacific
Bank was ranked 13 by the Seattle Times “Annual Northwest’s Top 100 Public Companies” for
the year 2003, and ranked 6 in the Oregon state [for the year 2003], which ranked ahead of
names such as Nike, Microsoft, Costco, AT&T Wireless and Amazon.com.
In 1997, Mr Chan acquired and ran a regional investment banking and securities broking-
dealing business headquartered in Denver, with 12 offices throughout USA.

Interest in Shares and
Options

Directorships held in
other listed entities



Ordinary Shares

45,145,101
Mr Chan exercised 12,330,166 options, via his company Global eHealth Limited and
transferred 3,500,000 options to an unrelated third-party.



Mr Chan also sits on the board of Singapore eDevelopment Limited.

8. Meetings of directors and committees
During the financial year six meetings of Directors (including committees of Directors) were held. Attendances by each Director
during the year are stated in the following table.

DIRECTORS'
MEETINGS

REMUNERATION AND
NOMINATION COMMITTEE

FINANCE AND OPERATIONS
COMMITTEE

AUDIT
COMMITTEE

Number
eligible to
attend

Number
Attended

Number
eligible to
attend

Number
Attended

Number
eligible to
attend

Number
Attended

Number
eligible to
attend

Number
Attended

Rajen Manicka

Daniel Joseph O’Connor

Chan Heng Fai

Indemnifying officers or auditor

9.1.

Indemnification

At the date of this report, the Audit, Nomination, and Finance and
Operations Committees comprise the full Board of Directors. The Directors
believe the Company is not currently of a size nor are its affairs of such
complexity as to warrant the establishment of these separate
committees. Accordingly, all matters capable of delegation to such
committees are considered by the full Board of Directors.

The Company has agreed to indemnify all the directors of Holista for any liabilities to another person (other than the
Company or related body corporate) that may arise from their position as directors of the Company and its controlled
entities, except where the liability arises out of conduct involving a lack of good faith.

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ANNUAL REPORT
31 December 2017

9.2.

Insurance premiums
During the financial year the Group has paid a premium of $17,230 (6 months to 31 December 2016: $17,381) in respect
of a contract to insure the directors and officers of the Company and its controlled entities against any liability incurred in
the course of their duties to the extent permitted by the Corporations Act 2001.

10. Options

10.1. Unissued shares under option

At the date of this report, the unissued ordinary shares of Holista CollTech Limited under option (listed and unlisted) are
as follows:

Grant Date

Date of Expiry

Exercise Price
$

Number under
Option

11 April 2016

8 Sep 2018

8 Mar 2019

27 Feb 2017

17 Dec 2018

23 Mar 2017

23 Mar 2020

18 May 2017

23 Mar 2020

18 May 2017

31 Dec 2019

26 Jun 2017

26 Jul 2017

23 Jun 2020

1 Aug 2020

16 Oct 2017

16 Oct 2020

0.25

0.30

0.06

0.20

0.10

0.20

0.25

0.30

0.10

0.20

3,954,205

3,500,000

6,500,000

3,500,000

1,000,000

6,000,000

3,000,000

2,000,000

7,000,000

42,408,410

No person entitled to exercise the option has or has any right by virtue of the option to participate in any share issue of
any other body corporate.

10.2. Shares issued on exercise of options

12,330,166 (Dec 2016: 2,136,500) ordinary shares have been issued by the Company during the financial year as a result
of the exercise of options.

11. Non-audit services
During the year, Stantons International Audit and Consulting Pty Ltd, the Company’s auditor, did not perform any services
other than their statutory audits (2016: $nil). Details of remuneration paid to the auditor can be found within the financial
statements at Note 30 Auditor's Remuneration on page 71.

In the event that non-audit services are provided by Stantons International Audit and Consulting Pty Ltd, the Board has
established certain procedures to ensure that the provision of non-audit services are compatible with, and do not compromise,
the auditor independence requirements of the Corporations Act 2001. These procedures include:
 non-audit services will be subject to the corporate governance procedures adopted by the Company and will be reviewed

by the Board to ensure they do not impact the integrity and objectivity of the auditor; and

 ensuring non-audit services do 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.

12. Proceedings on behalf of company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings.

The Company was not a party to any such proceedings during the year.

13. Auditor's independence declaration
The lead auditor's independence declaration under section 307C of the Corporations Act 2001 (Cth) for the year ended
31 December 2017 has been received and can be found on page 19 of the annual report.

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DIRECTORS' REPORT

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

14. Remuneration report (audited)

The information in this remuneration report has been audited as required by s308(3C) of the Corporations Act 2001 (Cth).

14.1. Key management personnel (KMP)

KMP have authority and responsibility for planning, directing and controlling the activities of the Group. KMP comprise
the directors of the Company and key executive personnel:
 Dr Rajen Manicka
 Mr Daniel Joseph O’Connor Non-executive Director
 Mr Chan Heng Fai

Managing Director Chief Executive Officer

Non-executive Director

As at 31 December 2016, Mr Jay Stephenson was no longer a person having authority and responsibility for planning,
directing and controlling the activities of the Group, directly or indirectly. Mr Stephenson has solely undertaken the role
of Company Secretary, and is not a director of the Company. As such Mr Stephenson is not deemed to be KMP for the
year ended 31 December 2017.

14.2. Principles used to determine the nature and amount of remuneration

a. Remuneration philosophy

The performance of the Company depends upon the quality of the KMP. The philosophy of the Company in
determining remuneration levels is to:
 set competitive remuneration packages to attract and retain high calibre employees;
 link executive rewards to shareholder value creation; and
 establish appropriate, demanding performance hurdles for variable executive remuneration.

b. Remuneration committee

Currently the responsibilities of the Remuneration Committee are undertaken by the full Board.

The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing
compensation arrangements for the directors, the CEO and the executive team.

The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of directors
and executives on a periodic basis by reference to relevant employment market conditions with an overall objective
of ensuring maximum stakeholder benefit from the retention of a high quality KMP.

c. Remuneration structure

In accordance with best practice Corporate Governance, the structure of non-executive director and executive
remuneration is separate and distinct.

d. Non-executive director remuneration

The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and
retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.

The ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from
time to time by a general meeting. The latest determination was at the Annual General Meeting held on 1 December
2003 when shareholders approved an aggregate remuneration of $200,000 per year.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is
apportioned amongst directors is reviewed annually. The Board considers advice from external shareholders as well
as the fees paid to non-executive directors of comparable companies when undertaking the annual review process.

Each director receives a fee for being a director of the Company. An additional fee is also paid for each Board
committee on which a director sits. The payment of additional fees for serving on a committee recognises the
additional time commitment required by directors who serve on one or more sub committees.

The remuneration of non-executive directors for the period ended 31 December 2017 is detailed in section 14.3 of
this remuneration report.

e. Senior manager and executive director remuneration

Remuneration consists of fixed remuneration and variable remuneration (comprising short-term and long-term
incentive schemes).

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DIRECTORS' REPORT

14. Remuneration report (audited)

f. Fixed Remuneration

ANNUAL REPORT
31 December 2017

Fixed remuneration is reviewed annually by the Board. The process consists of a review of relevant comparative
remuneration in the market and internally and, where appropriate, external advice on policies and practices. The
Committee has access to external, independent advice where necessary.

Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms
including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner
of payment chosen will be optimal for the recipient without creating undue cost for the Group.

The fixed remuneration component of the company executives is detailed in section 14.3 of this remuneration report.

g. Variable Remuneration

The aggregate of annual payments available for KMP across the Group is subject to the approval of the Remuneration
Committee During the year.

h. Performance Based Remuneration – Short-term and long-term incentive structure

The Board will review short-term and long-term incentive structures from time to time. Any incentive structure will
be aligned with shareholders' interests

 Short-term incentives

No short-term incentives in the form of cash bonuses were granted during the year.

 Long-term incentives

The Board has a policy of granting incentive options and performance rights to KMP with exercise prices above
market share price. As such, incentive options granted to executives will generally only be of benefit if the
executives perform to the level whereby the value of the Group increases sufficiently to warrant exercising the
incentive options granted.

The executive Directors will be eligible to participate in any short term and long term incentive arrangements operated or
introduced by the Company (or any subsidiary) from time to time.

i. Service Contracts

Remuneration and other terms of employment for the directors and other KMP are formalised in contracts of
employment.

j. Engagement of Remuneration Consultants

During the financial year, the Company did not engage any remuneration consultants.

k. Relationship between Remuneration of KMP and Earnings

The Company is also in the midst of commercialising some of its patented technologies, namely its Healthy Food
Ingredients and Sheep Collagen. Accordingly, the Company’s remuneration policy during the current and the previous
four financial years is not related to the Company’s performance.

14.3. Directors and KMP remuneration

Details of the remuneration of the Directors and KMP of the Group (as defined in AASB 124 Related Party Disclosures) are
set out in the following table.

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31 December 2017

Directors' report

14. Remuneration report (audited)

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

2017 – Group

Group KMP

Rajen Manicka(1)

Daniel Joseph
O’Connor(2)

Salary, fees
and leave
$

224,881

48,000

Chan Heng Fai

36,000

Short-term benefits

Profit share
and bonuses

Non-
monetary
$

Other

Post-
employment
benefits
Super-
annuation
$

42,728

Long-term
benefits

Termination
benefits

Equity-settled share-
based payments

Total

Other

Equity /
Perf. Rights

1,033,291

Options

1,300,900

192,036

240,036

36,000

-
(1) In respect to Dr Manicka’s equity-settled share-based payments, Dr Manicka was issued 9,000,000 performance rights in accordance

1,033,291

192,036

308,881

42,728

1,576,936

with terms and conditions as detailed in Note 21b.i(7)

(2) In respect to Mr O’Connor’s equity-settled share-based payments, Mr O’Connor was issued 3,500,000 options in accordance with terms

and conditions as detailed in Note 21b.i(1)

2016 – Group

Group KMP

Salary, fees
and leave
$

Rajen Manicka

112,361

Daniel Joseph O’Connor

Chan Heng Fai

Jay Stephenson

18,000

24,400

154,761

Short-term benefits

Profit share
and bonuses

Non-
monetary
$

Post-
employment
benefits
Super-
annuation
$

21,350

Other

Long-term
benefits

Termination
benefits

Equity-settled share-
based payments

Total

Other

Equity

Options

133,711

18,000

24,400

176,111

14.4. Service Agreements

a. Employment Agreement with Dr Rajen Manicka

On 7 September 2010, the Group entered into an Employment Agreement with Dr Rajen Manicka to act as Chief
Executive Officer and Managing Director. On the 28 August 2015, the Board of Directors reviewed and renewed the
Employment Agreement of Dr Rajen Manicka as the Chief Executive Director and Managing Director of the Group.
Saved for the changes below, all other terms and conditions of the original Agreement dated 7 September 2010
remains the same.

A summary of the terms of his employment are as follows:
 Commencement date
 Termination date of contract
 Period of notice for resignation/termination 3 months
 Remuneration
 Termination (with cause)

10 July 2015

Initial 3 year period

RM692,160 per annum with annual increments of 3% - 5%.

The Company may terminate at any time without notice if serious
misconduct has occurred. Where termination with cause occurs
employees are only entitled to entitlements up to the date of
termination and any unvested options will
immediately be
forfeited.

 Termination (without cause)

The Agreement provides for the termination of the Agreement by
paying a severance payment of up to three months in addition to
notice period.

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14.5. Share-based compensation

ANNUAL REPORT
31 December 2017

The Group believes that encouraging its directors and executives to become shareholders is the best way of aligning their
interests with those of its shareholders. At present the Group does not have an employee share option plan.

No shares or options were issued as share based compensation during the year. (Jun 2016: nil)

There were no equity instruments issued during the year to Directors as a result of options exercised that had previously
been granted as compensation.

a. Securities received that are not performance-related

No members of KMP are entitled to receive securities that are not performance-based as part of their remuneration package.

b. Options and Rights Granted as Remuneration

During the financial year ended 31 December 2017 9,000,000 performance rights were granted to Dr Manicka and
3,500,000 options were granted to Mr O’Connor as remuneration as detailed note 21 Share-based payments. No equity
instruments were granted in the six months ended 31 December 2016.

14.6. KMP equity holdings

a. Fully paid ordinary shares of Holista CollTech Limited held by each KMP

2017 – Group

Group KMP

Rajen Manicka

Daniel Joseph O’Connor

Chan Heng Fai

2016 – Group

Group KMP

Rajen Manicka

Daniel Joseph O’Connor

Chan Heng Fai

Jay Stephenson

Balance at
start of year
No.

73,914,400

32,814,935

106,729,335

Balance at
start of year
No.

73,914,400

32,514,935

106,429,335

Received during
the year as
compensation
No.

Received during
the year on
the exercise of
options
No.

12,330,166

Received during
the year on
the exercise of
options
No.

300,000

Other changes
during the year
No.

Balance at
end of year
No.

73,914,400

45,145,101

119,059,501

Balance at
end of year
No.

73,914,400

32,814,935

106,729,335

b. Options in Holista CollTech Limited held by each KMP

2017 – Group

Group KMP

Rajen Manicka

Daniel Joseph
O’Connor

Balance at
start of year
No.

Granted as
Remuneration
during the year
No.

Exercised
during the year
No.

Other changes
during the year
No.

Balance at
end of year
No.

Vested and
Exercisable
No.

Not Vested
No.

3,500,000

Chan Heng Fai(1)

15,830,166

(12,330,166)

(3,500,000)

15,830,166

3,500,000

(12,330,166)

(3,500,000)

3,500,000

(1)

In respect to Mr Chan, other changes during the year relate to an off-market transfer of 3,500,000 options for consideration
of $210,000 ($0.06 per option) to an unrelated third-party.

P a g e | 17

For personal use only

ANNUAL REPORT
31 December 2017

Directors' report

14. Remuneration report (audited)

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

2016 – Group

Group KMP

Rajen Manicka

Daniel Joseph
O’Connor

Balance at
start of year
No.

Granted as
Remuneration
during the year
No.

Exercised
during the year
No.

Other changes
during the year
No.

Balance at
end of year
No.

Vested and
Exercisable
No.

Chan Heng Fai

17,966,666

Jay Stephenson

17,966,666

(300,000)

(1,836,500)

15,830,166

(300,000)

(1,836,500)

15,830,166

Not Vested
No.

c. Performance rights of Holista CollTech Limited held by each KMP

2017 – Group

Group KMP

Rajen Manicka

Daniel Joseph O’Connor

Chan Heng Fai

Balance at
start of year
No.

Received during
the year as
compensation
No.

9,000,000

Received during
the year on
the exercise of
options
No.

Other changes
during the year
No.

Balance at
end of year
No.

9,000,000

2016 – Group: There were no performance rights on issue in the comparative period.

14.7. Other Equity-related KMP Transactions

There have been no other transactions involving equity instruments other than those described in the tables above
relating to options, rights and shareholdings.

14.8. KMP Loans

There are no loans to or from KMP as at 31 December 2017. In the comparative period ended 31 December 2016, a loan
amounting to US$250,000 was advanced by an associated company of a Director as detailed in Note 17e. On 24 March
2017, 6,012,698 options were exercised to affect the settlement of a loan of $360,762 from Global eHealth Limited.

14.9. Other transactions with KMP and or their Related Parties

As disclosed Note 16b, the Group has amounts due to Directors of $297,601 (2016: 69,098). There have been no other
transactions in addition to those described in the tables or as detailed in Note 28 Related party transactions.

END OF REMUNERATION REPORT

This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of directors
made pursuant to s.298(2) of the Corporations Act 2001 (Cth).

DR RAJEN MANICKA

Managing Director

Dated this Thursday, 29 March 2018

P a g e | 18

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

ANNUAL REPORT
31 December 2017

Auditor's independence declaration
Under Section 307c Of The Corporations Act 2001 (Cth)
To The Directors Of Holista Colltech Limited

TO BE REPLACED BY AUDITORS

P a g e | 19

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2017

Continuing operations
Revenue

Other income

Change in inventories of finished goods and work in progress

Raw materials and consumables used

Distribution costs

Consultancy and professional fees

Depreciation and amortisation

Employment costs

Finance costs

Foreign exchange loss

Share-based payments expense

Research and development

Advertising and promotion

Impairment

Other expenses

(Loss) / profit before tax

Income tax benefit / (expense)

Net (loss) / profit for the period

Note

12 months to
31 December
2017
$

Restated
6 months to
31 December
2016
$

7,569,007

338,736

3,716,876

351,404

7,907,743

4,068,280

51,564

(51,263)

(3,868,768)

(1,486,996)

5b,2b

(313,880)

(861,427)

(224,514)

(2,379,167)

(83,580)

(78,053)

(1,589,954)

(468,223)

(556,481)

(152,205)

(717,541)

(3,334,486)

160,218

(176,955)

(215,732)

(70,532)

(877,867)

(34,032)

(46,429)

(6,943)

(65,237)

(288,020)

(10,434)

(510,594)

227,246

(63,388)

(3,174,268)

163,858

Other comprehensive income, net of income tax

 Items that will not be reclassified subsequently to profit or loss

 Items that may be reclassified subsequently to profit or loss:

 Foreign currency movement

Other comprehensive income for the period, net of tax

(37,405)

(197,639)

(37,405)

(197,639)

Total comprehensive income attributable to members of the parent entity

(3,211,673)

(33,781)

(Loss) / profit for the period attributable to:
 Non-controlling interest

 Owners of the parent

Total comprehensive income attributable to:
 Non-controlling interest

 Owners of the parent

Earnings per share:

Basic (loss) / profit loss per share (cents per share)

Diluted profit per share (cents per share)

(143,978)

(3,030,290)

(143,978)

(3,067,695)

₵

(1.69)

N/A

(2,410)

166,268

(8,012)

(25,769)

₵

0.10

0.08

The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.

P a g e | 20

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Consolidated statement of financial position
as at 31 December 2017

Current assets
Cash and cash equivalents

Trade and other receivables

Inventories

Other current assets

Total current assets

Non-current assets
Property, plant, and equipment

Intangible assets

Investment accounted using the equity method

Deferred tax asset

Other non-current assets

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Borrowings

Current tax liabilities

Short-term provisions

Total current liabilities

Non-current liabilities
Deferred tax liability

Borrowings

Total non-current liabilities

Total liabilities

Net assets

Equity

Issued capital

Reserves

Accumulated losses

Non-controlling interest

Total equity

ANNUAL REPORT
31 December 2017

Note

11a

2017
$

Restated
2016
$

120,982

58,105

1,807,114

2,040,254

956,236

876,746

891,340

596,101

3,761,078

3,585,800

1,557,436

1,569,356

858,803

321,986

15c.iii, 2a

11b,2a

292,526

343,912

99,085

471,193

17a

17b

3,052,677

2,461,620

6,813,755

6,047,420

2,557,670

1,672,621

222,975

718,700

7,588

8,081

6,569

6,516

2,796,314

2,404,406

533,929

770

532,866

533,636

3,330,243

2,938,042

3,483,512

3,109,378

19a

11,538,515

10,798,705

4,395,833

1,896,643

(12,257,265)

(9,378,424)

(193,571)

(207,546)

3,483,512

88,018
2,624,709

3,109,378

585,293
2,787,392

The consolidated statement of financial position is to be read in conjunction with the accompanying notes.

P a g e | 21

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Balance at 1 July 2016

Loss for the period attributable owners of the parent

Other comprehensive income for the period attributable owners of the parent

Total comprehensive income for the period attributable owners of the parent

Transaction with owners, directly in equity

Shares issued during the period

Options granted during the period

Balance at 31 December 2016

Balance at 1 January 2017

Loss for the year attributable owners of the parent

Other comprehensive income for the year attributable owners of the parent

Total comprehensive income for the year attributable owners of the parent

Transaction with owners, directly in equity

Shares issued during the year

Options granted during the year

NCI upon acquisition of subsidiary

NCI acquisition of additional interests

Reduction of interest in subsidiary

Balance at 31 December 2017

Note

Share-based
Payments
Reserve

Foreign
Currency
Translation
Reserve

Accumulated
Losses

Non-
controlling
Interest
(NCI)

Issued
Capital

Total

10,670,515

2,265,730

(183,993)

(9,544,692)

(199,534)

3,008,026

128,190

6,943

166,268

(192,037)

(2,410)

(5,602)

163,858

(197,639)

(192,037)

166,268

(8,012)

(33,781)

128,190

6,943

10,798,705

2,272,673

(376,030)

(9,378,424)

(207,546)

3,109,378

10,798,705

2,272,673

(376,030)

(9,378,424)

(207,546)

3,109,378

739,810

2,536,595

(3,030,290)

(143,978)

(3,174,268)

(37,405)

(3,030,290)

(143,978)

(3,211,673)

179,408

129,994

739,810

2,536,595

179,408

129,994

151,449

(151,449)

11,538,515

4,809,268

(413,435)

(12,257,265)

(193,571)

3,483,512

19a

19e

19a

19e

3a.ii

21b

The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.

|
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2

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Consolidated statement of cash flows
for the year ended 31 December 2017

Cash flows from operating activities

Receipts from customers

Payments to suppliers and employees

Interest received

Finance costs

Other revenue

Net income tax received

ANNUAL REPORT
31 December 2017

Note

31 December
2017
$

31 December
2016
$

8,362,462

3,716,876

(8,017,323)

(3,331,165)

6,302

(75,235)

(35,284)

5,901

(24,080)

37,825

283,851

Net cash from operating activities

8c.i

240,922

689,208

Cash flows from investing activities

Proceeds from legal settlements

Proceeds from the sale of property, plant and equipment

Purchase of intellectual property

Purchase of property, plant, and equipment

Increase in fixed deposits pledged

Construction of plant and equipment

Loans provided, net

Net cash acquired on acquisition

Increase in deposits / investments

Net cash used in investing activities

Cash flows from financing activities

Proceeds from exercise of options

Shares issued to non-controlling interest

(Repayment of) / proceeds from borrowings, net

Advance loan to third party

Net cash provided by financing activities

Net decrease in cash held

Cash and cash equivalents at the beginning of the period

Change in foreign currency held

8c.iv(2),(3)

(68,663)

(161,940)

(257,166)

28,035

3,456

3,467

(117,181)

(106,808)

(5,757)

(532,427)

(48,144)

(104,579)

(115,703)

(564,313)

(919,097)

379,049

128,968

(120,362)

128,190

355,663

(377,453)

387,655

106,400

64,264

(123,489)

58,105

(1,387)

348,434

(166,840)

Cash and cash equivalents at the end of the period

120,982

58,105

The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.

P a g e | 23

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Statement of significant accounting policies

Note 1
These are the consolidated financial statements and notes of Holista Colltech Limited (Holista or the Company) and controlled
entities (collectively the Group). Holista is a company limited by shares, domiciled and incorporated in Australia.

The separate financial statements of Holista, as the parent entity, have not been presented with this financial report as
permitted by the Corporations Act 2001 (Cth).

The financial statements were authorised for issue on 29 March 2018 by the directors of the Company.

a. Basis of preparation
The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing the
consolidated financial statements, the Company is a for-profit entity. Material accounting policies adopted in the preparation
of these financial statements are presented below. They have been consistently applied unless otherwise stated.

i. Statement of compliance
These financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board (AAS Board) and
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and
the Corporations Act 2001 (Cth).

Australian Accounting Standards (AASBs) set out accounting policies that the AAS Board has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions to which they apply.
Compliance with AASBs ensures that the financial statements and notes also comply with IFRS as issued by the IASB.

ii. Change in financial year end
In the prior reporting period, the company changed its financial year end from 30 June to 31 December. The current period
figures relate to 12 months from 1 January 2017 to 31 December 2017, whereas (as a result of the change in financial year
end), the comparative period relates to the 6 months ended 31 December 2016.

The comparative amounts disclosed in the financial report and related notes are not comparable as the lengths of the
periods differ by six months.

iii. Going Concern

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

The Group incurred a loss for the year of $3,174,268 (2016: $163,858 profit) and a net cash in-flow from operating activities
of $240,922 (2016: $689,208 in-flow). As at 31 December 2017, the Company working capital of $964,764 (2016:
$1,181,394 working capital), as disclosed in Note 19f of the Issued capital note.

This financial report is prepared on the going concern basis, which contemplates continuity of normal business activities
and realisation of assets and settlement of liabilities in the ordinary course of business. The ability of the Group to continue
to pay its debts as and when they fall due is dependent upon the Group's ability to generate positive cash flows through its
existing business and/ or raising of further equity.

The Group's cosmetic collagen business continues to grow and is generating revenue of $392,400 with a growth of 41.5%
over 2016. This area of business will grow with new interest from an international cosmetic company operating out of
China. This will be a much higher margin business that we contemplate with get attention with the network of this
company in Thailand and Indonesia.

The Group has invested in some essential equipment at its Collie Plant to produce the Food Grade Collagen on a higher
scale. We expect this equipment to be commissioned in June 2018. The Group is confident that this new source of revenue
from Collie will contribute positively to the Group’s revenue in the coming financial year as oral grade collagen is a large
and growing global market.

Beside the cosmetic and food grade collagen, the Group will also enter into the Medical Grade collagen. The Group expects
to get its ISO certification in June and be able to supply this as feedstock from September 2018.

On the Healthy Food Ingredients, we expect to see significant revenue in Australia, Asia and Europe in the next 12 months.
Our US indirect subsidiary, Holista Foods Inc, to distribute our low-GI product in North America and has met with success
with the low GI noodles. This business segment will expected to generate revenue in next financial year

Our sales of dietary supplement ingredients to companies in the Multi-Level Marketing space will continue to grow in the
area of EMULIN and Glutathione precursors. This has grown to $2.4 million and 97% in terms of growth

P a g e | 24

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

ANNUAL REPORT
31 December 2017

While the Group is optimistic that its Malaysian and Australian revenue will continue to grow and contribute positively in
the future, it does realise the risk should the Group fail to generate sufficient positive cash flows and/or obtain funding
when required. There is significant uncertainty as to whether the Group will continue as a going concern and whether it will
realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial
report.

iv. Use of estimates and judgments
The preparation of consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
These estimates and associated assumptions are based on historical experience and various factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from other sources. 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.

Judgements made by management in the application of AASBs that have significant effect on the consolidated financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in Note 1t.

v. Comparative figures
The comparative figures presented in financial statements are from the 31 December 2016 Annual Report, which was a six
month annual report due to a change in financial year. Accordingly, changes from the comparative period have been
effected by the differing length of reporting period. The Company believes these comparatives presented are the most
relevant to users.

Where required by AASBs comparative figures have been adjusted to conform to changes in presentation for the current
financial year.

Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its
financial statements, an additional (third) statement of financial position as at the beginning of the preceding period in
addition to the minimum comparative financial statements is presented.

b. Accounting Policies
The Group has consistently applied the following accounting policies to all periods presented in the financial statements. The
Group has considered the implications of new and amended Accounting Standards applicable for annual reporting periods
beginning after 1 January 2017 but determined that their application to the financial statements is either not relevant or not
material.

c. Principles of consolidation
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial
statements as well as their results for the year then ended. Where controlled entities have entered (left) the Consolidated
Group during the year, their operating results have been included (excluded) from the date control was obtained (ceased).

i. Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on
which control is transferred to the Group. Control exists when the Group is exposed to variable returns from another entity
and has the ability to affect those returns through its power over the entity.

The Group measures goodwill at the acquisition date as:
 the fair value of the consideration transferred; plus
 the recognised amount of any non-controlling interests in the acquire; plus


if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree;

less
 the net recognised amount of the identifiable assets acquired and liabilities assumed.

P a g e | 25

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

The excess of the consideration transferred the amount of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over the fair value of the Group's share of the net identifiable
assets acquired is recorded as goodwill.

If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement
of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

The consideration transferred does not include amounts related to settlement of pre-existing relationships. Such amounts
are generally recognised in profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is
classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to
the fair value of the contingent consideration are recognised in profit or loss.

ii. Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.

The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the
Group.

Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as non-controlling
interests. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and
are entitled to a proportionate share of the subsidiary's net assets on liquidation at either fair value or at the non-
controlling interests' proportionate share of the subsidiary's net assets. Subsequent to initial recognition, non-controlling
interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling
interests are shown separately within the equity section of the statement of financial position and statement of
comprehensive income.

The grant by the company of options over its equity instruments to the employees of subsidiary undertakings in the group
is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured
by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary
undertakings, with a corresponding credit to equity.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing
so causes the non-controlling interests to have a deficit balance.

A list of controlled entities is contained in Note 14 Interest In Subsidiaries of the financial statements.

iii. Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests
and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is
recognised in profit or loss. If the Group retains any interest in the previous subsidiary, than such interest is measured at
fair value at the date control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-
sale financial asset depending on the level of influence retained.

iv. Transactions eliminated on consolidation
All intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.

d. Foreign currency transactions and balances

i. Functional and presentation currency
The functional currency of each of the Group's entities is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which
is the legal parent entity's functional and presentation currency.

P a g e | 26

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

ANNUAL REPORT
31 December 2017

ii. Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured
at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the profit or loss except where
deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive
income to the extent that the gain or loss is directly recognised in other comprehensive income, otherwise the exchange
difference is recognised in the profit or loss.

iii. Group companies and foreign operations

The financial results and position of foreign operations whose functional currency is different from the Group's
presentation currency are translated as follows:
 assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;


income and expenses are translated at average exchange rates for the period; and

 retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the Group's foreign currency
translation reserve in the statement of financial position. These differences are recognised in the profit or loss in the period
in which the operation is disposed.

e. Taxation

Income tax

i.
The income tax expense or benefit for the period is the tax payable on the current period's taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary difference and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company's subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be
paid to the tax authorities.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted by the balance date.

Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:
 when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or

 when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.

P a g e | 27

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ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
 when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition
of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; or

 when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary
difference will reverse in the foreseeable future and taxable profit will be available against which the temporary
difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilised.

Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets
and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax
assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation
authority.

Holista CollTech Limited recognises its own current and deferred tax amounts and those current tax liabilities, current tax
assets and deferred tax assets arising from unused tax credits and unused tax losses which it has assumed from its
controlled entities within the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
payable or receivable from or payable to other entities in the Group. Any difference between the amounts receivable or
payable under the tax funding agreement are recognised as a contribution to (or distribution from) controlled entities in
the tax consolidated group.

Where the Group receives the Australian Government's Research and Development Tax Incentive, the Group accounts for
the refundable tax offset under AASB 112. Funds are received as a rebate through the parent company's income tax return
and disclosed as such in Note 7 Income Tax.

Value added taxes

ii.
Value-added tax (VAT) is the generic term for the broad-based consumption taxes that the Group is exposed to such as:
Australia (Goods and Services Tax or GST) and in Malaysia (Goods and Sales Tax or GST), hereafter collectively referred to
as GST.

Revenues, expenses, and assets are recognised net of the amount of 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 an item of the expense. Receivables and payables in the statement of financial position are shown
inclusive of GST.

The net amount of GST recoverable from, or payable to, the Australian Taxation Office (or jurisdictional equivalent) is
included as a current asset or liability in the balance sheet.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.

P a g e | 28

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

f. Fair Value

ANNUAL REPORT
31 December 2017

i. Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending
on the requirements of the applicable AASB.

Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly
unforced transaction between independent, knowledgeable and willing market participants at the measurement date.

As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine
fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.

To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts
from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction
costs and transport costs).

For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the asset
in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.

The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statements.

ii. Fair value hierarchy
AASB 13 Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which
categorises fair value measurements into one of three possible levels based on the lowest level that an input that is
significant to the measurement can be categorised into as follows:

Level 1

Level 2

Level 3

Measurements based on quoted prices
(unadjusted) in active markets for
identical assets or liabilities that the
entity can access at the measurement
date.

Measurements based on inputs other
than quoted prices included in Level 1
that are observable for the asset or
liability, either directly or indirectly.

Measurements based on unobservable
inputs for the asset or liability.

The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all
significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more
significant inputs are not based on observable market data, the asset or liability is included in Level 3.

The Group would change the categorisation within the fair value hierarchy only in the following circumstances:



if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or

if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.

When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (i.e.
transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred.

iii. Valuation techniques
The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available
to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the
asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the
following valuation approaches:
 Market approach: valuation techniques that use prices and other relevant information generated by market transactions for

identical or similar assets or liabilities.



Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single
discounted present value.

P a g e | 29

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

 Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity.

Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the
asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those
techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are
developed using market data (such as publicly available information on actual transactions) and reflect the assumptions
that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for
which market data is not available and therefore are developed using the best information available about such
assumptions are considered unobservable.

Impairment of non-financial assets

g.
The carrying amounts of the Group's non-financial assets, other than deferred tax assets (see accounting policy 1e) are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then
the asset's recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from
other assets and groups. Impairment losses are recognised in the income statement, unless the 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. Impairment losses recognised in respect of cash-generating units are
allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of
the other assets in the unit on a pro rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its 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.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. 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 and amortisation, if no impairment loss had been
recognised.

h. Financial instruments

Initial recognition and measurement

i.
A financial instrument is recognised if the Group becomes party to the contractual provisions of the instrument. Financial
assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the
Group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the
asset. Financial liabilities are derecognised if the Group's obligations specified on the contract expire or are discharged or
cancelled.

ii. Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash
equivalents and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through
profit or loss, any directly attributable transactions costs. Subsequent to initial recognition non-derivative financial
instruments are measured as described below.

P a g e | 30

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

iii. Classification and Subsequent Measurement

ANNUAL REPORT
31 December 2017

Cash and cash equivalents

(1)
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are reported
within borrowings in current liabilities or the statement of financial position. For the purposes of the statement of cash
flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank
overdrafts.

Loans

(2)
Loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market
and are subsequently measured at amortised cost.

Loans are included in current assets, except for those which are not expected to mature within 12 months after the end
of the reporting period.

Trade and other receivables

(3)
Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days. Receivables
expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other
receivables are classified as non-current assets.

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less any provision for impairment. Impairment of trade receivables is continually
reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An
allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due
according to the original contractual terms. Factors considered by the Group in making this determination include
known significant financial difficulties of the debtor, review of financial information and significant delinquency in
making contractual payments to the Group. The impairment allowance is set equal to the difference between the
carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original
effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance. (see
also Note 1h.vii).

The amount of the impairment loss is recognised in the statement of profit or loss and other comprehensive income
within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes
uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against other expenses in the statement of profit or loss and other comprehensive
income.

Financial assets at fair value through profit or loss

(4)
Financial assets classified as held for trading are included in the category 'financial assets at fair value through profit or
loss'. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term.
Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or
losses on investments held for trading are recognised in profit or loss.

(5) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-
maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for
an undefined period are not included in this classification. Investments that are intended to be held-to-maturity, such
as bonds, are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus
principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference
between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or
received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all
other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profit or
loss when the investments are derecognised or impaired, as well as through the amortisation process. If the Group
were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be
tainted and reclassified as available-for-sale.

P a g e | 31

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

(6) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are
not classified as any of the three preceding categories. After initial recognition available-for sale investments are
measured at fair value with gains or losses being recognised as a separate component of equity until the investment is
derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is recognised in profit or loss. The fair value of investments that are actively traded in organised
financial markets is determined by reference to quoted market bid prices at the close of business on the balance date.
For investments with no active market, fair value is determined using valuation techniques. Such techniques include
using recent arm's length market transactions, reference to the current market value of another instrument that is
substantially the same, discounted cash flow analysis and option pricing models.

Financial liabilities

(7)
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains
or losses are recognised in profit or loss through the amortisation process and the financial liability is derecognised..

Trade and other payables

(8)
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged
to make future payments in respect of the purchase of these goods and services. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months.

Interest-bearing loans and borrowings

(9)
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid
on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the
extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised
as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

The fair value of the liability portion of a convertible note is determined using a market interest rate for an equivalent
non-convertible note. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion
or maturity of the note. The remainder of the proceeds is allocated to the conversion option. This is recognised and
included in shareholders' equity, net of income tax effects.

Borrowings are removed from the statement of financial position when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss as other income or finance costs. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the
reporting period.

(10) Share capital
Ordinary issued capital is recorded at the consideration received. Incremental costs directly attributable to the issue of
ordinary shares and share options are recognised as a deduction from equity, net of any related income tax benefit.
Ordinary issued capital bears no special terms or conditions affecting income or capital entitlements of the
shareholders.

iv. Amortised cost
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition
less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the
difference between that initial amount and the maturity amount calculated using the effective interest method.

v. Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar
instruments and option pricing models.

P a g e | 32

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

ANNUAL REPORT
31 December 2017

vi. Effective interest method
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and
other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of the
financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net
cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or expense
item in profit or loss.

vii. Impairment
The Group assesses at each balance date whether a financial asset or group of financial assets is impaired.

Financial assets carried at amortised cost

(1)
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been
incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The
carrying amount of the asset is reduced either directly or through use of an allowance account. The amount of the loss
is recognised in profit or loss.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are
individually significant, and individually or collectively for financial assets that are not individually significant. If it is
determined that no objective evidence of impairment exists for an individually assessed financial asset, whether
significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that
group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is or continues to be recognised are not included in a collective assessment of
impairment.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to
an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any
subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the
asset does not exceed its amortised cost at the reversal date.

Financial assets carried at cost

(2)
If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not
carried at fair value (because its fair value cannot be reliably measured), or on a derivative asset that is linked to and
must be settled by delivery of such an unquoted equity instrument, the amount of the loss is measured as the
difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at
the current market rate of return for a similar financial asset.

(3) Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference
between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss
previously recognised in profit or loss, is transferred from equity to the statement of comprehensive income. Reversals
of impairment losses for equity instruments classified as available-for-sale are not recognised in profit. Reversals of
impairment losses for debt instruments are reversed through profit or loss if the increase in an instrument's fair value
can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.

viii. Derecognition

Financial assets

(1)
A financial asset or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognised when:
 the rights to receive cash flows from the asset have expired;
 the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full

without material delay to a third party under a 'pass-through' arrangement; or
 the Group has transferred its rights to receive cash flows from the asset and either:

 has transferred substantially all the risks and rewards of the asset, or

 has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred

control of the asset.

P a g e | 33

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained
substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the
extent of the Group's continuing involvement in the asset. Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum
amount of consideration received that the Group could be required to repay.

When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or
similar provision) on the transferred asset, the extent of the Group's continuing involvement is the amount of the
transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash-
settled option or similar provision) on an asset measured at fair value, the extent of the Group's continuing
involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities

(2)
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the
original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognised in profit or loss.

ix. Finance income and expenses
Finance income comprises interest income on funds invested (including available-for-sale financial assets), gains on the
disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or
loss. Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.

Financial expenses comprise interest expense on borrowings calculated using the effective interest method, unwinding of
discounts on provisions, changes in the fair value of financial assets at fair value through profit or loss and impairment
losses recognised on financial assets. All borrowing costs are recognised in profit or loss using the effective interest
method.

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a
substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in income in the
period in which they are incurred.

Foreign currency gains and losses are reported on a net basis.

Inventories
Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present
location and conditions are accounted for as follows:
 Raw materials - purchase cost on a first-in, first-out basis; and
 Finished goods and work-in-progress - cost of direct materials and labour and a proportion of manufacturing overheads

based on normal operating capacity but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.

j. Property, Plant, and equipment

i. Recognition and measurement
Land and buildings are measured at fair value less accumulated depreciation on buildings and less any impairment losses
recognised after the date of the revaluation.

Items of plant and equipment are measured on the cost basis and carried at cost less accumulated depreciation (see below)
and impairment losses (see accounting policy 1g Impairment of non-financial assets).

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working
condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are
located, and an appropriate proportion of production overheads. Cost includes the cost of replacing parts that are eligible
for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its
cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation.

P a g e | 34

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

ANNUAL REPORT
31 December 2017

Where considered material, the carrying amount of property, plant, and equipment is reviewed annually by Directors to
ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of
the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net
cash flows have not been discounted to their present values in determining recoverable amounts.

Where parts of an item of property, plant, and equipment have different useful lives, they are accounted for as separate
items of plant and equipment.

ii. Subsequent costs
The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured
reliably. Any costs of the day-to-day servicing of plant and equipment are recognised in the income statement as an
expense as incurred.

iii. Depreciation
Depreciation is charged to the income statement on a straight-line basis over the asset's useful life to the Group
commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of
either the unexpired period of the lease or the estimated useful lives of the improvements.

Depreciation rates and methods are reviewed annually for appropriateness. The depreciation rates used for the current
and comparative period are:

 Buildings

 Plant and equipment

 Motor Vehicles

2017
%

4.00

2016
%

4.00

20.00 to 33.33

20.00

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater
than its estimated recoverable amount.

iv. Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are
expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is
derecognised.

k. Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the
business (see 1c.i) less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (CGU) (or groups
of CGUs) that is expected to benefit from the synergies of the combination.

A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other
assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is
recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.

The Group's policy for goodwill arising on the acquisition of an associate is described at Note 1m below.

P a g e | 35

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

Intangible assets and amortisation

Intangible assets acquired separately

i.
Intangible assets acquired separately are recorded at cost less accumulated amortisation and impairment. Amortisation is
charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method is
reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted for
on a prospective basis.

Intangible assets acquired in a business combination

ii.
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes
in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method
or period.

iii. Subsequent measurement
The following useful lives are used in the calculation of amortisation:

 Licenses

 Software

2017
%

10.00

25.00

2016
%

10.00

25.00

m. Investments in joint arrangements
Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous
decisions about relevant activities are required.

Separate joint venture entities providing joint venturers with an interest to net assets are classified as a "joint venture" and
accounted for using the equity method.

Joint venture operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure
to each liability of the arrangement. The Group's interests in the assets, liabilities, revenue and expenses of joint operations are
included in the respective line items of the consolidated financial statements.

Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties' interests. When the
Group makes purchases from a joint operation, it does not recognise its share of the gains and losses from the joint
arrangement until it resells those goods/assets to a third party.

n. Employee benefits

i. Short-term benefits
Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12 months of
the reporting date represent present obligations resulting from employees' services provided to the reporting date and are
calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay at the
reporting date including related on-costs, such as workers compensation insurance and payroll tax.

Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and services,
are expensed based on the net marginal cost to the Group as the benefits are taken by the employees.

ii. Other long-term benefits
The Group's obligation in respect of long-term employee benefits other than defined benefit plans, such as long service
leave, is the amount of future benefit that employees have earned in return for their service in the current and prior
periods plus related on-costs; that benefit is discounted to determine its present value, and the fair value of any related
assets is deducted. The discount rate is the Reserve Bank of Australia's cash rate at the report date that have maturity
dates approximating the terms of the Company's obligations. Any actuarial gains or losses are recognised in profit or loss in
the period in which they arise.

P a g e | 36

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

ANNUAL REPORT
31 December 2017

iii. Retirement benefit obligations: Defined contribution superannuation funds
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions onto a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to
defined contribution superannuation funds are recognised as an expense in the income statement as incurred.

iv. Termination benefits
When applicable, the Group recognises a liability and expense for termination benefits at the earlier of: (a) the date when
the Group can no longer withdraw the offer for termination benefits; and (b) when the Group recognises costs for
restructuring pursuant to AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the costs include
termination benefits. In either case, unless the number of employees affected is known, the obligation for termination
benefits is measured on the basis of the number of employees expected to be affected. Termination benefits that are
expected to be settled wholly before 12 months after the annual reporting period in which the benefits are recognised are
measured at the (undiscounted) amounts expected to be paid. All other termination benefits are accounted for on the
same basis as other long-term employee benefits.

v. Equity-settled compensation
The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair
value is measured at grant date and spread over the period during which the employees become unconditionally entitled
to the options. The fair value of the options granted is measured using the Black-Scholes pricing model, taking into account
the terms and conditions upon which the options were granted. The amount recognised is adjusted to reflect the actual
number of share options that vest except where forfeiture is only due to market conditions not being met.

o. Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate assets but only when the reimbursement is virtually certain. The expense relating to
any provision is presented in the statement of comprehensive income net of any reimbursement.

Provisions are measured at the present value or management's best estimate of the expenditure required to settle the present
obligation at the end of the reporting period.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks
specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as an
interest expense.

p. Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal
ownership, are transferred to entities in the Group are classified as finance leases.

Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the Group will
obtain ownership of the asset or over the term of the lease.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised in the
income statement on a straight-line basis over the term of the lease.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the
lease term.

q. Revenue and other income
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts
and volume rebates allowed. When the inflow of consideration is deferred, it is treated as the provision of financing and is
discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the
amount initially recognised and the amount ultimately received is interest revenue.

All revenue is stated net of the amount of GST (Note 1e.ii Value added taxes).

P a g e | 37

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ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

i. Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the
costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are
considered passed to the buyer at the time of delivery of the goods to the customer.

ii. Royalty income

Royalty income is recognised on an accrual basis in accordance with the substance of the relevant agreement.

iii. Rendering of services
Revenue from the rendering of services is recognised by reference to the stage of completion of the contract.

iv. Interest revenue
Interest revenue is recognised in accordance with Note 1h.ix Finance income and expenses.

v. Customer loyalty points
Deferred revenue in respect to customer loyalty points is recognised in accordance with Note 1t.v Key estimates –
Deferred revenue for customer loyalty points.

r. Revenue and other income
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and
recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred
income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets.

s. Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and
recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred
income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets.

t. Critical Accounting Estimates and Judgments
Management discusses with the Board the development, selection and disclosure of the Group's critical accounting policies and
estimates and the application of these policies and estimates. The estimates and judgements that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed
below.

i. Key judgements and estimates – Business Combinations
Refer Note 3 Business combinations.

ii. Key estimate – Taxation
Refer Note 7 Income Tax.

iii. Key estimates – Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-
Scholes option pricing model, using the assumptions detailed in Note 21 Share-based payments.

iv. Key estimates – Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which
goodwill has been allocated. The value in use calculation requires the directors to estimate the future cash flows expected
to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual
future cash flows are less than expected, a material impairment loss may arise. Refer Note 13 Intangible assets.

P a g e | 38

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies

v. Key estimates – Deferred revenue for customer loyalty points

ANNUAL REPORT
31 December 2017

The Group operates a customer loyalty program that allows its customers to accumulate customer loyalty points on the
purchases of the Group's products sold in the Group's stores. These customer loyalty points can be used for the
redemption of products from the Group's stores.

The Group allocates consideration received from the sale of products to the products sold and the points issued that are
expected to be redeemed.

The Group has estimated the fair value of the points issued that are expected to be redeemed and has accounted it as a
deferred revenue in the statements of financial position. This deferred revenue is recognised as revenue when the points
are redeemed or no longer expected to be redeemed and the amount of revenue recognised is based on the number of
points that have been redeemed, relative to the total number expected to be redeemed..

u. New Accounting Standards and Interpretations not yet mandatory or early adopted
A number of new standards, amendments to standards and interpretations issued by the AASB which are not yet mandatorily
applicable to the Group have not been applied in preparing these financial statements. Those which may be relevant to the
Group are set out below. The Group does not plan to adopt these standards early.

i. AASB 9 Financial Instruments and associated Amending Standards (applicable for annual reporting period commencing

1 January 2018)

The Standard will be applicable retrospectively (subject to the comment on hedge accounting below) and includes revised
requirements for the classification and measurement of financial instruments, revised recognition and derecognition
requirements for financial instruments and simplified requirements for hedge accounting.

Key changes made to this standard that may affect the Group on initial application include certain simplifications to the
classification of financial assets, simplifications to the accounting of embedded derivatives, and the irrevocable election to
recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive
income.

The Directors anticipate that the adoption of AASB 9 will not have a material impact on the Group’s financial instruments.

ii. AASB 15 Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after 1

January 2018).

When effective, this Standard will replace the current accounting requirements applicable to revenue with a single,
principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will
apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to
facilitate sales to customers and potential customers.

The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:

(1)

(2)

Identify the contract(s) with a customer;

Identify the performance obligations in the contract(s);

(3) Determine the transaction price;

(4) Allocate the transaction price to the performance obligations in the contract(s); and
(5) Recognise revenue when (or as) the performance obligations are satisfied.

This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue.

The Directors are currently assessing the impact of the adoption of AASB 15; however currently anticipate adoption of the
standard will not have a material impact on the Group’s revenue recognition and disclosures.

iii. AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019).
AASB 16 removes the classification of leases as either operating leases or finance leases for the lessee effectively treating
all leases as finance leases. Short term leases (less than 12 months) and leases of a low value are exempt from the lease
accounting requirements. Lessor accounting remains similar to current practice.

P a g e | 39

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 1

Statement of significant accounting policies
The main changes introduced by the new Standard are as follows:

(1)

recognition of the right-to-use asset and liability for all leases (excluding short term leases with less than 12 months of
tenure and leases relating to low value assets);

(2) depreciating the right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and

unwinding of the liability in principal and interest components;

(3)

(4)

inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability
using the index or rate at the commencement date;

application of practical expedient to permit a lessee to elect not to separate non-lease components and instead
account for all components as a lease; and

(5)

additional disclosure requirements.

The Directors anticipate that the adoption of AASB 16 will not have a material impact on the Group’s recognition of leases
and disclosures).

v. Adjustments made subsequent to the lodgement of the ASX Appendix 4E

Subsequent to the lodgement of the ASX Appendix 4E:
i. Loss after tax increased by $74,750 due to:

(1)

Increases in – Share-based payments: $74,750.

ii. Other changes having no impact on profit include:

(1) Other income increased by $78,053 due to the separate presentation of foreign exchange losses of $78,053;

(2) Other expenses decreased by $1,175,307 due to the separate presentation of distribution costs of $313,880 and

consultancy and professional fees of $861,427;

iii. Reserves increased by $74,750 due to valuation of options issued through share-based payments amounting to $74,750.
iv. Accumulated losses decreased by $30,406 due to share-based payments expenses amounting to ($74,750) and in

increase in non-controlling interests of $44,704
v. Non-controlling interests increased by $44,704.

P a g e | 40

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 2

Prior period correction

Funds loaned to related companies

ANNUAL REPORT
31 December 2017

In the prior reporting period a net amount of $111,019 was incorrectly recorded as an investment in a joint venture. This value
represented a loan ($117,243 net of impairment $6,224). As such, the comparative balances have been restated to reflect the
correction to the classification. There has been no effect on reported profit and loss or net assets, being a reclassification of
non-current assets and expense items.

Whilst the Company believed at the time this transaction was accounted for correctly, upon subsequent review, it was
determined that a cash component transferred to the investment in a joint venture was in actuality a loan fully repayable to the
Company.

The effect of the correction was contained within non-current assets, and has no effect on the net assets of the Group.
Furthermore, the effect is quarantined to six months ended 31 December 2016, effecting balances of that period only. The
correction has no effect on cash nor cash flows. There was no effect upon stated profit of the Group, as the amount of share of
net loss of joint ventures was reclassified as an impairment to loan to related parties (in other non-current assets).

Details in relation to the impact of this correction on comparative financial information are disclosed following.

a. Adjustments made to statements of financial position (extract)

As at 31 December 2016

Non-current assets (extract)
Other non-current assets

Investment accounted using the equity method

Note

11b

Non-current asset

Net assets

Total equity

b. Statement of profit or loss and other comprehensive income

(extract)
For the 6 months ended 31 December 2016

Previously
reported
31 Dec 2016
$

Effect of
accounting
correction
$

31 Dec 2016
(restated)
$

360,174

111,019

2,461,620

3,109,378

111,019

(111,019)

471,193

2,461,620

3,109,378

Previously
reported
31 Dec 2016
$

Effect of
accounting
correction
$

31 Dec 2016
(restated)
$

Income statement (extract)
Impairment

Share of net loss of joint ventures

Profit/(Loss) for the year

4,210

6,224

163,858

6,224

(6,224)

10,434

163,858

P a g e | 41

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 3

Business combinations

a. HF Pre IPO Fund I LLC

On 1 January 2017, Holista Colltech Limited (Holista), acquired 67% of the ordinary share capital and voting rights of HF Pre
IPO Fund I LCC (HF Pre IPO). This transaction constitutes a business combination under AASB 3.

i. Acquisition consideration

The fair value of the consideration for the issued capital of HF Pre IPO was $354,936.

ii. Goodwill

The identifiable net assets of the acquiree are remeasured to their fair value on the date of acquisition (i.e. the date
that control passes. Goodwill is calculated as the difference between the fair value of consideration transferred less the
fair value of the identified net assets of the acquired. Details of the transaction are as follows:

Fair value of:

Consideration given for controlling interest

Non-controlling interest

Fair value of identifiable assets and liabilities held at acquisition date:
Cash
Trade and other receivables
Other current assets
Trade and other payables

Fair value of identifiable assets and liabilities assumed

Goodwill

b. Holista Foods Inc.

Note

8c.iv

Fair value
$

354,936

179,173

534,109

156
54,417
503,336
(23,800)

534,109

On 16 October 2017, LiteFoods Inc. (LiteFoods)(a subsidiary of the Company), acquired an additional 25% in the ordinary
share capital and voting rights of Holista Foods Inc.. This transaction constitutes a business combination under AASB 3.

i. Acquisition consideration

As consideration for the issued capital of Holista Foods Inc., LiteFoods paid $503 for an additional 396 shares. LiteFoods
also had loans to Holista Foods Inc. amounting to $528,044, for total deemed consideration of $528,547.

ii. Fair value of previously held interest

An equity interest previously held in the acquiree (Holista Foods Inc.) which qualified as an equity accounted
investment is treated as if it were disposed of and reacquired at fair value on the acquisition date. Accordingly, it is
remeasured to its acquisition date fair value, and any resulting gain or loss compared to its carrying amount is
recognised in profit or loss. Any amount that has previously been recognised in other comprehensive income, and that
would be reclassified to profit or loss following a disposal, is similarly reclassified to profit or loss. In addition, non-
controlling interests are measured on the date of acquisition.

Investment in joint venture entity
Share of associate's loss to the date of acquisition

Carrying value at date of acquisition

Implied value of previously held interest

Fair valuation on deemed disposal and acquisition of joint venture entity

Fair valuation of non-controlling interests

249
(249)

249

Nil

264

P a g e | 42

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 3

Business combinations

iii. Goodwill

ANNUAL REPORT
31 December 2017

Fair value of:
 Deemed consideration given additional equity

 Previously held interest

 Non-controlling interest

Fair value of identifiable assets and liabilities held at acquisition date:
 Cash
 Other current assets
 Property, plant, and equipment
 Trade and other payables


Interest-bearing loans and borrowings

Fair value of identifiable assets and liabilities assumed

Goodwill

Note 4

Revenue and other income

a. Revenue

Sale of goods

b. Other Income

Note

Fair value
$

8c.v

528,547

8c.v

249

264

529,060

27,879
256
2,132
(9,983)
(635)

19,649

13a

509,411

12 months to
31 December
2017
$

6 months to
31 December
2016
$

7,569,007

3,716,876

7,569,007

3,716,876

Loss on disposal of property, plant and equipment

(33)

(65)

Interest income

Rental income

Research and development grant income

Other income

Dividend receivable

6,302

54,593

134,137

143,737

10,874

37,825

283,851

3,467

15,452

338,736

351,404

P a g e | 43

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 5

(Loss) / profit before income tax

The following significant revenue and expense items are relevant in explaining
the financial performance:
a. Other Expenses:

 Compliance

 Insurance

 Other expenses

 Collie factory maintenance costs

 Audit fees

 Operating lease rental expense

 Provision for stock written off

b. Impairment:

 Doubtful debts

 Impairment of intangibles

 Impairment of funds loaned

Note 6

Earnings per share (EPS)

a. Reconciliation of earnings to profit or loss

(Loss) / profit for the period

Less: loss attributable to non-controlling equity interest

12 months to
31 December
2017
$

6 months to
31 December
2016
$

81,105

45,025

349,686

66,727

72,782

96,749

5,467

56,362

36,207

282,610

45,323

46,093

35,709

8,290

717,541

510,594

19,217

1,310

131,678

152,205

4,210

6,224

10,434

12 months to
31 December
2017
$

6 months to
31 December
2016
$

(3,174,268)

(143,978)

163,858

(2,410)

11b,2b

Note

(Loss) / profit used in the calculation of basic and diluted EPS

(3,030,290)

166,268

12 months to
31 December
2017
No.

6 months to
31 December
2016
No.

179,185,314

171,151,573

N/A

30,250,131

179,185,314

201,401,704

12 months to
31 December
2017
₵

6 months to
31 December
2016
₵

(1.69)

N/A

0.10

0.08

b. Weighted average number of ordinary shares outstanding during the year

used in calculation of basic EPS

Weighted average number of dilutive equity instruments outstanding
c. Weighted average number of ordinary shares outstanding during the year

used in calculation of basic EPS

d. Earnings per share

Basic EPS (cents per share)

Diluted EPS (cents per share)

e. As at 31 December 2017 the Group has 46,362,616 unissued shares under options (31 December 2016: 30,692,782) and
9,000,000 performance shares on issue (31 December 2016: nil). The Group does not report diluted earnings per share on losses
generated by the Group. During the year ended 31 December 2017 the Group's unissued shares under option and partly-paid
shares were anti-dilutive.

P a g e | 44

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 7

Income tax

Income tax (benefit) / expense
Current tax

Deferred tax

ANNUAL REPORT
31 December 2017

Note

12 months to
31 December
2017
$

6 months to
31 December
2016
$

(160,218)

63,388

(3,334,486)

(916,984)

227,246

62,493

(9,382)

(36,888)

45,037

(160,218)

109,005

7,265

801,947

(160,218)

4.80

(129,309)

(85,155)

2,781

63,388

95,106

(9,077)

63,161

63,388

27.89

Deferred income tax expense included in income tax expense comprises:



Increase / (decrease) in deferred tax assets

 (Increase) / decrease in deferred tax liabilities

b. Reconciliation of income tax expense to prima facie tax payable

The prima facie tax (benefit) / payable on (loss) / profit from ordinary
activities before income tax is reconciled to the income tax expense as
follows:
Accounting (loss) / profit before tax

Prima facie tax on operating loss at 27.5% (2016: 27.5%)

Add / (Less) tax effect of:

 Profit attributable to foreign subsidiaries

 Research and development tax offset exempted from tax

 Foreign tax losses not recognised

 Foreign income tax payable

 Non-deductible expenses

 Timing differences

 Deferred tax asset not brought to account

Income tax (benefit) / expense attributable to operating loss

c. The applicable weighted average effective tax rates attributable to operating

profit are as follows

i. The tax rates used in the above reconciliations is the corporate tax rate of
27.5% payable by the Australian corporate entity on taxable profits under
Australian tax law. There has been no change in this tax rate since the
previous reporting year.

ii. The foreign tax payable relates to the Malaysian corporate entities, where
the current corporate tax rate is 25%. The Malaysian corporate entities tax
losses have unrecognised deferred tax assets in relation to unutilised tax
losses carried forward for which no deferred tax asset has been recorded
as it is not probable that taxable profit will be available in the foreseeable
future.

P a g e | 45

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 7

Income tax (cont.)

Note

d. Balance of franking account at year end of the parent

e. Current tax liabilities

Income tax payable in Malaysia

f. Deferred tax assets

Tax losses

Net deferred tax assets

g. Deferred tax liabilities

Other

Net deferred tax liabilities

h. Tax losses and deductible temporary differences

Unused tax losses and deductible temporary differences for which no
deferred tax asset has been recognised, that may be utilised to offset tax
liabilities:

 Tax losses Australia

 Tax losses attributable to foreign subsidiaries

2017
$

nil

7,588

292,526

2016
$

nil

6,569

99,085

770

1,792,376

1,080,469

968,124

923,087

2,760,500

2,003,556

Potential deferred tax assets attributable to tax losses have not been brought to account at 31 December 2017 because
the directors do not believe it is appropriate to regard realisation of the deferred tax assets as probable at this point in
time. These benefits will only be obtained if:

the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the loss to be realised;

ii. the company continues to comply with conditions for deductibility imposed by law; and

iii. no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the loss.

Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the best estimates
of directors. These estimates take into account both the financial performance and position of the company as they
pertain to current income taxation legislation, and the directors understanding thereof. No adjustment has been made for
pending or future taxation legislation. The current income tax position represents that directors' best estimate, pending an
assessment by tax authorities in relevant jurisdictions.

The parent company has accumulated tax losses of $6,517,731 (2016: $3,928,978) which are expected to be available
indefinitely for offset against future taxable profits of the parent company in which the losses arose. The recoupment of
these losses is subject to assessment of the Australian Taxation Office. The parent company has additional accumulated tax
losses of $7,938,150 which are not expected to be available to offset any future taxable profits as their origin cannot be
determined. No deferred tax asset has been recorded in relation to these tax losses as it is not probable that taxable profit
will be available in the foreseeable future and they may not be used to offset taxable.

P a g e | 46

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 8

Cash and cash equivalents

a. Current

Cash at bank

ANNUAL REPORT
31 December 2017

2017
$

120,982

2016
$

58,105

b. The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 23

Financial risk management.

c. Cash Flow Information

i. Reconciliation of cash flow from operations to (loss)/profit after income tax

(Loss) / profit after income tax

Cash flows excluded from loss attributable to operating activities

Non-cash flows in (loss)/profit from ordinary activities:

 Depreciation and amortisation

 Foreign exchange loss

 Net share-based payments expensed



Impairment

 (Gain) and interest on non-current assets

 Dividends receivable

 Accrued interest payable or capitalised

 Accrued interest receivable

 Loss on disposal of property, plants, and equipment

Changes in assets and liabilities, net of the effects of purchase and
disposal of subsidiaries:

 Decrease/(increase) in receivables

 (Increase/decrease in inventories

 (Increase)/decrease in prepayments



Increase in trade and other payables

Increase in provisions

 (Increase)/decrease tax balances

12 months to
31 December
2017
$

6 months to
31 December
2016
$

(3,174,268)

163,858

224,514

78,053

2,536,595

152,205

8,345

69,413

(87,198)

(154,607)

781,610

1,729

(195,502)

70,532

46,429

6,943

10,434

(3,467)

(15,452)

9,952

(4,973)

(423,452)

129,985

321,519

327,253

6,516

43,066

689,208

Cash flow from operations

240,922

ii. Credit and loan standby arrangement with banks

Refer Note 17g Financing facilities available.

iii. Non-cash investing and financing activities

A loan amounting to US$250,000 was advanced by an associated company of a Director. On 24 March 2017, 6,012,698
options were exercised to affect the settlement of a loan of $360,762 from Global eHealth Limited, a related party.

Refer also to acquisitions of entities at Notes 8c.iv Acquisition of entities: HF Pre IPO Fund I LLC and 8c.v Acquisition of
entities: Holista Foods Inc..

P a g e | 47

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 8

Cash and cash equivalents (cont.)

iv. Acquisition of entities: HF Pre IPO Fund I LLC

HF Pre IPO Fund I LLC
On 1 January 2017 Holista Colltech Limited acquired 67% of the ordinary
share capital and voting rights in HF Pre IPO as described in Note 3a

(1) Purchase consideration:

Consideration exchanged

(2) Cash acquired:

Cash held by HF Pre IPO Fund I LLC at date of acquisition

(3) Assets and liabilities held at acquisition date (excluding cash) excluded from

the consolidated statement of cash flow:
 Trade and other receivables
 Other current assets
 Trade and other payables

v. Acquisition of entities: Holista Foods Inc.

On 16 October 2017, LiteFoods Inc. (LiteFoods)(a subsidiary of the
Company), acquired an additional 25% of the ordinary share capital and
voting rights of Holista Foods Inc as described in Note 3b

(1) Purchase consideration:

 Loans deemed to form part of the consideration
 Consideration exchanged

Total consideration

(2) Cash acquired:

Note

2015
$

2017
$

354,936

156

54,417

503,336

(23,800)

2017
$

3b.i

528,044

503

528,547

Cash in-flow on acquisition

3b.iii

27,879

(3) Assets and liabilities held at acquisition date (excluding cash) excluded from

the consolidated statement of cash flow:
 Other current assets
 Property, plant, and equipment
 Trade and other payables
 Interest-bearing loans and borrowings (net of loans deemed to

3b.iii

form part of consideration)

256

2,132

(9,983)

(635)

2014
$

P a g e | 48

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 9

Trade and other receivables

a. Current

Trade receivable

Amounts advanced to third parties

Other receivables

ANNUAL REPORT
31 December 2017

Note

2017
$

2016
$

1,404,003

1,367,066

258,082

145,029

417,941

255,247

1,807,114

2,040,254

b. The Group's exposure to credit rate risk is disclosed in Note 23 Financial risk management.

c. The average credit period on sales of goods and rendering of services is range from 30 to 90 days. Interest is not charged.
No allowance has been made for estimated irrecoverable trade receivable amounts arising from the past sale of goods and
rendering of services, determined by reference to past default experience.

Amounts are considered as ‘past due’ when the debt has not been settled, with the terms and conditions agreed between
the group and the customer or counter party to the transaction.

d. Amounts advanced to third parties of $258,082 (Dec 2016: $417,941) to third party attracts 5% interest on accrual basis

Note 10

Inventories

Current
Raw materials - at cost

Finished goods - at cost

Note 11 Other assets

a. Current

Security deposits

Other deposits

Prepayments

b. Non-current

Legal settlement proceeds due

Unlisted investments (Level 3)

Loans to related parties

Less: Impairment

2017
$

627,987

328,249

956,236

2016
$

291,497

599,843

891,340

Note

11d

11e

2a,11c

2a,5b

2017
$

Restated 2016
$

Previously Stated
2016
$

417,177

109,655

349,914

876,746

475,590

(131,678)

400,794

195,307

596,101

5,238

354,936

117,243

(6,224)

195,307

596,101

5,238

354,936

343,912

471,193

360,174

c. The balance as at 31 December 2017 related to funds loans to Galen BioMedical Inc. The comparative balances have been
adjusted by $111,019, net of impairment, previously recorded as an investment in a joint venture as detailed in Note 2a.

d. Security deposits are restricted cash. In order to obtain various financing facilities, banks in Malaysia require cash to be
deposited if other collateral is not available. These deposits are interest bearing and the interest is compounded and added
to the principal.

e. In the comparative period, an unlisted investment of units in a Limited Liability Company was treated as Level 3 investment
based on unobservable inputs for the units. On 1 January 2017, Holista Colltech Limited (Holista), acquired 67% of the
ordinary share capital and voting rights of HF Pre IPO Fund I LCC (HF Pre IPO), accordingly this investment has been
accounted for as an investment in a subsidiary. Refer Note 3a Business combinations: HF Pre IPO Fund I LLC.

P a g e | 49

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 12

Property, plant, and equipment

Freehold land and buildings

Accumulated depreciation and impairment

Plant and equipment

Plant and equipment under construction

Accumulated depreciation

Motor vehicles

Accumulated depreciation

Total plant and equipment

a. Movements in Carrying Amounts

Note

31 December
2017
$

31 December
2016
$

2,408,331

2,385,557

12d

(1,666,308)

(1,643,660)

742,023

741,897

2,052,091

1,711,209

532,427

(1,248,318)

(1,450,284)

803,773

793,352

151,891

(140,251)

148,160

(114,053)

11,640

34,107

1,557,436

1,569,356

Freehold land
and buildings
$

Plant and
Equipment
$

Motor Vehicles
$

Total
$

Carrying amount at the beginning of the period

741,897

Additions

Disposals / write-offs

Depreciation expense

Foreign currency exchange differences

Carrying amount at the end of year

(17,813)

17,939

742,023

793,352

161,940

(33)

34,107

1,569,356

161,940

( 33)

(152,658)

(22,400)

(192,871)

1,172

803,773

(67)

19,044

11,640

1,557,436

b. The carrying value of plant and equipment held under finance leases and hire purchase contracts at 31 December 2017 is
$11,640 (2016: $34,107) There were no additions during the year to motor vehicles held under finance leases and hire
purchase contracts.

c. The carrying value of property, plant and equipment temporarily idle is $nil (2016 $nil). Leased assets and assets under hire
purchase contracts are pledged as security for the related finance lease and hire purchase liabilities. Land and buildings with
a carrying amount of $742,023 (2016: $741,897) are subject to a first charge to secure a loan from RHB Bank, Malaysia.

d. Impairment Disclosure

Collagen Extraction Facility in Collie, Western Australia

This facility was built on land subject to a 20 years lease entered into in June 2004. The facility buildings have a carrying
value of $nil as at 31 December 2017 (2016: $nil).

P a g e | 50

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 13

Intangible assets

Goodwill

Patents and licences

Accumulated amortisation and impairment

a. Movements in Carrying Amounts

Carrying amount at the beginning of the period

Additions

Amortisation expense

Foreign currency exchange differences

ANNUAL REPORT
31 December 2017

Note

13b

2017
$

514,113

393,999

(49,309)

2016
$

337,098

(15,112)

858,803

321,986

Note

Goodwill
$

3b.iii

509,411

4,702

Patents and
licences
$

321,986

68,663

(31,643)

(14,316)

Total
$

321,986

578,074

(31,643)

(9,614)

Carrying amount at the end of year

514,113

344,690

858,803

b. Included in the intangible is payment to ATM Metabolics of $248,756 (USD180,000) for use of the brand Emulin Plus per
term sheet entered into on the 6 December 2015. Exclusive Product Management and Distribution Agreement was signed
on 9 January 2017.

c. Allocation of goodwill to cash-generating units (CGU)

Goodwill has been allocated for impairment testing purposes to the Food Ingredients unit. Before recognition of
impairment losses, the carrying amount of goodwill (other than goodwill relating to discontinued operations) was allocated
to CGU as follows.



Food Ingredients

2017
$

514,113

2016
$

The recoverable amount of the Group’s Food Ingredients CGU has been determined based on a value in use calculation
which uses cash flow projections based on financial budgets approved by the directors utilising the following key
assumptions:

The key assumptions used in the value in use calculations for the Food Ingredients CGU are as follows:




Revenue (cash in-flows) have been extrapolated at a growth rate of 5.00%
Expenses (cash out-flows) have been extrapolated at a growth rate of 10.00%
Discount rate is based upon a weighted average cost of capital of 10.52%.

The directors believe that any reasonably possible further change in the key assumptions on which recoverable amount is
based would not cause Food Ingredients CGU carrying amount to exceed its recoverable amount.

P a g e | 51

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 14

Interest in subsidiaries

Information about principal subsidiaries

The subsidiaries listed below have share capital consisting solely of ordinary shares which are held directly by the Group
and the proportion of ownership interest held equals the voting rights held by the Group. Investments in subsidiaries are
accounted for at cost. Each subsidiaries country of incorporation is also its principal place of business:



Holista Biotech Sdn Bhd

Total Health Concept Sdn Bhd



Alterni (M) Sdn Bhd
 Medi Botanics Sdn Bhd


Revonutrix Sdn Bhd
LiteFoods Inc.(1)
Holista Foods Inc. (74% owned by LiteFoods Inc.)



Country of
Incorporation

Malaysia

USA

Class of
Shares

Ordinary

Percentage Owned

2017

100.0

53.0

39.2

2016

100.0

N/A

74.0

N/A

HF Pre IPO Fund I LLC


(1) LiteFoods Inc is 53% owned by the Group with the remaining 47% being held by private shareholders including the Company’s Director

Ordinary

67.0

USA

N/A

Mr. Chan Heng Fai

b. During the 2017 financial year the Company and non-controlling interests (NCI) contributed additional capital to LiteFoods
Inc. (LiteFoods). The Company contributed $129,994; however, due to the contributions on NCI (and related increase in NCI
ownership), the Company’s share in LiteFoods was reduced by 21% to 53%. Consequently, the Company’s interests and NCI
are adjusted to reflect the new relative interests. Components of equity relating to NCI have been reallocated between the
amounts attributable to the parent's owners and NCI. Differences between the consideration paid and the amount by which
NCI are adjusted and recognised in equity, and attributed to owners of the parent.

c. Summarised financial information of

subsidiaries with material NCI

i. Summarised financial position

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Net assets

Carrying amount of NCI

ii. Summarised financial performance

Revenue

Loss for the period

Total comprehensive income

Loss attributable to NCI

Distributions paid to NCI

iii. Summarised cash flow information

Net cash used in operating activities

Net cash used in investing activities

Net cash from financing activities

Net (decrease) / increase in cash and cash
equivalents

LiteFoods Group
(LiteFoods Inc. and Holista Foods Inc.)
2016
$

2017
$

22,892

515,506

(18,663)

(1,255,450)

(735,715)

(345,786)

873

111,019

(69,154)

(840,992)

(798,254)

(207,546)

HF Pre IPO Fund I LLC

2017
$

50,601

343,912

(22,078)

372,435

122,904

2016
$

12 months to
31 December
2017
$

6 months to
31 December
2016
$

12 months to
31 December
2017
$

6 months to
31 December
2016
$

(165,429)

(6,951)

(131,704)

(165,457)

(377,564)

507,550

(9,270)

23,625

(543,021)

14,355

P a g e | 52

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 15 Associates and Joint Arrangements

Information about principal joint arrangements

ANNUAL REPORT
31 December 2017

The entity listed below has share capital consisting solely of ordinary shares. The proportion of ordinary shares held by the
Group equals the voting rights held by the Group. The entity's place of incorporation is its principal place of business.

Note

Place of
Incorporation /
Business

Measurement
Bases

Proportion of Ordinary Share
Interests / Participating Share

Carrying Amount

2017
%

2016
%

36.26

2017
$

Restated
2016
$

Previously
Stated 2016
$

111,019

 Holista Foods

Inc(1)

USA

Equity method

(1) On 12 July 2016, the Group and Nadja Foods LLC announced a 51-49 joint venture company, Holista Foods Inc, to be run by Nadja Piatka as
Chief Executive Officer. Holista Foods Inc. will be the distributor for the Group’s low-GI products in North America. Holista CollTech Ltd
holds 74% of LiteFoods Inc. and LiteFoods Inc. hold 49% of Holista Foods Inc.

b. Change in the Group's ownership interest in a joint venture company

On 16 October 2017, LiteFoods Inc. acquired an additional 25% of the ordinary share capital and voting rights in its joint
venture company Holista Foods Inc. As such, as at 31 December 2017, the Group no longer holds an interest in the joint
venture company. Details in respect to the acquisition and fair value measurements made upon acquisition have been
disclosed in Note 2a.

c. Summarised financial information for joint arrangement

Set out below is the summarised financial information for the Group's investments in joint arrangement. Unless otherwise
stated, the disclosed information reflects the amounts presented in the Australian Accounting Standards financial
statements of the joint arrangement. The following summarised financial information, however, reflects the adjustments
made by the Group when applying the equity method, including adjustments for any differences in accounting policies
between the Group and the joint arrangement.
Balances reported below pertaining to the 2017 financial year are quoted as at the date of acquisition, 16 October 2017.

i. Summarised financial position

Total current assets

Total non-current assets

Total current liabilities

Total non-current liabilities

Net liabilities

Group's share (%)

Group's share of joint arrangement’s net liabilities

ii. Summarised financial performance

Revenue

Loss after tax from continuing operations

Other comprehensive income

Note

Holista Foods Inc.

Restated
2016
$

Previously Stated
2016
$

49.0%

15,616

92,765

(3,800)

(117,284)

49.0%

Restated
6 months to
31 December
2016
$

Previously Stated
6 months to
31 December
2016
$

(12,703)

Total comprehensive income

(12,703)

Group's share of joint arrangement’s profit after tax from continuing
operations
Group's share of joint arrangement’s other comprehensive income

(6,224)

P a g e | 53

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 15 Associates and Joint Arrangements

iii. Reconciliation to Carrying Amounts

Group's share of joint arrangement’s opening net assets

Investments during the period

Group's share of joint arrangement’s profit after tax from continuing
operations

Note

Group's share of joint arrangement’s closing net assets (carrying amount of
investment)

Note 16

Trade and other payables

Current
Unsecured
Trade payables

Accruals

Advance deposits and deferred revenue

Amounts due to Directors

Dividends payable

Other payables

16a

16b

Restated
6 months to
31 December
2016
$

Previously Stated
6 months to
31 December
2016
$

2017
$

746,687

609,208

624,590

297,601

22,079

257,505

117,243

(6,224)

111,019

2016
$

731,688

495,920

227,875

69,098

148,040

Included in the accruals is deferred revenue amounting of $59,732 which represents customer loyalty points and is
estimated based on the amount of loyalty points outstanding at reporting date that are expected to be redeemed.

b. Amounts due to Directors are comprised of $236,891 due to Dr Manicka (2016: $nil) and $60,710 (2016: $69,098) due to Mr

Chan in respect the accrued director fees.

2,557,670

1,672,621

Note 17

Interest-bearing loans and borrowings

Note

a. Current

Banker’s acceptance

Leases

Term loan

Loan from related parties

b. Non-current
Term loan

Leases

17c

17d

17e

17d

2017
$

156,349

13,966

52,019

641

222,975

498,857

35,072

533,929

2016
$

313,338

12,998

35,285

357,079

718,700

485,032

47,834

532,866

c. The bankers’ acceptance bears interest of 5.15% (2016: 5.15%) and is secured by the following:

i. Facility Agreement;

ii. Pledge of fixed deposits with licensed banks (refer to Note 11a)

iii. Execution of a fresh letter of authorisation, memorandum of Deposit and letter of set off;

iv. First-party assignment over the office lots of the Company; and

v. Joint and several guarantees from certain Directors of the Company and a third-party.

P a g e | 54

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

ANNUAL REPORT
31 December 2017

Note 17
d. The term loan is repayable over 240 monthly instalments (principal plus interest) of $5,119 which commenced on 1 July

Interest-bearing loans and borrowings (cont.)

2008. The term loan bears interest rates ranging from 5.20% (2016: 5.35%) per annum is secured by the following:

i. As principal Instrument, an "all monies" Facilities Agreement stamped to the amount of facilities advanced;

ii. First-party absolute assignment of all rights, interest, title and benefits in and to property beneficially owned by a

Subsidiary Company;

iii. Corporate Guarantee by subsidiary company for $823,949; and

iv. Personal Guarantee for $823,949 by a Director of the subsidiary company.

e. Related party loans

In the current period, the amounts related to funds loaned to Holista Foods Inc. amounting to US$500. In the comparative
period, a loan amounting to US$250,000 was advanced by an associated company of a Director. This loan attracted interest
of 10% per annum. On 24 March 2017, 6,012,698 options were exercised to affect the settlement of a loan of $360,762
from Global eHealth Limited.

f. Assets pledged as security

Floating charge

Inventories

Security deposits

Total current assets pledged as security

First mortgage

Freehold land and buildings

Total non-current assets pledged as security

Note

11a

2017
$

956,236

109,655

2016
$

891,340

1,065,891

891,340

742,023

1,807,914

1,633,363

g. Financing facilities available

At balance date, the following
financing facilities had been
negotiated and were
available:

Term loan

Banker’s acceptance

Finance lease

Total facilities

Facilities used

Facilities unused

2017
$

550,876

379,027

49,038

2016
$

520,317

369,720

60,832

2017
$

2016
$

(550,876)

(520,317)

2017
$

2016
$

(156,349)

(313,338)

222,678

56,382

(49,038)

(60,832)

Total facilities at balance date

978,941

950,869

(756,263)

(894,487)

222,678

56,382

Note 18

Provisions

Current

Provision for employee entitlements

a. Description of provisions

Note

18a

2017
$

8,081

2016
$

6,516

Provision for employee benefits represents amounts accrued for annual leave (AL) and long service leave (LSL). The current
portion for this provision includes the total amount accrued for AL entitlements and the amounts accrued for LSL
entitlements that have vested due to employees having completed the required period of service. The Group does not
expect the full amount of AL or LSL balances classified as current liabilities to be settled within the next 12 months.
However, these amounts must be classified as current liabilities since the Group does not have an unconditional right to
defer the settlement of these amounts in the event employees wish to use their leave entitlement.

P a g e | 55

For personal use only

ANNUAL REPORT
31 December 2017

Notes to the consolidated financial statements
for the year ended 31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Note 19

Issued capital

Note

Fully paid ordinary shares at no par value

a. Ordinary shares

At the beginning of the period

Shares issued during the period:

31 December
2017
No.

31 December
2016
No.

31 December
2017
$

31 December
2016
$

184,039,087
12 months to
31 December
2017
No.

171,708,921

171,708,921
6 months to
31 December
2016
No.

11,538,515
12 months to
31 December
2017
$

10,798,705
6 months to
31 December
2016
$

169,572,421

10,798,705

10,670,515

 19.08.16 Options exercised at $0.06

2,136,500

128,190

 24.03.17 Options exercised at $0.06

19c

 18.04.17 Options exercised at $0.06

 14.06.17 Options exercised at $0.06

 26.09.17 Options exercised at $0.06

 05.10.17 Options exercised at $0.06

Transaction costs relating to share issues

6,012,698

1,666,667

1,500,000

1,484,134

360,762

100,000

90,000

89,048

At reporting date

184,039,087

171,708,921

11,538,515

10,798,705

b. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares
have no par value and the company does not have a limited amount of authorised capital.

c. On 24 March 2017, 6,012,698 options were exercised to affect the settlement of a loan of $360,762 from Global eHealth

Limited, a related party.

d. Performance shares

Performance shares

e. Options

At beginning of the period

 Options issued during the year

 Options exercisable at 25 cents expiring 31 December 2019

 Options exercisable at 20 cents expiring 20 March 2020

 Options exercisable at 10cents expiring 31 December 2019

 Options exercisable at 20 cents expiring 23 June 2020

 Options exercisable at 25 cents expiring 23 June 2020

 Options exercisable at 30 cents expiring 23 June 2020



Issued to Patent Consultant exercisable at 10 cents expiring 1 August 2020

Issued to Holista Foods Inc. shareholder/director and I Galen consultant
exercisable at 20 cents expiring 20 October 2020

 Expired Options

Options exercised

At reporting date

31 December
2017
No.

9,000,000

31 December
2017
No.

31 December
2016
No.

30,692,782

31,829,282

1,000,000

10,000,000

1,000,000

6,000,000

3,000,000

2,000,000

7,000,000

(3,000,000)

(12,330,166)

(2,136,500)

46,362,616

30,692,782

P a g e | 56

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 19

Issued capital (cont.)

f. Capital Management

ANNUAL REPORT
31 December 2017

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's overall
strategy remains unchanged from 2011.

The capital structure of the Group consists of debt, cash and cash equivalents and equity attributable to equity holders of
the parent, comprising issued capital, reserves and accumulated losses.
None of the Group's entities are subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax,
dividends and general administrative outgoings.
Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the
risks associated with each class of capital.

The working capital position of the Group were as follows:

Cash and cash equivalents

Trade and other receivables

Inventories

Other current assets

Trade and other payables

Borrowings

Current tax liabilities

Current provisions

Working capital position

Note 20 Reserves

Foreign currency translation reserve

Share-based payment reserve

a. Foreign currency translation reserve

Note

2017
$

120,982

1,807,114

956,236

876,746

2016
$

58,105

2,040,254

891,340

596,101

(2,557,670)

(1,672,621)

(222,975)

(718,700)

(7,588)

(8,081)

(6,569)

(6,516)

964,764

1,181,394

31 December
2017
$

31 December
2016
$

20a

20b

(413,435)

(376,030)

4,809,268

2,272,673

4,395,833

1,896,643

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries.

b. Share-based payment reserve (formerly Option reserve)

The share-based payment reserve records the value of options and performance rights issued the Company to its
employees or consultants.

P a g e | 57

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 21

Share-based payments

a. Share-based payments:

 Recognised as Share-based payment expense

 Recognised in Consultancy and professional services

 Recognised in Research and Development expenses

Gross share-based payments

b. Share-based payment arrangements in effect during the period

i. Share-based payments recognised in profit or loss

(1) Director options - Daniel O’Connor

Note

31 December
2017
$

31 December
2016
$

21b.i(1),(4),
(5),(6),(7)

21b.i(2),(3),
(5)

21b.i(3)

1,589,954

6,943

624,410

322,231

2,536,595

6,943

As approved by shareholders 18 May 2017 the Company issued 3,500,000 Options to provide a performance linked
incentive component in the Directors’ remuneration packages to assist the Company in rewarding his performance,
and to align their interests with those of Shareholders on the terms as detailed below and in Note 21d:

Number under Option

Date of Expiry

Exercise Price

Vesting Terms

3,500,000

23 March 2020

$0.20

Immediately upon issue

(2) Plant Consultant and Patent Holders Options

On 23 March 2017 the Company granted 6,500,000 Options to Patent Holders and Plant Consultant in the
proportions as follows, and as detailed below and in Note 21d:

 Professor Jaya Henry

2,000,000

 Mr Neville King

 GRDG Sciences LLC

2,000,000

2,500,000

Number under Option

Date of Expiry

Exercise Price

Vesting Terms

6,500,000

23 March 2020

$0.20

Immediately upon issue

(3) Patent Holder and Consultant Options

On 23 June 2017, in consideration for a pro-biotics patent and consultancy services, the Company granted
11,000,000 Options to Biolife Ingredients GmbH (Biolife) and Palm Best Limited (Palm) as detail below:

Number under Option

Date of Expiry

Exercise Price

Issued To

Vesting Terms

6,000,000

3,000,000

2,000,000

23 June 2020

$0.20

$0.25

$0.30

50% Biolife / 50% Palm Immediately upon issue

50% Biolife

Immediately upon issue

50% Biolife

Immediately upon issue

(4) Co-Inventor and Patent Provider Options

On 26 July 2017 the Company granted 2,000,000 Options to Professor Jaya Henry, co-inventor of the Low GI and
Low Sodium Patents, as detailed below and in Note 21d:

Number under Option

Date of Expiry

Exercise Price

Vesting Terms

2,000,000

23 March 2020

$0.20

Immediately upon issue

P a g e | 58

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 21

Share-based payments (cont.)

(5)

Incentive Options

ANNUAL REPORT
31 December 2017

On 16 October 2017 the Company granted 7,000,000 Options to incentivise joint venture partners and consultants
to the Company in the proportions as follows, and as detailed below and in Note 21d:

 Ms Nadja Piatka

 Nadja Foods LLC

 Palm Best Limited

2,000,000

3,000,000

2,000,000

Number under Option

Date of Expiry

Exercise Price

Vesting Terms

7,000,000

16 October 2020

$0.20

Immediately upon issue

(6) Subsidiary Director Options

In consideration for serving on the Board of LiteFoods Inc. the Company issued Mr Roscoe Michael Moore Jr
1,000,000 Options as detailed below and in Note 21d:

Number under Option

Date of Expiry

Exercise Price

Vesting Terms

1,000,000

31.12.19

$0.1000

Immediately upon issue

(7) Director Performance Rights

As approved by shareholders 9 January 2017 the Company issued 9,000,000 performance rights to Dr Rajen
Manicka to provide a performance linked incentive component in the Directors’ remuneration packages to assist
the Company in rewarding his performance, and to align their interests with those of Shareholders on the terms as
detailed below and as detailed below and in Note 21e:

Class of
Performance
Right

Performance Condition

Performance
rights
No.

Milestone Date Expiry Date

Performance
Condition
Satisfied

Upon the Company signing a binding
agreement for the sale, distribution, licensing
and/or manufacturing of at least 3 Low GI
Products.

Upon the Company securing the patents
associated with its Low GI Products.

The Company achieving an EBIT of at least
$2.2m from the sale of Low GI Products.

3,600,000

30 June 2020 5 years from the

Yes

date of issue

2,700,000

30 June 2020 5 years from the

Yes

date of issue

1,800,000

30 June 2021 5 years from the

date of issue

The Company achieving an EBIT of at least
$4m from the sale of Low GI Products.

900,000

30 June 2021 5 years from the

date of issue

No, probability
employed in
estimated 100%

c. Movement in share-based payment arrangements during the period

A summary of the movements of all Company options issued as share-based payments is as follows:

Outstanding at the beginning of the year

Granted

Exercised

Expired

2017

2016

Number of Options

Weighted Average
Exercise Price

Number of Options

Weighted Average
Exercise Price

30,692,782

31,000,000

(12,330,166)

(3,000,000)

$0.1100

$0.2016

$0.0600

$0.1000

31,829,282

1,000,000

(2,136,500)

$0.0600

$0.2500

$0.0600

Outstanding at year-end

46,362,616

$0.2033

30,692,782

$0.1100

Exercisable at year-end

46,362,616

$0.2033

30,692,782

$0.1100

P a g e | 59

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 21

Share-based payments (cont.)

i. 12,330,166 options were exercised during the year at $0.06 cents per option.

ii. The weighted average remaining contractual life of options outstanding at year end was 1.89 years (2016: 2 years). The
weighted average exercise price of outstanding shares at the end of the reporting period was $0.2055 (2016: $0.1100).

iii. The fair value of the options granted to employees is deemed to represent the value of the employee services received

over the vesting period.

d. Fair value of options granted during the period

The fair value of the options granted to employees is deemed to represent the value of the employee services received
over the vesting period.

The weighted average fair value of options granted during the year was $0.0204 (2016: $0.0150). These values were
calculated using the Black-Scholes option pricing model, applying the following inputs to options issued this year:

Note Reference

21b.i(1)

21b.i(2)

21b.i(3)

21b.i(4)

21b.i(5)

21b.i(6)

Grant date:

18.5.2017

23.3.2017

23.6.2017

26.7.2017

16.10.17

18.5.2017

Grant date share
price:

$0.130

$0.140

$0.110

$0.100

$0.094

$0.130

Option exercise price:

$0.200

$0.250

$0.300

$0.100

$0.200

Number of options
issued:

3,500,000

6,500,000

6,000,000

3,000,000

2,000,000

7,000,000

1,000,000

Remaining life (years):

2.80

3.00

2.00

Expected share price
volatility:

83.49%

84.52%

85.56%

83.49%

Risk-free interest rate:

1.74%

1.92%

1.77%

1.94%

2.04%

1.74%

Value per option

$0.0549

$0.0643

$0.0449

$0.0393

$0.0348

$0.0555

$0.0358

$0.0749

Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative
of future movements.

The life of the options is based on the historical exercise patterns, which may not eventuate in the future.

e. Fair value of performance rights granted during the period

Class

Performance
rights
No.

Probability
performance
condition is met
%

Share Price at Date
of Issue
$

Discounted value
per performance
right
$

3,600,000

2,700,000

1,800,000

900,000

100%

0.15

Fair value of
performance rights
issued

$540,000

$405,000

$270,000

$135,000

Performance
Condition
Satisfied

Yes, expensed
immediately
Yes, expensed
immediately
No, expensed over
vesting period
No, expensed over
vesting period

The probability ability of conditions being met represents an estimate by management.

P a g e | 60

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 22 Operating segments

Identification of reportable segments

ANNUAL REPORT
31 December 2017

2016
$

2015
$

The Group has identified its operating segments based on the internal reports that are provided to the Board of Directors
(the Board) on a monthly basis and in determining the allocation of resources. Management has identified the operating
segments based on the principal activities – Supplements; Sheep Collagen; Food Ingredients; and Corporate.

b. Basis of accounting for purposes of reporting by operating segments

i. Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board, being the chief decision maker with respect to operating
segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual
financial statements of the Group.

ii.

Inter-segment transactions

All such transactions are eliminated on consolidation of the Group's financial statements.

Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of
transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to
fair value based on market interest rates. This policy represents a departure from that applied to the statutory financial
statements.

iii. Segment assets

Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority
economic value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their
nature and physical location.

iv. Segment liabilities

Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the
operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and
are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

v. Unallocated items

The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not
considered part of the core operations of any segment:

 Depreciation and amortisation
 Gains or losses on sales of financial and non-financial assets

 Corporate transaction accounting expense

Investment income

c. Types of products and services by segment

i. Supplements

This operating segment is involved in the manufacture and wholesale distribution of dietary supplements.

ii. Sheep collagen

This operating segment is involved in the manufacture and distribution of cosmetic grade collagen.

iii. Food ingredients

This operating segment is involved in the manufacture and wholesale distribution of healthy food ingredients.

P a g e | 61

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 22 Operating segments (cont.)

d. Segment Financial Performance

Year ended 31 December 2017

Revenue
 External sales
 Other income

Supplements
$

7,176,607
-

Sheep
Collagen
$

392,400
-

Total segment revenue

7,176,607

392,400

Reconciliation of segment revenue to group
revenue:

Total group revenue and other income

Segment loss from continuing operations
before tax

Loss before income tax

6 months to 31 December 2016

Revenue
 External sales
 Other income

Total segment revenue

Reconciliation of segment revenue to group
revenue:
 Intra-segment eliminations

Total group revenue and other income

Segment profit from continuing operations
before tax

Profit before income tax

Food
Ingredients
$

Corporate
$

Total
$

-
-

-
338,736

7,569,007
338,736

338,736

7,907,743

330,632

(516,509)

(158,984)

(2,989,625)

(3,334,486)

3,641,576
-

3,641,576

75,300
-

75,300

-
-

-
351,404

3,716,876
351,404

351,404

4,068,280

431,032

(194,514)

(9,272)

227,246

P a g e | 62

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 22 Operating segments (cont.)

e. Segment Financial Position

ANNUAL REPORT
31 December 2017

At as 31 December 2017

Supplements
$

Sheep
Collagen
$

Food
Ingredients
$

Corporate
$

Total
$

Segment Assets

4,512,336

5,073,769

932,911

10,519,016

Reconciliation of segment assets to group assets:
 Intra-segment eliminations

Total assets

Segment Liabilities

1,007,196

2,191,435

1,296,191

Reconciliation of segment liabilities to group
liabilities
 Intra-segment eliminations

Total liabilities

As at 31 December 2016

3,505,140

2,882,334

(363,280)

Segment Assets

5,548,246

4,372,886

(839,058)

Reconciliation of segment assets to group assets:
 Intra-segment eliminations

Total assets

Segment Liabilities

2,257,600

1,763,696

(41,864)

Reconciliation of segment liabilities to group
liabilities
 Intra-segment eliminations

Total liabilities

3,290,646

2,609,190

(797,194)

f. Revenue by geographical region

Revenue, including revenue from discontinued operations, attributable to
external customers is disclosed below, based on the location of the external
customer:

31 December
2017
$

_
-

(3,705,261)

6,813,755

4,494,822

(1,164,579)

3,330,243

3,483,512

9,082,074

(3,034,654)

6,047,420

3,979,432

(1,041,390)

2,938,042

3,109,378
31 December
2016
$

Australia

Malaysia

United States

Total revenue

g. Assets by geographical region

The location of segment assets / (deficiency) by geographical location of the
assets is disclosed below:

Australia

Malaysia

United States

Total assets

P a g e | 63

392,400

75,300

7,176,607

3,641,576

7,569,007

3,716,876

5,073,769

4,512,336

932,911

4,372,886

5,548,246

(839,058)

10,519,016

9,082,074

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 22 Operating segments (cont.)

h. Major customers

The Group has a number of customers to whom it provides both products and services. Within the Food Ingredients and
Supplement segment, the Group supplies to a number of retailers through one single external distributor who account for
56.4% (2016: 67.7%) of total revenue for this segment. The Group supplies to a few external customers for the Sheep
Collagen segment, where the major customer accounts for 99.4% (2016: 98.4%) of revenue for this segment.

Note 23

Financial risk management

a. Financial Risk Management Policies

This note presents information about the Group's exposure to each of the above risks, its objectives, policies and
procedures for measuring and managing risk, and the management of capital.

The Group's financial instruments consist mainly of deposits with banks, short-term investments, and accounts payable and
receivable.

The Group does not speculate in the trading of derivative instruments.

A summary of the Group's financial assets and liabilities is shown below:

Floating
Interest
Rate

Financial Assets

 Cash and cash equivalents

120,982

 Trade and other receivables

 Other assets

 Investments

 Loans, net of impairment

Fixed
Interest
Rate

343,912

Non-
interest
Bearing

2017
Total

Floating
Interest
Rate

120,982

58,105

1,807,114

526,832

343,912

Fixed
Interest
Rate

Non-
interest
Bearing

2016
Total

58,105

2,040,254

406,032

354,936

111,019

Total Financial Assets

120,982

343,912

2,333,946

2,798,840

58,105

111,019

2,801,222

2,970,346

Financial Liabilities

Financial liabilities at
amortised cost

 Trade and other payables

2,557,670

1,672,621

 Borrowings

707,225

49,038

641

756,904

833,655

417,911

1,251,566

Total Financial Liabilities

707,225

49,038

2,558,311

3,314,574

833,655

417,911

1,672,621

2,924,187

Net Financial (Liabilities) /
Assets

(586,243)

294,874

(224,365)

(515,734)

(775,550)

(306,892)

1,128,601

46,159

b. Specific Financial Risk Exposures and Management

The main risk the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk
consisting of interest rate, foreign currency risk and equity price risk.

The Board of directors has overall responsibility for the establishment and oversight of the risk management framework.
The Board adopts practices designed to identify significant areas of business risk and to effectively manage those risks in
accordance with the Group's risk profile. This includes assessing, monitoring and managing risks for the Group and setting
appropriate risk limits and controls. The Group is not of a size nor is its affairs of such complexity to justify the
establishment of a formal system for risk management and associated controls. Instead, the Board approves all
expenditure, is intimately acquainted with all operations and discuss all relevant issues at the Board meetings. The
operational and other compliance risk management have also been assessed and found to be operating efficiently and
effectively.

P a g e | 64

For personal use only

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 23 Financial risk management (cont.)

iv. Credit risk

ANNUAL REPORT
31 December 2017

Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Group.

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts
with entities that are rated the equivalent of investment grade and above. This information is supplied by independent
rating agencies where available and, if not available, the Group uses publicly available financial information and its own
trading record to rate its major customers. The Group's exposure and the credit ratings of its counterparties are
continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.
Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management
committee annually.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade
and other receivables.

 Credit risk exposures

The maximum exposure to credit risk is that to its alliance partners and that is limited to the carrying amount, net
of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements.

Credit risk related to balances with banks and other financial institutions is managed by the Group in accordance
with approved Board policy. Such policy requires that surplus funds are only invested with financial institutions
residing in Australia, where ever possible.



Impairment losses

The ageing of the Group's trade and other receivables at reporting date was as follows:

Gross
2017
$

820,774
47,243
152,681
403,318

1,424,016

Impaired
2017
$

-
-
-
(20,013)

(20,013)

Past due but not
impaired
2017
$

Net
2017
$

820,774
47,243
152,681
383,305

1,404,003

-
47,243
152,681
383,305

583,229

403,111

1,827,127

(20,013)

1,807,114

583,229

Trade receivables
Not past due
Past due up to 15 days
Past due 15 days to 3 months
Past due over 3 months

Other receivables
Not past due

Total

v. Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group's reputation.

Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate
liquidity risk management framework for the management of the Group's short, medium and long-term funding and
liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking
facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities.

P a g e | 65

For personal use only

ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 23 Financial risk management (cont.)

Typically the Group ensures that it has sufficient cash to meet expected operational expenses for a period of 60 days,
including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot
reasonably be predicted, such as natural disasters.

The financial liabilities of the Group include trade and other payables as disclosed in the statement of financial position.
All trade and other payables are non-interest bearing and due within 30 days of the reporting date.

 Contractual Maturities

The following are the contractual maturities of financial assets and liabilities of the Group:

Within 1 Year

Greater Than 1 Year

2017
$

2016
$

2017
$

2016
$

Total

2017
$

2016
$

Financial liabilities due for payment
Trade and other payables
Borrowings

2,557,670
222,975

1,672,621
718,700

-
533,929

-
532,866

2,557,670
756,904

1,672,621
1,251,566

Total contractual outflows

2,780,645

2,391,321

533,929

532,866

3,314,574

2,924,187

Financial assets

Cash and cash equivalents
Trade and other receivables
Loans, net of impairment

120,982
1,807,114
-

58,105
2,040,254
-

-
-
343,912

-
-
111,019

120,982
1,807,114
343,912

58,105
2,040,254
111,019

Total anticipated inflows

1,928,096

2,098,359

343,912

111,019

2,272,008

2,209,378

Net (outflow)/inflow on financial
instruments

(852,549)

(292,962)

(190,017)

(421,847)

(1,042,566)

(714,809)

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at
significantly different amounts.

vi. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising the
return.

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates,
commodity prices and exchange rates. The Group enters into a variety of derivative financial instruments to manage its
exposure to foreign currency and commodity price risk including foreign exchange forward contracts to hedge the
exchange rate and commodity price risk arising on its production. There has been no change to the Group's exposure to
market risks or the manner in which it manages and measures the risk from the previous period.

In the comparative period, an unlisted investment in HF Pre IPO Fund I LCC was treated as Level 3 investment based on
unobservable inputs for the units. On 1 January 2017, the Company acquired 67% of the ordinary share capital and
voting rights of HF Pre IPO Fund I LCC, accordingly this investment has been accounted for as an investment in a
subsidiary. Refer Note 3a Business combinations: HF Pre IPO Fund I LLC.

The Group has also 10% free carried interest in Global Biolife Inc. (formerly Sed BioMed Inc.), a company incorporated
in the State of Delaware, USA in which Mr Chan is a significant shareholder.

(1) Interest rate risk

The company and the Group are exposed to interest rate risk as entities in the Group borrow funds at both fixed
and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and
floating rate borrowings.

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 23

Financial risk management (cont.)

ANNUAL REPORT
31 December 2017

The Company and the Group’s exposures to interest rate in financial assets and financial liabilities are detailed in
the liquidity risk management section of this note.

(2) Foreign exchange risk

Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument
fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial
instruments which are other than the AUD functional currency of the Group.

(3) Price risk

Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market prices. The Group does not presently hold material amounts subject to price risk. As such the
Board considers price risk as a low risk to the Group.

vii. Sensitivity Analyses

The following table illustrates sensitivities to the Group's exposures to changes in interest rates. The table indicates the
impact on how profit and equity values reported at balance sheet date would have been affected by changes in the
relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the
movement in a particular variable is independent of other variables.

(1) Interest rates

Year ended 31 December 2017

±100 basis points change in interest rates
6 months ended 31 December 2016

±50 basis points change in interest rates

(2) Foreign exchange

Year ended 31 December 2017

±5% of Australian dollar strengthening/weakening against the Malaysian ringgit
6 months 31 December 2016

Profit
$

Equity
$

± (5,862)

± (3,878)

Profit
$

Equity
$

± nil

± 175,257

±10% of Australian dollar strengthening/weakening against the Malaysian ringgit

± nil

± 329,065

(3) Foreign exchange

Year ended 31 December 2017

±7.5% of Australian dollar strengthening/weakening against the United States
dollar
6 months 31 December 2016

Profit
$

Equity
$

± nil

± 27,246

±10% of Australian dollar strengthening/weakening against the United States
dollar

± nil

± 79,719

viii. Net Fair Values

(1) Fair value estimation

The fair values of financial assets and financial liabilities are presented in the table in Note 23a and can be
compared to their carrying values as presented in the statement of financial position. Fair values are those
amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an
arm's length transaction.

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ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 23

Financial risk management (cont.)

Financial instruments whose carrying value is equivalent to fair value due to their nature include:
 Cash and cash equivalents;


Trade and other receivables; and



Trade and other payables.

The methods and assumptions used in determining the fair values of financial instruments are disclosed in the
accounting policy notes specific to the asset or liability.

Note 24

Commitments

a. Operating lease commitments - Group as lessee

The Group has entered into commercial leases on certain motor vehicles and items of machinery. These leases have an
average life of between 3 and 7 years with no renewal option included in the contracts. There are no restrictions placed
upon the lessee by entering into these leases.

The Group has a 1-3 year lease for commercial office, retail shop and warehouse in Malaysia. The future minimum rental
payments under non-cancellable tenancy agreements are $6,781.

The Group has a 20 year lease entered into in June 2004 for a site in Collie, Western Australia. The rent for this site is
$8,620 increased by CPI per hectare per annum.

Future minimum rentals payable under non-cancellable operating leases as at 31 Dec are as follows:

Within one year

After one year but not more than five years

After five years

Total

Consolidated
2017
$

15,401

34,480

25,860

75,741

2016
$

25,668

45,785

29,379

100,832

Parent

2017
$

8,620

34,480

25,860

68,960

2016
$

9,793

39,171

29,379

78,343

b. Finance lease and hire purchase commitments - Group as lessee

The Group has finance leases and hire purchase contracts for various items of plant and machinery. These leases have
terms of renewal but no purchase options and escalation clauses. Renewals are at the option of the specific entity that
holds the lease.

Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the
net minimum lease payments are as follows:

Within one year

After one year but not more than five years

Later than five years

Total minimum lease payments

Less amounts representing finance charges

Present value of minimum lease payments

c. Capital commitments

None.

Consolidated
2017
$

17,623

35,072

52,695

(3,657)

49,038

2016
$

15,425

51,401

66,826

(5,994)

60,832

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 25

Events subsequent to reporting date

ANNUAL REPORT
31 December 2017

a. On 6 February 2018, the Company entered into a Controlled Placement Agreement (CPA) with Acuity Capital. The CPA
provides Holista with up to $3,000,000 of standby equity capital over the coming 24-month period. As collateral for the
CPA, Holista has agreed to issue 9,500,000 shares to Acuity Capital (Collateral Shares) in two tranches (6,500,000 shares
from its LR7.1 capacity and tranche two of the issue will be 3,000,000 shares subject to shareholder approval). At any time,
the Company may cancel the CPA and buy back the Collateral Shares for no consideration (subject to shareholder approval).

b. On 9 February 2018, the Company issued 6,500,000 ordinary shares in accordance with the CPA referred to above.

c. On 14 February 2018, Holista (ASX: HCT) a group company Holista Food’s Inc. signed a three year memorandum of
understanding (MOU) to supply its patented low glycemic index mix to Wing’s Group. A maiden order for US$250,000 was
secured on 22 February 2018.

Note 26

Contingent liabilities

There are no contingent liabilities as at 31 December 2017 (31 December 2016: Nil).

Note 27 Key Management Personnel compensation (KMP)

The names and positions of KMP are as follows:



Dr Rajen Manicka

Managing Director and Chief Executive Officer

 Mr Daniel Joseph O’Connor
 Mr Chan

Non-executive Director
Non-executive Director

Information regarding individual directors and executives’ compensation and some equity instruments disclosures as required
by the Corporations Regulations 2M.3.03 is provided in the Remuneration report table on page 16.

Short-term employee benefits

Post-employment benefits

Share-based payments

Other long-term benefits

Termination benefits

Total

Note 28 Related party transactions

31 December
2017
$

31 December
2016
$

308,881

42,728

1,225,327

154,761

21,350

1,576,936

176,111

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available
to other parties unless otherwise stated.

Consolidated

Parent

31 December
2017
$

31 December
2016
$

31 December
2017
$

31 December
2016
$

10,979

10,919

49,134

5,674

24,019

357,079

1,889,450

1,367,018

1,189,413

(325,107)

Director fee paid to Mdm Nora Hassan

Legal fees paid to Sumita K & Associates for
provision of legal advice. Mrs Sumita’s
husband is a director of the Company

Director fee paid to Mrs Sumita

Consultation fee paid to Samabudi Consulting
Sdn Bhd which director have interest

Loan and interest from Global eHealth Ltd
which a director have interest in

Loan from subsidiary

Loan to subsidiary

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ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 29

Parent entity disclosures

Holista CollTech Limited is the ultimate Australian parent entity and ultimate parent of the Group.

Holista CollTech Limited did not enter into any trading transactions with any related party during the year.

a. Financial Position of Holista CollTech Limited

Current assets

Non-current assets

Total assets

Current liabilities
Non-current liabilities

Total liabilities

Net assets

Equity
Issued capital

Share-based payment reserve

Accumulated losses

Total equity

b. Financial performance of Holista CollTech Limited

Profit / (loss) for the year

Other comprehensive income

Total comprehensive income

2017
$

2016
$

68,093

823,064

5,005,677

3,563,708

5,073,770

4,386,772

2,191,435
-

1,777,582
-

2,191,435

1,777,582

2,882,335

2,609,190

10,047,441

4,809,268

9,307,630

2,272,673

(11,974,374)

(8,971,113)

2,882,335

2,609,190

12 months to
31 December
2017
$

6 months to
31 December
2016
$

(3,003,260)

(194,513)

(3,003,260)

(194,513)

c. Guarantees
There are no guarantees entered into by Holista CollTech Limited for the debts of its subsidiaries as at 31 December 2017 (31
December 2017: none).

d. Contractual commitments
The parent company has capital commitments at 31 December 2017 of $nil (2016: $nil). The parent company other
commitments are disclosed in Note 24 Commitments.

e. Contingent liabilities
There are no guarantees entered into by Holista CollTech Limited for the debts of its subsidiaries as at 31 December 2017 (31
December 2017: none).

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AND CONTROLLED ENTITIES
ABN 24 094 515 992

Notes to the consolidated financial statements
for the year ended 31 December 2017

Note 30 Auditor's remuneration

Remuneration of the auditor for:
 Auditing or reviewing the financial reports:

 Stanton's International (Australia)

 Russell Bedford LC & Company (Malaysia)

Note 31

Company details

ANNUAL REPORT
31 December 2017

12 months to
31 December
2017
$

6 months to
31 December
2016
$

45,000

27,782

72,782

28,000

18,093

46,093

The registered office of the Company is:
Address:
Street:

283 Rokeby Road
SUBIACO WA 6008
PO Box 52
WEST PERTH WA 6872
+61 (0)8 6141 3500
+61 (0)8 6141 3599

Postal:

Telephone:
Facsimile:

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ANNUAL REPORT
31 December 2017

Directors' declaration

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

The Directors of the Company declare that:

1. The financial statements and notes, as set out on pages 20 to 71, are in accordance with the Corporations Act 2001 (Cth)

and:

(a) comply with Accounting Standards;

(b) are in accordance with International Financial Reporting Standards issued by the International Accounting Standards

Board, as stated in Note 1 to the financial statements; and

that date of the Group.

(d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001 (Cth);

in the directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
directors by:

DR RAJEN MANICKA

Managing Director

Dated this Thursday, 29 March 2018

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AND CONTROLLED ENTITIES
ABN 24 094 515 992

Independent auditor's report

ANNUAL REPORT
31 December 2017

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AND CONTROLLED ENTITIES
ABN 24 094 515 992

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AND CONTROLLED ENTITIES
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ANNUAL REPORT
31 December 2017

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AND CONTROLLED ENTITIES
ABN 24 094 515 992

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AND CONTROLLED ENTITIES
ABN 24 094 515 992

ANNUAL REPORT
31 December 2017

Corporate governance statement
The Board is responsible for establishing the Company’s corporate governance framework. In establishing its corporate
governance framework, the Board has referred to the 3rd edition of the ASX Corporate Governance Councils’ Corporate
Governance Principles and Recommendations.

The Corporate Governance Statement discloses the extent to which the Company follows the recommendations. The Company
will follow each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its
corporate governance practices. Where the Company’s corporate governance practices will follow a recommendation, the
Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the “if not,
why not” reporting regime, where, after due consideration, the Company’s corporate governance practices will not follow a
recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any,
alternative practices the Company will adopt instead of those in the recommendation.

The Company’s governance-related documents can be found on its website at www.holistaco.com.

PRINCIPLES AND RECOMMENDATIONS

COMPLY
(YES/NO)

EXPLANATION

Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
A listed entity should have and disclose a charter which:
(a)

YES

(b)

sets out the respective roles and responsibilities of the
board, the chair and management; and
includes a description of those matters expressly
reserved to the board and those delegated to
management.

The Company has adopted a Board Charter.

The Board Charter sets out the specific responsibilities of the Board,
requirements as to the Boards composition, the roles and
responsibilities of the Chairman and Company Secretary, the
establishment, operation and management of Board Committees,
Directors access to company records and information, details of the
Board’s relationship with management, details of the Board’s
performance review and details of the Board’s disclosure policy.

A copy of the Company’s Board Charter is stated in Schedule 1 of the
Corporate Governance Plan which is available on the Company’s
website.

(a) The Company has detailed guidelines for the appointment and
selection of the Board. The Company’s Corporate Governance
Plan requires the Board to undertake appropriate checks
before appointing a person, or putting forward to security
holders a candidate for election, as a director.

(b) Material information relevant to any decision on whether or
not to elect or re-elect a Director will be provided to security
holders in the notice of meeting holding the resolution to elect
or re-elect the Director.

The Company’s Corporate Governance Plan requires the Board to
ensure that each Director and senior executive is a party to a written
agreement with the Company which sets out the terms of that
Director’s or senior executive’s appointment.

The Board Charter outlines
responsibility and
accountability of the Company Secretary. The Company Secretary is
accountable directly to the Board, through the chair, on all matters
to do with the proper functioning of the Board.

roles,

the

Recommendation 1.2
A listed entity should:
(a) undertake appropriate checks before appointing a person,
or putting forward to security holders a candidate for
election, as a director; and

(b) provide security holders with all material

information
relevant to a decision on whether or not to elect or re-elect
a director.

Recommendation 1.3
A listed entity should have a written agreement with each director
and senior executive setting out the terms of their appointment.

Recommendation 1.4
The company secretary of a listed entity should be accountable
directly to the board, through the chair, on all matters to do with
the proper functioning of the board.

YES

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31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

PRINCIPLES AND RECOMMENDATIONS

COMPLY
(YES/NO)

EXPLANATION

Recommendation 1.5
A listed entity should:
(a) have a diversity policy which includes requirements for the

board:
(i)

(ii)

to set measurable objectives for achieving gender
diversity; and
to assess annually both the objectives and the entity’s
progress in achieving them;
(b) disclose that policy or a summary or it; and
(c) disclose as at the end of each reporting period:

(i)

the measurable objectives for achieving gender
diversity set by the board in accordance with the
entity’s diversity policy and its progress towards
achieving them; and

(ii) either:
(A)

the respective proportions of men and women
on the board, in senior executive positions and
across the whole organisation (including how
the entity has defined “senior executive” for
these purposes); or
the entity’s “Gender Equality Indicators”, as
defined in the Workplace Gender Equality Act
2012.

(B)

NO
(not
followed
in full)

(a) The Company has adopted a Diversity Policy.

(i)

The Diversity Policy provides a framework for the
Company to achieve a list of 6 measurable objectives that
encompass gender equality.

(ii) The Diversity Policy provides for the monitoring and
evaluation of the scope and currency of the Diversity
Policy. The company is responsible for implementing,
monitoring and reporting on the measurable objectives.
(b) The Diversity Policy is stated in Schedule 9 of the Corporate

Governance Plan which is available on the company website.

(c)

(i)

The measurable objectives set by the Board will be
included in the annual key performance indicators for the
CEO, MD and senior executives. In addition the Board will
review progress against the objectives in its annual
performance assessment.

(ii) The Board will include in the annual report each year, the
measurable objectives, progress against the objectives,
and the proportion of male and female employees in the
whole organisation, at senior management level and at
Board Level.

Recommendation 1.6
A listed entity should:
(a) have and disclose a process for periodically evaluating the
performance of the board, its committees and individual
directors; and

(b) disclose in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting
period in accordance with that process.

YES

Recommendation 1.7
A listed entity should:
(a) have and disclose a process for periodically evaluating the

YES

performance of its senior executives; and

(b) disclose in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting
period in accordance with that process.

(a) The Board is responsible for evaluating the performance of the
Board and individual directors on an annual basis. It may do so
with the aid of an independent advisor. The process for this
can be found in Schedule 6 of the Company’s Corporate
Governance Plan. .

(b) The Company’s Corporate Governance Plan requires the Board
to disclosure whether or not performance evaluations were
conducted during the relevant reporting period. Details of the
performance evaluations conducted will be provided in the
Company’s Annual Reports.

(a) The Board is responsible for evaluating the performance of
is to arrange an annual

senior executives. The Board
performance evaluation of the senior executives.

(b) The Company’s Corporate Governance Plan requires the Board
to conduct annual performance of the senior executives.
Schedule 6 ‘Performance Evaluation’ requires the Board to
disclose whether or not performance evaluations were
conducted during the relevant reporting period. Details of the
performance evaluations conducted will be provided in the
Company’s Annual Report.

Principle 2: Structure the board to add value
Recommendation 2.1
The board of a listed entity should:
(a) have a nomination committee which:

(i)

has at least three members, a majority of whom are
independent directors; and
is chaired by an independent director,

(ii)
and disclose:
(iii)
(iv)
(v)

the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the number
of times the committee met throughout the period
and the individual attendances of the members at
those meetings; or

(b)

if it does not have a nomination committee, disclose that
fact and the processes it employs to address board
succession issues and to ensure that the board has the
appropriate balance of skills, experience, independence and
knowledge of the entity to enable it to discharge its duties
and responsibilities effectively.

(a) Due to the size and nature of the existing Board and the
magnitude of the Company’s operations the Company
currently has no Nomination Committee. Pursuant to clause
4(h) of the Company’s Board Charter, the full Board carries out
the duties that would ordinarily be assigned to the Nomination
Committee under the written terms of reference for that
committee.

The duties of the Nomination Committee are outlined in
Schedule 5 of the Company’s Corporate Governance Plan
available online on the Company’s website.

The Board devotes time at each board meeting to discuss
board succession issues. All members of the Board are involved
in the Company’s nomination process, to the maximum extent
permitted under the Corporations Act and ASX Listing Rules.
The Board regularly updates the Company’s board skills matrix
(in accordance with recommendation 2.2) to assess the
appropriate balance of skills, experience, independence and
knowledge of the entity.

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AND CONTROLLED ENTITIES
ABN 24 094 515 992

PRINCIPLES AND RECOMMENDATIONS

COMPLY
(YES/NO)

EXPLANATION

ANNUAL REPORT
31 December 2017

Recommendation 2.2
A listed entity should have and disclose a board skill matrix setting
out the mix of skills and diversity that the board currently has or is
looking to achieve in its membership.

YES

Board Skills Matrix

Number of
Directors that
Meet the Skill

Executive & Non- Executive experience

Industry experience & knowledge

Leadership

Corporate governance & risk management

Strategic thinking

Desired behavioural competencies

Geographic experience

Capital Markets experience

Subject matter expertise:

- accounting

- capital management

- corporate financing

- industry taxation 1

- risk management

- legal

- IT expertise 2

YES

(1)

(2)

Skill gap noticed however an external taxation firm
emplo4yed to maintain taxation requirements.

Skill gap noticed however an external IT firm is employed on
an adhoc basis to maintain IT requirements.

(a) The Board Charter provides for the disclosure of the names of
Directors considered by the Board to be independent. These
details are provided in the Annual Reports and Company
website.

(b) The Board Charter requires Directors to disclose their interest,
positions, associations and relationships and requires that the
independence of Directors is regularly assessed by the Board in
light of the interests disclosed by Directors. Details of the
Directors interests, positions associations and relationships are
provided in the Annual Reports and Company website.

(c) The Board Charter provides for the determination of the
Directors’ terms and requires the length of service of each
Director to be disclosed. The length of service of each Director
is provided in the Annual Reports and Company website.

YES

The Board Charter requires that where practical the majority of the
Board will be independent.

YES

Details of each Director’s independence are provided in the Annual
Reports and Company website.

The Board Charter provides that where practical, the Chairman of
the Board will be a non-executive director. If the Chairman ceases to
be independent then the Board will consider appointing a lead
independent Director.

The Board Charter states that a specific responsibility of the Board is
to procure appropriate professional development opportunities for
Directors. The Board is responsible for the approval and review of
induction and continuing professional development programs and
procedures for Directors to ensure that they can effectively
discharge their responsibilities.

Recommendation 2.3
A listed entity should disclose:
(a)

the names of the directors considered by the board to be
independent directors;
if a director has an interest, position, association or
relationship of the type described in Box 2.3 of the ASX
Corporate Governance Principles and Recommendation (3rd
Edition), but the board is of the opinion that it does not
compromise the independence of the director, the nature of
the interest, position, association or relationship in question
and an explanation of why the board is of that opinion; and
the length of service of each director

(b)

(c)

Recommendation 2.4
A majority of the board of a listed entity should be independent
directors.

Recommendation 2.5
The chair of the board of a listed entity should be an independent
director and, in particular, should not be the same person as the
CEO of the entity.

providing

Recommendation 2.6
A listed entity should have a program for inducting new directors
and
development
opportunities for continuing directors to develop and maintain
the skills and knowledge needed to perform their role as a
director effectively.

professional

appropriate

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AND CONTROLLED ENTITIES
ABN 24 094 515 992

PRINCIPLES AND RECOMMENDATIONS

COMPLY
(YES/NO)

EXPLANATION

Principle 3: Act ethically and responsibly
Recommendation 3.1
A listed entity should:
(a) have a code of conduct for its directors, senior executives

and employees; and

(b) disclose that code or a summary of it.

Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1
The board of a listed entity should:
(a) have an audit committee which:

(i)

(ii)

has at least three members, all of whom are non-
executive directors and a majority of whom are
independent directors; and
is chaired by an independent director, who is not
the chair of the board,

YES

and disclose:
(iii)
(iv)

(v)

the charter of the committee;
the relevant qualifications and experience of the
members of the committee; and
in relation to each reporting period, the number of
times the committee met throughout the period
and the individual attendances of the members at
those meetings; or

(b)

if it does not have an audit committee, disclose that fact and
the processes it employs that independently verify and
safeguard the integrity of its financial reporting, including
the processes for the appointment and removal of the
external auditor and the rotation of the audit engagement
partner.

Recommendation 4.2
The board of a listed entity should, before it approves the entity’s
financial statements for a financial period, receive from its CEO
and CFO a declaration that the financial records of the entity have
been properly maintained and that the financial statements
comply with the appropriate accounting standards and give a true
and fair view of the financial position and performance of the
entity and that the opinion has been formed on the basis of a
sound system of risk management and internal control which is
operating effectively.

Recommendation 4.3
A listed entity that has an AGM should ensure that its external
auditor attends its AGM and is available to answer questions from
security holders relevant to the audit.

Principle 5: Make timely and balanced disclosure
Recommendation 5.1
A listed entity should:
(a) have a written policy for complying with its continuous

disclosure obligations under the Listing Rules; and

(b) disclose that policy or a summary of it.

YES

(a) The Corporate Code of Conduct applies to the Company’s

directors, senior executives and employees.

(b) The Company’s Corporate Code of Conduct is in Schedule 2 of
the Corporate Governance Plan which is on the Company’s
website.

(a) Due to the size and nature of the existing Board and the
magnitude of the Company’s operations the Company
currently has no Audit and Risk Committee. Pursuant to Clause
4(h) of the Company’s Board Charter, the full Board carries out
the duties that would ordinarily be assigned to the Audit and
Risk Committee under the written terms of reference for that
committee.
The role and responsibilities of the Audit and Risk Committee
are outlined in Schedule 3 of the Company’s Corporate
Governance Plan available online on the Company’s website.
The Board devote time at annual board meetings to fulfilling
the roles and responsibilities associated with maintaining the
Company’s internal audit function and arrangements with
external auditors. All members of the Board are involved in the
Company’s audit function to ensure the proper maintenance of
the entity and the integrity of all financial reporting.

The Company’s Corporate Governance Plan states that a duty and
responsibility of the Board is to ensure that before approving the
entity’s financial statements for a financial period, the CEO and CFO
have declared that in their opinion the financial records of the entity
have been properly maintained and that the financial statements
comply with the appropriate accounting standards and give a true
and fair view of the financial position and performance of the entity
and that the opinion has been formed on the basis of a sound
system of risk management and internal control which is operating
effectively.

The Company’s Corporate Governance Plan provides that the Board
must ensure the Company’s external auditor attends its AGM and is
available to answer questions from security holders relevant to the
audit.

(a) The Board Charter provides details of the Company’s disclosure
policy. In addition, Schedule 7 of the Corporate Governance
Plan is entitled ‘Disclosure – Continuous Disclosure’ and details
the Company’s disclosure requirements as required by the ASX
Listing Rules and other relevant legislation.

(b) The Board Charter and Schedule 7 of the Corporate
Governance Plan are available on the Company website.

Principle 6: Respect the rights of security holders
Recommendation 6.1
A listed entity should provide information about itself and its
governance to investors via its website.

YES

Information about the Company and its governance is available in the
Corporate Governance Plan which can be found on the Company’s
website.

Information about the Company and its governance is available in the
Corporate Governance Plan which can be found on the Company
website.

Recommendation 6.2
A listed entity should design and implement an investor relations
program to facilitate effective two-way communication with
investors.

YES

The Company has adopted a Shareholder Communications Strategy
which aims to promote and facilitate effective two-way communication
with investors. The Shareholder Communications Strategy outlines a
range of ways in which information is communicated to shareholders.

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

PRINCIPLES AND RECOMMENDATIONS

COMPLY
(YES/NO)

EXPLANATION

ANNUAL REPORT
31 December 2017

Recommendation 6.3
A listed entity should disclose the policies and processes it has in
place to facilitate and encourage participation at meetings of
security holders.

YES

The Shareholder Communication Strategy states that as a part of the
Company’s developing investor relations program, Shareholders can
register with the Company Secretary to receive email notifications of
when an announcement is made by the Company to the ASX, including
the release of the Annual Report, half yearly reports and quarterly
reports. Links are made available to the Company’s website on which all
information provided to the ASX is immediately posted.

Shareholders are encouraged to participate at all EGMs and AGMs of the
Company. Upon the despatch of any notice of meeting to Shareholders,
the Company Secretary shall send out material with that notice of
meeting stating that all Shareholders are encouraged to participate at
the meeting.

Recommendation 6.4
A listed entity should give security holders the option to receive
communications from, and send communications to, the entity
and its security registry electronically.

Principle 7: Recognise and manage risk
Recommendation 7.1
The board of a listed entity should:
(a) have a committee or committees to oversee risk, each of

which:
(i) has at least three members, a majority of whom are

independent directors; and

(ii) is chaired by an independent director, and disclose:
(iii) the charter of the committee;
(iv) the members of the committee; and
(v) as at the end of each reporting period, the number of
times the committee met throughout the period and
the individual attendances of the members at those
meetings; or

if it does not have a risk committee or committees that
satisfy (a) above, disclose that fact and the process it
employs for overseeing the entity’s risk management
framework.

(b)

Recommendation 7.2
The board or a committee of the board should:
(a)

review the entity’s risk management framework with
management at least annually to satisfy itself that it
continues to be sound, to determine whether there have
been any changes in the material business risks the entity
faces and to ensure that they remain within the risk appetite
set by the board; and

(b) disclose in relation to each reporting period, whether such a

review has taken place.

Recommendation 7.3
A listed entity should disclose:
(a)

(b)

if it has an internal audit function, how the function is
structured and what role it performs; or
if it does not have an internal audit function, that fact and
the processes it employs for evaluating and continually
improving the effectiveness of its risk management and
internal control processes.

YES

Security holders can register with the Company to receive email
notifications when an announcement is made by the Company to the
ASX.

Shareholders queries should be referred to the Company Secretary at
first instance.

Due to the size and nature of the existing Board and the magnitude
of the Company’s operations the Company currently has no Audit
and Risk Committee. Pursuant to Clause 4(h) of the Company’s
Board Charter, the full Board currently carries out the duties that
would ordinarily be assigned to the Audit and Risk Committee under
the written terms of reference for that committee.

The role and responsibilities of the Audit and Risk Committee are
outlined in Schedule 3 of the Company’s Corporate Governance Plan
available online on the Company’s website.

The Board devote time at annual board meeting to fulfilling the roles
and responsibilities associated with overseeing risk and maintaining
the entity’s risk management framework and associated internal
compliance and control procedures.

(a)

YES

(b)

The Company process for risk management and internal
compliance includes a requirement to identify and measure
risk, monitor the environment for emerging factors and
trends that affect these risks, formulate risk management
strategies and monitor the performance of risk management
systems. Schedule 8 of the Corporate Governance Plan is
entitled ‘Disclosure – Risk Management’ and details the
Company’s disclosure requirements with respect to the risk
management review procedure and internal compliance and
controls.
The Board Charter requires the Board to disclose the number
of times the Board met throughout the relevant reporting
period, and the individual attendances of the members at
those meetings. Details of the meetings will be provided in
the Company’s Annual Report.

YES

Schedule 3 of the Company’s Corporate Plan provides for the
internal audit function of the Company. The Board Charter outlines
the monitoring, review and assessment of a range of internal audit
functions and procedures.

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ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

PRINCIPLES AND RECOMMENDATIONS

COMPLY
(YES/NO)

EXPLANATION

Recommendation 7.4
A listed entity should disclose whether, and if so how, it has
regard to economic, environmental and social sustainability risks
and, if it does, how it manages or intends to manage those risks.

YES

Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
The board of a listed entity should:
(a) have a remuneration committee which:

(i)

(ii)

(iii)
(iv)
(v)

has at least three members, a majority of whom are
independent directors; and
is chaired by an independent director,

and disclose:

(b)

if it does not have a remuneration committee, disclose that
fact and the processes it employs for setting the level and
composition of remuneration for directors and senior
executives and ensuring that such remuneration
is
appropriate and not excessive.

Recommendation 8.2
A listed entity should separately disclose its policies and practices
regarding the remuneration of non-executive directors and the
remuneration of executive directors and other senior executives
and ensure that the different roles and responsibilities of non-
executive directors compared to executive directors and other
senior executives are reflected in the level and composition of
their remuneration.
Recommendation 8.3
A listed entity which has an equity-based remuneration scheme
should:
(a) have a policy on whether participants are permitted to enter
into transactions (whether through the use of derivatives or
otherwise) which limit the economic risk of participating in
the scheme; and

(b) disclose that policy or a summary of it.

Schedule 3 of the Company’s Corporate Plan details the Company’s
risk management systems which assist in identifying and managing
potential or apparent business, economic, environmental and social
sustainability risks (if appropriate). Review of the Company’s risk
management framework is conducted at least annually and reports
are continually created by management on the efficiency and
effectiveness of the Company’s risk management framework and
associated internal compliance and control procedures.

Due to the size and nature of the existing board and the magnitude of
the Company’s operations
the Company currently has no
Remuneration Committee. Pursuant to clause 4(h) of the Company’s
Board Charter, the full Board currently carries out the duties that
would ordinarily be assigned to the Remuneration Committee under
the written terms of reference for that committee.

The role and responsibilities of the Remuneration Committee are
outlined in Schedule 4 of the Company’s Corporate Governance Plan
available online on the Company’s website.

The Board devote time at annual board meetings to fulfilling the
roles and responsibilities associated with setting the level and
composition of remuneration for Directors and senior executives
and ensuring that such remuneration is appropriate and not
excessive.

YES

The Company’s Corporate Governance Plan requires the Board to
disclose its policies and practices regarding the remuneration of non-
executive, executive and other senior directors

YES

(a) Company’s Corporate Governance Plan states that the Board is
required to review, manage and disclose the policy (if any) on
whether participants are permitted to enter into transactions
(whether through the use of derivatives or otherwise) which
limit the economic risk of participating in the scheme. The Board
must review and approve any equity based plans.

(b) A copy of the Company’s Corporate Governance Plan is available

on the Company’s website.

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

ANNUAL REPORT
31 December 2017

Additional Information for Listed Public Companies

The following additional information is required by the Australian Securities Exchange in respect of listed public companies.

Capital as at 16 March 2018.

a. Ordinary share capital

190,539,087 ordinary fully paid shares held by 1,035 shareholders.

b. Unlisted Options over Unissued Shares

Number of
Options

3,500,000

3,954,205

10,000,000

1,000,000

6,000,000

3,000,000

2,000,000

7,000,000

42,408,410

Exercise Price
$

Expiry
Date

0.06

0.25

0.30

0.20

0.10

0.20

0.25

0.30

0.10

0.20

17 December 2018

8 September 2018

8 March 2018

23 March 2018

31 December 2019

23 June 2020

1 August 2020

16 October 2020

c. Performance Rights over Unissued Shares

Class of
Performance
Right

Performance Condition

Milestone Date

Expiry Date

Performance
rights
No.

Upon the Company signing a binding agreement
for the sale, distribution, licensing and/or
manufacturing of at least 3 Low GI Products.

3,600,000

30 June 2020 5 years from the

date of issue

Upon the Company securing the patents
associated with its Low GI Products.

The Company achieving an EBIT of at least
$2.2m from the sale of Low GI Products.

2,700,000

30 June 2020 5 years from the

date of issue

1,800,000

30 June 2021 5 years from the

date of issue

The Company achieving an EBIT of at least $4m
from the sale of Low GI Products.

900,000

30 June 2021 5 years from the

date of issue

d. Voting Rights

The voting rights attached to each class of equity security are as follows:

9,000,000

 Ordinary shares: Each ordinary share is entitled to one vote when a poll is called, otherwise each member

present at a meeting or by proxy has one vote on a show of hands.

 Unlisted Options: Options do not entitle the holders to vote in respect of that equity instrument, nor participate
in dividends, when declared, until such time as the options are exercised or performance shares convert and
subsequently registered as ordinary shares.

 Performance Rights: A Performance Right does not entitle a Holder to vote on any resolutions proposed at a
general meeting of shareholders of the Company. A Performance Right does not entitle a Holder to any
dividends. A Performance Right does not entitle the Holder to participate in the surplus profits or assets of the
Company upon winding up of the Company. A Performance Right is not transferable.

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ANNUAL REPORT
31 December 2017

HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

Additional Information for Listed Public Companies

e. Substantial Shareholders as at 16 March 2018.

Name

Dr. Rajen Manicka

Global eHealth Limited

Number of Ordinary
Fully Paid Shares Held

% Held of Issued Ordinary
Capital

73,914,400

45,145,101

38.79

23.69

f. Distribution of Shareholders as at 16 March 2018.
Category (size of holding)

Total Holders

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 – and over

223

280

170

290

Number
Ordinary

78,148

842,585

1,329,542

10,080,976

178,207,836

1,035

190,539,087

% Held of Issued
Ordinary Capital

0.04

0.44

0.70

5.29

93.53

100.00

g. Unmarketable Parcels as at 16 March 2018

At the date of this report there were 442 shareholders who held less than a marketable parcel of shares holding
622,991 shares.

h. On-Market Buy-Back

There is no current on-market buy-back.

i. Restricted Securities

The Company has no restricted securities

j.
Rank Name

20 Largest Shareholders — Ordinary Shares as at as at 16 March 2018

Acuity Capital Investment Management Pty Ltd

Dr. Rajen Manicka

Ms Sarinderjit Kaur

Dr Fathil Mohamed

Global eHealth Limited

Fairview Holdings Pty Ltd

Chandra Sekaran P Perumal

Franjack Pty Ltd & Aurjoe Pty Ltd

HSBC Custody Nominees (Australia) Limited

1.
2.
3.
4.
5.
6.
7.
8.
9.
10. Mr Ravindran Govindan
11. Mr Kok Wah Ong
12. BNP Paribas Noms Pty Ltd
13. Thank Keating Pty Ltd
14. Harold Cripps Holdings Pty Ltd
15. Catl Pty Ltd
16. Mrs Shivani Kamalanathan
17. IRSS Nominees (21) Limited
18. Gattenside Pty Ltd
19. Lifescience Securities Ltd
20. Ms Emma Schneider

Number of Ordinary
Fully Paid Shares
Held

% Held of Issued
Ordinary Capital

73,914,400

45,145,101

38.79

23.69

8,461,500

6,500,000

6,220,000

4,516,497

4,503,158

3,333,333

3,300,000

2,595,587

1,696,220

1,620,728

1,300,000

1,030,645

779,000

738,089

660,000

802,697

600,000

574,520

4.44

3.41

3.26

2.37

2.36

1.75

1.73

1.36

0.89

0.85

0.68

0.54

0.41

0.39

0.35

0.42

0.31

0.30

TOTAL

168,291,475

88.30

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HOLISTA COLLTECH LIMITED
AND CONTROLLED ENTITIES
ABN 24 094 515 992

ANNUAL REPORT
31 December 2017

Additional Information for Listed Public Companies

The Joint Company Secretaries are Brett Francis Fraser and Jay Richard Stephenson

Principal registered office

As disclosed in Note 31 Company details on page 71 of this Annual Report.

Registers of securities

As disclosed in the Corporate directory on page ii of this Annual Report.

Stock exchange listing

Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian
Securities Exchange Limited, As disclosed in the Corporate directory on page ii of this Annual Report.

Use of funds

The Company has used its funds in accordance with its initial business objectives.

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