Appendix 4D (Listing Rule 4.2A) Genera Biosystems Limited HALF YEAR REPORT

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3 Genera Biosystems Limited Appendix 4D 31 December 2013 Appendix 4D (Listing Rule 4.2A) Genera Biosystems Limited A.B.N HALF YEAR REPORT Reporting period: 1 July 2013 to 31 December 2013 Previous corresponding period: 1 July 2012 to 31 December 2012 The information in this report should be read in conjunction with the most recent annual financial report, being the report for the year ended 30 June 2013 Results for announcement to the market Half year ended Half year ended Percentage 31 December December 2012 change Revenue from continuing activities $82,849 $37, % Profit/(Loss) from ordinary activities after tax attributable to members Net Profit/(Loss) for the period attributable to members Up/(down) ($1,268,272) ($969,676) (31%) Up/(down) ($1,268,272) ($969,676) (31%) Half year ended Half year ended 31 December December 2012 Cents per share Cents per share Net Tangible Assets per share (0.63) 3.94 Up/(down) Dividends Final dividend Interim dividend Record date for determining entitlements to the dividends Amount per security Nil Nil N/A Franked amount per security Nil Nil No dividends have been paid or declared during the half year ended 31 December 2013 and it is not proposed to pay dividends in respect of that period. 1

4 Genera Biosystems Limited Appendix 4D 31 December 2013 Brief explanation necessary to enable the figures above to be understood: Operating Loss The Company s loss for the half-year ended 31 December 2013 was greater than the previous corresponding period for the following reasons: Income Tax Benefit The Company received an R&D tax incentive payment of $342,452 during the half-year ended 31 December No such payment was received during the half-year ended 31 December The Company received an R&D tax incentive payment of $451,566 in January Revenue Revenue from product sales increased to $81,988 ($25,380 in 2012) due to increased demand. Interest income reduced from $11,936 (2012) to $861 due to lower cash balances during the period. Expenses Total expenses were $1,351,121, almost identical to the prior period ($1,349,444 in 2012) reflecting the Company s tight control on expenditure. 2

5 CORPORATE DIRECTORY Board of Directors Mr Lou Panaccio (Executive Chairman) Dr Karl Poetter (Executive Director) Mr Richard Hannebery (Executive Director) Mr David Symons (Non-Executive Director) Mr Jim Kalokerinos (Non-Executive Director) CONTENTS Page Corporate Directory... 3 Directors' Report... 4 Auditor s Independence Declaration... 6 Independent Review Report... 7 Directors Declaration... 9 Company Secretary Mrs Melanie Leydin Leydin Freyer Level 4, 100 Albert Road SOUTH MELBOURNE VIC 3205 Address Small Technologies Cluster 1 Dalmore Drive SCORESBY VIC 3179 Phone: Fax: Condensed Statement of Profit or Loss and Other Comprehensive Income Condensed Statement of Financial Position Condensed Statement of Changes in Equity Condensed Statement of Cash Flows Notes to the Financial Statements Auditor Grant Thornton Chartered Accountants Level 30, 525 Collins Street MELBOURNE VIC 3000 Solicitors McCullough Robertson, Lawyers Level 11 Central Plaza Two 66 Eagle Street BRISBANE QLD 4000 Patent Attorneys Davies Collison Cave 1 Nicholson Street MELBOURNE VIC 3000 Share Registry Computershare Investor Services Pty Ltd GPO Box 2975 MELBOURNE VIC 3001 Telephone: (within Australia) (outside Australia) ASX Code: GBI. 3

6 DIRECTORS REPORT The directors of Genera Biosystems Limited submit the financial report for the half-year ended 31 December DIRECTORS The names of the Company s directors in office during, or since the end of the half-year are as follows. The directors were in office for the entire half-year unless otherwise stated: Name Lou Panaccio Dr. Karl Poetter Richard Hannebery David Symons Jim Kalokerinos Executive Chairman Executive Director Executive Director Non-Executive Director Non-Executive Director 2. RESULTS OF OPERATIONS The net loss after income tax for the half-year was $1,268,272. (2012: loss of $969,676). 3. REVIEW OF OPERATIONS & WORK PLAN During the six months to 31 December 2013, the Company continued development work associated with the multiplexed molecular diagnostics (MDx) tests based on its patented Ampasand technology and Sirocco automated testing platform, while continuing to sell small quantities of its existing PapType SP Human Papillomavirus (HPV) and RTIplex (Respiratory Tract Infection) diagnostic tests on a RUO basis. Significant resources were allocated to progressing the TGA registration of both PapType and RTIplex. Registration of each of these tests is expected during 2014, and work completed during the period included additional clinical studies with both Healthscope and Sonic Healthcare to validate the performance of the tests. During the period the Company successfully completed three issues of shares and convertible notes to major existing sophisticated and professional investors. Genera is pleased to have the support of these investors who have demonstrated a willingness to fund the company s near term working capital requirements as progress is made toward a value inflection point. Discussions and meetings were held with various companies involved in the IVD industry, both in Australia and internationally, to explore their interest in Genera s tests and the potential of the Company s technology platform. These discussions and meetings, which have continued subsequent to balance date, confirm the underlying potential of the Company s AmpaSand technology. The Company believes that its AmpaSand technology can be used as the base to offer an effective, efficient and integrated MDx testing solution to the pathology industry globally. Genera s focus for the remainder of the 2014 financial year is to significantly progress discussions with interested parties with the objective of delivering value to the Company s shareholders. Appointment of Corporate Advisor The Board s primary focus is on delivering value for Genera s shareholders. The Directors believe Genera s AmpaSand platform technology and associated product suite have significant commercial 4

7 potential underpinned by sound clinical data and a robust intellectual property position, which comprises a range of granted patents in the USA and other jurisdictions. Given the company s lack of meaningful revenue, Genera has been reliant on shareholders to fund operations whilst discussions with potential commercial partners have been pursued over a number of years. To date, discussions with interested parties have been the result of informal contacts. By their nature, these discussions take time to progress to a point where value may be able to be delivered to Genera s shareholders. It is the Board s view that the level of awareness of Genera amongst potential commercial partners is now at a stage that shareholders best interests will be served by engaging a corporate advisory firm to formally manage the process of engaging with these parties in a more structured fashion. The corporate advisory firm will manage a formal process that will see selected parties invited to submit commercial proposals within an agreed timeframe. To this end, the Board expects to finalise the appointment of an advisory firm within the next week. 4. AUDITOR S INDEPENDENCE DECLARATION A copy of the lead auditor s independence declaration pursuant to section 307C of the Corporations Act 2001 in relation to the review of the half-year is included on page 6. Made and signed in accordance with a resolution of the directors. Lou Panaccio Executive Chairman MELBOURNE, 28 February

8 Grant Thornton Audit Pty Ltd ACN The Rialto, Level Collins St Melbourne Victoria 3000 Correspondence to: GPO Box 4736 Melbourne Victoria 3001 T F E info.vic@au.gt.com W Auditor s Independence Declaration To The Directors of Genera Biosystems Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Genera Biosystems Limited for the half-year ended 31 December 2013, I declare that, to the best of my knowledge and belief, there have been: a b No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and No contraventions of any applicable code of professional conduct in relation to the review. GRANT THORNTON AUDIT PTY LTD Chartered Accountants B.A. Mackenzie Partner - Audit & Assurance Melbourne, 28 February 2014 Grant Thornton Audit Pty Ltd ACN a subsidiary or related entity of Grant Thornton Australia Ltd ABN Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another s acts or omissions. In the Australian context only, the use of the term Grant Thornton may refer to Grant Thornton Australia Limited ABN and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

9 Grant Thornton Audit Pty Ltd ACN The Rialto, Level Collins St Melbourne Victoria 3000 Correspondence to: GPO Box 4736 Melbourne Victoria 3001 T F E info.vic@au.gt.com W Independent Auditor s Review Report To the Members of Genera Biosystems Limited We have reviewed the accompanying half-year financial report of Genera Biosystems Limited ( Company ), which comprises the statement of financial position as at 31 December 2013, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a statement or description of accounting policies, other explanatory information and the directors declaration. Directors responsibility for the half-year financial report The directors of Genera Biosystems Limited are responsible for the preparation of the halfyear financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such controls as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Genera Biosystems Limited financial position as at 31 December 2013 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations As the auditor of Genera Biosystems Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. Grant Thornton Audit Pty Ltd ACN a subsidiary or related entity of Grant Thornton Australia Ltd ABN Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another s acts or omissions. In the Australian context only, the use of the term Grant Thornton may refer to Grant Thornton Australia Limited ABN and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

10 A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our review, we complied with the independence requirements of the Corporations Act Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Genera Biosystems Limited is not in accordance with the Corporations Act 2001, including: a b giving a true and fair view of the Company s financial position as at 31 December 2013 and of its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations Material uncertainty regarding going concern Without qualification to the conclusion expressed above, attention is drawn to the following matter. As a result of matters described in Note 2 in the half year financial report which indicates that the Company incurred a net loss of $ 1,268,272 during the half year ended 31 December 2013 and a current net asset deficiency of $933,001. This condition, along with other matters as set forth in Note 2, indicate the existence of a material uncertainty which may cast significant doubt about the Company s ability to 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 statements. GRANT THORNTON AUDIT PTY LTD Chartered Accountants B.A. Mackenzie Partner - Audit & Assurance Melbourne, 28 February 2014

11 DIRECTORS DECLARATION In accordance with a resolution of the directors of Genera Biosystems Limited, the directors declare that, in the directors opinion: (a) the financial statements and notes of the Company are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position of the Company as at 31 December 2013, and of the performance of the Company for the half-year ended on that date; and (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the directors. Lou Panaccio Executive Chairman MELBOURNE, 28 February

12 CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2013 Half-year ended Half-year ended 31 December December 2012 $ $ Revenue Sales revenue 81,988 25,380 Interest income ,936 Total revenue 82,849 37,316 Expenses Employee benefits expense 543, ,270 Depreciation and amortisation 353, ,507 Finance Costs 83,722 - Professional fees 1,953 - Rent expense 113, ,629 Corporate expenses 87,662 60,437 Travel expenses 10,164 8,654 Laboratory expenses 91, ,056 Other expenses 65,513 90,891 Total expenses 1,351,121 1,349,444 Profit/(loss) before income tax for the period (1,268,272) (1,312,128) Income tax (expense)/benefit - 342,452 Net profit/(loss) for the period (1,268,272) (969,676) Other comprehensive income/(loss) - - Total comprehensive income/(loss) for the period (1,268,272) (969,676) Cents per Cents per share share Earnings/(Loss) per Share Basic earnings/(loss) per share (1.50) (1.27) Diluted earnings/(loss) per share (1.50) (1.27) This statement is to be read in conjunction with the accompanying notes to the financial statements. 10

13 CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER December June 2013 $ $ Current Assets Cash and cash equivalents 70, ,326 Trade and other receivables 17,995 64,278 Inventories 8,240 8,241 Other current assets 80,143 93,221 Total Current Assets 177, ,066 Non-Current Assets Plant and equipment 416, ,568 Deferred tax assets 489, ,116 Development costs 2,001,483 2,131,749 Intangible assets 1,768,770 1,812,193 Total Non-Current Assets 4,675,957 4,947,626 Total Assets 4,853,298 5,241,692 Current Liabilities Trade and other payables 206, ,775 Borrowings 733,648 - Provisions 170, ,396 Total Current Liabilities 1,110, ,171 Non-current Liabilities Deferred tax liabilities 489, ,116 Provisions 26,951 19,735 Total Non-current Liabilities 516, ,851 Total Liabilities 1,626, ,022 Net Assets 3,226,889 4,244,670 Equity Issued Capital 23,550,815 23,310,324 Share Option reserve 190, ,382 Accumulated losses (20,514,044) (19,321,036) Total Equity 3,226,889 4,244,670 This statement is to be read in conjunction with the accompanying notes to the financial statements. 11

14 CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2013 Share Capital Accumulated losses Share Option Reserve Total $ $ $ $ Equity as at 1 July ,310,324 (19,321,036) 255,382 4,244,670 Loss for the period - (1,268,272) - (1,268,272) Other comprehensive income/(loss) Total comprehensive loss for the - period - (1,268,272) (1,268,272) Issue of ESOP options ,000 10,000 Issue of ordinary shares 240, ,491 Transfer of expired options 75,264 (75,264) - Transactions with owners 240,491 75,264 (65,264) 250,491 Equity as at 31 December ,550,815 (20,514,044) 190,118 3,226,889 Equity as at 1 July ,543,716 (17,604,687) 794,205 5,733,234 Loss for the period - (969,676) - (969,676) Other comprehensive income/(loss) Total comprehensive loss for the period - (969,676) - (969,676) Issue of ESOP options - - 7,694 7,694 Issue of ordinary shares 766, ,585 Transactions with owners 766,585-7, ,279 Equity as at 31 December ,310,301 (18,574,363) 801,899 5,537,837 This statement is to be read in conjunction with the accompanying notes to the financial statements. 12

15 CONDENSED CASH FLOW STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2013 Half-year ended 31 December 2013 Half-year ended 31 December 2012 Cash flows from operating activities $ $ Receipts from customers 73,744 39,009 R&D tax concession received - 342,452 Payments to suppliers and employees (794,734) (1,074,866) Net GST recovered from ATO (217) 97,715 Interest paid - - Net cash used in operating activities (721,207) (595,690) Cash flows from investing activities Payments for purchases of intangibles (83,553) (86,851) Payments for purchase of plant and equipment - (182,480) Interest received ,936 (82,700) Net cash used in investing activities (257,395) Cash flows from financing activities Proceeds from issue of shares and options 129, ,685 Proceeds from issue of convertible notes 655,747 - Payments for share and convertible note issue costs (38,456) (6,100) Payments of insurance premium funding facility - (52,013) Net cash from financing activities 746, ,572 Net increase/(decrease) in cash and cash equivalents (57,363) (204,513) Cash and cash equivalents at the beginning of period 128,326 1,338,766 Cash and cash equivalents at the end of period 70,963 1,134,253 This statement is to be read in conjunction with the accompanying notes to the financial statements. 13

16 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Statement of compliance The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. The halfyear financial report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the most recent annual financial report. (b) Basis of preparation The condensed financial statements have been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets. The same accounting policies and methods of computation are followed in the half-year financial report as compared with the Company s most recent annual financial report, for the financial year ended 30 June New and revised accounting standards applicable for the first time to the current half-year reporting period The Company has adopted all of the new and revised Accounting Standards and interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for the current reporting period, including: AASB Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Income which requires entities to group items presented in Other Comprehensive Income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently, and changes the title of statement of comprehensive income to statement of profit or loss and other comprehensive income. The adoption of the new and revised Australian Accounting Standards and Interpretations has had no significant impact on the Company s accounting policies or the amounts reported during the current halfyear. The adoption of AASB has resulted in changes to the Company s presentation of its half-year financial statements. 2. GOING CONCERN The financial report has been prepared on a going concern basis. This contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business even though the Company has experienced operating losses of $1,268,272 during the half year ended 31 December Cash reserves were $70,963 at 31 December 2013, however an R&D tax credit of $451,566 was received in January The Directors are of the opinion that the existing cash reserves, further revenues and, if required, additional capital to be raised within the next 12 months will provide the Company with adequate funds to ensure its continued viability and operate as a going concern. The Genera Board continues to believe that the opportunities for the Company are substantial. Specifically, the Board considers the Ampasand platform technology and associated product suite to have significant commercial potential with a robust intellectual property position encompassing a range of granted patents both in the US and other jurisdictions. The Board is committed to the process of crystallising value for 14

17 shareholders through an appropriately structured commercialisation process that may in due course lead to a monetisation event. The Board is confident, given current circumstances, that existing cash reserves will provide Genera adequate time to undertake the formal commercialization process and also to raise further capital to enable the Company to conclude a significant commercial agreement or achieve a monetisation event. The Company continues to closely monitor expenditure, and the Board is confident that it will be able to manage its cash resources appropriately without negatively impacting upon planned activities. In light of the matters referred to above, the Directors are of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recognised in the financial report as at 31 December Accordingly, no adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying amounts and classification of liabilities that might be necessary should the Company not continue as a going concern. 3. SEGMENT INFORMATION Genera Biosystems Limited operates in one business and geographical segment being the development and commercialisation of a portfolio of molecular diagnostic test technologies in Australia. 4. MOVEMENTS OF EQUITY SECURITIES The following movements of equity securities occurred during the half-year: (a) Ordinary fully paid shares 31 December December 2012 Number $ Number $ Movement in ordinary shares Balance on issue at 1 July 83,090,708 23,310,324 75,321,663 22,543,716 Issue of ordinary shares - July ,000 28,500 Issue of ordinary shares - December - - 7,619, , Issues of ordinary shares - July ,230, , Issues of ordinary shares - December ,292, , Issues - totals 2,523, ,389 7,769, ,585 Capital raising costs for above items - (11,898) - - Balance on issue as at period end 85,613,945 23,550,815 83,090,708 23,310,301 15

18 4. MOVEMENTS OF EQUITY SECURITIES (cont d) (b) Share options 31 December December 2012 Number WAEP $ Number WAEP $ Movement in share options Balance on issue at 1 July 2,098, ,034, Granted during half-year: investor options Granted during half-year: ESOP 6,850, , options Exercised/expired during half-year (563,108) Balance on issue as at period end 8,385, ,244, CONVERTIBLE NOTES During the half year ended 31 December 2013, the Company raised $655,747 through the issue of 6,558 unlisted convertible notes with a face value of $100 per note. The notes have a maturity date of 30 June 2015, and accrue interest at a rate of 40% per annum. The proceeds will be used to fund the Company s working capital requirements and related activities. 6. CONTINGENCIES AND COMMITMENTS Directors fees contingent payments. For the period 30 June 2011 to 15 August 2013, certain directors of the Company agreed to forgo part of their fees until such time as the Company achieves a monetisation event, being a commercial agreement with a third party that delivers material revenue to Company, including, but not limited to, a licensing or sales agreement relating to the Company s products. The total amount of directors fees forgone as at 31 December 2013 was $437,500 (2012: $387,000). This amount has not been provided for in the Company s accounts as at 31 December 2013 as it will become payable only in the event that a monetisation event occurs. 7. SUBSEQUENT EVENTS An R&D tax credit of $451,566 was received during January There were no other material events arising subsequent to the end of the half year that have not been reflected in the financial statements for that half-year. 16