Anteris Technologies Global Corp. - Interim / Quarterly Report 2017

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28.02.18 ASX

ANNOUNCEMENT

ASX Market Announcements Australian Securities Exchange Limited 10[th] Floor, 20 Bond Street SYDNEY NSW 2000

Admedus Limited (ASX:AHZ)

ADMEDUS FINANCIAL RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2017

On 11 December 2017 the Company announced a change to its financial year-end from 30 June to 31 December. This change more closely aligns the Company’s reporting period with its global business sales cycles, assisting with forecasting, cash flow management and investment decisions. The Company is therefore reporting on a six-month accounting period from 1 July 2017 to 31 December 2017. For the Financial Report the comparative accounting period will be for 12 months from 1 July 2016 to 30 June 2017.

HIGHLIGHTS OF THE SIX MONTH REPORTING PERIOD INCLUDE:

Record sales of ADAPT® driven by expansion of product range and targeted sales strategy
Infusion business grew driven by higher demand from the new Royal Adelaide Hospital which opened in September 2017.
Regulatory approval to launch CardioCel® in the Republic of India granted, launched January 2018
Submission of two IP applications for TAVR device, potential market of US$3.5 billion
ADAPT® sales gaining further momentum in North America, Europe and Emerging Markets with new sales representatives introduced in 2018
CardioCel® 3D user evaluation completed and product launch in North America in February 2018

During the period, the Company continued its focus on executing initiatives to drive revenue growth, improve margins, reduce costs and improve operating cash flows. The Company achieved solid revenue growth, launched breakthrough and innovative development projects and expanded in new and emerging markets during the period.

ADAPT®, the Company’s leading bio-scaffold tissue business, achieved strong revenues of $3.8 million for the six months primarily driven by increasing sales in the Europe and the Emerging Market regions and expansion of the product range. North American ADAPT® sales were temporarily impacted by a restructure and rejuvenation of the field force which was largely complete by year end.

Revenue in the Australia and New Zealand infusion business was $7.5 million for the six month shortened year, driven by a combination of strong underlying consumables sales across the

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infusion product portfolio and the commencement of operations at the new Royal Adelaide Hospital (nRAH). Excluding the one-off capital sales at nRAH in the previous six month corresponding period, the underlying Infusion revenues grew by 41%.

Gross profit for the period was $6.7 million, representing a gross profit margin of approximately 59%, a significant improvement from 48% in the 12 months to 30 June 2017, reflecting the growth platform of the business. The Company invested in extensive training material and resources for the ADAPT business line introducing digital sales and marketing tools to support the team and facilitate market penetration. Operating costs increased to $14.2 million for the period primarily driven by higher employee costs associated with revenue growth, employees achieving their incentive targets and one-off costs associated with further restructuring of the business during the period.

Operating cash out flows for the period were $6.6 million reflecting increased net operating costs, without the offsetting benefit of the refundable Research and Development cash tax offset.

In October 2017, the Company entered into a financing facility with Partners For Growth (PFG) and fully drew down the $5 million term loan during the period. The Company received a waiver from PFG on a 31 December 2017 financial covenant and restructured the financial covenants under the loan agreement to better align with its 2018 budget targets.

The closing cash for the period was $8.3 million, including $5 million from the PFG term loan, down from $11.3 million at 30 June 2017.

In 2018 the Company is committed to the growth of its CardioCel® product portfolio, expansion of ADAPT® into additional markets such as Australia, Mexico and Turkey and securing a commercial partner to advance the development of our TAVR device. The Company will continue to focus on improvement initiatives in its manufacturing operation to improve efficiency, reduce costs and maximise margins and yields.

Wayne Paterson, CEO said

“2017 was a year of execution, we delivered on several key initiatives and invested in the longterm sustainability of our business. In what is a transformational step for the business, we lodged two IP applications for our revolutionary TAVR technology, expanded the ADAPT portfolio and established 2 permanent expert advisory boards (CHD and TAVR).”

“The ADAPT ® product portfolio has gained significant momentum, aided by a revitalized sales force and entry into new markets. Following the year end, we launched CardioCel ® in India and Cardiocel ® 3D in North America and expanded the sales force in North America, reinforcing the investment proposition. The team enters 2018 with a sense of purpose, strategic direction and intense enthusiasm for what will be a pivotal year in our company’s history. Patients and stakeholders alike will benefit in 2018 from the efforts in 2017 as they continue to add significant value to our company.”

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About Admedus Limited

Admedus (ASX:AHZ) is a medical technologies company delivering clinically superior solutions that help healthcare professionals create life-changing outcomes for patients. Our focus is on investing in and developing next generation technologies with world class partners, acquiring strategic assets to grow product and service offerings and expanding revenues from our existing medical sales and distribution business. The company has assets from research & development through clinical development as well as sales, marketing and distribution.

Website: www.admedus.com Facebook: www.facebook.com/Admedus Twitter: @Admedus

For more information, please contact:

Admedus Limited Barbara Ferres +61 7 3152 3216 [email protected]

Admedus Limited

ABN 35 088 221 078

Registered Office 26 Harris Road Malaga, Western Australia 6090

Customer Service T 1300 550 310 F 1300 880 398

International T: +61 8 9266 0100 F: +61 8 9266 0199

E: [email protected] W: www.admedus.com

Brisbane • Minneapolis Zurich • Singapore

Appendix 4E (Rule 4.3a)

Preliminary Final Report

Name of entity

Admedus Limited

ABN 35 088 221 078	Financial year ended (“current period”)
35 088 221 078	31 December 2017

RESULTS FOR ANNOUNCEMENT TO THE MARKET

(Comparisons to the prior corresponding period refer to the 6 months ended 31 December 2016)

$A’000’s

*RESULTS FOR ANNOUNCEMENT TO THE MARKET* *(Comparisons to the prior corresponding period refer to the 6 months ended 31 December 2016)* *$A’000’s*	*RESULTS FOR ANNOUNCEMENT TO THE MARKET* *(Comparisons to the prior corresponding period refer to the 6 months ended 31 December 2016)* *$A’000’s*	*RESULTS FOR ANNOUNCEMENT TO THE MARKET* *(Comparisons to the prior corresponding period refer to the 6 months ended 31 December 2016)* *$A’000’s*

Revenues from ordinary activities Loss from ordinary activities after tax Loss for the period attributable to members	Down 8% Up 29% Up 35%	to (11,305) to (8,829) to (8,632)
Dividends	Amount per security	Franked amount per security
Final dividend proposed	NIL ¢	NIL ¢
Interim dividend	NIL¢	NIL¢
	31 December 2017	30 June 2017
Net Tangible Asset Backing	3.5 cents	7.0 cents

The company recently announced a change in its financial year-end from 30 June to 31 December. This change more closely aligns Admedus’ reporting period with its global business sales cycles, assisting with forecasting, cash flow management and investment decisions. The Company is therefore reporting on a six-month accounting period from 1 July 2017 to 31 December 2017. The comparative accounting period in the attached Financial Report will be for the 12 months from 1 July 2016 to 30 June 2017.

Annual General Meeting

The Annual General Meeting will be held in Brisbane on the 24 May 2018.

Audit

The financial statements on which this report is based have been audited.

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ADMEDUS LIMITED ABN 35 088 221 078

FINANCIAL REPORT FOR THE PERIOD ENDED 31 DECEMBER 2017

CORPORATE DIRECTORY

Directors

John Seaberg Wayne Paterson Simon Buckingham Mathew Ratty

Chairman - CEO and Managing Director - Non-Executive Director - Non-Executive Director

Company Secretary

Tanya Mangold (Appointed 27 February 2018) Maja McGuire (Resigned 27 February 2018)

Company and Registered Office

Level 9, 301 Coronation Drive Milton, Queensland 4064 Telephone: +61 1300 550 310 Facsimile: +61 1300 880 398 Website: www.admedus.com Email: [email protected]

Auditors

HLB Mann Judd Level 4, 130 Stirling Street Perth, Western Australia 6000

Solicitors

DLA Piper Australia Level 31, 152-158 St Georges Terrace Perth, Western Australia 6000

Bankers

ANZ 77 St Georges Terrace Perth, Western Australia 6000

Share Registry

Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace Perth, Western Australia 6000

T: 1300 850 505 (within Australia T: +61 3 9415 4000 (outside Australia) F: +61 3 9473 2500

Securities Exchange Listing

ASX code: AHZ (ordinary shares)

Directors’ Report	1
Auditor’s Independence Declaration	19
Consolidated Statement of Profit or Loss	21
Consolidated Statement of Other Comprehensive Income	22
Consolidated Statement of Financial Position	23
Consolidated Statement of Changes in Equity	24
Consolidated Statement of Cash Flows	25
Notes to the Consolidated Financial Statements	26
Directors’ Declaration	60
Independent Auditor’s Report	61

DIRECTORS’ REPORT

Your Directors present their report on Admedus Limited (“the Company”) and the consolidated entity (referred to hereafter as the Group) for the period ended 31 December 2017.

The company recently announced a change in its financial year end from 30 June to 31 December. This change more closely aligns Admedus’ reporting period with its global business sales cycles, assisting with forecasting, cash flow management and investment decisions. The Company is therefore reporting on a six-month accounting period from 1 July 2017 to 31 December 2017. The comparative accounting period in this report will be for the 12 months from 1 July 2016 to 30 June 2017, in line with the previous released financial report.

DIRECTORS

The Directors of the Company in office during the period ended 31 December 2017 and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

John Seaberg
Wayne Paterson
Simon Buckingham
Mathew Ratty

PRINCIPAL ACTIVITIES

During the period, the principal activities of the Group consisted of:

The securing of a debt facility of up to $10 million with Partners for Growth (PFG).
Record sales for ADAPT with the introduction of new sales representatives, strategy and key emerging markets.
The growth of the Infusion business into a consistent monthly revenue stream with the new Royal Adelaide Hospital (nRAH) generating significant revenue during the year.
Submission of two separate IP applications for an Admedus-developed TAVR device signalling our entry to a potential market of US$3.5 billion.
Regulatory approval to launch CardioCel® in the Republic of India, with official product launch in India on 30 January 2018.
Establishment of the permanent TAVR Advisory Board with participants from leading US paediatric health centres.
Launch of CardioCel® NEO in Europe.
Product registration for CardioCel® granted in Jordan.
An exclusive agreement with 4C Medical to supply ADAPT treated tissue for use in their TMVR device.
Completion of the CardioCel® 3D user-evaluation and expanded access program ahead of North American launch on 1 February 2018.
Refreshed corporate brand and patient-centric marketing strategy.

OPERATING RESULT

The operating result for the period:

Loss before Income Tax Income Tax (Expense)/Benefit Loss for the Year	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
	(8,828,576) (12,676,211)
	- -
	(8,828,576) (12,676,211)

DIVIDENDS

No dividend was paid during the period and the Board has not recommended the payment of a dividend.

SHARE CAPITAL

254,795,534 ordinary shares, 10,165,007 unlisted options and 10,568,799 unlisted warrants were on issue as at 31 December 2017.

DIRECTORS’ REPORT (continued)

OPERATING AND FINANCIAL REVIEW

Group Overview

Admedus Limited is a global medical technologies company delivering clinically superior solutions that help healthcare professionals create life-changing outcomes for patients. Our focus is on investing in and developing next generation technologies with world class partners, acquiring strategic assets to grow product and service offerings and expanding revenues for our existing, successful medical sales and distribution business. The Company has assets from research and development through clinical development as well as sales, marketing and distribution.

During the reporting period, the Company has continued to build its sales and marketing function across both the ADAPT® regenerative tissue franchise and the infusion business and its, while transitioning into a cost-effective business with a target of becoming a sustainable business with growing profits and returns for shareholders.

Review of Operations

The loss for the consolidated entity after providing for income tax for the 6 month shortened year was $8.8M (2017: $12.7M for 12 months). The current period loss included a number of non-recurring employee expenses ($1.1M), while the comparative period loss included $4.3M of revenue from capital sales related to implementing the new Royal Adelaide Hospital contract; excluding these sales the comparative loss would have been $17.0M against a normalised loss of $7.7M for the current period. Revenues from ordinary activities were $11.3M and net operating cash outflows were $6.6M. Key factors contributing to the current period’s performance are discussed below.

During the period the Company continued its focus on executing initiatives resulting from its strategic review to drive revenue growth, improve margins, reduce costs and improve operating cash flows as it works towards resetting the business on a more sustainable path towards profitability and positive operating cash flows.

The Group achieved solid revenue growth, launched breakthrough and innovative development projects and expanded in new and emerging markets during the period. ADAPT®, our leading bio-scaffold tissue business, achieved revenues of $3.8M for the period this was driven by increasing sales in the Europe and the Emerging Markets regions, with North American sales temporarily impacted by vacancies in the Company’s field force. These vacancies have been largely filled subsequent to the end of the period. ADAPT growth was also driven by the roll out its expanding product range including CardioCel® Neo, VascuCel® and CardioCel® 3D. Following completion of a comprehensive re-evaluation program, CardioCel® 3D was launched for sale in North America from February 2018. The Infusion business in Australia and New Zealand delivered revenues of $7.5M driven by a combination of strong underlying consumables sales across the infusion product portfolio and the commencement of operations at the new Royal Adelaide Hospital (nRAH). December 2017 was the fifth consecutive month of infusion sales exceeding a million dollars, including achieving a record number of ambIT pump sales.

Operating costs increased to $14.2M for the period (2017: $23.4M) primarily driven by higher employee costs associated with revenue growth and a number of one-off expenses related to restructuring the company.

In October 2017 the Group entered into an agreement with Partners for Growth (“PFG”) for a secured debt facility of up to $10M. The facility consists of a $5M revolving line of credit and a term loan of $5M. The $5M term loan was drawn down upon execution and the Group has incurred interest expenses associated with the loan. In conjunction with receiving the loan facility from PFG, Admedus agreed to issue PFG a 7-year warrant for the issue of 4,938,799 ordinary shares in the Company at an exercise price of AUD$0.25 per share. The components of the warrant were valued at the time of issue and will continue to be revalued at each balance date. The Company recognised a $0.2M fair value loss on the warrant during the period.

Financial Position

The closing cash position for the period was $8.3M , including $5M from the PFG term loan, down from $11.3M at 30 June 2017.

New working capital decreased by $10.1M during the year largely driven by the new PFG financing facility and warrant put in place during the period ($5.0M), provision for annual employee bonuses ($1.7M) and an increasing investment associated with the fiveyear NRAH that had been foreshadowed by the Company.

The PFG secured debt facility of up to $10.0M, secured established the period, has provided a non-dilutive debt financing facility to fund key operational and strategic projects focused on improving efficiency and expansion.

The PFG facility contained a number of quarterly financial covenants. For the December 2017 quarter, the Group breached the EBITDA covenant in relation to the PFG loan. At 31 December 2017, as a result of the breach, the loan became payable on demand and consequently is disclosed as a Current Financial Liability. On 28[th] February 2018, PFG waived the loan breach and renegotiated the loan covenants for the 2018 calendar year. If this waiver had been in place at 31 December 2017, $3.5M of the loan, classified as a Current Financial Liability, would have been disclosed as Non-Current Liabilities, increasing the value of working capital by $3.5M to $10.3M, with a corresponding decrease in Current Financial Liabilities.

DIRECTORS’ REPORT (continued)

OPERATING AND FINANCIAL REVIEW (continued)

Cash Flow

The net cash outflow during the period was $3.0M. Operating cash out flows were $6.6M reflecting increased net operating costs without the offsetting benefit of the 43.5% refundable Research and Development (“R&D”) cash tax offset. The Australian tax group has now exceeded the $20M aggregate turnover threshold and consequently the R&D benefit will be in the nature of a 38.5% nonrefundable tax offset rather than a 43.5% refundable offset (cash refund).

As noted above, the Group entered into a financing facility with PFG and fully drew down the $5M term loan during the period. The Group incurred an expense of $0.5M in relation to establishing the new facility.

During the period the Group invested in sales and marketing tools for its field force teams as well as commenced a minor upgrade to its ERP system.

Material Business Risks

The Group has identified the below specific risks which could impact upon its prospects.

Commercial risk

As with all businesses there is always a commercial risk that not all customers will use your product, or that competing products are used in preference to the Company’s product and therefore 100% market penetration is uncommon. With ADAPT® now on the market in the US, Europe, Canada, India, Hong Kong, Malaysia, New Zealand, the Middle East and Singapore, the Company continues to progress its global coverage for the product and build market penetration and product awareness. During the year the Company has continued to build on improving marketing messaging, sales force optimisation and bring new ADAPT® products to market with a focus to build market penetration and market expansion, resulting in a reduced commercial risk.

Admedus has numerous ongoing R&D and product development programs in both its bio-scaffold and therapeutic immunotherapies areas to further develop the technologies. The development of additional bio-scaffold products such as CardioCel® Neo, VascuCel® and CardioCel® 3D reinforces the quality of the ADAPT® platform technology, as well as reducing the commercial risk by having an increased number of products on the market.

The Group currently maintains a range of patents across the various technologies and continues to monitor these patents, as well as explore new patents based on the R&D currently being undertaken by the Company.

Clinical trial risk

The development of innovative products in the biomedical and healthcare industries will always have an element of risk associated with it. Admedus is working with Professor Ian Frazer and his team to develop therapeutic vaccines with one programme having completed two clinical studies, and the second programme scheduled to enter clinical studies in the coming financial year. In addition, Admedus continues to develop products from its ADAPT® platform technology, albeit de-risked, because of the lead product ADAPT® being on market and actively used in patients. Because of these ongoing activities there is an inherent risk associated with clinical studies and R&D and it is subject to many factors beyond the Company’s control. The Company continuously monitors the progress of these studies and aims to manage these risks.

Competition

Admedus actively monitors its markets and the activities of potential competing products. As a Company, we feel it is highly likely that other companies and organisations may be trying to develop competing products. Admedus believes that its platform technologies and products have clear advantages over other technologies and products and continues to undertake R&D to further illustrate and explore these advantages and benefits.

Regardless of the diligent activities of the Admedus team, there is no assurance that the Group’s competitors will not succeed in developing technologies that compete with the Admedus technologies.

Despite the existence of a general statutory framework in Australia and international conventions which are intended to protect against certain anti-competitive practices, there can be no assurance that the applicable laws will be enforced sufficiently to protect the Group from anti-competitive practices by its competitors or that major competitors will not use their strategic positions to gain a competitive advantage in some future period, whether by means of price reductions or by other means.

Financial performance

To date Admedus has not declared a dividend. The amount, timing and payment of any dividend will depend on a range of factors, including future capital and R&D activities and associated capital requirements and the financial position generally of the Group at the time. There will also be factors that affect the ability of the Group to pay dividends and the timing of those dividends that will be outside the control of the Group and its Directors. The Directors are, therefore, unable to give any assurance regarding the payment of dividends in the future.

Intellectual property

The Group’s success will depend, in part, on its ability to obtain adequate and valid patent protection, maintain trade secret protection and operate without infringing the proprietary rights of third parties or having third parties circumvent the Group’s rights. Admedus prepares files and maintains patents in countries relevant to the use and manufacturing of products using our technologies.

DIRECTORS’ REPORT (continued)

OPERATING AND FINANCIAL REVIEW (continued)

Material Business Risks (continued)

While the Group believes, it has taken appropriate steps to protect its proprietary technology, the law may not adequately protect it in all places the Group does business or enable the Group’s rights to be enforced with sufficient adequacy.

The enforceability of a patent is dependent on several factors which may vary between jurisdictions, including the validity of the patent and the scope of protection it provides. The validity of a patent depends upon factors such as the novelty of the invention, the requirement in many jurisdictions that the invention not be obvious considering the prior art (including any prior use or documentary disclosure of the invention), the utility of the invention and the extent to which the patent specification clearly discloses the best method of working or carrying out the invention. The legal interpretation of these requirements often varies between jurisdictions. The scope of rights provided by a patent can also differ between jurisdictions. There can be no assurance even if the Group succeeded or succeeds in obtaining the grant of patents, that others will not seek to imitate the Group’s products, and in doing so, attempt to design their products in such a way as to circumvent the Group patent rights. Additionally, the ability of the legal process to provide efficient and effective procedures for dealing with actual or suspected infringements can vary considerably between jurisdictions.

Regarding the Group’s patent applications, no guarantee can be given that such protection will be obtained by the Group. If such patents are not granted, it may be possible for a third party to imitate and use the Group’s intellectual property without its authorisation or to develop and use similar technology independently. The Group will pursue vigorously both its existing and all future patent applications for Australian and foreign patent applications. No guarantee can be given nor does the grant of a patent guarantee that the patent concerned is valid, or that the patented technology does not infringe the rights of others.

The Group may wish to expand into additional foreign countries in the future and the laws of many foreign countries treat the protection of proprietary rights differently from the laws in Australia. Those laws may not protect the Group’s proprietary rights to the same extent as do laws in Australia.

Staff

Admedus’ success is dependent on the skills and abilities of its employees. To encourage a motivated, engaged and expert workforce, he Company strives to create a positive culture underpinned by its AORTIC values and alignment to strategic objectives. Competition for skilled employees can be intense and there can be no assurance that the Group will be able to retain its key managerial, R&D, and technical employees or that it will be able to attract and retain additional highly qualified personnel in the future. The inability to attract and retain the necessary personnel could have a material and adverse effect upon the Group’s business, results of operations and financial condition. To mitigate this risk, Admedus provides incentive and engagement opportunities as appropriate.

Likely Developments

Outlook

During 2017 the Company continued its evolution with the delivery of several key initiatives and increased investment in long-term strategic projects. We look forward to leveraging these developments and building on the momentum that’s currently driving us forward as a bankable, sustainable business.

In 2018 we are committed to:

Significant growth of the CardioCel® product portfolio with reinvigorated sales teams and new opportunities in the US, EU and emerging markets.
Establishment of permanent CardioCel 3D Advisory Board to progress our shaped tissue franchise.
Securing a commercial partner to advance the development of our TAVR device.
Expansion of ADAPT® into emerging markets such as Australia, Mexico and Turkey.
Investing in continuous improvement initiatives in our manufacturing operation to improve efficiency, reduce costs and maximise margins and yields.
Ensuring a financially strong and stable business through detailed planning, responsible management and transparency of strategy and outcomes.
Continued growth and expansion of the Infusion business, including research and development.
Establishing a clear path for the immunotherapies group.

Business Strategies

The Group’s business strategies to achieve the above goals include:

Actively seeking co-development partners for TAVR device, ideally with global cardiac device companies and is in discussions with potential partners.
Technology enablement programs to enable and equip the sales teams and management with timely, accurate and insightful information.
The launch of ADAPT® into India in January 2018.

DIRECTORS’ REPORT (continued)

OPERATING AND FINANCIAL REVIEW (continued)

Likely Developments (continued)

ADAPT® sales budgeted to double with product expansion and new/expanded sales force put in place in US and EU and a more focused and strategic sales methodology applied.
Infusion business restructured to focus on capturing new large accounts, increasing its brand presence, and the potential for developing proprietary products that could expand our footprint beyond current geographic territories.
Continue to develop the patient-centric narrative around the ADAPT® message and its advantages for patients and surgeons.
Grow ADAPT® market penetration and sales through a refined product range targeting separate segments of the cardiovascular market.
Apply a disciplined and conservative approach to expenditure relative to sales growth.
Continued product expansion with focus on products with near term revenue potential to contribute to sales growth.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

In the opinion of the Directors, there were no significant changes in the state of affairs of the Group that occurred during the financial period not otherwise disclosed in this report and the Financial Statements.

EVENTS SINCE THE END OF THE FINANCIAL PERIOD

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

ENVIRONMENTAL REGULATIONS

The Company is subject to environmental regulation and other licences due to its research, development and manufacturing. The Company complies with all relevant Federal, State and Local environmental regulations. The Board is not aware of any breach of applicable environmental regulations by the Company.

GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS

The Group have reviewed the reporting requirements of both the Energy Efficiency Opportunities Act 2006 and the National Greenhouse and Energy Reporting Act 2007 and the Group is not currently subject to any reporting obligations .

DIRECTORS’ REPORT (continued)

INFORMATION ON DIRECTORS

The name of the Directors holding office during the period ended 31 December 2017 are set out below, together with details of Directors’ experience, qualifications, special responsibilities and other listed company directorships during the past three financial years.

Mr Wayne Paterson

Mr Paterson has been a Director of Admedus since 10 October 2014. He was subsequently appointed as Chair on 9 February 2016. Mr Paterson subsequently accepted the position of Chair and Interim CEO on 23 May 2016. On 15 March 2017, Mr Paterson was appointed as the Company’s Chief Executive Officer and stepped down as Chair.

Experience: Mr Paterson has held numerous senior positions in multi-national pharmaceutical companies and has lived in seven countries during the past 25 years. Throughout his career, he has been responsible for building and managing multi-billion dollar businesses throughout the world, including; mergers, integrations, acquisitions and major restructures as President and CEO.

From 2005 to 2013 Mr Paterson held senior positions at Merck Kgaa, most recently as President of Europe, Canada and Australia. Prior to this, Mr Paterson was

President of Emerging Markets, President of Japan and Global Head of Cardiovascular medicine.

Between 1999 and 2005, Mr Paterson served at Roche Pharmaceuticals where he was most recently Head of Pharmaceuticals in Roche’s South Korean operation. He also served as Head of Commercial Operations for Roche China based in Shanghai.

Qualifications: MBA, University of Southern Queensland and Business Studies from the Queensland University of Technology.

Other directorships: Cepheid Inc (NASDAQ:CHPD) from April 2015 to November 2016.

Mr Paterson is an Australian national and resides in Minneapolis, Minnesota, United States of America.

Mr John Seaberg

Mr Seaberg has been an independent Non-Executive Director of Admedus since 10 October 2014. He was appointed as Deputy Chair on 16 June 2016 and Chair on 14 March 2017.

Mr Seaberg is a member of the Remuneration Committee and the Audit and Risk Management Committee.

Experience: Mr Seaberg has significant experience in cardiovascular products and markets.

the Mayo Clinic for the repair of the mitral valve via minimally invasive techniques.

From 1996 to 2006, Mr Seaberg served at Guidant Corp (subsequently acquired by Boston Scientific Corp) where he served in various executive level positions including Director of Bradycardia Marketing for Cardiac Rhythm Management, Vice President of Sales for Cardiac Surgery and Vice President of Sales for Cardiac Rhythm Management.

From 2008 until its sale to Baxter in 2012, Mr Seaberg served as Chairman of the Board of Synovis Inc (NASDAQ:SYNO), a Minneapolis based manufacturer of various medical devices and bio scaffold tissue products.

From 2007 until 2014 he was Founder, Chairman and CEO of NeoChord Inc., a venture capital-backed company commercialising technology developed at

In 1991, Mr Seaberg was co-founder of ACIST Medical and served as its first President and CEO.

Qualifications: MBA, University of Minnesota and BA, University of Minnesota.

Other directorships: N/A.

Mr Seaberg is a resident of Minneapolis, Minnesota, United States of America.

Mr Mathew Ratty

Mr Ratty has been an independent Non-Executive Director of Admedus since 27 May 2016.

Mr Ratty is Chair of the Audit and Risk Management Committee and a member of the Remuneration Committee.

Experience: Mr Ratty is the Co-founder and Head of Investment at MC Management Group Pty Ltd, a globally focused venture fund. He has extensive capital, equity and debt markets experience and holds the role as Head of Investment at MC Management Group.

Prior to MC Management Group Pty Ltd, Mr Ratty worked at Gladstone Bridge Pty Ltd where

he worked as an analyst and was offered a Directorship at Gladstone Bridge Pty Ltd following his success at the company.

Mr Ratty has experience in both domestic and international capital markets as well as investment and funding feasibility analysis.

Qualifications: B-Comm and BCom (Hons), Curtin University, Western Australia.

Other directorships: Tech Mpire Limited (ASX:TPM) since February 2017.

Mr Ratty is a resident of Perth, Western Australia, Australia.

DIRECTORS’ REPORT (continued)

INFORMATION ON DIRECTORS (continued)

Dr Simon Buckingham

Dr Buckingham has been an independent Non-Executive Director of Admedus since 17 February 2017.

Dr Buckingham is Chair of the Remuneration Committee and a member of the Audit and Risk Management Committee.

Experience: Dr Buckingham has over 25 years of experience in the global pharmaceutical industry across a range of functions and variety of therapeutic areas.

Dr Buckingham is currently a Non-Executive Director of several companies and serves as a Senior Advisor to a new Swiss biotech company Idorsia Ltd. He was President, Global Corporate and Business Development at Actelion from 2005-2011 and President, North America and AsiaPacific at Actelion from 2000-2005.

He was the Founding President of Actelion Pharmaceuticals US Ltd (2000 - 2004).

From 1998 to 2000 he worked in sales and marketing for Parke-Davis (now part of Pfizer) in the United States.

Prior to Parke-Davis, Dr Buckingham served at Roche in Switzerland and Australia.

Qualifications: BVSc (Hons), University of Sydney; PhD, University of Melbourne; Graduate from the Australian Graduate School of Management (University of New South Wales) and the Australian Institute of Company Directors.

Other directorships: Pharmaxis Ltd (ASX:PXS) since July 2012; Creso Pharma Ltd (ASX:CPH) from October 2016 to May 2017.

Dr Buckingham is a resident of Sydney, New South Wales, Australia.

COMPANY SECRETARY

Ms Tanya Mangold was appointed as Company Secretary on 27 February 2017, replacing Mrs Maja McGuire who resigned on 27 February 2017. Ms Mangold combines her company secretarial duties with her role as General Counsel and brings to the role approximately twenty years of relevant experience, gained in South Africa and Australia, including working with listed companies as a general counsel, company secretary and in top tier private practice. She holds a BComm, LLB, LLM and postgraduate taxation qualifications and was admitted as a solicitor in Australia in 2008. She is also a member of the Queensland Law Society and Australian Institute of Company Directors.

MEETINGS OF DIRECTORS

The numbers of meetings of the Company’s Board of Directors and of each Board committee held during the six-month period ended 31 December 2017, and the numbers of meetings attended by each Director were:

Directors1	Board of Directors	Audit and Risk Management	Remuneration Committee
		Committee
Mr Wayne Paterson	6/6	n/a	n/a
Mr John Seaberg	6/6	4/4	2/2
Dr Simon Buckingham	5/6	4/4	2/2
Mr Mathew Ratty	6/6	4/4	2/2

1 Excludes circular resolutions.

Where a Director stood down from the Board and/or a committee during the period, excused himself from a meeting due to a conflict or was appointed during the period, only meetings before standing down or after the date of appointment are shown.

The Board meets regularly on an informal basis in addition to the above meetings.

Details of the membership of the committees of the Board are presented in the Corporate Governance Statement.

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (Audited)

The remuneration report is set out under the following main headings:

A Key Management Personnel
B Principles Used to Determine the Nature and Amount of Remuneration
C Remuneration Governance
D Details of Remuneration
E Service Agreements
F Share-based Compensation
G Additional Information
H Additional Disclosures Relating to Key Management Personnel
I Loans to Key Management Personnel

The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001.

A Key Management Personnel

For the purposes of this report personnel deemed Key Management Personnel (KMP) at any time during the six-month period to 31 December 2017 are:

Name	Position
John Seaberg	Chairman and Non-Executive Director
Wayne Paterson	CEO and ManagingDirector
Simon Buckingham	Non-Executive Director
Mathew Ratty	Non-Executive Director
Catherine Costello	Chief Financial Officer - appointed 7 November, 2017
Ben Jensen	Chief Human Resources and Technology Officer – deemed KMP from 1 July2017
David St Dennis	Chief OperatingOfficer - appointed 1 July,2017
Julian Chick	Previous Chief Operating Officer - resigned on 31 July2017
Mark Ziirsen	Previous Chief Financial Officer - resigned on 6 November 2017

B Principles Used to Determine the Nature and Amount of Remuneration

The objective of the Company’s remuneration framework is to ensure reward for performance is competitive and appropriate for the results delivered and set to attract and retain suitably qualified and experienced candidates.

Remuneration levels are competitively set to attract qualified and experienced directors and senior executive officers, in the context of prevailing market conditions.

The Company embodies the following principles in its remuneration framework:

the Board seeks independent advice on remuneration policies and practices including recommendations on remuneration packages and other terms of employment for Directors; and
in determining remuneration, advice is sought from external consultants on current market practices for similar roles, the level of responsibility, performance and potential of the individual and performance of the Group.

In accordance with best practice corporate governance, the structure of Non-Executive and Executive remuneration is separate and distinct. Remuneration Committee responsibilities are carried out by Simon Buckingham, John Seaberg and Mathew Ratty.

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (continued)

Non-Executive Director Remuneration Policy

Fees and payments to the Non-Executive Directors reflect the demands which are made on and the responsibilities of the Directors. The Non-Executive Chairman’s fees are determined based on competitive roles in the external market. The Chairman is not present at any discussions relating to the determination of his own remuneration.

The Non-Executive Directors’ fees and payments are reviewed by the remuneration committee to ensure they were appropriate and in line with the market. The Chairman currently receives a fixed fee for his services as a Director.

The Company’s Non-Executive Directors’ remuneration package contains the following key element:

primary benefits – monthly director’s fees including superannuation in the case of Australian based directors only.
equity – share options under the Admedus Share Option Incentive Plan (as approved by shareholders at the Annual General Meeting on 13 November 2015).
the Admedus Long Term Incentive Plan approved by Shareholders at the AGM on 16 November 2017 has no provision for Non-Executive Directors to participate.

The Non-Executive Directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $700,000 per annum and was approved by shareholders at the 2014 Annual General Meeting.

No retirement benefits are provided other than compulsory superannuation.

Executive Remuneration Policy

The Company’s Executive Director and other Executives remuneration packages contain the following key elements:

primary benefits – Base salary, short term incentives, superannuation or pension contributions and in the case of US based executives a health benefit plan.
equity – share options under the Admedus Share Option Incentive Plan (as approved by shareholders at the Annual General Meeting on 13 November 2015 and the Admedus Long Term Incentive Plan approved by Shareholders at the Annual General Meeting on 16 November 2017).

The combination of these components comprises the Executive Directors’ and Executive’s total remuneration.

External remuneration information provides benchmark information to ensure remuneration is set to reflect the market for a comparable role. Base fees are reviewed annually to ensure the level is competitive with the market. There is no guaranteed salary increase included in any contracts.

There are no performance conditions on options issued to directors and employees under the 2015 Plan.

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (continued)

Executive remuneration mix

The following chart sets out the executives’ target remuneration mix.

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Targeted remuneration mix
CEO
Other Executives
0% 20% 40% 60% 80% 100%
Base pay and Benefits STI LTI
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CONSOLIDATED ENTITY PERFORMANCE AND LINK TO REMUNERATION

Remuneration for individuals is directly linked to performance of the consolidated entity. Incentive payments are dependent on defined corporate and individual key performance indicators being met. Incentive payments are at the discretion of the Remuneration Committee. Refer to section G of the Remuneration Report for details of the last five years’ revenue, earnings and factors that are considered to affect total shareholders return.

The Remuneration Committee believes the continued improved results can be attributed in part to the adoption of performance based compensation and is satisfied that this improvement will continue to increase shareholder wealth if maintained over the coming years.

USE OF REMUNERATION CONSULTANTS

The Company’s objective is to ensure that remuneration policies are fair and competitive and aligned with the long-term interests of the Company. In doing this, during the 2017 financial period through to 30 June 2017 the Remuneration Committee sought advice from AON Hewitt as an independent remuneration consultant to benchmark executive and non-executive director wages and fees at a cost of $6,500 (excluding GST) and other roles wages and fees across different countries at a cost of $15,480 (excluding GST).

There were no remuneration recommendations other than benchmarking data provided by AON Hewitt.

No remuneration advice was sought during the current six-month period to 31 December 2017.

The Remuneration Committee is satisfied that the benchmarking analysis provided by AON Hewitt is free from undue influence. AON Hewitt also confirmed to the Remuneration Committee that the services provided adheres to the Company’s protocol relating to KMP remuneration and had not been subjected to undue influence from the Company’s KMP.

C Remuneration Governance

The Remuneration Committee is a committee of the Board. It is primarily responsible for making recommendations to the Board on:

the over-arching executive remuneration framework;
the operation of the incentive plans which apply to executive directors and other executives, including key performance indicators and performance hurdles;
the remuneration levels of executives; and
non-executive director fees.

The Corporate Governance Statement provides further information on this committee.

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (continued)

D Details of Remuneration

Details of the remuneration of the Directors of the Group is set out below:

1 July 2017 to 31 December 2017	Directors fees $	Short-term benefits Salary $ Bonus7 $ Non-monetary benefits $	Post-employment benefits Share based benefits Super- annuation $ Termination benefits $ Equity shares/options $	Total Percentage remuneration consisting of shares/options for the period $ %	Performance related %
Non-Executive Director1 J. Seaberg S. Buckingham M. Ratty Executive Directors W. Paterson Total directors’ compensation (Group) Key Management Personnel J. Chick2 C. Costello3 B. Jensen4 D. St Denis5 M. Ziirsen6 Total key management personnel compensation (Group) TOTAL	70,000 50,000 50,000 -	- - - - - - - - - 381,960 663,384 12,741	- - 6,672 5,000 - - 5,000 - - - - 6,672	76,672 9% 55,000 - 55,000 - 1,064,757 -	- - - 62%
	170,000	381,960 663,384 12,741	10,000 - 13,344	1,251,429
	- - - - -	27,170 - - 55,201 20,000 - 165,536 103,222 - 231,101 126,781 11,806 124,023 - -	6,286 100,560 402 4,745 - 1,668 14,046 - 2,414 6,400 - 9,019 5,923 177,695 (2,141)	134,418 - 81,614 2% 285,218 1% 385,107 2% 305,500 (1%)	- - 36% 33% -
	-	603,031 250,003 11,806	37,400 278,255 11,362	1,191,857
	170,000	984,991 913,387 24,547	47,400 278,255 24,706	2,443,286 -	-

(1) There are no termination or retirement benefits for Non-Executive Directors (other than statutory superannuation).

(2) J Chick resigned as Chief Operating Officer on 31 July, 2017

(3) C Costello was appointed as Chief Financial Officer on 7 November, 2017

(4) B Jensen, Chief Human Resources and Technology Officer was deemed KMP from 1 July 2017

(5) D St Denis was appointed as Chief Operating Officer on 1 July, 2017

(6) M Ziirsen resigned as Chief Financial Officer on 6 November, 2017

(7) Admedus has adopted a formal STI scheme which allows KMP bonuses for the calendar year to be finalised prior to the signing of the financial statements. The bonus figures disclosed for KMP relates to bonuses accrued for the 6 months to 31 December 2017. Note W Paterson’s bonus also includes a cash payment for the achievement of set targets in the previous year. Moving forward the bonus disclosed in the remuneration report will only relate to amounts accrued for that year as determined under the STI scheme.

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (continued)

D Details of Remuneration (continued)

1 July 2016 to 30 June 2017	Directors fees $	Short-term benefits Consulting fees $ Salary $ Bonus $	Post-employment benefits Super- annuation $ Termination benefits $	Share based benefits Total Percentage remuneration consisting of shares/options for the year Performance related Equity shares/options $ $ % %
Non-Executive Director1 J. Seaberg3 M. Ratty S. Buckingham5 Executive Directors W. Paterson2, 6 & 7 M. Bennet5 Total directors’ compensation (Group) Key Management Personnel M. Ziirsen 4 S. Mann4 & 6 J. Chick6 Total key management personnel compensation (Group) TOTAL	118,624 78,000 36,798 - -	- - - - - - - - - - 730,117 274,233 153,750 - -	- - 10,000 - 3,680 - 7,268 - 15,375 135,300	- 118,624 - - 22,000 110,000 20% - - 40,478 - - - 1,011,618 - 27% 304,425 - 0%
	233,422	153,750 730,117 274,233	36,323 135,300	22,000 1,585,145
	- - -	- 184,134 - - 141,658 26,595 - 237,266 86,390	19,203 - 10,815 67,492 38,654 -	41,818 245,155 17% 0% - 246,560 - 11% - 362,310 - 24%
	-	- 563,058 112,985	68,672 67,492	41,818 854,025
	233,422	153,750 1,293,175 387,218	104,995 202,792	63,818 2,439,170 - -

(1) There are no termination or retirement benefits for Non-Executive Directors (other than statutory superannuation).

(2) W. Paterson was appointed Non-Executive 10 October 2014 and CEO 15 March 2017

(3) J. Seaberg was appointed as Non-Executive Director on 10 October 2014, and appointed as Chairman 14 March 2017

(4) S. Mann resigned 23 November 2016, and M. Ziirsen appointed CFO 7 November 2016

(5) S. Buckingham appointed Non-Executive Director and M. Bennett resigned as Executive Director 17 February 2017.

(6) W Paterson, S. Mann and J. Chick achieved all performance milestones to receive bonuses. No bonuses were forfeited or carried forward.

(7) W Paterson bonus figure includes $235,049 relating to bonuses accrued for the 2017 financial year.

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (continued)

D Details of Remuneration (continued)

Details of short term bonuses achieved or forfeited in the current reporting period are as follows:

	Short term incentive bonus(i)	Short term incentive bonus(i)
	% achieved inyear(ii)	% forfeited inyear(iii)
Director
Wayne Paterson	104.9%	Nil
Executives
Catherine Costello(iv)	n/a	n/a
David St Denis	104.9%	Nil
Ben Jensen	104.9%	Nil

(i) Budgeted revenue and cost targets and EBITDA are the main financial performance targets when setting short-term incentives

(ii) The percent achieved is based on the maximum short-term incentive for each executive and includes stretch targets

(iii) The amounts forfeited are due to the performance of service criteria not being met in relation to the current year

(iv) Catherine Costello’s bonus payment was discretionary in nature. Ms Costello was not entitled to a short-term incentive for the current period as she had not been employed for the minimum period to trigger an entitlement.

E Service Agreements

On appointment, the Non-Executive Director enters into a service agreement with the Company in the form of a letter of appointment. The letter outlines the Board’s policies and terms, including remuneration relevant to the office of director.

The company has also entered into service agreements with other executives as noted below, which contain standard terms and conditions for agreements of this nature, including confidentiality, restraint on competition and intellectual property provisions. These agreements may be terminated by notice by either party, or earlier in the event of certain breaches of the terms and conditions. Specific terms and conditions of the service agreements of the executives at the end of the financial period are summarised below:

Name	Position	Term of agreement	Notice period (by either party)
Wayne Paterson	CEO and Managing Director	3 years expiring 14 March 2020	3 months
Catherine Costello	Chief Financial Officer	n/a	6 months
David St Denis	Chief OperatingOfficer	n/a	12 months
Ben Jensen	Chief Human Resources and TechnologyOfficer	n/a	6 months

These executives will receive a termination entitlement if they are terminated or resign equivalent to their salary over their respective notice period.

Further information relating to the CEO and Managing Director service agreement are set out below.

Appointed CEO and Managing Director from 15 March 2017

Term of agreement – commences on 15 March 2017 for a maximum of three years
Base salary of US$595,000 to be reviewed annually
401k pension employer contribution of 3%
Short term incentive opportunity at target of 60% of base salary. 70% of this target is based on financial performance against budgeted revenue and costs targets and a EBITDA target; with the remainder dependent on the delivery of a strategic plan for the Group and an improved Human Resource capability and culture
Long term incentive opportunity at target of 40% of base salary
Specific strategic deliverable bonus US$250,000 (one off deliverable for calendar year 2017)
Health Insurance

Interim CEO and Managing Director until 15 March 2017

Term of agreement – commenced on 20 May 2016 and shall continue until terminated
Base salary of US$400,000 for the year ended 30 June 2016, to be reviewed annually
Short term incentive opportunity at target of 40% of base salary
Motor vehicle allowance of US$1,000 per month payable under the agreement
Contract may be terminated early by either party with two weeks’ notice

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (continued)

F Share-based Compensation

Options

Set out below are summaries of options granted by Admedus Limited to directors and other key management personnel:

Grant date Expiry date Exercise price $	Balance at start of the period Number Granted during the period Number Commenced as KMP Number Ceased as KMP Number Balance at end of the period Number Fair Value at grant date
18/6/2013 18/6/2018 0.95 21/05/2014 21/05/2019 1.70 30/6/2015 30/6/2020 1.17 10/12/2015 10/12/2020 1.39 23/12/2015 23/12/2020 0.79 18/11/2016 18/11/2021 0.33 22/09/2017 22/09/2022 0.26 17/11/2017 15/12/2022 0.22 Total	400,000 - - (400,000) - 0.33 - - 200,000 - 200,000 0.75 100,000 - 100,000 (100,000) 100,000 0.43 200,000 - - - 200,000 0.52 190,000(1) - - - 190,000 - 200,000 - - (200,000) - 0.21 - 400,000 - - 400,000 0.15 - 200,000 - - 200,000 0.13
	1,090,000 600,000 300,000 (700,000) 1,290,000

(1) M. Ratty received warrants via participation in Placement prior to becoming a Non-Executive Director.

Option holdings

The number of options over ordinary shares in the Company held during the financial period by each director of Admedus Limited, including their personally related parties, and other KMP are set out below:

Option holder Balance at the start of the period	Granted as compensation Commenced as KMP	Net Change/ Cancelled Ceased as KMP Expired/ Exercised Balance at the end of the period	Unvested Vested and exercisable
1 July 2017 - 31 December 2017 Directors of Admedus Limited J. Seaberg 100,000 - - W. Paterson 100,000 - - S. Buckingham - - - M. Ratty 190,000(1) - - Other key management personnel of the group J. Chick 500,000 - - C. Costello - 200,000 - B. Jensen - - 300,000 D. St Denis - 400,000 - M. Ziirsen 200,000 - -		- - - 100,000 - - - 100,000 - - - - - - - 190,000 - (500,000) - n/a - - - 200,000 - - - 300,000 - - - 400,000 - (200,000) - n/a	33,334 66,666 33,334 66,666 - - 190,000 - - 200,000 - 33,334 266,666 400,000 - - -

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (continued)

F Share-based Compensation (continued)

Option holder Balance at the start of the year	Granted as compensation Options beneficially held	Net Change/ Cancelled Expired/ Exercised Ceased as KMP Balance at the end of the year	Unvested Vested and exercisable
1 July 2016 - 30 June 2017 Directors of Admedus Limited J. Seaberg 100,000 - - W. Paterson 100,000 - - M. Bennett 380,000 - - S. Buckingham - - - M. Ratty 190,000(1) - - Other key management personnel of the group J. Chick 955,834 - - S. Mann 427,500 - - M. Ziirsen - 200,000 -		- - - 100,000 - - - 100,000 - (250,000) (130,000) - - - - - - - - 190,000 - (455,834) - 500,000 - (227,500) (200,000) - - - - 200,000	66,667 33,333 66,667 33,333 - - - - 190,000 33,333 466,667 - - 200,000 -

(1) M. Ratty received warrants via participation in Placement prior to becoming a Non-Executive Director.

Fair Value of Options Granted

The assessed fair value at grant date of options granted during the period ended 31 December 2017 was 15.0 cents per option for Tranche E, and 13.0 cents per option for Tranche F. The fair value at grant date is determined using a Black-Scholes option pricing model that considers the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The model inputs for options granted during the period ended 31 December 2017 included:

	Tranche E	Tranche F
Exercise price:	$0.26	$0.22
Grant date:	22-Sep-17	17-Nov-17
Expiry date:	22-Sep-22	15-Dec-22
Share price at grant date:	$0.31	$0.24
Expected price volatility of the	70%	70%
company’s shares:
Risk-free interest rate:	2.39%	2.10%

All Tranches of options are granted for no consideration and vest based on the holder still being employed by Admedus Limited over a three-year period. Vested options are exercisable for a period up to the expiry date.

The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.

G Additional Information

The earnings of the consolidated entity for the five and a half years to 31 December 2017 are summarised below:

	31 DECEMBER	30 JUNE	30 JUNE	30 JUNE	30 JUNE	30 JUNE
	2017	2017	2016	2015	2014	2013
	$	$	$	$	$	$
Sales revenue	11,305,079	22,324,145	14,150,521	10,133,460	7,940,622	7,415,188
EBITDA	(7,717,524)	(10,913,923)	(28,220,840)	(23,120,891)	(8,559,638)	(2,750,544)
EBIT	(8,615,465)	(12,770,865)	(29,764,781)	(24,914,874)	(9,846,302)	(3,023,324)
Profit/(Loss) after tax	(8,828,576)	(12,676,211)	(25,130,409)	(26,799,970)	(9,048,843)	(2,418,497)

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (continued)

G Additional Information (continued)

The factors that are considered to affect total shareholder return (‘TSR’) are summarised below:

	31 DECEMBER	30 JUNE	30 JUNE	30 JUNE	30 JUNE	30 JUNE
	2017	2017	2016	2015	2014	2013
Share price at year/period end ($A)	0.30	0.27	0.33	0.70	1.35	0.49
Total dividends declared (cents	-	-	-	-	-	-
per share)
Basic loss per share	(3.39)	(4.83)	(12.58)	(16.48)	(6.22)	(2.08)
(cents per share)

H Additional Disclosure Relating to Key Management Personnel

Shareholding

The number of shares in the Company held during the six-month period by each director and other KMP of the consolidated entity, including their personally related parties, is set out below. There were no shares granted during the reporting or comparative period as compensation.

Ordinary shareholders Balance at the start of the year/period	Received during the year on exercise of options Other changes during year/period
1 July 2017 - 31 December 2017 Directors of Admedus Limited J. Seaberg 19,036 W. Paterson 50,000 S. Buckingham - M. Ratty 10,434,373 Other key management personnel of the group J. Chick 495,739 C. Costello - B. Jensen D. St Denis - M. Ziirsen -	- - - - - - - - - - - - - - - -
1 July 2016 - 30 June 2017 Directors of Admedus Limited J. Seaberg 19,036 W. Paterson 50,000 M. Bennett 1,257,400 S. Buckingham - M. Ratty 10,088,587 Other key management personnel of the group J. Chick 492,739 S. Mann 12,500 M. Ziirsen -	- - - - - (154,750) - - - 345,786 - 3,000 - - - -

I Loans to Key Management Personnel

No loans have currently been provided to key management personnel.

THIS IS THE END OF THE AUDITED REMUNERATION REPORT

DIRECTORS’ REPORT (continued)

SHARES UNDER OPTION/WARRANT

Unissued ordinary shares of Admedus Limited under option/warrant as at the date of this report are as follows:

Date options granted	Expiry date	Issue price of shares	Number under option	Value of option at grant
		$		date $
18/6/2013	18/6/2018	0.95	1,388,340	0.33
16/12/2013	16/12/2018	2.70	710,000	1.01
28/3/2014	1/2/2019	2.45	200,000	0.90
21/5/2014	21/5/2019	1.70	900,000	0.75
5/11/2014	5/11/2019	2.10	310,000	0.70
30/6/2015	30/6/2020	1.17	1,635,000	0.43
21/7/2015	21/7/2020	1.44	1,030,000	0.41
10/12/2015	10/12/2020	0.83	425,000	0.58
10/12/2015	10/12/2020	1.39	200,000	0.52
18/12/2015	18/12/2020	0.79	5,250,000	-
23/12/2015	23/12/2020	0.79	380,000	-
24/6/2016	24/6/2021	0.30	150,000	0.16
15/09/2016	15/09/2021	0.33	450,000	0.19
15/09/2016	15/09/2021	0.33	50,000	0.19
18/11/2016	18/11/2021	0.33	66,667	0.21
23/03/2017	23/03/2022	0.34	1,000,000	0.20
22/09/2017	22/09/2022	0.26	1,150,000	0.15
25/10/2017	24/10/2022	0.26	4,938,799	0.28
17/11/2017	15/12/2022	0.22	500,000	0.13
Total			20,733,806

No option/warrant holder has any right under the options/warrants to participate in any other share issue of the Company or any other entity. The options/warrants are exercisable at any time after vesting or before the expiry date.

During the six-month period to 31 December 2017, 858,333 unlisted options were cancelled (12 months to 30 June 2017: 213,334).

INSURANCE OF OFFICERS

During the period to 31 December 2017, the Company paid a premium in respect of a contract insuring the Directors and Officers of the Company and any subsidiary against a liability incurred as a Director or Officer to the extent permitted by the Corporations Act 2001 . Due to a confidentiality clause in the policy, the amount of the premium has not been disclosed.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purposes of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

DIRECTORS’ REPORT (continued)

NON-AUDIT SERVICES

The Company may decide to employ the auditor on assignments additional to their statutory audit duties, where the auditors’ expertise and experience with the Company are important.

No non-audit services were provided by the auditor (HLB Mann Judd) during the period.

During the period, the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms:

	31 DECEMBER 2017 $	30 JUNE 2017 $
Non-audit Services Related practices of HLB: Taxation services Corporate finance services Audit services Total paid to HLBMann Judd	- - - 45,000 45,000	- -
		-
		70,000
		70,000

AUDITOR

In accordance with s327C of the Corporations Act 2001 , HLB Mann Judd (WA Partnership) continued in office until the next AGM

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is attached.

This report is made in accordance with a resolution of the Directors.

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John Seaberg Chairman

Dated 28 February 2018

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the consolidated financial report of Admedus Limited for the period ended 31 December 2017, I declare that to the best of my knowledge and belief, there have been no contraventions of

a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) any applicable code of professional conduct in relation to the audit.

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Perth, Western Australia 28 February 2018

M R Ohm Partner

HLB Mann Judd (WA Partnership) ABN 22 193 232 714

Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533 Email: [email protected] | Website: www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers

CONTENTS
Consolidated Statement of Profit or loss	21
Consolidated Statement of Other Comprehensive Income	22
Consolidated Statement of Financial Position	23
Consolidated Statement of Changes in Equity	24
Consolidated Statement of Cash Flows	25
Group Performance
1. Basis of Preparation	26
2. Segment Reporting	28
3. Revenue and Other Income	30
4. Expenses	31
5. Income Tax	32
Assets and Liabilities
6. Financial Assets and Liabilities	35
7. Non-Financial Assets and Liabilities	39
8. Fair Value Measurement	43
Capital Structure and Risk Management
9. Contributed Equity	44
10. Reserves	45
11. Loss per Share	46
12. Financial Risk Management	47
Group Composition
13. Controlled Entities	50
14. Non-Controlling Interest	50
15. Parent Entity Information	52
Unrecognised items
16. Commitments	53
17. Contingent Liabilities	53
18. Events Occurring After the Reporting Period	53
Other Information
19. Share Based Payments	53
20. Related Party Transactions	56
21. Dividends	57
22. Remuneration of Auditors	57
23. Summary of Accounting Policies	57
Directors’ Declaration	60

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE PERIOD ENDED 31 DECEMBER 2017

Note	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Revenue from continuing operations 3 Cost of sales Gross profit Other income 3 Employee benefits 4 Consultancy and legal fees Travel and conference expenses Research and development costs Share based payments 19 Asset write-downs 4 Depreciation and amortisation expense 4 Financing costs 4 Fair value of movement of warrant Other expense Loss before income tax from continuing operations Income tax (expense)/benefit 5 Loss after income tax for the period/year Total loss is attributable to: Equity holders of Admedus Limited Non-controlling interest Loss per share from continuing operations attributable to ordinary equity holders of the Company (cents per share) Basic loss per share 11 Diluted loss per share	11,305,079 22,324,145 (4,636,699) (11,592,288)
	6,668,380 10,731,857 406,972 3,409,969 (10,644,514) (14,845,587) (992,577) (1,893,566) (1,247,121) (2,403,952) (597,557) (1,756,560) (355,073) (776,779) - (450,288) (897,941) (1,856,942) (252,782) (65,694) (211,342) - (705,021) (2,768,669)
	(8,828,576) (12,676,211)
	- -
	(8,828,576) (12,676,211)
	(8,631,786) (12,312,076) (196,790) (364,135)
	(8,828,576) (12,676,211)
	Cents Cents (3.39) (4.89) n/a n/a

The Company is reporting on a six-month accounting period from 1 July 2017 to 31 December 2017. The comparative accounting period is for the 12 months from 1 July 2016 to 30 June 2017, in line with the previous released financial report.

The above Consolidated Statement of Profit or Loss should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31 DECEMBER 2017

Note	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Loss for the period/year Items that may be reclassified to profit or loss: FX translation Other comprehensive income Total comprehensive loss Total comprehensive loss is attributable to: Equity holders of Admedus Limited Non-controlling interest	(8,828,576) (12,676,211) (568,921) (100,790) - -
	(9,397,497) (12,777,001)
	(9,200,707) (12,412,866) (196,790) (364,135)
	(9,397,497) (12,777,001)

The above Consolidated Statement of Other Comprehensive Income should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2017

Note	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
ASSETS Current Assets Cash and cash equivalents 6(a) Trade and other receivables 6(b) Inventories 6(c) Total Current Assets Non-Current Assets Property, plant & equipment 7(a) Intangibles 7(b) Deferred asset 6(f) Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 6(d) Employee benefit provisions 7(c) Borrowings 6(f) Financial liability - warrant 6(g) Deferred consideration 6(e) Total Current Liabilities Non-Current Liabilities Lease make good provisions 7(c) Deferred consideration 6(e) Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 9 Reserves 10 Accumulated losses Capital and reserves attributable to equity holders of Admedus Non-controlling interest 14 TOTAL EQUITY	8,254,823 11,260,657 4,718,096 4,286,062 5,553,620 4,453,871
	18,526,539 20,000,590
	3,680,744 2,355,996 5,913,774 6,220,328 248,944 -
	9,843,462 8,576,324
	28,370,001 28,576,914
	5,448,470 1,962,635 875,651 754,315 4,766,449 - 248,766 - 400,000 400,000
	11,739,336 3,116,950
	553,631 472,745 1,150,619 1,018,380
	1,704,250 1,491,125
	13,443,586 4,608,075
	14,926,415 23,968,839
	106,025,631 106,025,631 (2,481,230) (2,267,382) (89,461,204) (80,829,418)
	14,083,197 22,928,831 843,218 1,040,008
	14,926,415 23,968,839

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31 DECEMBER 2017

	Share Capital $ Share-based payments reserve $ Other Reserves $ Foreign currency translation reserve $ Accumulated Losses $ Total $ Non-controlling Interest $ Total Equity $
Balance at 1 July 2016 Loss for the year Total comprehensive loss Transactions with non-controlling interest Transactions with owners in their capacity as owners Options issued during the period Shares issued during the period Capital raising costs Foreign currency - subsidiaries Rights issue Shares issued in lieu of directors fees Rights issue Shares issued in lieu of consideration of Regen Balance at 30 June 2017 Loss for the period Foreign currency - subsidiaries Total comprehensive loss Transactions with owners in their capacity as owners Options issued during the period Balance at 31 December 2017	87,887,942 3,835,556 (2,921,934) 464,100 (68,517,342) 20,748,322 1,891,431 22,639,753
	- - - - (12,312,076) (12,312,076) (364,135) (12,676,211)
	- - - - (12,312,076) (12,312,076) (364,135) (12,676,211) - - (4,321,093) - - (4,321,093) (487,288) (4,808,381) - 776,779 - - - 776,779 - 776,779 10,000,000 - - - - 10,000,000 - 10,000,000 (1,192,676) - - - - (1,192,676) - (1,192,676) - - - (100,790) - (100,790) - (100,790) 990 - - - - 990 - 990 22,000 - - - - 22,000 - 22,000 8,307,375 - - - - 8,307,375 - 8,307,375 1,000,000 - - - - 1,000,000 - 1,000,000
	106,025,631 4,612,335 (7,243,027) 363,310 (80,829,418) 22,928,831 1,040,008 23,968,839
	(8,631,786) (8,631,786) (196,790) (8,828,576) - - - (568,921) - (568,921) - (568,921)
	- - - (568,921) (8,631,786) (9,200,707) (196,790) (9,397,497) - 355,073 - - - 355,073 - 355,073
	106,025,631 4,967,408 (7,243,027) (205,611) (89,461,204) 14,083,197 843,218 14,926,415

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED 31 DECEMBER 2017

Note	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payment to suppliers R&D tax refund Interest paid Interest received NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6(a) CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant & equipment Payments for intangible assets Additional shares acquired in subsidiary NET CASH OUTFLOW FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share or options issues Share issue transaction costs Proceeds from borrowings Term facility transaction costs NET CASH INFLOW FROM FINANCING ACTIVITIES NET (DECREASE)/INCREASE IN CASH HELD CASH AT BEGINNING OF THE PERIOD Exchange rate adjustments CASH AT END OF THE PERIOD 6(a)	11,383,314 20,279,009 (17,914,986) (37,340,245) - 4,493,046 (109,340) (59,939) 14,705 160,348
	(6,626,307) (12,467,781)
	(782,109) (193,638) (361,866) (75,303) - (2,400,000)
	(1,143,975) (2,668,941)
	816 18,307,375 - (1,192,676) 5,000,000 - (497,888) -
	4,502,928 17,114,699
	(3,267,354) 1,977,977
	11,260,657 8,813,119
	261,520 469,561
	8,254,823 11,260,657

The above Consolidated Statement of Cash Flow should be read in conjunction with the accompanying notes.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

1. BASIS OF PREPARATION

The consolidated financial statements comprise of the Consolidated Group, being Admedus Limited (Company) and its controlled entities. The consolidated financial statements are general purpose financial statements and are presented in Australian dollars, unless otherwise stated.

The consolidated financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities which have been measured at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments.

In accordance with the Corporations Act 2001 , these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 15.

The company recently announced a change in its financial year-end from 30 June to 31 December. This change more closely aligns Admedus’ reporting period with its global business sales cycles, assisting with forecasting, cash flow management and investment decisions. The Company is therefore reporting on a six-month accounting period from 1 July 2017 to 31 December 2017. The comparative accounting period in this report is for the 12 months from 1 July 2016 to 30 June 2017, in line with the previous released financial report.

The group’s accounting policies have been consistently applied to all of the periods presented unless otherwise stated.

(a) Going concern

The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and realisation of assets and discharges of liabilities in the ordinary course of business.

As disclosed in the financial statements, the Group incurred a net loss of $8,828,576 and had net cash outflows from operating activities of $6,626,307 for the six-months ended 31 December 2017. As at that date, the Group had cash balances of $8,254,823 and net working capital of $6,787,203 For the December 2017 quarter, the Group was in breach of an EBITDA covenant in relation to its PFG loan. Consequently, the loan became payable on demand and is disclosed as a current financial liability. The Company received a waiver of the loan breach and has renegotiated its loan covenants for the 2018 calendar year.

The Directors believe that it is reasonably foreseeable that the Group will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors:

New partnerships and alliances for ADAPT and TAVR products
Contract wins for the infusion business
Securing an external source of funding for Admedus Vaccines or a partial divestment of its interest in Admedus Vaccines
Access to a $5 million working capital revolving finance facility, subject to meeting a minimum borrowing base threshold and providing representations and warranties, that was entered into during the period and is available for 36 months from first draw down
Positive net working capital and cash balances totalling $6,787,203
New product lines such as CardioCel® Neo, VascuCel®,CardioCel® 3D and TAVR that are at varying stages of introduction in our existing markets
New markets for the Groups ADAPT® products including India, Australia, China, Mexico, Philippines, Taiwan, Vietnam, Turkey, Thailand, Japan and Spain
Monitoring, management and containment of discretionary costs, including R&D costs, and capital expenditures
The Group’s cash flow forecasts that incorporates some but not all of the above factors, thus providing some upside sensitivity, indicated that the Group will be in a positive cash position during the period of twelve months from the date of approval of this report

The ability of the Company and the Group to continue as going concerns and fund the path to profitability is dependent upon securing additional funds in the coming months from amongst a range of sources/opportunities including securing an external source of funding for Admedus Vaccines or a partial divestment of its interest in Admedus Vaccines, issuing new equity and/or drawing on debt facilities. The Directors believe that the Company and Group has the capacity to raise equity finance.

Notwithstanding the above factors, as a company moving towards profitability dependent upon continuing support from current shareholders and financiers, should the Company and the Group not receive the forecast cash inflows and additional funding referred to above there are material uncertainties as to whether the Company and the Group will be able to continue as going concerns and therefore, whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report.

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Company and Group not continue as going concerns.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

1. BASIS OF PREPARATION (continued)

(b) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Admedus Limited as at 31 December 2017 and the results of all subsidiaries for the six-month period then ended. Admedus Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.

Subsidiaries are all those entities over which the consolidated entity has control. Control is achieved when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the statement of profit or loss and statement of other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interests in full, even if that results in a deficit balance.

Where the consolidated entity loses control over a subsidiary, it de-recognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

(c) Critical accounting estimates and judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgments, estimates and assumptions on historical experience and on other various factors, including expectations of future events that management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed in the following notes.

Note 19(e) Share-based payment transactions Note 6(b) Allowance for impairment of receivables Note 6(c) Allowance for impairment of inventories Note 8 Fair value measurement hierarchy
Note 7(a) Estimation of useful lives of assets
Note 7(b) Goodwill and other indefinite life intangible assets
Note 7(b) Impairment of non-financial assets other than goodwill and other indefinite life intangible assets Note 5(f) Income tax Note 7(c)(i) Employee benefits provision Note 7(c)(ii) Lease make good provision

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

2. SEGMENT REPORTING

(a) Description of segments

Segment information is presented using a management approach, i.e. segment information is provided on the same basis as information as used for internal reporting purposes by the chief operating decision maker (CODM, being the CEO that makes key strategic decisions). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Management has determined that there are four identifiable reportable segments as follows:

Disposable medical product and medical devices distribution;
Bio implant operations – inclusive of sales, distribution and manufacturing;
Regenerative medicine R&D - ADAPT technology; and
Immunotherapies R&D.

Intersegment transactions

Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.

Intersegment receivables, payables and loans

Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

	Segment information
	Medical products and devices Bio Implant operations Regenerative medicine R&D Immunotherapies R&D Total $ $ $ $ $
	31 DECEMBER 2017 Total segment revenue 7,508,488 3,796,591 - - 11,305,079 Segment profit/(loss) (1,320,903) (4,960,805) (1,694,446) (852,422) (8,828,576) Segment assets 6,005,318 9,507,857 2,817,700 4,790,182 23,121,057 Segment liabilities 2,646,139 3,743,697 1,828,486 210,049 8,428,371 Acquisition of non-current assets 260,933 1,424,140 228,649 2,410 1,916,132 Depreciation & amortisation 117,140 293,206 233,553 254,042 897,941 Asset write downs - - - - -
	30 JUNE 2017 Total segment revenue 15,449,751 6,874,394 - - 22,324,145 Segment profit/(loss) 1,207,640 (10,161,968) (1,356,286) (1,214,456) (11,525,070) Segment assets 5,447,766 6,755,734 3,827,638 5,573,966 21,605,104 Segment liabilities 427,073 1,098,446 76,135 140,656 1,742,310 Acquisition of non-current assets 12,122 192,569 15,920 - 220,611 Depreciation & amortisation 12,959 479,158 345,471 997,015 1,834,603 Asset write downs 250,000 200,288 - - 450,288

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

2. SEGMENT REPORTING (continued)

(b) Other segment information

(i) Segment revenue

Sales between segments are carried out at arm’s length and are eliminated on consolidation. Segment revenue reconciles to total revenue from continuing operations as follows:

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Segment revenue Total revenue from continuing operations	11,305,079 22,324,145
	11,305,079 22,324,145

(ii) Segment result

Performance is measured based on segment result before tax.

The reconciliation of segment information to loss before income tax from continuing operations is as follows:

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Segment loss Unallocated: Depreciation and amortisation Asset write downs Share-based payments Other corporate and administration (expenses)/benefits Loss before income tax from continuing operations	(8,828,576) (11,525,070) - (22,339) - - - (776,779) - (352,023)
	(8,828,576) (12,676,211)

(iii) Segment assets and liabilities

Segment assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis.

Segment assets include all assets used by the segment and consist primarily of cash and cash equivalents, trade and other receivables, property, plant and equipment and intangible assets.

Segment liabilities consist primarily of trade and other creditors and provisions.

Reportable segment assets reconciled to total assets as follows:

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Segment assets Intersegment eliminations Unallocated: Cash and cash equivalents Trade and other receivables Property, Plant & Equipment Deferred Asset Total assets per the statement of financial position	23,121,057 21,605,104 5,000,000 6,527,313 - 421,461 - 23,036 248,944 -
	28,370,001 28,576,914

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

2. SEGMENT REPORTING (continued)

Reportable segment liabilities reconciled to total liabilities as follows:

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Segment liabilities Intersegment eliminations Unallocated: Trade and other payables Provisions Borrowings Financial liability - warrant Total liabilities per the statement of financial position	8,428,371 1,742,310 - - - 863,665 - 2,002,100 4,766,449 - 248,766 -
	13,443,586 4,608,075

(c) Major customers

There were no major customers for the current period individually representing greater than 10% of Group revenues (30 June 2017: 1). The major customer from the previous year represented $4,566,464 of the Group’s total revenues.

3. REVENUE AND OTHER INCOME

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Revenue from continuing operations Sale of goods Other income Interest income Research and development tax incentive Grant income Sundry income Total other income	11,305,079 22,324,145
	39,671 160,348 - 3,247,386 365,336 - 1,965 2,235
	406,972 3,409,969

Recognition and Measurement

Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Sale of goods

Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the goods, the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns and trade discounts.

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

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 consolidated entity will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the statement of profit and loss over the period necessary to match them with the costs that they are intended to compensate.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

4. EXPENSES

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Depreciation and amortisation Depreciation 430,015 533,867 Amortisation 467,926 1,323,075 897,941 1,856,942 Asset write-downs - 450,288 Employment expenses Remuneration and on-costs 9,485,196 13,532,395 Superannuation expense 381,746 758,850 Other employee benefits 777,572 554,342 10,644,5141 14,845,587 1higher employee costs associated with revenue growth and a number of one-off expenses related to restructuring the company. Share based payments 355,073 776,779 Operating lease rental expense 297,736 719,739 Finance costs Interest and finance charges paid/payable 141,059 59,779 Interest received on term deposit (investment of loan funds) (21,163) - Amortisation of loan transactions costs 15,392 - Difference between consideration paid for warrant and inception day fair value 36,608 - Unwind discount on lease make good provision 80,886 5,915 252,782 65,694	430,015 533,867 467,926 1,323,075
	897,941 1,856,942
	- 450,288
	9,485,196 13,532,395 381,746 758,850 777,572 554,342
	10,644,5141 14,845,587
	297,736 719,739
	141,059 59,779 (21,163) - 15,392 - 36,608 - 80,886 5,915
	252,782 65,694

Depreciation Refer Note 7(a) for details on depreciation.

Employee Benefits

Refer Note 7(c) for details on employee provisions and employee superannuation and Note 19 for details on share based payments.

Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses and accounted for on a straight line basis in the periods in which they are incurred.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

5. INCOME TAX

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
(a) Numerical reconciliation of income tax benefit to prima facie tax payable Loss from continuing operations before income tax expense Tax expense/(benefit) at the Australian tax rate of 27.5% (2017 financial year 30%) Tax effect of amounts that are not deductible/(taxable) in calculating taxable income: Share based payments Legal expenses R&D Tax Incentive income Amortisation Sundry items – net non-deductible/(non-assessable) Subtotal Adjustment for difference in foreign tax rates Total tax expense/(benefit) Deferred tax – current period benefits not recognised Deferred tax – reversal of prior period temporary differences Income tax expense/(benefit)	(8,828,576) (12,676,211)
	(2,427,859) (3,802,863)
	96,873 233,034 - 116,534 - (974,216) - 98,661 181,446 55,454
	(2,149,540) (4,273,396) 47,974 - (2,101,566) (4,273,396)
	(1,503,576) (4,273,396) (597,990) -
	- -

Legislation was passed by the Australian Government in April 2017 to progressively reduce the corporate tax rate from 30% to 25% for small and medium business over a 10-year period. Admedus Limited expects to benefit from the reduced corporate tax rates as a medium business with a turnover of more than $10 million but less than $50 million in the foreseeable future. Consequently, the deferred tax balances have been remeasured based on the 27.5% effective tax rate. The impact of the reduced corporate tax rate is reflected in the unrecognised deferred tax expense that would otherwise be credited to the profit or loss.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

5. INCOME TAX (continued)

(b) Deferred Tax Assets

The composition and movement of deferred assets is as follows:

Balance 30 June 16 $ Provisions 442,614 Accruals 95,867 Share issue costs through equity 1,063,146 Property, plant and equipment (536,108) Intangible assets (1,676,789) Sundry - other - Tax losses carried forward 15,475,567 Sub-total 14,864,297 Unrecognised net deferred tax assets (14,864,297) Tax assets - Deferred tax assets are attributable to Consolidated Provisions Accruals Share issue costs through equity Property, plant and equipment Intangible assets Sundry - other Tax losses carried forward Sub-total Set off deferred tax liabilities Unrecognised net deferred tax assets Tax assets	Balance 30 June 16 $ 442,614 95,867 1,063,146 (536,108) (1,676,789) - 15,475,567	Recognised in profit or loss $ Recognised in equity $ Balance 30 June 17 $ Recognised in profit or loss $ Recognised in equity $ Balance 31 December 17 $ - - 442,614 (56,066) - 386,548 1,518 - 97,385 680,633 - 778,018 129,530 - 1,192,676 (889,803) - 302,873 43,534 - (492,574) 63,766 - (428,808) 371,354 - (1,305,435) 1,697,211 - 391,776 - - - 26,091 - 26,091 3,717,933 - 19,193,500 (1,067,568) - 18,125,932 4,263,869 - 19,128,166 454,264 - 19,582,430 (4,263,869) - (19,128,166) (454,264) - (19,582,430) - - - - - - the following: Assets Liabilities Net 31 DECEMBER 30 JUNE 31 DECEMBER 30 JUNE 31 DECEMBER 30 JUNE 2017 $ 2017 $ 2017 $ 2017 $ 2017 $ 2017 $ 386,548 442,614 - - 386,548 442,614 778,018 97,385 - - 778,018 97,385 302,873 1,192,676 - - 302,873 1,192,676 - - (428,808) (492,574) (428,808) (492,574) 391,776 - - (1,305,435) 391,776 (1,305,435) 26,091 - - - 26,091 - 18,125,932 19,193,500 - - 18,125,932 19,193,500
	14,864,297 (14,864,297)
	-
		20,011,238 20,926,175 (428,808) (1,798,009) 19,582,430 19,128,166 (428,808) (1,798,009) - - - - (19,582,430) (19,128,166) - - (19,582,430) (19,128,166)
		- - - - - -

(c) Tax losses

Unused tax losses for which no deferred tax assets have been recognised Australian losses Foreign losses Sub-total Potential tax benefit		CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
		41,853,035 36,808,786 30,251,390 27,169,548
		72,104,425 63,978,334
		18,125,932 19,193,500

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

5. INCOME TAX (continued)

(c) Tax losses (continued)

All unused tax losses were incurred by Australian and foreign entities. Unused tax losses for which no deferred tax asset has been recognised have not been recognised as the future recovery of those losses is subject to the Company satisfying the requirements imposed by the regulatory taxation authorities in the relevant tax jurisdictions, in addition to accounting standards requirements for the recognition of tax losses.

(d) Recognition and Measurement

The income tax expense or benefit for the period is the tax payable on that 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 differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

When the deferred income tax asset or liability arises from the initial recognition of goodwill or 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 nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entity's which intend to settle simultaneously.

Tax Consolidation

Admedus Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation legislation. The parent entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts.

In addition to its own current and deferred tax amounts, the parent entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

(e) Critical accounting estimates

The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

6. FINANCIAL ASSETS AND LIABILITIES

6. FINANCIAL ASSETS AND LIABILITIES
Financial assets Notes*	31 December 2017$ 30 June 2017$
	Current Non- current Total Current Non- current Total
Cash and cash equivalents Cash at bank 6(a) Short term deposits 6(a)	3,146,060 - 3,146,060 11,260,657 - 11,260,657 5,108,763 - 5,108,763 - - -
Total Cash and cash equivalents	8,254,823 - 8,254,823 11,260,657 - 11,260,657
Trade and other receivables Trade receivables 6(b) Other receivables 6(b)	4,076,555 - 4,076,555 3,255,029 - 3,255,029 641,541 - 641,541 1,031,033 - 1,031,033
Total Trade and other receivables	4,718,096 - 4,718,096 4,286,062 - 4,286,062
Inventories 6(c)	5,553,620 - 5,553,620 4,453,871 - 4,453,871
Deferred asset 6(f)	- 248,944 248,944 - - -
Total financing assets	18,526,539 248,944 18,775,483 20,000,590 - 20,000,590

Financial liabilities Notes*	31 December 2017$ 30 June 2017$
	Current Non- current Total Current Non- current Total
Trade and other payables Trade payables 6(d) Otherpayables 6(d)	1,256,823 - 1,256,823 1,522,549 - 1,522,549 4,191,647 - 4,191,647 440,086 - 440,086
Total Trade and otherpayables	5,448,470 - 5,448,470 1,962,635 - 1,962,635
Deferred consideration Provision for deferred settlement 6(e)	400,000 1,150,619 1,550,619 400,000 1,018,380 1,418,380
Total Deferred consideration	400,000 1,150,619 1,550,619 400,000 1,018,380 1,418,380
Financial liabilities
Borrowings 6(f)	4,766,449 - 4,766,449 - - -
Total Financial liabilities	4,766,449 - 4,766,449 - - -
Financial Instruments
Warrant 6(g)	248,766 - 248,766 - - -
Total Financial instruments	248,766 - 248,766 - - -
Total financing liabilities	10,863,685 1,150,619 12,014,304 2,362,635 1,018,380 3,381,015

Consolidated numbers 6(a) Cash and cash equivalents

	CONSOLIDATED 31 DECEMBER 2017 30 JUNE 2017 $ $
Reconciliation of Loss After Income Tax to Net Cash Outflow from Operating Activities Loss for the period/year Depreciation/Amortisation expense Inventory write-down Accretion expense Non-cash share expense – share based payments Non-cash interest expense Reclassification of software licenses Foreign exchange differences Sundry Change in operating assets and liabilities: Increase in receivables Increase in inventories (Decrease)/increase in creditors (Decrease)/increase in other provisions Net cash outflow from operating activities	(8,828,576) (12,676,211) 897,941 1,856,942 14,820 444,373 117,494 - 355,073 776,779 226,734 - (398,480) - (261,520) 171,325 (518,194) 5,915 (562,587) (75,939) (1,386,056) (886,377) 3,580,847 (779,664) 136,197 (1,304,924)
	(6,626,307) (12,467,781)

CONSOLIDATED
31 DECEMBER 2017
30 JUNE 2017
$
$

Reconciliation of Loss After Income Tax to Net Cash Outflow from Operating Activities
Loss for the period/year
Depreciation/Amortisation expense
Inventory write-down
Accretion expense
Non-cash share expense – share based payments
Non-cash interest expense
Reclassification of software licenses
Foreign exchange differences
Sundry
Change in operating assets and liabilities:
Increase in receivables
Increase in inventories
(Decrease)/increase in creditors
(Decrease)/increase in other provisions
Net cash outflow from operating activities

(8,828,576)
(12,676,211)
897,941
1,856,942
14,820
444,373
117,494
-
355,073
776,779
226,734
-
(398,480)
-
(261,520)
171,325
(518,194)
5,915
(562,587)
(75,939)
(1,386,056)
(886,377)
3,580,847
(779,664)
136,197
(1,304,924)

(6,626,307)
(12,467,781)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

6. FINANCIAL ASSETS AND LIABILITIES

6(a) Cash and cash equivalents (continued)

Recognition and measurement

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position.

Cash at Bank

These are interest bearing accounts held at bank with average interest rates of 0.15% (30 June 2017: 0.15%).

Short term deposits

These represent interest bearing short term deposits held at bank with average interest rate of 2.34% (30 June 2017: n/a)

Non-cash investing and financing activities

The Group has no non-cash investing and financing activities to disclose.

6(b) Trade and other receivables

Recognition and measurement

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity will not be able to collect all amounts due per the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment.

Critical accounting estimates

The allowance for impairment of receivables assessment requires a degree of estimation and judgement. The level of allowance is assessed by considering the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtor’s financial position.

Refer to Note 12 for information on the risk management policy of the Group.

Other receivables

Other receivables include prepayments and security deposits for rental of corporate offices.

Past due but not impaired

As at 31 December 2017, trade receivables of $407,356 (30 June 2017: $321,646) were past due but not impaired. These relate to customers for whom there is no recent history of default. A significant portion of these trade receivables past due but not impaired have been subsequently paid post 31 December 2017. The ageing analysis of these trade receivables is as follows:

	31 DECEMBER 30 JUNE 2017 $ 2017 $
Over 90 days	407,356 321,646

The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the history of these other classes, it is expected that these amounts will be received.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

6. FINANCIAL ASSETS AND LIABILITIES (continued)

6(c) Inventories

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Raw materials – at cost Work in progress – at net realisable value Finished goods – at net realisable value Finished goods – at cost Provision for impairment of inventory	184,099 85,674 500,611 304,077 2,398,090 1,752,973 2,485,681 2,561,147
	5,568,481 4,703,871 (14,861) (250,000)
	5,553,620 4,453,871

Inventory expense

Write-downs of inventories to net realisable value recognised as an expense during the period ended 31 December 2017 amounted to $9,097 (30 June 2017: $444,373).

Recognition and measurement

Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a weighted average cost formula. Cost comprises direct materials and delivery costs, direct labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity. Costs of purchased inventory are determined after deducting rebates and discounts received or receivable.

Stock in transit is stated at the lower of cost and net realisable value. Cost comprises purchase and delivery costs, net of rebates and discounts received or receivable. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

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

Critical accounting estimates

The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of allowance is assessed by considering the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence.

6(d) Trade and other payables

Recognition and measurement

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial period and which are unpaid. Due to their short-term nature, they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Refer to Note 12 for information on the risk management policy of the Group.

6(e) Deferred consideration

The present value of the deferred consideration is $1,550,619 payable in 4 equal instalments to January 2021.

This relates to the acquisition by the Parent Company of the remaining 11.13% of the shares in Regen Pty Ltd and the settlement of associated Federal Court proceedings. As a result of the settlement, the Group owns 100% of Admedus’ regenerative tissue technology ADAPT®.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

6. FINANCIAL ASSETS AND LIABILITIES (continued)

6(f) Financial liabilities - borrowings

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Borrowings - current Capitalised borrowing costs	5,000,000 - (233,551) -
	4,766,449 -

Recognition and measurement

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.

In October 2017 Admedus Limited entered into an agreement with Partners for Growth (PFG) for a secured debt facility of up to AUD $10 million. The new PFG facility for Admedus consists of a $5 million revolving line of credit (RLOC) at an interest rate of 9.75% and a $5 million term loan at an interest rate of 11.75%. Both the RLOC and term loan are repayable in 36 months. In October 2017 the Company fully drew down the term loan facility. Principal payments commence in May 2018. PFG has been granted a first-ranking security for the loans on all assets of the Company and most wholly-owned group companies.

The Company incurred $497,888 in relation to setting up the new facility. 50% of these costs relates to the drawn term loan facility and is being amortised over the term of the loan. The remaining 50% relates to the undrawn RLOC and are being held as a Deferred NonCurrent Asset. At that time of drawdown of the RLOC, these costs will be treated as a transaction cost amortised over the respective loan term.

For the December 2017 quarter, the Group was in breach of an EBITDA covenant in relation to its PFG loan. Consequently, the loan became payable on demand and is disclosed as a Current Financial Liability in the Statement of Financial Position. However, following recent discussions with PFG in February 2018, Admedus has received a waiver of the loan breach and has renegotiated its loan covenants for the 2018 calendar year. If this waiver had been in place by 31 December 2017, $3,500,000 of the loan would have been disclosed as Non-Current Liabilities, reducing the value of Current Liabilities to $8,239,336.

6(g) Financial liabilities - warrant

In conjunction with receiving the loan facility from PFG, Admedus has agreed to issue PFG a 7-year warrant for the issue of 4,938,799 ordinary shares in the Company at an exercise price of AUD$0.25 per share (being the 5-day volume weighted average price of Admedus shares up to the last trading day before this announcement). The warrant expires on 26 October 2024. The holder of the warrant also has the option to put the warrant to the Company for AUD$1,500,000 on expiry or on the occurrence of certain events. Both these components need to be considered when determining the valuation of the warrant.

The value of the call option component of the warrant in relation to the issue of the shares has been determined using a Black Scholes pricing model that incorporates a share price hurdle. The share price hurdle reflects the fact the call option will only be exercised in circumstances where the value that can be derived from exercising the call option exceeds the value that can be derived from the put option. The value of the put option is determined having regard to a discounted cash flow (‘DCF’) methodology to calculate its riskadjusted present value.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

7. NON-FINANCIAL ASSETS AND LIABILITIES

7. NON-FINANCIAL ASSETS AND LIABILI	TIES
Non-Financial assets Notes*	31 December 2017$ 30 June 2017$
	Current Non-current Total Current Non-current Total
Property, plant and equipment 7(a) Intangible assets 7(b) Total non-financing assets	- 3,680,744 3,680,744 - 2,355,996 2,355,996 - 5,913,774 5,913,774 - 6,220,328 6,220,328
	- 9,594,518 9,594,518 - 8,576,324 8,576,324

Financial liabilities Notes*	31 December 2017$ 30 June 2017$
	Current Non-current Total Current Non-current Total
Provisions Employee benefit provisions 7(c)(i) Lease makegoodprovisions 7(c)(ii)	875,651 - 875,651 754,315 - 754,315 - 553,631 553,631 - 472,745 472,745
Total Provisions	875,651 553,631 1,429,282 754,315 472,745 1,227,060
Total non-financing liabilities	875,651 553,631 1,429,282 754,315 472,745 1,227,060

Consolidated numbers

7(a) Property, plant and equipment

	CONSOLIDATED 31 DECEMBER 2017 $ 30 JUNE 2017 $ Plant and equipment Software Total Plant and equipment Total
Plant & equipment Cost Accumulated depreciation Net book amount Reconciliation Opening net book amount Additions Disposals – Cost Disposals – Accumulated depreciation Depreciation charge Closing net book amount	4,954,668 1,401,595 6,356,263 4,602,627 4,602,627 (2,604,608) (70,911) (2,675,519) (2,246,631) (2,246,631)
	2,350,060 1,330,684 3,680,744 2,355,996 2,355,996
	2,355,996 - 2,355,996 2,696,225 2,696,225 353,168 1,401,595 1,754,763 193,638 193,638 - - - - - - - - - - (359,104) (70,911) (430,015) (533,867) (533,867)
	2,350,060 1,330,684 3,680,744 2,355,996 2,355,996

Recognition and measurement

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Leasehold improvements 3-10 years Plant and equipment 3-7 years Software 3-5 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.

An item of property, plant and equipment is de-recognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation reserve relating to the item disposed of is transferred directly to retained profits.

Costs incurred in developing software products or systems and costs incurred in acquiring software and licences that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised include external direct costs of materials and services and direct payroll related costs of employees’ time spent on the project.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

7. NON-FINANCIAL ASSETS AND LIABILITIES (continued)

7(a) Property, plant and equipment (continued)

Software development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility and where the Group has an intention and ability to use the asset.

Critical accounting estimates

The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly because of technical innovations or some other event. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

7(b) Intangibles

(b) Intangibles
	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Patents Intellectual property Technology Licence Goodwill Reconciliation - Patents Opening net book value Additions - acquisitions Amortisation Closing net book value Reconciliation – Intellectual property Opening net book value Amortisation Closing net book value Reconciliation – Technology Licence Opening net book value Amortisation Closing net book value Reconciliation – Goodwill Opening net book value Closing net book value	362,740 279,582 1,903,025 2,027,721 2,058,716 2,323,732 1,589,293 1,589,293
	5,913,774 6,220,328
	279,582 276,637 161,369 81,477 (78,211) (78,532)
	362,740 279,582
	2,027,721 2,277,102 (124,696) (249,381)
	1,903,025 2,027,721
	2,323,732 3,317,801 (265,016) (994,069)
	2,058,716 2,323,732
	1,589,293 1,589,293
	1,589,293 1,589,293

Critical accounting estimates

The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated below. The recoverable amounts of cash-generating units are determined based on either value-in-use calculations or fair value less cost of disposal. Value-in-use calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Fair value is based upon a formal valuation by an independent expert.

The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to the asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or valuein-use calculations, which incorporate several key estimates and assumptions.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

7. NON-FINANCIAL ASSETS AND LIABILITIES (continued)

7(b) Intangibles (continued)

The fair value of the technology licence and goodwill from the Admedus Vaccines transaction were subject to impairment testing at 30 June 2017 with no impairment arising as the recoverable amount is in excess of the associated cash generating unit. The impairment test was performed based on utilising the fair value less costs to sell valuation methodology.

The fair value has been determined by Glasshouse Advisory (independent IP valuers) using the income approach and Risk Adjusted Discounted Cash Flow method. A licensing business model was assumed, with the Company’s forecast earnings stream based on royalty income received from a hypothetical licensee. This methodology is commonly used to value pre-revenue companies and, despite the uncertainty inherent to development technology, it is the method of investors in pharmaceutical and biotech start-up and pre-revenue companies. The discount rate applied to cash flow projections was 24.7% (2016: 24.6%) and cash flows were calculated using Implied Peak Sales of $2.3B to $2.5B for HSV-2 (2016: HSV-2 $2.0B to$3.8B and HPV $1.2B) using a cumulative probability of success of 23.7% HSV-2 (2016: 24% HSV-2 and 14% HPV) and royalty of 5% (2016: 4.75%).

As at 31 December 2017 the Company performed a review of the key assumptions applied for the 30 June 2017 impairment test. As there were found to be no material changes to these assumptions or the composition of the cash generating unit, the previous outcome of no impairment was determined to be accurate for the current reporting period end.

In addition to the above, the Group assessed whether any indicators of impairment existed at reporting date for the intellectual property and patents for the ADAPT business. No indicators were identified as at 31 December 2017.

Recognition and measurement

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 the de-recognition 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.

Goodwill

Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

Research and development

Research costs are expensed in the period in which they are incurred. Development costs are capitalised, up to the stage of commercialization, when it is probable that the project will be a success considering its commercial and technical feasibility; the consolidated entity can use or sell the asset; the consolidated entity has sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, being their finite life of up to 17 years.

Patents and trademarks

Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of up to 17 years.

Impairment of non-financial assets

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

7. NON-FINANCIAL ASSETS AND LIABILITIES (continued)

7(c) Provisions

(i) Employee benefits

The current provision for employee benefits includes accrued annual leave, vesting sick leave and long service leave. For long service leave it covers all unconditional entitlements where employees have completed the required period of service and those where employees are entitled to pro-rata payments in certain circumstances. The entire amount of the provision is presented as current, since the group does not have an unconditional right to defer settlement for any of these obligations. However, based on experience, the group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

Critical accounting estimate

In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been considered.

(ii) Lease make good

The lease make good provision relates to the removing of lease hold improvements including laboratories and clean rooms in accordance with lease agreement. The provision is based on a valuation performed by Griffin Valuation Advisory.

Critical accounting estimate

The calculation of this provision requires assumptions such as application of closure dates and cost estimates. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are recognised in the statement of financial position by adjusting the asset and the provision. Reductions in the provision that exceed the carrying amount of the asset will be recognised in profit or loss.

(iii) Recognition and measurement

Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation due to a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, considering the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expense

Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Retirement benefit obligations

All employees of the consolidated entity are entitled to benefits from the consolidated entity's superannuation plan on retirement, disability or death. The consolidated entity only has a defined contribution section within its plan. The defined contribution section receives fixed contributions from entities in the consolidated entity and the consolidated entity's legal or constructive obligation is limited to these contributions.

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The entity recognises termination benefits at the earlier of the following dates: (a) when the entity can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of AASB 137 and involves the payment of terminations benefits.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

8. FAIR VALUE MEASUREMENT

Fair value hierarchy

The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three-level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability

Consolidated – 31 December 2017 Assets Technology licence Property, plant and equipment Total assets Liabilities Lease make good provision Warrant Total liabilities Consolidated – 30 June 2017 Assets Technology licence Property, plant and equipment Total assets Liabilities Lease make good provision Total liabilities	Level 1 Level 2 Level 3 Total $ $ $ $ - 2,058,716 - 2,058,716 - 3,680,744 - 3,680,744
	- 5,739,460 - 5,739,460
	- 553,631 - 553,631 - 248,766 - 248,766
	- 802,397 - 802,397
	Level 1 Level 2 Level 3 Total $ $ $ $ - 2,323,732 - 2,323,732 - 2,355,996 - 2,355,996
	- 4,679,728 - 4,679,728
	- 472,745 - 472,745
	- 472,745 - 472,745

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature. The fair values of Intellectual property, Property, plant and equipment and Lease make good provision were initially calculated by independent valuation specialists upon inclusion in the financials. The fair values have since been adjusted for amortization, depreciation and interest.

Recognition and measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principle market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Critical accounting estimates

Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

9. CONTRIBUTED EQUITY

		SHARES $ 31 DECEMBER 30 JUNE 31 DECEMBER 30 JUNE 2017 2017 2017 2017
(a) Share Capital Ordinary shares Fully paid		254,795,534 254,795,534 106,025,631 106,025,631

	Date	Notes No. shares Issue Price $
(b) Movements in Ordinary Share Capital Details Balance Shares issued in lieu of directors fees Shares issued in lieu of consideration of Regen Share placement Rights Issue Rights Issue Transaction costs Balance Nil movement Balance
	30/6/16 196,254,798 87,887,942
	(b) 60,841 0.36 22,000 (c) 3,000,000 0.33 1,000,000 (d) 30,303,031 0.33 10,000,000 (e) 3,000 0.33 990 (e) 25,173,864 0.33 8,307,375 - (1,192,676)
	30/6/17 254,795,534 106,025,631
	- -
	31/12/17 254,795,534 106,025,631

(a) Ordinary Shares

Ordinary shares entitle the holder to participate in dividends and the proceeds of 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.

(b) Shares issued in lieu of directors fees

In December 2016, directors elected to receive a portion of their fees as shares at an issue price of $0.3616 (based on the 5 day VWAP).

(c) Shares issued in lieu of consideration of Regen

In September 2016, these shares are held in escrow for 12 months starting from September 2016 as an issue price of $0.33 (based on the 5 day VWAP).

(d) Share placement

In September 2016, current shareholders and sophisticated investors were approached to make further investment in the Group at a $0.33 per share.

(e) Rights Issue

A non-renounceable rights issue of shares was undertaken at an issue price of $0.33 per share

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

9. CONTRIBUTED EQUITY (continued)

(f) Recognition and measurement

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(g) Capital Risk Management

The Company’s objective when managing capital is to safeguard the ability to continue as a going concern and to provide returns for shareholders and benefits for other stakeholders and to maintain capital structure to reduce the cost of capital.

The Board of Directors monitors capital on an ad-hoc basis. No formal targets are in place for return on capital or gearing ratios as the Group has not derived any income from the developing technology. The Group defines capital as equity and net debt.

10. EQUITY – RESERVES

		CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
(a) Reserves Share based payments Other reserve Foreign currency translation reserve		4,967,408 4,612,335 (7,243,027) (7,243,027) (205,611) 363,310
		(2,481,230) (2,267,382)

Reconciliation - Share based payment	Date No. options/ warrants Valuation $
Balance Unlisted options issued Unlisted options issued Unlisted options cancelled Unlisted options issued Unlisted options issued Unlisted option lapsed Share based payment Balance Unlisted options issued Unlisted options issued Unlisted options cancelled Share based payment Balance
	30/6/16 20,316,925 3,835,556
	575,000 0.33 29,224 50,000 0.33 2,541 (2,326,667) 0.60 (249,268) 200,000 0.34 8,523 1,700,000 0.34 30,789 (5,511,918) - 954,970
	30/6/17 15,003,340 4,612,335
	1,150,000 0.15 15,338 500,000 0.13 4,169 (858,333) 335,566
	31/12/17 15,795,007 4,967,408

Note: In addition to the options and warrants noted above, Admedus issue PFG a 7-year warrant for the issue of 4,938,799 ordinary shares in the Company at an exercise price of AUD$0.25 per share. Refer to note 6(g) for further information on this warrant.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

10. EQUITY – RESERVES (continued)

Reconciliation – Other reserve	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Opening balances Minority interest contribution Closing balance During the prior 12-month period the company acquired the remaining non- controlled interest in Admedus Regen.	(7,243,027) (2,921,934) - (4,321,093)
	(7,243,027) (7,243,027)
Reconciliation – Foreign currency translation reserve	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 $ 2017 $
Opening balances Foreign exchange on subsidiaries Closing balance	363,310 464,100 (568,921) (100,790)
	(205,611) 363,310

(b) Nature and purpose

The share-based payments reserve is used to recognise the grant date fair value of options issued to employees but not exercised.

The other reserve reflects the additional consideration paid by the Company, over and above the historical fair value of the subsidiary assessed at the time of gaining control, to acquire a portion of the remaining non-controlling interests.

The foreign currency translation reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars, in addition to exchange differences on an entity’s net investment in foreign operations.

11. LOSS PER SHARE

	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 Number 2017 Number
(a) Weighted Average Number of Shares Used as the Denominator Weighted average number of ordinary shares used in the denominator in calculating basic loss per share Adjustment for calculation of diluted loss per share: Options Weighted average number of ordinary shares used in the denominator in calculating diluted loss per share (b) Loss Used in Calculating Loss Per Share Basic loss per share Diluted loss per share	254,795,534 251,382,294
	- -
	n/a n/a
	Cents Cents (8,631,786) (12,312,076) (3.39) (4.89) n/a n/a

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

11. LOSS PER SHARE (continued)

(c) Information concerning classification of securities

Options:

No listed or unlisted options of Admedus Limited have been included in the determination of basic loss per share because all options on issue have an exercise price above the market share price of the Company as at period end.

Details relating to options granted under the Admedus Employee Share Option Plan (ESOP) are outlined in Note 19(a).

12. FINANCIAL RISK MANAGEMENT

The Group’s activities expose it to a variety of financial risks (including interest rate risk, credit risk and liquidity risk). The Group’s overall risk management program focuses on the unpredictability of the financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate risk, ageing analysis for credit risk and at present are not exposed to price risk.

Risk management is carried out by the Board of Directors with assistance from suitably qualified external advisors. The Board provides written principles for overall risk management and further policies will evolve commensurate with the evolution and growth of the Company.

The Group and the Company hold the following financial instruments:

Financial assets Cash and cash equivalents Trade and other receivables Inventories Deferred asset Financial liabilities Trade and other payables Deferred consideration Borrowings Warrant Net financial assets	CONSOLIDATED 31 DECEMBER 30 JUNE 2017 2017 $ $
	8,254,823 11,260,657 4,718,096 4,286,062 5,553,620 4,453,871 248,944 -
	18,775,483 20,000,590
	5,448,470 1,962,635 1,550,619 1,418,380 4,766,449 - 248,766 -
	12,014,304 3,381,015
	6,761,179 16,619,575

The Group’s principal financial instruments comprise cash and short-term deposits.

The main purpose of the financial instruments is to fund the Group’s operations.

It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group are cash flow (interest rate risk, liquidity risk and credit risk). The Board reviews and agrees policies for managing each of these risks and they are summarised below:

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

12. FINANCIAL RISK MANAGEMENT (continued)

(a) Market Risk

Cash flow and interest rate risk

The Group’s only interest rate risk arises from cash and cash equivalents held. Term deposits and current accounts held with variable interest rates expose the group to cash flow interest rate risk. The Company does not consider this to be material to the Group and has therefore not undertaken any further analysis of risk exposure.

The following sets out the Group’s exposure to interest rate risk, including the effective weighted average interest rate by maturity periods:

eriods:
Note	Weighted average interest rate	Total $
31 December 2017 Consolidated Financial assets Cash and cash equivalents 6(a) 30 June 2017 Consolidated Financial assets Cash and cash equivalents 6(a)	1.45% 0.23%	8,254,823
		11,260,657

Sensitivity

At 31 December 2017, if interest rates had increased by 10% or decreased by 10% from the period end rates with all other variables held constant, post-tax loss for the period would have been $14,149 lower/$14,149 higher (30 June 2017 changes 10%: $2,308 lower/ $2,308 higher), mainly because of higher/lower interest income from cash and cash equivalents.

(b) Credit Risk

Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, considering its financial position, experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The compliance with credit limits by wholesale customers is regularly monitored by line management. Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk.

For some receivables in Note 6 the group obtained deposits to cover the cost of defaults by customers. The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates.

(c) Foreign currency risk management

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Following a review of the AUD equivalent of foreign currency cash held, or receivable or payable, in entities within the Group whose functional currency is different to that foreign currency, it was determined there does not exist any material net exposure foreign exchange risk.

The Group regularly monitors the level of foreign currency exposure and where appropriate, considers the use of foreign exchange contracts to manage significant exposures. There were no foreign exchange contracts entered at 31 December 2017 (30 June 2017: nil).

Foreign currency exposures are currently managed via natural hedges.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

12. FINANCIAL RISK MANAGEMENT (continued)

(d) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash balances and access to equity funding.

The Group’s exposure to the risk of changes in market interest rates relates primarily to cash assets and floating interest rates. The Group does not have significant interest-bearing assets and is not materially exposed to changes in market interest rates.

The Directors monitor the cash-burn rate of the Group on an ongoing basis against budget. As at reporting date the Group had sufficient cash reserves to meet its requirements. The Group has no access to credit standby facilities or arrangements for further funding or borrowings in place.

The financial liabilities the Group had at reporting date were trade payables incurred in the normal course of the business. These were non-interest bearing and were due within the normal 30-60 days’ terms of creditor payments.

Maturities of financial liabilities

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

	Less than 6 months $	6-12 months 1-2 years 2-5 years Over 5 years $ $ $ $	Total contractual cash flows Carrying amount (assets)/ liabilities $ $
Group – At 31 December 2017 Non-derivatives Trade and other payables Borrowings Non-interest bearing Total non-derivatives Group – At 30 June 2017 Non-derivatives Trade and other payables Non-interest bearing Total non-derivatives	5,448,470 795,382 -	- - - - 1,300,278 2,595,660 1,947,153 - - - - -	5,448,470 5,448,470 6,638,473 6,638,473 - -
	6,243,852	1,300,278 2,595,660 1,947,153 -	12,086,943 12,086,943
	1,962,635 -	- - - - - - - -	1,962,635 1,962,635 - -
	1,962,635	- - - -	1,962,635 1,962,635

(e) Fair Value Estimation

The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes.

The carrying value less impairment provision of receivables and trade payables are assumed to approximate their fair values due to their short-term nature.

The consolidated entity’s principal financial instruments consist of cash and deposits with banks, accounts receivable, trade payables and loans payable. The main purpose of these non-derivative financial instruments is to finance the entity’s operations.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

13. CONTROLLED ENTITIES

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the accounting policy.

			Equity Holding		Cost to Company	Cost to Company
Name of entity	Class of share	Country of Incorporation	31 December 2017	30 June 2017	31 December 2017	30 June 2017
			%	%	$	$
Accounting Parent Entity
Admedus Investments Pty Limited		Australia	100	100	30,263,471	30,129,510
Legal Parent Entity
Admedus Limited	Ordinary	Australia	-	-	-	-
Controlled Entities
Admedus (NZ) Limited	Ordinary	New Zealand	100	100	1	1
Admedus (Australia) Pty Limited	Ordinary	Australia	100	100	892,989	892,989
Admedus Regen Pty Limited	Ordinary	Australia	100	100	16,347,175	16,214,936
Admedus Corporation	Ordinary	USA	100	100	104	104
Admedus Vaccines Pty Limited	Ordinary	Australia	72.8	72.8	13,000,049	13,000,049
Admedus GmbH	Ordinary	Switzerland	100	100	23,151	23,151
Admedus Biomanufacturing Pty Ltd	Ordinary	Australia	100	100	1	1
Admedus (Singapore) Pty Ltd	Ordinary	Singapore	100	100	1	1

The proportion of ownership interest is equal to the proportion of voting power held.

14. NON-CONTROLLING INTEREST

CONSOLIDATED
31 December
30 June
2017
$
2017
$

Interest in:
Share Capital
-
-
Reserves
7,243,027
7,243,027
Accumulated losses
(8,086,245)
(8,283,035)
(843,218)
(1,040,008)
et out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the group.
he amounts disclosed for each subsidiary are before inter-company eliminations.
Admedus Vaccines Pty Ltd
31 December
30 June
2017
$
2017
$ Current assets
1,192,505
1,657,447
Current liabilities
147,131
140,656
Current net assets
1,045,374
1,516,791
Non-current assets
2,058,116
3,916,520
Non-current liabilities
-
-
Non-current net assets
2,058,116
3,916,520
Net assets
3,103,490
5,433,311
Accumulated non-controlling interests
843,218
1,040,008

-
-
7,243,027
7,243,027
(8,086,245)
(8,283,035)

(843,218)
(1,040,008)

Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the group. The amounts disclosed for each subsidiary are before inter-company eliminations.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

14. NON-CONTROLLING INTEREST (continued)

4. NON-CONTROLLING INTEREST (continued)
Revenue Loss for the period/Total comprehensive loss Loss allocated to non-controlling interests Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Total per period ending in cash and cash equivalents	Admedus Vaccines Pty Ltd 31 December 30 June 2017 $ 2017 $ - - (724,291) (865,834)
	(196,790) (324,744) (860,910) (1,846,489) 1,087 (20,208) - 3,500,000
	(859,823) 1,633,303

At 30 June 2017 Admedus Regen Pty Ltd is a fully consolidated subsidiary.

(a) Transactions with non-controlling interests

On 7 September 2016 Admedus reached a confidential binding settlement in full and final resolution of the proceedings and without admission of liability. As a result, Admedus owns 100% of the regenerative tissue technology ADAPT®.

The overall effect of this transaction on the equity attributable to the owners of Admedus Limited during 2017 is summarised as follows:

	CONSOLIDATED 31 December 30 June 2017 $ 2017 $
Carrying amount of non-controlling interest acquired Consideration paid to non-controlling interest Excess of consideration paid recognised in other reserves within equity	- 3,287,908 - (3,500,000)
	- (212,092)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

15. PARENT ENTITY INFORMATION

The following details information related to the legal parent entity, Admedus Limited, at 31 December 2017. The information presented here has been prepared using consistent Admedus’s accounting policies.

	THE COMPANY 31 December 30 June 2017 $ 2017 $
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Contributed equity Reserves Accumulated losses Total equity Statement of comprehensive income Loss for the period/year Other comprehensive loss for the period/year Total comprehensive loss for the period/year	6,673,558 6,948,596 18,038,170 16,563,401
	24,711,728 23,511,997
	(8,265,249) (2,155,938) (2,079,828) (1,418,380)
	(10,345,077) (3,574,318)
	130,384,683 130,436,688 5,495,491 5,088,304 (121,513,523) (115,587,313)
	14,366,651 19,937,679
	(5,926,210) (1,277,885) - -
	(5,926,210) (1,277,885)

Contingent liabilities of the parent entity

There were no contingent liabilities in relation to the current reporting period.

Commitments of the parent entity

Total expenditure commitments at reporting date not provided for in the financial statements

	CONSOLIDATED 31 December 30 June 2017 $ 2017 $
Operating Lease Commitments Future operating lease commitments not provided for in the financial statements and payable: Within one year Later than one year but no later than five years Later than five years	157,282 154,545 29,369 109,890 - -
	186,651 264,435

The Company leases office space in Brisbane under an operating lease that expires in January 2019 and photocopiers expiring June 2020.

Investments in subsidiaries, associates and joint venture entities

Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

16. COMMITMENTS

Total expenditure commitments at reporting date not provided for in the financial statements

	CONSOLIDATED 31 December 30 June 2017 $ 2017 $
Operating Lease Commitments Future operating lease commitments not provided for in the financial statements and payable: Within one year Later than one year but no later than five years Later than five years	519,492 549,486 581,438 272,806 - -
	1,100,930 822,292

The Company leases office space in Brisbane under an operating lease that expires in January 2019 and photocopiers expiring June 2020.

Admedus Regen Pty Ltd leases office space in Melbourne under an operating lease expiring in May 2018

Admedus Australia leases office space in Adelaide under an operating lease that expires in June 2018

Admedus Biomanufacturing Pty Ltd leases office and laboratory space under operating leases that expire in January 2019 *, and photocopiers expiring August 2019

Admedus Vaccines Pty Ltd leases office and lab space under an operating lease that expires January 2018.

Admedus Corporation leases office space under an operating lease that expires December 2022.

Contract contains two 5 year options to extend the lease to January 2029.

17. CONTINGENT LIABILITIES

There were no contingent liabilities in relation to the current reporting period.

18. EVENTS OCCURRING AFTER THE REPORTING PERIOD

19. SHARE BASED PAYMENTS

(a) Employee Share Option Plan

The new Admedus Employee Share Option Plan (ESOP) was approved by shareholders at the 2017 Annual General Meeting. Eligible employees can participate in the Plan. The previous ESOP in place for the Company was approved by shareholders at the 2015 Annual General Meeting. As detailed below, during the six-month period covering this report, staff options were issued to employees over both plans.

The key terms of both ESOP’s include:

Options are issued to selected Eligible Employees for nil cost;
The allotment of options is at the discretion of the Board of Directors;
Shares allotted on the exercise of the options are to be issued at an exercise price determined by the Board in its absolute discretion;
Options expire 5 years after the grant date;
Options are unlisted and not transferable unless the Directors in their absolute discretion agree to a transfer; and
Options carry no dividend rights or voting rights.

The Company issued 1,650,000 staff options over ordinary shares in the Company during the six-months to 31 December 2017 (12 months to 30 June 2017: 2,525,000). These were split as follows:

On 22 September 2017, the Company issued 1,150,000 options to employees under the ESOP (Tranche E).
On 15 December 2017, the Company issued 500,000 options to directors under the ESOP (Tranche F).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

19. SHARE BASED PAYMENTS (continued)

(a) Employee Share Option Plan (continued)

Set out below are summaries of options granted by Admedus Limited:

Grant date Expiry date Exercise price $	Balance at start of the period Number Granted during the period Number Forfeited during the period Number Lapsed during the period Number Balance at end of the period Number Value at grant date $
31 December 2017 18/6/2013 18/6/2018 0.95 16/12/2013 16/12/2018 2.70 28/3/2014 1/2/2019 2.45 21/5/2014 21/5/2019 1.70 5/11/2014 5/11/2019 2.10 30/6/2015 30/6/2020 1.17 21/7/2015 21/7/2020 1.44 10/12/2015 10/12/2020 0.83 10/12/2015 10/12/2020 1.39 24/6/2016 24/6/2021 0.30 15/09/2016 15/09/2021 0.33 15/09/2016 15/09/2021 0.33 18/11/2016 18/11/2021 0.33 23/03/2017 23/03/2022 0.34 22/09/2017 22/09/2022 0.26 17/11/2017 15/12/2022 0.22 Total Weighted average exercise price	1,388,340 - - - 1,388,340 0.33 710,000 - - - 710,000 1.01 200,000 - - - 200,000 0.90 900,000 - - - 900,000 0.75 310,000 - - - 310,000 0.70 1,635,000 - - - 1,635,000 0.43 1,030,000 - - - 1,030,000 0.41 425,000 - - - 425,000 0.58 200,000 - - - 200,000 0.52 150,000 - - - 150,000 0.16 475,000 - - (25,000) 450,000 0.19 50,000 - - - 50,000 0.19 200,000 - - (133,333) 66,667 0.21 1,700,000 - - (700,000) 1,000,000 0.20 - 1,150,000 - - 1,150,000 0.15 - 500,000 - - 500,000 0.13
	9,373,340 1,650,000 - (858,333) 10,165,007
	$1.15 $0.25 - $0.34 $1.07

Grant date Expiry date Exercise price $	Balance at start of the year Number Granted during the year Number Lapsed Number Lapsed during the year Number Balance at end of the year Number Value at grant date $
30 June 2017 8/12/2011 10/07/2016 0.60 8/22/2011 10/07/2017 0.60 18/5/2012 18/5/2017 0.60 24/4/2013 1/3/2018 0.60 18/6/2013 18/6/2018 0.95 16/12/2013 16/12/2018 2.70 28/3/2014 1/2/2019 2.45 21/5/2014 1/7/2018 1.70 21/5/2014 21/5/2019 1.70 5/11/2014 5/11/2019 2.10 30/6/2015 30/6/2020 1.17 21/7/2015 21/7/2020 1.44 10/12/2015 10/12/2020 0.83 10/12/2015 10/12/2020 1.39 24/6/2016 24/6/2021 0.30 15/09/2016 15/09/2021 0.33 15/09/2016 15/09/2021 0.33 18/11/2016 18/11/2021 0.33 23/03/2017 23/03/2022 0.34 Total Weighted average exercise price	296,250 - - (296,250) - - 5,002,334 - - (5,002,334) - - 213,334 - - (213,334) - - 200,000 - (200,000) - - - 1,505,007 - (116,667) - 1,388,340 0.33 900,000 - (190,000) - 710,000 1.01 200,000 - - - 200,000 0.90 300,000 - (300,000) - - - 1,500,000 - (600,000) - 900,000 0.75 410,000 - (100,000) - 310,000 0.70 1,885,000 - (250,000) - 1,635,000 0.43 1,350,000 - (320,000) - 1,030,000 0.41 475,000 - (50,000) - 425,000 0.58 200,000 - - - 200,000 0.52 250,000 - (100,000) - 150,000 0.16 - 575,000 (100,000) - 475,000 0.19 - 50,000 - - 50,000 0.19 - 200,000 - - 200,000 0.21 - 1,700,000 - - 1,700,000 0.20
	14,686,925 2,525,000 (2,326,667) (5,511,918) 9,373,340
	$1.13 $0.34 $1.44 $0.60 $1.15

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

19. SHARE BASED PAYMENTS (continued)

(b) Expenses Arising from Share Based Payment Transactions

Total expenses arising from share based payment transactions recognised during the period were as follows:

otal expenses arisingfrom share basedpayment transactions recognised duringtheperiod were	as follows:
	CONSOLIDATED 31 December 30 June 2017 $ 2017 $
Options issued under employee option plan Total expenses from share-bases transactions	355,073 776,779
	355,073 776,779

(c) Fair Value of Options Granted

The model inputs for options granted during the period ended 31 December 2017 included:

	Tranche E	Tranche F
Exercise price:	$0.26	$0.22
Grant date:	22-Sep-17	17-Nov-17
Expiry date:	22-Sep-22	15-Dec-22
Share price at grant date:	$0.31	$0.24
Expected price volatility of the	70%	70%
company’s shares:
Risk-free interest rate:	2.39%	2.10%
Fair value at grant date:	$0.15	$0.13

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

19. SHARE BASED PAYMENTS (continued)

(d) Recognition and measurement

Equity-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for the rendering of services.

The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

(e) Critical Accounting Estimates

The consolidated entity 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 using either the Binomial or Black-Scholes model considering the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.

20. RELATED PARTY TRANSACTIONS

(a) Parent Entity

The parent entity within the Group is Admedus Limited.

(b) Subsidiary

Interests in subsidiaries are set out in Note 13.

(c) Key Management Personnel compensation

	31 December 2017$	30 June 2017$
Short-term employee benefits	2,092,925	2,067,565
Post-employment benefits	47,400	104,995
Termination benefits	278,255	202,792
Share based benefits	24,706	63,818
	2,443,286	2,439,170

Compensation of the Group’s key management personnel includes salaries and non-cash benefits.

(d) Transactions and Balances with Related Parties

No related party transactions were noted during the period.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

21. DIVIDENDS

No dividends have been declared or paid during the period.

Recognition and measurement

Dividends are recognised when declared during the financial period and no longer at the discretion of the company.

22. REMUNERATION OF AUDITORS

During the period, the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

	CONSOLIDATED 31 December 30 June 2017 $ 2017 $
Audit Services HLB Mann Judd (WA Partnership) Audit and review of financial reports and other audit work under the Corporations Act 2001	45,000 70,000

It is the Group’s policy to employ HLB Mann Judd on assignments additional to their statutory audit duties where HLB’s and expertise and experience with the Group are important.

No non-audit services were provided by HLB Mann Judd (WA partnership).

23. SUMMARY OF ACCOUNTING POLICIES

This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements to the extent they have not been disclosed in the other notes above. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated group which consists of Admedus Limited (Company) and its controlled entities. The company is a listed, for profit, public company, incorporated and domiciled in Australia.

(a) Statement of compliance

The consolidated financial statements of the Group are a general purpose financial report which has been prepared in accordance with the Corporations Act, Australian Accounting Standards and Interpretations, International Financial Reporting Standards (IFRS) and complies with other requirements of the law. The consolidated financial statements were authorised for issue on 28 February 2018.

(b) Business combinations

The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

23. SUMMARY OF ACCOUNTING POLICIES (continued)

(b) Business combinations (continued)

Where the business combination is achieved in stages, the consolidated entity re-measures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at fair value on the acquisition-date. Subsequent changes in the fair value of contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity.

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the noncontrolling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

Reverse Acquisition

In accordance with AASB 3 “Business Combinations”, when Admedus Limited (the legal parent) acquired Admedus Investments Pty Limited group (being Admedus Investments Pty Limited and its controlled entities Admedus (Australia) Pty Limited and Admedus (NZ) Limited) (the legal subsidiary), the acquisition was deemed to be a reverse acquisition since the substance of the transaction is that the existing shareholders of Admedus Investments Pty Limited have effectively acquired Admedus Limited. Under reverse acquisition accounting, the consolidated financial statements are prepared as if Admedus Investments Pty Limited had acquired Admedus Limited and its controlled entity, not vice versa as represented by the legal position.

In reverse acquisition accounting, the cost of the business is deemed to have been incurred by the legal subsidiary (the acquirer for accounting purposes) in the form of equity instruments issued to the owners of the legal parent (the acquiree for accounting purposes). However, since the fair value of the equity instruments of the legal subsidiary (Admedus Investments Pty Limited) was not clearly evident at the date which the control was passed, the alternative method was elected (per AASB 3), where the cost of the business combination was determined as the total fair value of all the issued equity instruments of the legal parent (Admedus Limited) immediately prior to the business combination.
In the separate financial statements of the legal parent (Admedus Limited), the investment in legal subsidiary (Admedus Investments Pty Limited) was accounted for at cost.

Consequently:

An exercise is performed to fair value the assets and liabilities of the legal acquirer, Admedus Limited;

The cost of the investment held by the legal parent (Admedus Limited) in the legal subsidiary (Admedus Investments Pty Limited) is reversed on consolidation and the cost of the reverse acquisition is eliminated on consolidation against the consolidated equity and reserves of Admedus Investments Pty Limited and its consolidated entities at date when control is passed. The effect of this is to restate the consolidated equity and reserves balances to reflect those of Admedus Investments Pty Limited at the date of acquisition;

The amount recognised as issued equity instruments are determined by adding to the issued equity of the legal subsidiary immediately before the business combination, the cost of the combination; and
The consolidated financial statements are issued under the name of the legal parent (Admedus Limited) but are a continuation of the financial statements of the deemed acquirer (Admedus Investments Pty Limited) under the reverse acquisition rules.

(c) Foreign currency translation

The financial statements are presented in Australian dollars, which is Admedus Limited's functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2017

23. SUMMARY OF ACCOUNTING POLICIES (continued)

(c) Foreign currency translation (continued)

approximate the rate at the date of the transaction, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency translation reserve in equity.

The foreign currency translation reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

(d) Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is current when: it is expected to be realized or intended to be sold or consumed in normal operating cycle; it is held primarily for trading; it is expected to be realized within twelve months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

(e) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

(f) Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case, it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

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

(g) New, revised or amending Accounting Standards and Interpretations adopted

Standards and Interpretations applicable to 31 December 2017

In the period ended 31 December 2017, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current reporting period. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Company and, therefore, no material change is necessary to Group accounting policies.

Standards and Interpretations in issue not yet adopted

The Directors have also reviewed all Standards and Interpretations in issue not yet adopted for the period ended 31 December 2017. As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations in issue not yet adopted by the Company and, therefore, no change is necessary to Group accounting policies.

The key new standard reviewed by the Group was AASB 15 Revenue from Contracts with Customers. The core principle of AASB 15 is that it requires identification of discrete performance obligations within a transaction and associated transaction price allocation to these obligations. Revenue is recognised upon satisfaction of these performance obligations, which occur when control of goods or services is transferred, rather than on transfer of risks and rewards. Revenue received for a contract that includes a variable amount is subject to revised conditions for recognition, whereby it must be highly probable that no significant reversal of the variable component may occur when the uncertainties around its measurement are removed.

DIRECTORS’ DECLARATION

The Directors of the Company declare that:

The financial statements, comprising the consolidated income statement, consolidated statement of consolidated statement of profit or loss, consolidated statement of financial position, consolidated statement of cash flow, consolidated statements of changes in equity, accompanying notes, are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards, the Corporations Regulations 2001, other mandatory professional reporting requirements; and
(b) give a true and fair view of the financial position as at 31 December 2017 and of the performance for the period ended on that date of the consolidated entity;
(c) comply with International Financial Reporting Standards as disclosed in Note 23(a) to the financial statements.
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.
The remuneration disclosures included in the Director’s Report (as part of the Remuneration Report) for the period ended 31 December 2017, comply with section 300A of the Corporations Act 2001 .
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001 .

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:

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John Seaberg Chairman

Dated 28 February 2018

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INDEPENDENT AUDITOR’S REPORT

To the members of Admedus Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Admedus Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 31 December 2017, the consolidated statement of profit or loss, the consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flow for the period then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

a) giving a true and fair view of the Group’s financial position as at 31 December 2017 and of its financial performance for the period then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

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

Material uncertainty related to going concern

We draw attention to Note 1(a) in the financial report, which indicates the existence of a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report .

HLB Mann Judd (WA Partnership) ABN 22 193 232 714

Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533 Email: [email protected] | Website: www.hlb.com.au

Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers

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Key Audit Matter

How our audit addressed the key audit matter

Carrying value of intangible assets

(Refer Note 7)

Description

Audit Approach

As at 31 December 2017, the Group has an intangible assets balance of $5.9 million which relates to patents, intellectual property, a technology licence and goodwill.

For the intangible assets which relate to the ADAPT product portfolio, our procedures included but were not limited to:

Consideration of any indicators of impairment, both internal and external, which would suggest that the cash generating unit’s assets may be impaired;
- Considering whether the assets comprising the cash generating unit had been correctly allocated;

Under AASB 136 Impairment of Assets, goodwill is subject to an annual impairment test and other finite life intangible assets are subject to an impairment test should indicators of impairment arise.

Analysing the performance of the cash generating unit for the period and comparing this with budget expectations;
- Comparing key assumptions in forecast cash flows to historical results and, where these were materially different, critically reviewing the basis for differing future expectations; and

A total of $2.3 million of the intangible assets balance at 31 December 2017 relates to the ADAPT product portfolio. Management allocated these intangible assets to a cash-generating unit and their review indicated that no impairment indicators are present.

Assessing the appropriateness of the disclosures included in the relevant notes to the financial report.

The remaining intangible assets balance of $3.6 million relates to the HPV and HSV-2 vaccines (inclusive of goodwill). At 31 December 2017, management allocated these intangible assets to a cash generating unit and performed an impairment assessment using a fair value less costs of disposal approach, whereby an independent expert was utilised in this process.

For the intangible assets which relate to Vaccines, our procedures included but were not limited to:

Assessing the independence and expertise of the valuer to ensure their report could be relied upon;
- Considering whether the assets comprising the cash-generating unit had been correctly allocated;
- Comparing the recoverable amount of the cash generating unit to its carrying amount;

We consider the recoverable amount of intangible - Considering whether the assets assets to be a key audit matter as it involves comprising the cash-generating unit had complex matters involving subjectivity and been correctly allocated; judgement, it is material to the users’ - Comparing the recoverable amount of the understanding of the financial statements as a cash generating unit to its carrying whole and it required significant auditor attention amount; and communication with those charged with - Assessing other factors which may impact governance. upon the recoverable amount calculation; and

Assessing the appropriateness of the disclosures included in the relevant notes to the financial report.

Accounting for the debt facility and warrant

(Refer Note 6)

Description

As at 31 December 2017, the Group has a borrowings balance of $4.8 million and a balance of $0.2 million relating to the value of the corresponding warrant issued.

These balances arose as a result of the company

Audit Approach

Our procedures included, but were not limited to:

Review of the key terms of the debt facility and warrant agreements entered into;
Review of the independent expert’s

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entering into an agreement for a secured debt facility of up to $10 million. In conjunction with receiving the loan facility from the lender, Admedus has agreed to issue the lender a 7-year warrant for the issue of ordinary shares in the Company.

We considered the accounting for this debt facility and warrant to be a key audit matter as it involved consideration of the appropriate accounting treatment and there is significant estimation involved with the valuation of the warrant.

valuation of the warrant at inception and at reporting date to ensure an appropriate methodology was applied and that the key inputs were correct;

Ensuring that the warrant has been correctly accounted for over the expected term of the financial liability;
Review of management’s assessment of the value of the transaction costs applied against the debt facility;
Ensuring that the debt facility and warrant have been correctly accounted for under the requirements of accounting standards; and
Assessing the appropriateness of the disclosures included in the relevant notes to the financial report.

Information other than the financial report and auditor’s report thereon

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the period ended 31 December 2017, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

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As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the remuneration report

We have audited the remuneration report included in the directors’ report for the period ended 31 December 2017.

In our opinion, the remuneration report of Admedus Limited for the period ended 31 December 2017 complies with section 300A of the Corporations Act 2001 .

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Responsibilities

The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

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HLB Mann Judd Chartered Accountants

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M R Ohm Partner

Perth, Western Australia 28 February 2018

AI assistant

Anteris Technologies Global Corp. — Interim / Quarterly Report 2017

33869_rns_2018-02-27_5f7e605e-d11f-4c05-a38b-4fe60a7f573a.pdf

28.02.18

ASX

ANNOUNCEMENT

Admedus Limited (ASX:AHZ)

ADMEDUS FINANCIAL RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2017

HIGHLIGHTS OF THE SIX MONTH REPORTING PERIOD INCLUDE:

Wayne Paterson, CEO said

About Admedus Limited

For more information, please contact:

Admedus Limited

Appendix 4E (Rule 4.3a)

Preliminary Final Report

Admedus Limited

RESULTS FOR ANNOUNCEMENT TO THE MARKET

(Comparisons to the prior corresponding period refer to the 6 months ended 31 December 2016)

Annual General Meeting

Audit

CORPORATE DIRECTORY

Directors

Company Secretary

Company and Registered Office

Auditors

Solicitors

Bankers

Share Registry

Securities Exchange Listing

CONTENTS

DIRECTORS’ REPORT

DIRECTORS

PRINCIPAL ACTIVITIES

OPERATING RESULT

DIVIDENDS

SHARE CAPITAL

DIRECTORS’ REPORT (continued)

OPERATING AND FINANCIAL REVIEW

Group Overview

Review of Operations

Financial Position

DIRECTORS’ REPORT (continued)

OPERATING AND FINANCIAL REVIEW (continued)

Cash Flow

Material Business Risks

Commercial risk

Clinical trial risk

Competition

Financial performance

Intellectual property

DIRECTORS’ REPORT (continued)

OPERATING AND FINANCIAL REVIEW (continued)

Material Business Risks (continued)

Staff

Likely Developments

Outlook

Business Strategies

DIRECTORS’ REPORT (continued)

OPERATING AND FINANCIAL REVIEW (continued)

Likely Developments (continued)

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

EVENTS SINCE THE END OF THE FINANCIAL PERIOD

ENVIRONMENTAL REGULATIONS

GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS

DIRECTORS’ REPORT (continued)

INFORMATION ON DIRECTORS

Mr Wayne Paterson

Mr John Seaberg

Mr Mathew Ratty

INFORMATION ON DIRECTORS (continued)

Dr Simon Buckingham

COMPANY SECRETARY

MEETINGS OF DIRECTORS

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (Audited)

A Key Management Personnel

B Principles Used to Determine the Nature and Amount of Remuneration

DIRECTORS’ REPORT (continued)

REMUNERATION REPORT (continued)

Non-Executive Director Remuneration Policy

Anteris Technologies Global Corp. Interim / Quarterly Report 2017