BLUGLASS LIMITED

Appendix 4D

Interim Report

ACN Six Months Ended 116825793 31 DECEMBER 2015 Corresponding period was the six months ended 31 December 2014

Results for announcement to the market

RESULTS
		$A	%		$A
Revenues from ordinary activities	Down	(549,950)	27	to	1,458,946
Loss from ordinary activities after tax	Up	(206,842)	13	to	(1,757,972)
attributable to members
Loss for the period attributable to members	Up	(206,842)	13	to	(1,757,972)

EPS	EPS	EPS
Earnings per Security (cents per share)	31 Dec 2015	31 Dec 2014
Basic loss per share (cents per share) Diluted lossper share(centsper share)	(0.55) cents (0.55)cents	(0.54) cents (0.54)cents
Net Tangible Asset Backing 31 Dec 2015 31 Dec 2014
Per OrdinarySecurity (centsper share)	1.37 cents	1.69 cents

Dividend Payable

No dividends have been paid or declared during the period.

Dividend Re-investment Plan

There is no dividend re-investment plan in operation.

Control gained over entities having material effect

Control gained over entities having material effect
	NIL
Loss of control of entities having material effect
Name of entity (orgroupof entities)	NIL
Details of associates and joint venture entities
Name of entity (orgroupof entities)	NIL

This report is based on the Half Year Financial Report which has been subject to review by the Auditors. All the documents comprise the information required by Listing Rule 4.2A. This information should be read in conjunction with the Interim Financial Report for the Half Year Ended 31 December 2015 and the 30 June 2015Annual Financial Report.

==> picture [595 x 629] intentionally omitted <==

INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2015 BLUGLASS LIMITED and CONTROLLED ENTITIES ABN 20 116 825 793

BluGlass Limited

Page 1 of 15

Half Yearly Results 31 December 2009

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

CONTENTS	Page
Directors’ Report	3
Auditor’s Independence Declaration	6
Consolidated Statement of Profit or Loss and Other Comprehensive Income	7
Consolidated Statement of Financial Position	8
Consolidated Statement of Changes In Equity	9
Consolidated Statement of Cash Flows	10
Notes to the Financial Statements	11
Directors’ Declaration	13
Independent Auditor’s Review Report	14

BluGlass Limited

Page 2 of 15

Half Yearly Results 31 December 2015

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

DIRECTORS’ REPORT

Your directors present their report on the company and its controlled entities for the half year ended 31 December 2015.

Directors

The names of directors in office at any time during or since the end of the half year are:

Mr George Venardos

Mr Greg Cornelsen

Mr Chandra Kantamneni

Dr William Johnson

Mr Giles Bourne

Principal Activities

The principal activity of the consolidated entity during the half year was the further development and commercialisation of novel technology for the manufacture of epitaxially grown gallium nitride at low temperature. BluGlass is also engaged in research activities in developing other high efficiency nitride devices.

All research and development activites are conducted in BluGlass Limited. There were no other significant changes in the nature of the consolidated entity’s principal activities during the half year.

Operating Results

Revenue has decreased by $549,950 down 27.4% to $1,458,946 due to the following factors:

Receipt of $192,479 from the Commonwealth Clean Technology grant, down 77% on last year.
Receipt of the operational foundry revenue $138,222 down 29% from prior year.
Accrual of $1,000,000 for the Research and Development Tax Rebate, applicable for the six month period, accrued on the same basis as the prior year.

Gross expenditure has decreased by $343,108, down 9.6% due to the following factors:

Employee benefits expense down 9.7% to $1,255,294 (2014: $1,390,122), and no staff bonus was paid during the period.
Research and Development consumables and repair expense is down 24% due to lower repair expenses and more efficient use of consumables to $414,322 (2014: $544,574).

The consolidated loss for the period amounted to $1,757,972 up 13.3% (2014: $1,551,130).

The company’s net assets as at 31 December 2015 were $12,927,983 (30 June 2015: $13,952,385).

The Statement of Financial Position does not include a value for the increasing number of patents granted during the period since listing on the ASX in 2006 as all research and development costs are expensed as incurred and not capitalised.

Dividends Paid or Recommended

No dividends were paid or declared during the period.

BluGlass Limited

Page 3 of 15

Half Yearly Results 31 December 2015

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

REVIEW OF OPERATIONS

The half year ended 31 December 2015 has seen BluGlass make some material commercial progress along with important technical advancement that is attracting growing interest from different areas of the semiconductor value chain.

The Company is currently involved in a number of discussions with respect to a potential strategic transaction. Should any of these discussions lead to terms being agreed, the Board will advise shareholders accordingly.

In Summary the key achievements during the half year were:

In July 2015 we welcomed SPP Technologies (SPT), a wholly owned subsidiary of Sumitomo Precision Products, to our share register. SPT are active in the Japanese compound semiconductor industry, delivering advanced equipment and process technologies such as plasma etch, plasma enhanced CVD (PECVD) and sacrificial layer etch in Japan. BluGlass is pleased to have this useful ally on our register as we progress towards commercialisation.

In September 2015, BluGlass received a significant foundry order from one of our existing key foundry customers of approximately $300,000; to be delivered over six months. This customer is developing a specialty LED application and BluGlass is supplying the green and blue LED wafers for their innovative product.

In addition to this foundry order, BluGlass has recently secured two new customers, both of which are interested in using RPCVD p-GaN in their product development. The first, an LED customer has already committed to trial RPCVD in their product development. In February 2016 BluGlass also announced that it had received a purchase order from a laser diode customer, developing a unique design that requires low temperature RPCVD p-GaN in order to work most effectively and improve the device performance. This will be the first RPCVD laser diode prototype that we have produced. If successful this will lead to repeat business and will be a further demonstration of the versatility and performance advantages of low temperature RPCVD.

One of the significant achievements during the half year (November 2015) was commencing a collaborative evaluation with a tier-1 LED manufacturer. BluGlass was approached by this LED company and has subsequently commenced a collaborative project to test a custom application of RPCVD which is targeting the improvement of LED performance and cost for a specialty application. BluGlass has invested considerable effort into this project which is advancing with good initial results utilising both of its RPCVD systems.

Also in November last year, we announced that the Veeco Instruments evaluation of RPCVD for green LEDs has moved to the next iteration following positive initial results on 2 inch wafers. The next part of the evaluation is involving greater collaboration between BluGlass and Veeco and focuses on demonstrating good green LED performance on larger size wafers.

The initial evaluation of RPCVD for power electronics for Veeco has shown that the low temperature overgrowth of p-GaN has the potential for a significant performance advantage. This is a very good indicator for BluGlass in its power electronics application development.

BluGlass Limited

Page 4 of 15

Half Yearly Results 31 December 2015

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

One of the particular challenges with power electronics that is important to all of our technology demonstrations is to show thickness uniformity across larger wafers. To this end, BluGlass has modelled and designed an upgrade to the existing BLG-300 RPCVD chamber that is now being machined and assembled by specialist external providers. The new chamber incorporates a new metal-organic injection arrangement to improve the thickness uniformity to a commercial standard sought by parties evaluating the RPCVD technology. The new chamber builds on the existing performance results we are achieving. The new chamber is scheduled to be installed and operational next quarter.

BluGlass is advancing its existing evaluation agreements with two of the industry leaders. From a successful evaluation of the RPCVD technology we envision BluGlass entering into a strategic partnership (licensing / joint venture / joint development) with one or more industry players to take the RPCVD technology to market.

The progress during the half year continues to build a solid position for the Company as we pursue the commercialisation of our breakthrough RPCVD platform technology, and demonstrate to the industry its performance capability and versatility. We are very encouraged that the level of interest from the industry continues to grow, including beyond our current evaluations, and we look forward to keeping our shareholders informed as all of these discussions progress.

Director George Venardos Dated this 22[nd] day of February 2015

Director Giles Bourne

==> picture [122 x 35] intentionally omitted <==

BluGlass Limited

Page 5 of 15

Half Yearly Results 31 December 2015

==> picture [307 x 65] intentionally omitted <==

Level 17, 383 Kent Street Sydney NSW 2000

Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

Auditor’s Independence Declaration To The Directors of BluGlass Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of BluGlass Limited for the half-year ended 31 December 2015, I declare that, to the best of my knowledge and belief, there have been:

a No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
b No contraventions of any applicable code of professional conduct in relation to the review.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

==> picture [71 x 35] intentionally omitted <==

G S Layland Director - Audit & Assurance

Sydney, 22 February 2016

Grant Thornton Audit Pty Ltd ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

Page 6 of 15

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2015

Note Revenue Other Income Employee benefits expense Professional fees Board and secretarial fees Corporate compliance & legal expenses Consultant fees Rent expense Travel and accommodation expense Engineering, consumable & repairs expense Depreciation expense Share based payment Other expenses Loss before income tax Income tax expense Loss for the period Other comprehensive income Total comprehensive loss attributable to members of the parent entity Loss attributable to: --members of the parent entity Total Comprehensive loss attributable -- members of the parent entity Earnings/(loss) per share Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share)	Consolidated Group 31.12.2015 31.12.2014 $ $ 1,291,804 1,784,287 167,142 224,609 (1,255,294) (1,390,122) (95,151) (116,942) (157,634) (140,377) (37,891) (34,532) (221,292) (183,487) (129,160) (125,000) (37,210) (36,914) (414,322) (544,574) (340,750) (388,796) (260,266) (301,272) (267,948) (298,010)
	(1,757,972) (1,551,130) - -
	(1,757,972) (1,551,130)
	- -
	(1,757,972) (1,551,130)
	(1,757,972) (1,551,130)
	(1,757,972) (1,551,130)
	(1,757,972) (1,551,130)
	(1,757,972) (1,551,130)
	(0.55) (0.54) (0.55) (0.54)

These financial statements should be read in conjunction with the accompanying notes.

BluGlass Limited

Page 7 of 15

Half Yearly Results 31 December 2015

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015

ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Consumables
Other current assets
TOTAL CURRENT ASSETS
Non-Current Assets
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Short-term provisions
TOTAL CURRENT LIABILITIES
Non-current Liabilities
Long-term provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated Losses
TOTAL EQUITY

Consolidated Group
31.12.2015
30.06.2015
$
$
2,796,697
2,528,849
1,000,000
2,050,812
84,363
76,919
109,036
57,373
3,990,096
4,713,953
1,036,450
1,376,286
8,695,000
8,695,000
9,731,450
10,071,286
13,721,546
14,785,239
158,990
242,554
209,852
186,651
368,842
429,205
424,721
403,649
424,721
403,649
793,563
832,854
12,927,983
13,952,385
44,992,591
44,519,279
709,028
448,760
(32,773,636)
(31,015,654)
12,927,983
13,952,385

These financial statements should be read in conjunction with the accompanying notes.

BluGlass Limited

Page 8 of 15

Half Yearly Results 31 December 2015

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2015

Balance at 1 July 2014 Total comprehensive loss for the period Transactions with owners in their capacity as owners: Stock options issued Dividends paid or provided for Balance at 31 December 2014 Balance at 1 July 2015 Total comprehensive loss for the period Transactions with owners in their capacity as owners: Share options issued Share Transaction costs during this year Share options issued Dividends paid or provided for Balance at 31 December 2015	Issued Capital Share based payments Reserve Other Reserve Accumulated Losses Total $ $ $ $ $
	42,673,992 940,513 (982,452) (27,832,404) 14,799,655 - - - (1,551,130) (1,551,130) - 301,274 - - 301,274 - - - - -
	42,673,992 1,241,787 (982,452) (29,383,534) 13,549,793
	44,519,279 1,431,212 (982,452) (31,015,654) 13,952,385 - - - (1,757,972) (1,757,972) 514,987 - - - 514,987 (41,683) - - - (41,683) - 260,266 - - 260,266 - - - - -
	44,992,583 1,691,478 (982,452) (32,773,626) 12,927,983

BluGlass Limited

Page 9 of 15

Half Yearly Results 31 December 2015

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2015

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from grants Interest & other income received Payments to suppliers and employees Net cash provided (used)\by in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Net cash (used) in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares net of transaction costs Net cash provided by financing activities Net (decrease)/increase in cash held Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	Consolidated Group 31.12.2015 31.12.2014 $ $ 192,479 833,895 1,266,467 1,175,001 (1,663,489) (1,829,476)
	(204,543) 179,420
	(913) (29,444)
	(913) (29,444)
	473,304 -
	473,304 -
	267,848 149,976 2,528,849 2,445,235
	2,796,697 2,595,211

These financial statements should be read in conjunction with the accompanying notes.

BluGlass Limited

Page 10 of 15

Half Yearly Results 31 December 2015

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2015

Note 1: Nature of Operation

Note 2: Basis of Preparation

These general purpose financial statements for the half-year reporting period ended 31 December 2015 have been prepared in accordance with requirements of the Corporations Act 2001 and AASB 134: Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial reporting standard IAS34 Interim Financial Reporting. The group is a for profit entity for financial reporting purposes under Australian Accounting standards.

This interim financial report is intended to provide users with an update on the latest annual financial statements of BluGlass Limited and its controlled entities (the Group). As such, it does not contain information that represents relatively insignificant changes occurring during the half year within the Group. It is therefore recommended that this financial report be read in conjunction with the annual financial report of the Group for the year ended 30 June 2015, together with any public announcements made during the half-year.

The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements, except in relation to the matters discussed below.

Significant Accounting Policies

The interim financial statements have been prepared in accordance with the accounting policies adopted in the Group’s last annual financial statements for the year ended 30 June 2015.

The financial statements of BluGlass Limited for the half year ended 31 December 2015 were authorised for issue in accordance with a resolution of the directors on 22 February 2016.

Going Concern

Notwithstanding the accumulated losses for the company and the consolidated entity, the directors have performed a review of the cash flow forecasts and have considered the cash flow needs of the company and consolidated entity. The directors have prepared the financial statements on a going concern basis, as the directors have a number of strategies in progress to generate revenues from operations and maintain the company in a cashflow positive position.

Note 3: Loss for the Period

Note 3: Loss for the Period
	Consolidated	Group
	31.12.2015	31.12.2014
The following revenue and expense items are relevant in explaining the financial
performance for the interim period:
Grant revenue	192,479	833,895
R&D Tax rebate	1,000,000	1,000,000

Note 4: Dividends

There were no dividends paid or declared during the period.

Note 5: Operating Segments

The consolidated group operates and reports in one business and geographic segment.

BluGlass Limited

Page 11 of 15

Half Yearly Results 31 December 2015

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2015

Note 6: Losses Per Share

Both the basic and diluted losses per share have been calculated using the losses attributable to shareholders of the Parent Company (BluGlass Limited) as the numerator, i.e. no adjustments to losses were necessary during the six (6) month period to 31 December 2015 and 2014.

The weighted average number of shares for the purposes of the calculation of diluted losses per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic losses per share as follows:

follows:
	6 months to	6 months to
	31-Dec-2015	31-Dec-2014
	$‘000s	$‘000s
Weighted average number of shares used in basic earningsper share	322,255,579	287,748,721
Weighted average number of shares used in diluted earnings per share	322,255,579	287,748,721

Note 7: Contingent liabilities

There has been no change in contingent liabilities since the last annual reporting date.

Note 8: Events subsequent to reporting date

There were no events subsequent to reporting date.

BluGlass Limited

Page 12 of 15

Half Yearly Results 31 December 2015

BLUGLASS LIMITED and Controlled Entities ABN 20 116 825 793

DIRECTORS’ DECLARATION

The directors of the company declare that:

the financial statements and notes as set out on pages 7 to 12 are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards AASB 134 Interim Financial Reporting; and
(b) give a true and fair view of the financial position as at 31 December 2015 and of the performance for the half year ended on that date.
in the directors’ opinion there are reasonable grounds to believe that the group will be able to pay its debts as and when they become due and payable.

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

==> picture [104 x 40] intentionally omitted <==

==> picture [121 x 35] intentionally omitted <==

Director George Venardos Managing Director Giles Bourne

Dated this 22nd day of February 2016

BluGlass Limited

Page 13 of 15

Half Yearly Results 31 December 2015

==> picture [307 x 65] intentionally omitted <==

Level 17, 383 Kent Street Sydney NSW 2000

Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

Independent Auditor’s Review Report To the Members of BluGlass Limited

We have reviewed the accompanying half-year financial report of BluGlass Limited (“Company”), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2015, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a statement or description of accounting policies, other explanatory information and the directors’ declaration of the consolidated entity, comprising both the Company and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

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

Auditor’s responsibility

Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the BluGlass Limited consolidated entity’s financial position as at 31 December 2015 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations

Grant Thornton Audit Pty Ltd ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

Page 14 of 15

==> picture [307 x 46] intentionally omitted <==

Regulations 2001. As the auditor of BluGlass Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of BluGlass Limited is not in accordance with the Corporations Act 2001, including:

a giving a true and fair view of the consolidated entity’s financial position as at 31 December 2015 and of its performance for the half-year ended on that date; and
b complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

==> picture [84 x 41] intentionally omitted <==

G S Layland Director - Audit & Assurance

Sydney, 22 February 2016

Page 15 of 15

AI assistant

BLUGLASS LIMITED Interim / Quarterly Report 2016

64532_rns_2016-02-22_105f284a-fc16-4d7c-9632-3bbf2f29a8d0.pdf

Appendix 4D

Interim Report