BTC HEALTH LTD — Annual Report 2010

Aug 30, 2010

BioTech Capital Limited

Financial Report - 30 June 2010

	Page
Contents	6
Financial Report
Statement of Comprehensive Income	2
Statement of Financial Position	3
Statement of Cash Flows	4
Statement of Changes in Equity	5
Notes to the Financial Statements	6

This financial report covers BioTech Capital Limited.

BioTech Capital Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

BioTech Capital Limited C/- Titan Bioventures Management Level 9 1 William Street PERTH WA 6000

1

BioTech Capital Limited

Statement of Comprehensive Income For the year ended 30 June 2010

Notes Revenue from continuing operations 2 Management fees 16(c) Directors fees Other expenses from operations Provision for non recovery of receivable Impairment loss on unlisted investments Impairment loss on listed investments reflecting current market value (Loss) from continuing operations before related income tax benefit Income tax benefit (expense) relating to continuing operations 3 (Loss) from continuing operations after related income tax benefit attributable to members of BioTech Capital Limited Other comprehensive income Net fair value gains on available for sale financial assets Income tax on items of other comprehensive income Other comprehensive income, net of tax Total comprehensive (loss) Basic earnings / (loss) per share 19 Diluted earnings / (loss) per share 19	2010 $’000 1,220 (515) (60) (212) (96) (6,044) - (6,927) (5,707) - (5,707) 355 - 355 (5,707) (7.28) cents (7.28) cents	2009 $’000 303 (548) (68) (195) - (2,720) (1,105)
		(4,636)
		(4,333) -
		(4,333)
		- -
		-
		(4,333)
		(5.18) cents (5.18) cents

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

2

BioTech Capital Limited

Statement of Financial Position As at 30 June 2010

Notes Current Assets Cash and cash equivalents 4 Trade and other receivables 5 Held to maturity financial assets 6 Available for sale financial assets 7 Total Current Assets Non-Current Assets Deferred tax assets 3 Available for sale financial assets 7 Total Non-Current Assets Total Assets Current Liabilities Trade and other payables 8 Current tax liabilities 3 Total Current Liabilities Non Current Liabilities Deferred tax liabilities 3 Total Non Current Liabilities Total Liabilities Net Assets Equity Issued Capital 9 Accumulated Losses 10 Reserves 11 Total Equity	2010 $’000 2,169 10 - 9,408 11,587 - 4,551 4,551 16,138 60 - 60 - - 60 16,078 39,339 (23,616) 355 16,078	2009 $’000 2,180 11 851 -
		3,042
		- 20,409
		20,409
		**23,451 **
		77 -
		77
		-
		-
		77
		23,374
		41,283 (17,909) -
		23,374

The above statement of financial position should be read in conjunction with the accompanying notes.

3

BioTech Capital Limited

Statement of Cash Flows

For the year ended 30 June 2010

Notes Cash Flows from Operating Activities Interest received Managers fees paid Payments to suppliers Net cash (outflow) from operating activities 12 Cash Flows from Investing Activities Proceeds from sale (payments for) of investments Receipts (payments for) from term deposits Net cash inflow (outflow) from investing activities Cash Flows from Financing Activities Share Buy-Back payment Net cash (outflow) from financing activities Net increase (decrease) in Cash Held Cash at the beginning of the financial year Cash at the End of the Financial Year 4	2010 $’000 62 (520) (282) (740) 1,822 851 2,673 (1,944) (1,944) (11) 2,180 2,169	2009 $’000 303 (556) (255)
		(508)
		(2,117) (851)
		(2,968)
		(354)
		(354)
		(3,830) 6,010
		2,180

The above statement of cash flows should be read in conjunction with the accompanying notes .

4

BioTech Capital Limited

Statement of Changes in Equity

For the year ended 30 June 2010

	Issued Accumulated Other capital losses reserves Total $'000 $'000 $'000 $'000
At 1 July 2008 Profit (loss) for the year Total income and expense for the year recognised directly in equity Other comprehensive income Total comprehensive (expense) for the year Transaction with owners in their capacity as owners: Share buy backs At 30 June 2009 At 1 July 2009 Profit (loss) for the year Total income and expense for the year recognised directly in equity Other comprehensive income Total comprehensive income (expense) for the year Transaction with owners in their capacity as owners: Share buy-backs At 30 June 2010	41,637 (13,576) - 28,061 - (4,333) - (4,333)
	- (4,333) - (4,333) - - - -
	- (4,333) - (4,333) (354) - - (354)
	41,283 (17,909) - 23,374
	41,283 (17,909) - 23,374 - (5,707) - (5,707) - (5,707) - (5,707) - - 355 355 - (5,707) 355 (5,352) (1,944) - - (1,944) 39,339 (23,616) 355 16,078

The above statement of changes in equity should be read in conjunction with the accompanying notes .

5

BioTech Capital Limited Notes to the Financial Statements For the year ended 30 June 2010

Contents
Note 1	Summary of Significant Accounting Policies	7
Note 2	Revenue	12
Note 3	Income Tax	13
Note 4	Cash and Cash Equivalents	14
Note 5	Trade and Other Receivables	14
Note 6	Held to Maturity Financial Assets	15
Note 7	Available for Sale Financial Assets	15
Note 8	Trade and Other Payables	16
Note 9	Issued Capital	16
Note 10	Retained Profits / (Accumulated Losses)	17
Note 11	Reserves	17
Note 12	Reconciliation of Operating (Loss) after Income Tax to the Net Cash Flow from Operating Activities	18
Note 13	Subsequent Events	18
Note 14	Directors and Executive Disclosure	18
Note 15	Remuneration of Auditors	19
Note 16	Related Party Disclosures	20
Note 17	Operating Segments	20
Note 18	Financial Risk Management Objectives and Policies	20
Note 19	Earnings/(Loss) Per Share	23
Note 20	Dividends	23
Note 21	Contingent Liability	24

6

BioTech Capital Limited Notes to the Financial Statements For the year ended 30 June 2010

Note 1 Summary of Significant Accounting Policies

The Financial Report of Biotech Capital Limited for the year ended 30 June 2010

This general purpose financial report has been prepared in accordance with the requirements of Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001. The financial report was authorised for issue in accordance with a resolution of the directors on 30 August 2010.

It is prepared in accordance with the historical cost convention, except for certain assets which, as noted, are at fair value. BioTech Capital Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian securities exchange. Both the functional currency and presentation currency of BioTech Capital Limited is Australian dollars ($AUD).

Statement of Compliance

Compliance with Australian Accounting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards (‘IFRS’).

New accounting standards and Interpretations

The Company has adopted all new and revised Australian Accounting Standards and AASB Interpretations that are relevant to its operations and effective for reporting periods beginning on 1 July 2009. The following standards have had an impact on the Company:

New or revised requirement	Effective for annual	More information	Impact on Company
	reporting periods
	beginning/ending on
	or after
AASB 101 Presentation of Financial Statements	Beginning 1 January	This has been adopted	The Company has
(Revised September 2007), AASB 2007-8	2009	for the year ended 30	adopted the revised
Amendments to Australian Accounting Standards		June 2010	terminologies for
& Interpretations and AASB 2007-10 Further			presentation of its
Amendments to AASBs arising from AASB 101			financial statements in
			accordance with
The revised standard affects the presentation of			AASB 101.
changes in equity and comprehensive income. It
does not change the recognition, measurement or
disclosure of specific transactions and other events
required by other AASB standards.
AASB 8 Operating Segments, AASB 2007-3	Beginning 1 January	This has been adopted	The Company has
Amendments to Australian Accounting Standards	2009	for the year ended 30	revised its disclosure
5, 6, 102, 107, 119, 127, 134, 136, 1023 & 1038		June 2010	requirements in
arising from AASB 8			accordance with
			AASB 8, for the
This standard supersedes AASB 114 Segment			Company’s operating
Reporting introducing a US GAAP approach of			segments as monitored
management reporting as part of the convergence			by management.
project with FASB.
AASB 123 Borrowing Costs (Revised), AASB 2007-	Beginning 1 January	This has been adopted	The adoption of this
6 Amendments to Australian Accounting Standards	2009	for the year ended 30	standard had no
1, 101, 107, 111, 116, 138 and Interpretations 1 &		June 2010	impact on the
12			Company.
This revision eliminates the option to expense
borrowing costs on qualifying assets and requires
that they be capitalised. The Amending Standard

7

BioTech Capital Limited

Notes to the Financial Statements For the year ended 30 June 2010

New or revised requirement	Effective for annual	More information	Impact on Company
	reporting periods
	beginning/ending on
	or after
eliminates reference to the expensing option in
various other pronouncements.
AASB 2008- 1 – Amendments to AASB2 “Share	Beginning 1 January	This has been adopted	The adoption of this
Based Payments”	2009	for the year ended 30	standard had no
		June 2010	impact on the
The amendment clarifies that vesting conditions			Company.
comprise service conditions and performance
conditions only and that other features of a share-
based payment transaction are not vesting
conditions. It also specifies that all cancellations,
whether by the entity or by other parties, should
receive the same accounting treatment.
AASB 2008-7: Amendments to Australian	Beginning 1 January	This has been adopted	The adoption of this
Accounting Standards – Cost of an Investment in a	2009	for the year ended 30	standard had no
Subsidiary, Jointly Controlled Entity or Associate		June 2010	impact on the
This amends and clarifies the following standards			Company.
AASB 101, AASB 118, AASB 127 & AASB 136
for the treatment of determining the cost of an
investment in a subsidiary, jointly controlled entity
or associate.
AASB 3 Business Combinations (Revised), AASB	Beginning 1 July 2009	This has been adopted	These standards are
127 Consolidated and Separate Financial Statements (Amended), AASB 2008-3 Amendments to AASBs arising from AASB 3 and AASB 127		for the year ended 30 June 2010	applied prospectively and had no material impact on prior
This revision changes the application of acquisition			business combinations.
accounting for business combinations and accounting for non-controlling interests. The revised and amended standards changes affect the valuation of non-controlling interest, the accounting of transaction costs and the initial recognition and subsequent recognition of			The adoption has amended the accounting policy of business combinations for the Company.
contingent considerations.

The following Australian Accounting Standards and Interpretations have recently been issued or amended but are not yet effective and have not been adopted by the Company for the year ended 30 June 2010:

New or revised requirement	Effective for annual	More information	Impact on Company
	reporting periods
	beginning/ending on
	or after
AASB 2009-5: Further Amendments to Australian	Beginning 1 January	This will be adopted	Management does not
Accounting Standards arising from the Annual	2010	for the year ending 30	anticipate any impact
Improvements Project. Amendments are made to		June 2011.	on adoption.
AASB 5, 8, 101, 107, 117, 118, 136 & 139.
AASB 2009-8: Amendments to Australian	Beginning 1 January	This will be adopted	Management does not
Accounting Standards – Company Cash-settled	2010	for the year ending 30	anticipate any impact
Share-based Payment Transactions AASB 2.		June 2011.	on adoption.
The amendments clarify the scope of AASB 2 by
requiring an entity that receives goods or services

8

BioTech Capital Limited

Notes to the Financial Statements For the year ended 30 June 2010

New or revised requirement	Effective for annual	More information	Impact on Company
	reporting periods
	beginning/ending on
	or after
in a share-based payment arrangement to account
for those goods or services no matter which entity
in the Company settles the transaction, and no
matter whether the transaction is settled in shares
or cash.
The amendments incorporate the requirements
previously included in Interpretation 8 and
Interpretation 11 and as a consequence these two
Interpretations are superseded by the amendments.
AASB 9: Financial Instruments and AASB 2009-	Beginning 1 January	This will be adopted	Management does not
_11:_Amendments to Australian Accounting	2013.	for the year ending 30	anticipate any impact
Standards arising from AASB 9_[AASB 1, 3, 4, 5,_		June 2014.	on adoption.
7, 101, 102, 108, 112, 118, 121, 127, 128, 131,
132, 136, 139, 1023 & 1038 and Interpretations 10
& 12].
AASB 9 simplifies the classifications of financial
assets into two categories:
• Those carried at amortised cost; and
• Those carried at fair value.
Simplifies requirements related to embedded
derivatives that exist in financial assets that are
carried at amortised cost, such that there is no
longer a requirement to account for the embedded
derivative separately.
Removes the tainting rules associated with held-to-
maturity assets.
Investments in unquoted equity instruments (and
contracts on those investments that must be settled
by delivery of the unquoted equity instrument)
must be measured at fair value. However, in
limited circumstances, cost may be an appropriate
estimate of fair value.
AASB 2009-10:Amendments to Australian	Beginning 1 February	This will be adopted	Management does not
Accounting Standards - Classification of Rights	2010	for the year ending 30	anticipate any impact
Issues.		June 2011.	on adoption.
Clarifies that rights options or warrants to acquire a
fixed number of an entities own equity instruments
for a fixed amount in any currency are equity
instruments if the entity offers the rights, options or
warrants pro rata to all existing owners of the same
class of its own non-derivative equity instruments.

9

BioTech Capital Limited Notes to the Financial Statements For the year ended 30 June 2010

New or revised requirement	Effective for annual	More information	Impact on Company
	reporting periods
	beginning/ending on
	or after
AASB 2009-12:Amendments to Australian	Beginning 1 January	This will be adopted	Management does not
Accounting Standards [AASBs 5, 8, 108, 110, 112,	2011	for the year ending 30	anticipate any impact
119, 133, 137, 139, 1023 & 1031 and		June 2012.	on adoption.
Interpretations 2, 4, 16, 1039 & 1052].
AASB 2009-12 makes amendments to a number of
Standards and Interpretations. In particular, it
amends AASB 8_Operating Segments_to require an
entity to exercise judgement in assessing whether a
government and entities known to be under the
control of that government are considered a single
customer for the purposes of certain operating
segment disclosures.
It also makes numerous editorial amendments to a
range of Australian Accounting Standards and
Interpretations, including amendments to reflect
changes made to the text of IFRSs by the IASB.
Revised AASB 124: Related Party Disclosures	Beginning 1 January	This will be adopted	Management does not
_(December 2009):_Related Party Disclosures	2011	for the year ending 30	anticipate any impact
(December 2009).		June 2012.	on adoption.
Simplifies the definition of a related party,
clarifying its intended meaning and eliminating
inconsistencies from the definition of a related
party.
Interpretation 19: Extinguishing Financial	Beginning 1 July 2010	This will be adopted	Management does not
Liabilities with Equity Instruments.		for the year ending 30	anticipate any impact
Requires the extinguishment of a financial liability		June 2011.	on adoption.
by the issue of equity instruments to be measured
at fair value (preferably using the fair value of the
equity instrument issued) with the difference
between the fair value of the instrument and the
carrying value of the liability extinguished being
recognised in profit or loss. The Interpretation does
not apply where the conversion terms were
included in the original contract (such as in the
case of a convertible debt) or to common control
transactions.

(a) Income Tax

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised.

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

10

BioTech Capital Limited Notes to the Financial Statements For the year ended 30 June 2010

when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

(b) Recoverable Amounts of Assets

At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

(c) Revenue Recognition

Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.

(d) Investments and other Financial Assets

(i) Available-for-sale

All investments are initially recognised at fair value, being the fair value of the consideration given and including transaction costs that are directly attributable to the acquisition or issue of the investment. After initial recognition, investments, which are classified as available-for-sale, are measured at fair value. Gains or losses on available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the statement of comprehensive income. For investments that are actively traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date. For investments that are unquoted, fair value cannot be reliably measured, as a result are reflected at cost.

(ii) Held-to-maturity

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-tomaturity when the company has the positive intention and ability to hold to maturity. Investments that are intended to be held-to-maturity, such as term deposits, are initially recognised at fair value and subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount.

(e) Cash and cash equivalents

Cash and short-term deposits in the statement of financial position comprises of cash at bank and in hand and shortterm deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of change in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(f) Trade and other creditors

These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(g) Earnings / (Loss) per share

• (i) Basic earnings / (loss) per share

Basic earnings per share is determined by dividing net profit after income tax attributable to members of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

11

BioTech Capital Limited Notes to the Financial Statements For the year ended 30 June 2010

(ii) Diluted earnings / (loss) per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(h) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(i) Rounding of Amounts to Nearest Thousand Dollars

The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities & Investments Commission, relating to the “rounding off” of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

(j) Significant accounting judgments, estimates and assumptions

In applying the Company's accounting policies, management continually evaluates judgments, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the Company. All judgments, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgments, estimates and assumptions. Significant judgments, estimates and assumptions made by management in the preparation of these financial statements are outlined below:

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences.

Classification of and valuation of investments

The Company has decided to classify investments in listed and unlisted securities as 'available -for-sale' investments and movements in fair value are recognised directly in equity. The fair value of listed shares has been determined by reference to published price quotations in an active market. The fair values of unlisted securities not traded in an active market are measured at cost less impairment. This is because directors consider that the fair value cannot be reliably measured.

Impairment of financial assets

The company assesses impairment of all assets at each reporting date by evaluating conditions specific to their investments and to the particular asset that may lead to impairment. If an impairment trigger exists the recoverable amount of the asset is determined. This involves impacts on estimated future cash flows which incorporate a number of key estimates and assumptions. The Board reviews the latest financial results of unlisted companies, project updates from the investment manager and market data available to determine any impairment on unlisted investments. Impairment is made based on management best estimates of future estimated cash flows. An impairment loss on listed investments of nil (2009: $1,105,000) and an impairment loss on unlisted investments of $6,043,832 (2009: $2,720,000) has been recorded in the statement of comprehensive income.

Note 2 Revenues from Ordinary Activities

Finance revenue – bank Profit on sale of financial assets Fair value movement on financial assets	30 June 2010 $’000 30 June 2009 $’000 62 303 901 - 257 - 1,220 303

12

BioTech Capital Limited Notes to the Financial Statements For the year ended 30 June 2010

Note 3 Income Tax

Major components of income tax expense for the years ended 30 June 2010 and 2009 are:

30 June 2010 $’000 Statement of Comprehensive Income Current Income Current income tax benefit - Adjustments in respect to current income tax of previous years - Deferred Income Tax Relating to origination and reversal of temporary differences - Income tax expense reported in the statement of comprehensive income - Statement of changes in equity Deferred Income Tax Unrealised gain on available for sale financial assets - Income tax benefit reported in equity - A reconciliation of income tax expense (benefit) applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the company’s effective income tax rate for the years ended 30 June 2010 and 2009 is as follows: Accounting profit (loss) before tax from continuing operations (5,707) Loss before tax from discontinued operations - Accounting profit (loss) before income tax (5,707) At the statutory income tax rate of 25% (2009: 25%) (1,427) Adjustments in respect of current income tax of previous years - Expenditure not allowable for income tax purposes 1,471 Temporary differences and tax losses not brought to account as a deferred tax asset (44) At effective income tax rate of (0%) (2009: (0%)) - Income tax expense reported in statement of comprehensive income - Income tax attributable to discontinued operation - - Note: The tax rate of 25% is because the Company has Pooled Development Fund status. Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Assets Liabilities 2010 $’000 2009 $’000 2010 $’000 2009 $’000 Fair value adjustments of investments - - - Capital raising costs - - - Tax (assets) liabilities - - - Set off of tax - - - Net tax (assets) liabilities - - -	30 June 2010 $’000 Statement of Comprehensive Income Current Income Current income tax benefit - Adjustments in respect to current income tax of previous years - Deferred Income Tax Relating to origination and reversal of temporary differences - Income tax expense reported in the statement of comprehensive income - Statement of changes in equity Deferred Income Tax Unrealised gain on available for sale financial assets - Income tax benefit reported in equity - A reconciliation of income tax expense (benefit) applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the company’s effective income tax rate for the years ended 30 June 2010 and 2009 is as follows: Accounting profit (loss) before tax from continuing operations (5,707) Loss before tax from discontinued operations - Accounting profit (loss) before income tax (5,707) At the statutory income tax rate of 25% (2009: 25%) (1,427) Adjustments in respect of current income tax of previous years - Expenditure not allowable for income tax purposes 1,471 Temporary differences and tax losses not brought to account as a deferred tax asset (44) At effective income tax rate of (0%) (2009: (0%)) - Income tax expense reported in statement of comprehensive income - Income tax attributable to discontinued operation - - Note: The tax rate of 25% is because the Company has Pooled Development Fund status. Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Assets Liabilities 2010 $’000 2009 $’000 2010 $’000 2009 $’000 Fair value adjustments of investments - - - Capital raising costs - - - Tax (assets) liabilities - - - Set off of tax - - - Net tax (assets) liabilities - - -	30 June 2009 $’000 - - - - - - (4,333) - (4,333) (1,083) - 956 127 - - - - Net 2010 $’000 2009 $’000 - - - - - -
	- - - - - -	- - - - - -
	- - -	- - -

13

BioTech Capital Limited

Notes to the Financial Statements For the year ended 30 June 2010

Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items: Tax Losses Other Investments Investment Provision The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of this item because it is not probable that future taxable profit will be available against which the company can utilise the benefits from.

30 June 2010 $’000 30 June 2009 $’000 1,860 4 1,904 3 267 1,314 1,034 408 3,445 3,349

Movement in deferred tax assets / liabilities

Movement in deferred tax assets / liabilities
	Balance		Recognised		Recognised	Balance
	1 July 2008		in Income		in Equity	30 June 2009
	$’000		$’000		$’000	$’000
Fair value adjustments of investments		-		-	-	-
Capital raising costs		-		-	-	-
		-		-	-	-
	Balance		Recognised		Recognised	Balance
	1 July 2009		in Income		in Equity	30 June 2010
	$’000		$’000		$’000	$’000
Fair value adjustments of investments		-		-	-	-
Capital raising costs		-		-	-	-
		-		-	-	-

Note 4 Cash and cash equivalents

Cash at bank and on hand Term Deposits	30 June 2010 $’000 30 June 2009 $’000 164 159 2,005 2,021 2,169 2,180

Cash at bank and on hand earns interest at floating rates based on daily bank deposit rates. Term deposits are made for varying periods; those deposits with a maturity date less than 3 months are classified as cash equivalents and earn interest at the respective term deposit rate.

Note 5 Trade and other receivables

Investment receivable Provision for non recovery of receivable GST recoverable	30 June 2010 $’000 96 (96) 10 10	30 June 2009 $’000 - - 11
		11

Trade and other receivables are non-interest bearing and are generally on a 60 day term.

14

BioTech Capital Limited Notes to the Financial Statements For the year ended 30 June 2010

Note 6 Held to maturity financial assets

6 Held to maturity financial assets
Term deposits	30 June 2010 $’000 - -	30 June 2009 $’000 851
		851

Term deposits are made for varying periods; those deposits with a maturity greater than 3 months are classified as held to maturity financial assets and earn interest at the respective term deposit rate.

Note 7 Available for Sale Financial Assets

Current Investment in listed companies – at market value Investment in Convertible Notes – listed company Investment in unlisted Companies – at fair value Investments in Convertible Notes – unlisted companies Less impairment loss on unlisted investments Total Available for sale Financial Assets Non Current Investment in listed companies – at market value Investment in Convertible Notes – listed company Investment in unlisted Companies – at fair value Investments in Convertible Notes – unlisted companies Less impairment loss on unlisted investments Total Available for sale Financial Assets	30 June 2010 $’000 2,614 1,478 7,201 235 (2,120) 9,408 - - 9,563 1,631 (6,643) 4,551	30 June 2009 $’000
		-
		-
		-
		-
		- -
		3,332
		1,167
		16,764
		1,866
		(2,720) 20,409

Available for sale financial assets consist of investments in ordinary shares or convertible notes into ordinary shares.

Listed shares

The fair value of listed available-for-sale investments has been determined directly by reference to published price quotations in an active market.

Unlisted shares

The fair value of unlisted available for sale investments cannot be reliably measured as they are not supported by observable market prices or rates. As a result, all unlisted investments are reflected at cost less impairment write down. Convertible Note – Listed entity

The convertible note in Phylogica Limited relates to the conversion of a maximum of 25,000,000 shares, the fair value has been determined by reference to the published price quoted for Phylogica Limited’s shares.

Impairment Loss on Unlisted Investments

An allowance for impairment loss is recognised when there is objective evidence that unlisted investments are impaired. During the year, the Board obtained the latest financial results of unlisted companies and reviewed project updates from the investment manager. Based on management’s best estimate of information available, the Board decided to record an impairment loss. An impairment loss on unlisted investments of $6,043,832 (2009: $2,720,000) has been recorded in the statement of comprehensive income.

15

BioTech Capital Limited

Notes to the Financial Statements For the year ended 30 June 2010

Summary of changes in investments available for sale Opening Acquisitions Impairment loss on unlisted investments Disposals Revaluations Closing	30 June 2010 $’000 20,409 - (6,044) (1,018) 612 13,959	30 June 2009 $’000 22,117 2,117 (2,720) - (1,105)
		20,409

Biotech Capital Limited (BTC) is not equity accounting investments it has greater than a 20% interest in because the characteristics of the investments confirm it does not exert significant influence. The investments concerned are Continara, Pacific Knowledge Systems Pty Ltd, XRT Ltd, Sensear Pty Ltd and Phylogica Limited. The reasons significant influence is not exerted include that BTC has no significant participation in policy making processes, the investee entities have no economic dependency on BTC, other investors hold a similar percentage interest in the entities, the Board representation in the entities by BTC is only one in each case and there is no interchange of managerial personnel between the entities and BTC.

Note 8 Trade and other payables

Managers fees payable – director related entity Director fees payable Trade Creditors Audit fees payable	30 June 2010 $’000 30 June 2009 $’000 41 47 - - 5 17 14 13 60 77

Trade and other payables are non-interest bearing and are generally settled on 60 day terms.

Note 9 Issued Capital

2010 Shares 2010 $’000 2009 Shares (a) Ordinary Shares Issued and fully paid 74,554,108 39,339 81,909,505 (b) Movements in ordinary shares on issue: 2010 2010 2010 2009 2009 Date Details No. of Shares Issue Price $’000 No. of Shares Issue Price 30/06/2009 Opening Equity 81,909,505 41,283 84,039,505 July 2009 to June 2010 Share Buy- Back/Cancellation (7,355,397) (1,944) (2,130,000) (7,355,397) (1,944) (2,130,000) 30/06/2010 Closing Equity 74,554,108 39,339 81,909,505	2010 Shares 2010 $’000 2009 Shares (a) Ordinary Shares Issued and fully paid 74,554,108 39,339 81,909,505 (b) Movements in ordinary shares on issue: 2010 2010 2010 2009 2009 Date Details No. of Shares Issue Price $’000 No. of Shares Issue Price 30/06/2009 Opening Equity 81,909,505 41,283 84,039,505 July 2009 to June 2010 Share Buy- Back/Cancellation (7,355,397) (1,944) (2,130,000) (7,355,397) (1,944) (2,130,000) 30/06/2010 Closing Equity 74,554,108 39,339 81,909,505	2010 Shares 2010 $’000 2009 Shares 74,554,108 39,339 81,909,505	2010 Shares 2010 $’000 2009 Shares 74,554,108 39,339 81,909,505	2010 Shares 2010 $’000 2009 Shares 74,554,108 39,339 81,909,505	2009 $’000 41,283
			2010 $’000	2009 2009 No. of Shares Issue Price	2009 $’000
	81,909,505		41,283	84,039,505	41,637
	(7,355,397) (7,355,397)		(1,944) (1,944)	(2,130,000) (2,130,000)	(354)
					(354)
	74,554,108		39,339	81,909,505	41,283

(c) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

The company does not have authorised capital or par value in respect of its issued capital.

16

BioTech Capital Limited

Notes to the Financial Statements For the year ended 30 June 2010

Note 10 Retained Profits/(Accumulated Losses)

Retained profits/(Accumulated losses) at the beginning of the financial year Net Profit (Loss) Retained profits/(Accumulated losses) at the end of the financial year Note 11 Reserves Net Unrealised Gains Reserve Net Unrealised Gains Reserve Movements During the Year Opening Balance Net revaluation increment on listed investments, net of 15% tax Closing Balance	30 June 2010 $’000 (17,909) (5,707) (23,616) 30 June 2010 $’000 355 355 - 355 355	30 June 2009 $’000 (13,576) (4,333)
		(17,909)
		30 June 2009 $’000 -
		-
		- -
		-

This reserve records the movement for available for sale financial assets to fair value. Unrealised gains and unrealised losses are arrived at by comparing the balance date value of each investment, as determined in accordance with the company’s declared valuation policy, with the investment’s cost price. The above unrealised gain on listed investments reflects market value at 30 June 2010. During the year, all unrealised impairment losses have been taken directly to the statement of comprehensive income. These calculations do not take into account incentive fees which might be payable to the Manager, or other persons, relating to gains realised on disposal of any investments. The balance of this reserve does not represent funds available for distribution to shareholders in specie, because of the unrealised nature of the net gain involved.

Note 12 Reconciliation of Operating (Loss) after Income Tax to the Net Cash Flow from Operating Activities

Operating (loss) after income tax Adjustment for: Provision for Loss on Unlisted Investments Unrealised Impairment Loss on Listed Investments Fair Value Movement in Investments Provision for Non recovery of receivable Profit on Sale of Investments Changes in assets and liabilities: (Increase) / Decrease in trade and other debtors (Decrease) / Increase in trade and other payables Net cash flow from operating activities	30 June 2010 $’000 (5,707) 6,044 - (257) 96 (901) - (15) (740)	30 June 2009 $’000 (4,333) 2,720 1,105 - - - 1 (1)
		(508)

17

BioTech Capital Limited

Notes to the Financial Statements For the year ended 30 June 2010

Note 13 Subsequent Events

On 12 August 2010, the Company announced it was adopting a change in investment strategy and restructuring. The Board believes the current portfolio should be liquidated in an orderly manner over the next 18 months with proceeds being returned to shareholders through a combination of dividends and other capital management strategies.

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the company, the results of those operations or the state of affairs of the economic entity in future financial years.

Note 14 Key Management Personnel

• (a) Name and position of key management personnel of the company in office at any time during the financial year: (i) Directors

K T Greiner – Chairman (non executive)

• A.Basten – non executive (resigned 12 August 2010)

• A.J.Davidson – non executive

• H.Karelis – Managing Director

• (ii) Executives

None noted.

• (b) Remuneration of each key management personnel during the year (see also notes below)

2010 (i) Directors K.T.Greiner Chairman (non-executive) A.Basten (non-executive) A.J.Davidson (non-executive) H.Karelis Managing Director (see note 16(c)) Total Remuneration 2009 (i) Directors K.T.Greiner Chairman (non-executive) A.Basten (non-executive) A.J.Davidson (non-executive) H.Karelis Managing Director (see note 16(c)) L.McIntyre (non-executive) resigned 19/11/2008 Total Remuneration	Short term employee benefits Post Employment Benefits Equity Options Other Benefits Total $
	20,000 - - - 20,000 - 20,000 - - 20,000 - 20,000 - - 20,000 515,409 - - - 515,409
	535,409 40,000 - - 575,409
	Short term employee benefits Post Employment Benefits Equity Options Other Benefits Total $
	20,000 - - - 20,000 - 20,000 - - 20,000 5,000 15,000 - - 20,000 548,170 - - - 548,170 7,026 695 - - 7,721
	580,196 35,695 - - 615,891

Note: None of the above directors fees are performance based.

18

BioTech Capital Limited Notes to the Financial Statements For the year ended 30 June 2010

• (c) Remuneration Options

No key management personnel of the company has received any options (listed or unlisted) as part of their remuneration during this financial year (2009 Nil).

(d)

• Remuneration Practices

With the exception of the Managing Director, Mr Karelis, the remuneration of each director has been established on the basis of a flat fee, inclusive of any superannuation benefit. Thus there is no direct link, as such, between performance and the level of remuneration.

Mr Karelis is a beneficiary and managing director of Titan Bioventures Management Pty Ltd (Titan), the company’s investment manager. Mr Karelis has not been and is not being remunerated by the company. However during the year, he has received and will receive benefits from his equity interest in and services provided to Titan. Details of management fees paid and payable during the year to Titan are shown in Note 16.

• (e) Equity instrument disclosures relating to key management personnel

Share holdings

The numbers of shares in the company held during the financial year by each director of BioTech Capital Limited, including their personallyrelated entities, are set out below.

Year ended 30 June 2010

Year ended 30 June 2010
Name	Balance at the start of the year	Received during the year on the exercise of options	Other net changes during the year	Balance at the end of the year
Ordinary shares (i)Director
K.T.Greiner	12,700	-	-	12,700
A.Basten	10,000	-	-	10,000
A.J.Davidson	120,000	-	-	120,000
H.Karelis	800,000	-	-	800,000
Year ended 30 June 2009
Name	Balance at the start of the year	Received during the year on the exercise of options	Other net changes during the year	Balance at the end of the year
Ordinary shares (i)Director
K.T.Greiner	12,700	-	-	12,700
A.Basten	10,000	-	-	10,000
A.J.Davidson	120,000	-	-	120,000
H.Karelis	800,000	-	-	800,000
L.M.McIntyre	13,000	-	-	13,000

Note 15 Remuneration of Auditors

PKF Remuneration for audit or review of the financial statements Remuneration for non-audit - taxation and other services DTT Remuneration for audit or review of the financial statements Remuneration for non-audit - taxation and other services	30 June 2010 $ 30 June 2009 $ 10,970 27,005 4,190 13,900 14,500 - - -

19

BioTech Capital Limited Notes to the Financial Statements For the year ended 30 June 2010

Note 16 Related Party Disclosures

(a) Remuneration Benefits

Information on remuneration benefits of key management personnel is disclosed in note 14.

(b) Transactions of directors and director related entities concerning shares or share options.

Aggregate number of shares of Biotech Capital Limited acquired or disposed of by directors of the company or their director related entities.

or their director related entities.
	2010		2009
	Number		Number
Ordinary shares acquired/(disposed of)		-		-

Aggregate number of shares of Biotech Capital Limited held directly, indirectly or beneficially by directors of the company or their director related entities at balance date. Ordinary Shares 955,700 955,700

(c) Transactions with directors and director related entities:

The terms and conditions of the transactions with directors and their director related entities were no more favourable than those available or which might reasonably be expected to be available, on similar transactions to non-director entities on an arm’s length basis.

Titan Bioventures Management Pty Ltd (‘Titan’), a company in which Harry Karelis is a director and beneficiary, is the investment manager of Biotech Capital Limited and commenced this role on 9 April 2004.

The Manager is entitled to be paid an annual management fee equal to 2.0% of the net value of the assets calculated on a quarterly basis. During the period to 30 June 2010 the management fees paid were $515,409 (2009: $548,170).

Performance Fee:

The Manager is also entitled to receive a performance fee of 10% of the difference between the realised value of an investment and the cost of the investment. This performance fee is to be reduced by any unrealised losses that may exist in the balance of the investment portfolio, and the Company is also entitled to a rebate of 30% on any performance fee payable. No performance fee was payable during the period. The balance date contingent liability relating to the performance fee is shown in Note 20.

Note 17 Operating Segments

The company operates in one business segment where it invests in entities operating in the life-science/biotechnology sectors. The company operates in one geographical segment being Australia.

Note 18 Financial Risk Management Objectives and Policies

Financial Risk Management Overview

The company have exposure to the following risks from their use of financial instruments – interest rate risk, credit risk, liquidity risk and market price risk. This note presents information about the Company’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital.

The Board of Directors have overall responsibility for the establishment and oversight of the risk management framework. The board reviews regularly the adequacy of the risk management framework in relation to the risks faced by the company. The company’s principal financial instruments comprise cash and short term term deposits and available for sale financial assets. The company has other financial instruments such as trade debtors and trade creditors which arise directly from its operations. The company’s policy in relation to the valuation of investments traded on organised markets, and unlisted investments has been described in Note 1(d). The investment manager performs reviews of investments on a regular basis, that is then reported to the Board, to allow them to make decisions regarding the company’s investments.

20

BioTech Capital Limited

Notes to the Financial Statements

For the year ended 30 June 2010

Interest Rate Risk

Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from fluctuations in interest bearing financial assets and liabilities that the company uses. The company’s financial assets which are affected by interest rate risk are the company’s cash and cash equivalents and term deposits held. The company manages its interest cost by using a mix of fixed and variable rates and trades only with recognised credit worthy third parties.

The following table sets out the carrying amount, by maturity, of the financial instruments that are exposed to interest rate risk:

30 June 2010

Financial Assets Cash Term deposits – cash equivalents Term deposits – held to maturity financial assets Receivables Available for sale financial assets: Listed investments Unlisted investments Total financial assets Financial liabilities - Payables Total financial liabilities Net Financial Assets	Balance $’000 Interest Rate Weighted Average Effective Interest Rate 164 Floating 4.30% 2,005 Floating 5.39% - Floating - 10 N/A - 4,093 9,866 N/A N/A 16,138 60 N/A - 60 16,078

30 June 2009

Financial Assets Cash Term deposits – cash equivalents Term deposits – held to maturity financial assets Receivables Available for sale financial assets: Listed investments Unlisted investments Total financial assets Financial liabilities - Payables Total financial liabilities Net Financial Assets	Balance $’000 Interest Rate Weighted Average Effective Interest Rate 159 Floating 3.05% 2,021 Floating 3.94% 851 Floating - 11 N/A - 4,204 16,205 N/A N/A 23,451 77 N/A - 77 23,374

Fair value sensitivity analysis for fixed rate instruments

The company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or loss.

21

BioTech Capital Limited

Notes to the Financial Statements For the year ended 30 June 2010

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. The analysis is performed on the same basis for 2009.

30 June 2010 Cash and cash equivalents Term deposits – cash equivalents Cash flow sensitivity (net) 30 June 2009 Cash and cash equivalents Term deposits – cash equivalents Term deposits – held to maturity Cash flow sensitivity (net)	Carrying Value	Profit or loss Equity
		100bp increase 100bp decrease 100bp increase 100bp decrease
	$’000 164 2,005 159 2,021 851	$’000 $’000 $’000 $’000 2 (2) 2 (2) 20 (20) 20 (20)
		22 (22) 22 (22) 2 (2) 2 (2) 20 (20) 20 (20) 9 (9) 9 (9)
		31 (31) 31 (31)

Credit Risk

Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the company's financial assets. The company’s maximum exposure to credit risk at balance date in relation to each class of recognised financial asset is the carrying amount of these assets.

Liquidity Risk

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

30 June 2010 Trade and other payables 30 June 2009 Trade and other payables	Carrying amount Contractual cash flows 6 mths or less
	$’000 $’000 $’000 60 60 60
	60 60 60 Carrying amount Contractual cash flows 6 mths or less
	$’000 $’000 $’000 77 77 77
	77 77 77

Fair Value of Financial Assets and Liabilities

There is no difference between the fair values and the carrying amounts of the company’s financial instruments. The company has no unrecognised financial instruments at balance date.

Market Price Risk

Equity price risk arises from available-for-sale equity securities held as a part of the company's operations. Investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the Board of Directors. The primary goal of the Company’s investment strategy is to maximise investment returns on sale of investments. Listed investments are designated as available for sale financial assets because their performance is actively monitored and they are managed on a fair value basis. Unlisted investments are designated as available for sale financial assets, however their performance is not supported by observable data and therefore recorded at cost.

Sensitivity analysis on changes in market equity prices

A change of 20% (based on the Board’s assessment of share price movements during the period and similar movements in the life sciences industry) in equity prices at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. The analysis is performed on the same basis for 2009. In 2009 and 2010, if equity prices decreased, movement would be recorded in the income statements due to impairment indicators noted, while if equity prices increased, movement would be taken to the asset revaluation reserve directly in equity.

22

BioTech Capital Limited

Notes to the Financial Statements

For the year ended 30 June 2010

30 June 2010 Available for sale financial assets: Listed investments Unlisted investments 30 June 2009 Available for sale financial assets: Listed investments Unlisted investments	Carrying Value	Profit or loss Equity 20% increase 20% decrease 20% increase 20% decrease
	$’000 4,093 9,866 4,204 16,205	$’000 $’000 $’000 $’000 - (819) 819 (819) - - - -
		- (819) 819 (819) - (841) 841 (841) - - - -
		- (841) 841 (841)

Impairment losses

An impairment loss of nil (2009: $1,105,496) was recognised in respect of listed available for sale investments due to significant decline in the securities market during the period.

Capital risk management

The Company objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The management of the Company's capital is performed by the Board. The company is not subject to externally imposed capital requirements. The Company’s overall strategy remains unchanged from 2009.

The capital structure of the Company consists of cash and cash equivalents and equity attributable to equity holders, comprising issued capital, reserves and retained earnings. Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax and general administrative outgoings.

	30 June 2010	30 June 2009
	$’000	$’000
Categories of financial instruments
Financial assets
Cash and cash equivalents	2,169	2,180
Trade and other receivables	10	11
Held to maturity financial assets	-	851
Available for sale financial assets	13,959	20,409
Financial liabilities
Trade and other payables	60	77

Note 19 Earnings/(Loss) Per Share

	30 June 2010	30 June 2009
Basic earnings/(loss) per share, based on the after tax	(7.28) cents per	(5.18) cents per
benefit loss of ($5,707,288) (2009: ($4,333,491))	share	share
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share	78,345,124 shares	83,716,898 shares

For the purposes of Diluted EPS there have been no diluting potential ordinary shares outstanding during the year. There have been no other transactions involving ordinary shares or potential ordinary share since the reporting date and before the completion of these financial statements.

Note 20 Dividends

On 30 August 2010, the directors declared an unfranked final dividend of 2 cents per share to the holders of fully paid ordinary shares in respect of the financial year ended 30 June 2010. This dividend has not been included as a liability in these financial statements. The dividend will be paid to all shareholders on the Register of Members on 9 September 2010. The total estimated dividend to be paid is $1,491,000.

23

BioTech Capital Limited Notes to the Financial Statements

For the year ended 30 June 2010

Note 21 Contingent Liability

Performance Fee

It has been assessed that if all investments were realised at their balance date book values, and after taking into account the company’s rebate entitlement, the performance fee payable to the Manager would be nil (2009: nil). The basis of the performance fee calculation has been described in Note 16. No liability has been recognised in respect to this.

24

BioTech Capital Limited

25