GENETIC TECHNOLOGIES LIMITED — Interim / Quarterly Report 2003

Mar 16, 2003

Genetic Technologies Limited ABN 17009 212 328

Directors' Report

The Directors of Genetic Technologies submit herewith the financial report for the half-year ended 31 December 2002. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

The names of the directors of the company during or since the end of the half year are:

Name

Dr Mervyn Jacobson Mr Fred Bart Mr Ian Alistair Dennis

Review of Operations

During the period under review from 1 July 2002 to 31 December 2002 the following significant events occurred:

The Company continued its licensing efforts for its non coding intellectual property and secured licenses with Perlegen Sciences Inc and Myriad Genetics Inc during the six month period.

Perlegen Sciences Inc

The license takes effect from 20 August, 2002, and is limited to the specialised field in genomic research known as "high resolution whole genome analysis", in which Perlegen is today the acknowledged world leader. While the specific terms of the license remain confidential, Perlegen paid Genetic Technologies Limited cash and securities worth approximately A\$1M as an issue fee for this limited license to the GTG patents.

Perlegen, a private US company based in Mountain View, California, uses high density, whole-wafer, micro-array technology to scan entire human genomes with a view to associate complex genetic patterns with either disease or drug responses. Perlegen was formed by Affymetrix, Inc. a leading US maker of micro-arrays used to study genes.

Myriad Genetics Inc

On October 28, 2002 Genetic Technologies Limited, announced the signing of a strategic alliance with Myriad Genetics Inc under which they will cross-license certain technologies related to the identification of non-coding DNA alterations and the assessment of inherited human diseases.

Under the terms of the agreement. Myriad received a broad, non-exclusive license to Genetic Technologies' non-coding DNA analysis and mapping patents for all applications in human therapeutics and diagnostics. Genetic Technologies will become Myriad's exclusive marketing agent in Australia and New Zealand for its world-leading predictive medicine products for a range of important diseases, including breast cancer, ovarian cancer, colon cancer, melanoma and hypertension. The testing for breast and ovarian cancer will be offered through Genetic Technologies' state-of-the-art testing facilities in Melbourne, Australia. The other predictive medicine products will be performed by Myriad in its laboratory in the United States. Myriad has granted Genetic Technologies an option to perform the other tests in Melbourne upon future payment of agreed fees and royalties.

Under the financial terms of the agreement. Myriad paid Genetic Technologies an upfront license fee of US\$1M (A\$1.8M) cash plus annual license fees. Genetic Technologies will pay Myriad various option fees and annual product royalties over the term of the license.

The licensing drive is gaining momentum as the world scientific community starts to understand the importance of the non coding regions and the patents owned by Genetic Technologies Limited. The company has employed a new licensing manager in Melbourne and has increased the resources in the US markets to attend to the growing number of companies who would benefit from a license to our patents.

Other Research Projects

The company continued its research projects into foetal cells, AIDS research and parasitology during the period with leading research institutions.

The company is also gearing up its testing facilities in the Melbourne laboratory to commence its comprehensive genetic susceptibility testing for various cancers including breast cancer and ovarian cancers. This development follows from the strategic alliance formed with Myriad Genetics and announced to the market in October 2002.

Corporate

The Directors are pleased to report that cash generated from operations for the six months was positive for the six month period for the first time in the history of the company. The Company was also cash flow positive for the quarter ended 31 December 2002 and also expects to be cash flow positive for the current financial year.

The Company is continuing with its NASDAQ listing for later this year, however the actual time of listing has not been finalised given the uncertainties in the world share markets.

Signed in accordance with a resolution of directors

On behalf of the Directors

I A Dennis Director Sydney, 5 March 2003