GENETIC TECHNOLOGIES LIMITED — Interim / Quarterly Report 2010

Aug 29, 2010

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GENETIC TECHNOLOGIES LIMITED A.B.N. 17 009 212 328

ASX Appendix 4E Preliminary Final Report for the year ended 30 JUNE 2010

GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

ASX APPENDIX 4E

The following information for Genetic Technologies Limited (“GTG” and the “Company”) is provided under Listing Rule 4.3A of the Listing Rules of the Australian Securities Exchange (“ASX”). The financial information provided in this Appendix 4E covers the consolidated Group, comprising Genetic Technologies Limited (the parent entity) and all entities that the Company controlled from time to time during the year and at the reporting date (30 June 2010). The date of this Appendix 4E is 30 August 2010 .

1. The reporting period covers the financial year ended 30 June 2010 (“Reporting Period”). The previous corresponding period is the financial year ended 30 June 2009 (“Previous Period”).

2. Results for announcement to the Market:

		Reporting Period	Movement from Previous Period	Movement from Previous Period
2.1	Consolidated revenue from ordinary activities	$9,970,544	Decreased by $2,211,088	Decreased by 18.2%
2.2	Consolidated loss from ordinary activities after tax attributable to Members of the Company	$(9,343,766)	Increased by $1,502,693	Increased by 19.2%
2.3	Consolidated loss for the Reporting Period attributable to Members of the Company	$(9,343,766)	Increased by $1,502,693	Increased by 19.2%
2.4	No dividends were paid during the Reporting Period nor are any proposed.
2.5	There is no record date for determining dividend entitlements.
2.6	All matters pertaining to the figures above are described elsewhere in this Appendix 4E.

1. The unaudited Consolidated Statement of Comprehensive Income for the consolidated Group covering the Reporting Period and the Previous Period is attached as page 4 of this Appendix 4E.

2. The unaudited Consolidated Balance Sheet for the consolidated Group covering the Reporting Period and the Previous Period is attached as page 5 of this Appendix 4E.

3. The unaudited Consolidated Cash Flow Statement for the consolidated Group covering the Reporting Period and the Previous Period is attached as page 6 of this Appendix 4E.

4. No dividends were paid during the Reporting Period or the Previous Period, nor are any proposed as at the date of this Appendix 4E.

5. The Company does not have a Dividend Reinvestment Plan as at the date of this Appendix 4E.

6. A Statement of Accumulated Losses covering the Reporting Period and the Previous Period is attached as Note 8 on page 11 of this Appendix 4E.

7. The consolidated net tangible assets as at the end of the Reporting Period were 1.03 cents per share. The corresponding figure as at the end of the Previous Period was 2.54 cents per share.

8. On 28 June 2010, Genetic Technologies Limited initiated the incorporation of Phenogen Sciences Inc. (“Phenogen”) in the US state of Delaware. All of the issued shares in Phenogen are owned by Genetic Technologies Limited. During the period from the date on which control was obtained to 30 June 2010, no revenues were generated nor expenses incurred by Phenogen.

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

ASX APPENDIX 4E (cont.)

1. During the Reporting Period, the consolidated Group held no interests in any associated entities.

2. Apart from the information contained elsewhere in this Appendix 4E, there is no other significant information needed by an investor to make an informed assessment of the Company’s financial performance and financial position as at the Reporting Date.

3. The Company is not a foreign entity.

4. Commentary on the financial results

Overview

During the 2010 financial year, Genetic Technologies Limited and its subsidiaries generated consolidated gross revenues and other income of approximately $10.0 million, representing a 18.2% decrease over the corresponding figure for the 2009 year. The overall decrease of $2.2 million included a 7.8% increase in revenue from operations (comprising the provision of genetic testing and reproductive services, but excluding fees from out-licensing activities) offset by a 30.6% fall in revenue from the Company’s outlicensing activities. However, as detailed below, the patent infringement suit initiated by GTG in the US has already started to generate material licensing revenues for the Company in 2011.

The consolidated loss after tax of $9.36 million included net non-cash items of approximately $5.29 million, comprising amortisation of patents and depreciation of plant and equipment ($3.71 million), impairment losses and other write-downs ($1.79 million), together with other net credits ($0.21 million). The consolidated loss after tax also included expenditure in respect of the Company’s various research and development activities of $1,576,503 which represented a 40% decrease over the 2009 financial year.

Operations

In 2010, the business completed a major strategic review of its operations and began implementing a new organisational structure. Apart from achieving stronger customer focus through the appointment of several senior staff members, the review was aimed at selecting fewer, higher-margin activities on which the Company could concentrate its efforts.

With a clear focus having been established to develop GTG into a specialist cancer diagnostics business, new field staff were hired to better target the Company’s customer base in Australia and New Zealand. A series of genetic tests were then licensed in from leading-edge companies overseas such as Rosetta Genomics, Trimgen and Response Genetics, which expanded the Company’s portfolio of products. These additional tests, coupled with a more focused targeting of oncologists, led to an increase in the number of contracts and other process improvements that cemented GTG’s reputation as having the fastest turnaround times in the industry. A comparative analysis for the fourth quarter of the 2010 financial year against the previous corresponding quarter revealed an 18% increase in revenue, demonstrating the strength of this strategy. By the end of May 2010, improvements to costing structures within the lab also delivered increased gross margins which will flow on into the 2011 financial year.

The successful purchase of assets from Perlegen Sciences Inc. (“Perlegen”) in California in April 2010, primarily the BREVAGen[TM] breast cancer risk assessment test, strengthened GTG’s expanding portfolio of medical tests. Following the acquisition, significant work has since been undertaken ahead of the US launch of BREVAGen[TM] in late 2010 which has included technical validation of the test in GTG’s Fitzroy laboratory, the recruitment of a US-based General Manager to oversee the US sales program, the incorporation of a local US subsidiary named Phenogen Sciences Inc. and the establishment of an office in Charlotte, North Carolina.

In order the fund the purchase of the assets from Perlegen, the Company announced in April 2010 that it had issued by way of private placement a total of 29,960,351 ordinary shares in the Company. The placement involved the issue of 27,940,530 ordinary shares to an institutional investor group in the USA at a price of $0.039 each, which raised a total of $1,089,681 in cash, before the payment of associated expenses. The remaining 2,019,821 ordinary shares, which were issued at a price of $0.040 each, were issued to Perlegen as partial consideration for the acquisition of the assets.

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

ASX APPENDIX 4E (cont.)

1. Commentary on the financial results (cont.)

Operations (cont.)

The current contract to provide forensic services to the New South Wales Police Force continued during the year and additional attention to the relationship has produced higher case volumes and revenues in excess of budget forecasts. Discussions with two other State-based Police Forces have also commenced.

The Company’s paternity business has been further streamlined. During 2010, the Company renewed its contract with Queensland Legal Aid and introduced online selling of the Silbase brand for paternity, giving the Company both a premium and entry level brand in this competitive market. Contracts were modified and renewed in the personal DNA area; primarily the Company’s sports gene test, ACTN3, in order to better align operational costs with current test volumes. The introduction of a novel genetic test for ancestry in 2010 gave GTG a public face and proved that in-house product development could be achieved in just six weeks and be successfully marketed.

With the overall direction for the business now focused on genetic testing, a detailed review of the profitability of the Company’s reproductive services business resulted in the divestment of the business that had been acquired as part of the acquisition of Frozen Puppies Dot Com Pty. Ltd. in 2008. The Company is now well advanced in disposing of all surplus assets from the business and terminating leases over premises that it had formerly occupied.

Notwithstanding the divestment of the reproductive services part of the Company’s animal business, agreements with both Gribbles Animal Pathology and the retail group Greencross Vet Clinics were executed pursuant to which GTG will market its animal tests through the veterinary channel without the need for incurring large start up investment costs. Work with specific breed clubs and Animal Welfare Leagues also increased sales and exposure for the Company’s BITSA test during 2010. The largest kennel club in China with over 170,000 members, the CKU, has also invited GTG to tender for its business as it moves to making DNA profiling compulsory for its members.

Licensing

During the 2010 year, the Company filed a patent infringement suit in respect of its non-coding DNA technologies against nine parties in the US District Court, Western District of Wisconsin. The case is being prosecuted by the Company’s Colorado based law firm Sheridan Ross PC, who has in the past successfully asserted and defended GTG’s intellectual property rights globally and has assembled a team of six partners and associates to support the case. Importantly, the Company has put in place arrangements pursuant to which it believes that the costs associated with the patent infringement suit should not have a material adverse impact on its finances.

Since initiating the patent infringement suit in February 2010, four of the nine parties have negotiated settlements of the dispute with the Company which have collectively generated gross fees, before the payment of commissions, of more than $2.3 million. Negotiations seeking to grant further licenses with other parties, including a number who are not involved with the suit, are continuing.

In May 2010, the Company announced that it had received formal notification from the United States Patent and Trademarks Office (USPTO) that it had upheld, without amendment, all of the claims which formed the basis of the re-examination action (as detailed in the Company’s ASX announcement dated 30 June 2009) of the Company’s core 5,612,179 non-coding deoxyribonucleic acid (DNA) patent.

1. The Financial Report for the year ended 30 June 2010 is in the process of being audited by the Company’s auditor, PricewaterhouseCoopers. As such, the financial information contained in this Preliminary Final Report is unaudited.

2. The Directors of the Company anticipate that the Auditor’s Report for the year ended 30 June 2010, once signed, should not contain any form of qualification.

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2010

Notes	Consolidated 2010 2009 $ $	Consolidated 2010 2009 $ $
Revenue from continuing operations Genetic testing services Reproductive services Total revenue from continuing operations Less: cost of sales 4 Gross profit from continuing operations Other revenue 2 Other income 3 Less: borrowing costs Less: other expenses 4 Loss before income tax expense Income tax expense Loss for the year Other comprehensive income/(loss) Realised gain on sale of available-for-sale investments transferred from reserve Unrealised gain on available-for-sale investments Exchange gains/(losses) on translation of controlled foreign operations Exchange gains/(losses) on translation of non-controlled foreign operations Other comprehensive income/(loss) for the year, net of tax Total comprehensive loss for the year Loss for the year is attributable to: Owners of Genetic Technologies Limited Non-controlling interests Loss for the year Total comprehensive loss for the year is attributable to: Owners of Genetic Technologies Limited Non-controlling interests Total comprehensive loss for the year Earnings per share attributable to owners of the Company: Basic loss per share (cents per share) 5 Diluted loss per share (cents per share) 5	4,915,528 890,030 5,805,558 (2,716,657) 3,088,901 3,951,178 213,808 (100,422) (16,508,674) (9,355,209) - (9,355,209) (170,000) - (8,623) 3,404 (175,219) (9,530,428) (9,343,766) (11,443) (9,355,209) (9,522,389) (8,039) (9,530,428) (2.5) (2.5)	4,599,286 782,803
		5,382,089 (2,203,839)
		3,178,250 6,012,014 787,529 (89,499) (17,746,615)
		(7,858,321) -
		(7,858,321)
		- 170,000 (13,408) 6,133
		162,725
		(7,695,596)
		(7,841,073) (17,248)
		(7,858,321)
		(7,684,481) (11,115)
		(7,695,596)
		(2.1) (2.1)

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

CONSOLIDATED BALANCE SHEET

As at 30 June 2010

Notes	Consolidated 2010 2009 $ $	Consolidated 2010 2009 $ $
ASSETS Current assets Cash and cash equivalents 6 Trade and other receivables Prepayments and other assets Performance bond and deposits Total current assets Non-current assets Available-for-sale investments Property, plant and equipment Intangible assets and goodwill Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Interest-bearing liabilities Deferred revenue Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Accumulated losses Parent entity interest Minority interests Total equity	3,306,311 754,657 369,535 71,658 4,502,161 - 1,977,826 1,799,585 3,777,411 8,279,572 1,195,673 382,640 194,441 706,189 2,478,943 82,933 82,933 2,561,876 5,717,696 72,378,105 1,529,142 (68,374,028) 5,533,219 184,477 5,717,696	7,826,902 1,829,239 446,825 200
		10,103,166
		255,000 3,010,025 4,609,540
		7,874,565
		17,977,731
		2,158,557 373,444 229,008 1,018,376
		3,779,385
		86,301
		86,301
		3,865,686
		14,112,045
		71,285,663 1,701,899 (59,030,262)
		13,957,300 154,745
		14,112,045

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 June 2010

CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 June 2010
Notes	Consolidated 2010 2009 $ $
Cash flows used in operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Other receipts Refund of performance bond Net cash flows used in operating activities 6 Cash flows used in investing activities Proceeds from the sale of available-for-sale investments Proceeds from the sale of plant and equipment Purchase of assets associated with BREVAGenTMbreast cancer test Purchase of non-coding patents Purchases of plant and equipment Investment in Frozen Puppies Dot Com Pty. Ltd. Costs incurred on acquisition of subsidiary Net cash flows used in investing activities Cash flows from / (used) in financing activities Net proceeds from the issue of shares Repayment of hire purchase principal Net cash flows from / (used) in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Net foreign exchange difference Cash and cash equivalents at end of year 6	10,116,896 (14,594,197) 216,549 (42,128) - - (4,302,880) 295,195 4,977 (952,480) (242,379) (144,796) - - (1,039,483) 1,011,650 (225,407) 786,243 (4,556,120) 7,826,902 35,529 3,306,311	9,216,374 (15,224,721) 585,776 (39,267) 469,430 68,917
		(4,923,491)
		- 338,269 - - (213,300) (469,730) (8,430)
		(353,191)
		- (192,591)
		(192,591)
		(5,469,273) 13,370,772 (74,597)
		7,826,902

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2010

Consolidated At 1 July 2008 Total comprehensive loss Transactions with owners in their capacity as owners Contributions of equity Share-based payments Share of issued capital At 30 June 2009 Total comprehensive loss Transactions with owners in their capacity as owners Contributions of equity Share-based payments Share of issued capital At 30 June 2010	Attributable to Members of Genetic Technologies Limited Contributed equity Reserves Accumulated losses Parent interests Minority interests Total equity $ $ $ $ $ $
	70,243,996 1,588,804 (51,189,189) 20,643,611 141,462 20,785,073
	- 156,592 (7,841,073) (7,684,481) (11,115) (7,695,596)
	1,041,667 - - 1,041,667 - 1,041,667 - (43,497) - (43,497) - (43,497) - - - - 24,398 24,398
	1,041,667 (43,497) - 998,170 24,398 1,022,568
	71,285,663 1,701,899 (59,030,262) 13,957,300 154,745 14,112,045
	- (178,623) (9,343,766) (9,522,389) (8,039) (9,530,428)
	1,092,442 - - 1,092,442 - 1,092,442 - 5,866 - 5,866 - 5,866 - - - - 37,771 37,771
	1,092,442 5,866 - 1,098,308 37,771 1,136,079
	72,378,105 1,529,142 (68,374,028) 5,533,219 184,477 5,717,696

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2010

1. BASIS OF PREPARATION

This general purpose Financial Report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Compliance with IFRS

The Financial Report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the measurement of the available-for-sale investments at fair value.

Going concern basis

During the financial year, the consolidated entity incurred a total comprehensive loss after income tax of $9,530,428 (2009: $7,695,596) and net cash outflows from operations of $4,302,880 (2009: $4,923,491). As at 30 June 2010, the consolidated entity held cash reserves of $3,306,311.

Given the net cash outflows from operations incurred during the year ended 30 June 2010 and the Company’s available cash reserves as at that date, the Directors have undertaken an assessment of the Company’s continued ability to pay its debts as and when they fall due and to remain as a going concern. As part of this assessment, the Directors have had regard to the Company’s cash flow forecasts for the twelve month period from the date of this Financial Report.

Subsequent to balance date, the consolidated entity is pursuing a transaction to secure additional funding to help it meet its financial obligations for the twelve-month period from the date on which the Financial Report for the year ended 30 June 2010 will be approved by the Directors.

Although there is some uncertainty in the Company’s cash flow forecasts in relation to the timing and quantum of licensing revenue, the Directors believe that the consolidated entity will be able to maintain sufficient cash reserves through a range of available options, which include:

• Generation of additional funds from the granting of further “non-coding” licenses as part of Company’s out-licensing and assertion programs and the sale of new genetic tests;

• Deferment of the expenditure associated with the roll-out of the BREVAGen[TM] test in the USA such that material costs are only incurred once sufficient funds become available;

• Continuation of cost containment strategies currently in progress; and

• Fundraising from the issue of new shares in the Company and/or the sale of non-core and surplus assets.

As a result of the above, the Directors believe that the Company has sufficient cash reserves to meet its forecast net cash outflows from operations for the next twelve months and consequently the Financial Report for the year ended 30 June 2010 has been prepared on a going concern basis.

	Consolidated 2010 2009 $ $	Consolidated 2010 2009 $ $
2. OTHER REVENUE License fees received Royalties and annuities received Interest received Rental recovery Miscellaneous revenue Total other revenue	2,058,303 1,681,444 211,431 - - 3,951,178	3,693,866 1,697,848 589,594 30,613 93
		6,012,014

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

	Consolidated 2010 2009 $ $	Consolidated 2010 2009 $ $
3. OTHER INCOME Net gain on disposal of available-for-sale investments Net foreign exchange gains Net gain / (loss) on disposal of plant and equipment Net gain on disposal of joint venture interest Grants received and related income Reversal of provision for rehabilitation expenses Total other income Net (loss) / gain on disposal of plant and equipment Proceeds from sale Less: carrying value at date of sale Net (loss) / gain on disposal of plant and equipment 4. EXPENSES Cost of sales Inventory used Direct labour costs Consumables written off Total cost of sales Other expenses Employee benefits expenses Wages and salaries Consulting fees Superannuation Payroll tax Directors’ fees Staff recruitment, training, amenities and other expenses Termination benefits Fringe benefits tax Workers’ compensation costs Share-based payments expense / (credit) Total employee benefits expenses Amortisation and depreciation expenses Patents Laboratory / veterinary equipment Equipment under hire purchase Computer equipment Leasehold improvements Office equipment Motor vehicles Total amortisation and depreciation expenses Impairment losses and other write-downs Impairment loss on goodwill Impairment loss on plant and equipment Net bad debts written down / off Impairment loss on consumables Impairment loss on available-for-sale investments Total impairment losses and other write-downs	210,195 10,517 (6,904) - - - 213,808 4,977 (11,881) (6,904) 2,038,646 442,435 235,576 2,716,657 4,117,094 653,626 358,977 232,591 212,371 180,628 118,529 40,236 25,687 5,866 5,945,605 2,821,002 537,759 234,476 51,747 41,605 19,741 - 3,706,330 1,264,603 493,061 22,637 6,232 - 1,786,533	- 68,007 100,811 185,000 338,724 94,987
		787,529
		338,269 (237,458)
		100,811
		1,524,881 501,785 177,173
		2,203,839
		4,206,580 763,490 382,666 266,783 286,194 132,841 345,000 67,940 31,552 (43,497)
		6,439,549
		2,947,337 726,704 187,678 78,890 21,602 24,449 1,336
		3,987,996
		- - 72,066 - 245,959
		318,025

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

	Consolidated 2010 2009 $ $	Consolidated 2010 2009 $ $
4. EXPENSES (cont.) General expenses Legal and patent fees 1,257,145 Administration expenses 979,006 Rent and outgoings 718,593 Royalties, license fees and commissions paid 399,318 Other laboratory and veterinary expenses 357,464 Marketing and promotion expenses 340,630 Contract research and trial expenses 90,000 Reversal of provision (370,346) Other expenses 1,298,396 Total general expenses 5,070,206 Total other expenses 16,508,674 5. LOSS PER SHARE The following reflects the income and share data used in the calculations of basic and diluted loss per share: 2010 $ Loss for the year attributable to the owners of Genetic Technologies Limited (9,343,766) Weighted average number of ordinary shares used in calculating loss per share 380,965,204 6. CASH AND CASH EQUIVALENTS Reconciliation of cash and cash equivalents Cash at bank and on hand 1,773,152 Short-term deposits 1,533,159 Total cash and cash equivalents 3,306,311 Reconciliation of operating loss Reconciliation of operating loss after income tax to net cash flows used in operating activities is as follows: Operating loss after income tax (9,355,209) Adjust for non-cash items Amortisation and depreciation expenses 3,706,330 Share-based payments expense / (credit) 5,866 Impairment losses and other write-downs 1,786,533 Net draw-downs under Applera settlement - Net loss / (gain) on disposal of available-for-sale investments (210,195) Net loss / (gain) on disposal of plant and equipment 6,904 Net foreign exchange (gains) / losses (10,517) Fair value of listed shares acquired - Adjust for changes in assets and liabilities (Increase)/decrease in trade and other receivables 1,074,582 (Increase)/decrease in prepayments / other assets 77,290 (Increase)/decrease in other financial assets (71,458) Increase/(decrease) in trade and other payables (962,884) Increase/(decrease) in deferred revenue (34,567) Increase/(decrease) in provisions (315,555) Net cash flows used in operating activities (4,302,880)		1,386,393 1,304,682 584,980 354,684 748,254 272,726 1,209,260 - 1,140,066
		7,001,045
		17,746,615
		2009 $ (7,841,073)
		373,906,149
		3,076,902 4,750,000
		7,826,902
		(7,858,321) 3,987,996 (43,497) 318,025 (1,801,628) - (100,811) (68,007) (85,000) (232,501) 410,400 68,917 372,145 90,067 18,724
		(4,923,491)

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

	Consolidated
	2010	2009
	$	$
6. CASH AND CASH EQUIVALENTS (cont.)
Financing facilities available
As at 30 June 2010, the following financing
facilities had been negotiated and were available:
Total facilities
Hire purchase facility	2,500,000	2,500,000
Credit cards	147,000	147,000
Facilities used as at reporting date
Hire purchase facility(refer note below)	(382,640)	(373,444)
Credit cards	(29,123)	(22,958)
Facilities unused as at reporting date
Hire purchase facility	2,117,360	2,126,556
Credit cards	117,877	124,042
Non-cash activities

During the financial year, the Group acquired plant and equipment with an aggregate fair value of $213,275 (2009: $269,420) by means of hire purchase agreements. The Group also acquired laboratory equipment with an aggregate fair value of $nil (2009: $1,801,628) from draw downs made under the Supply Agreement with Applera Corporation.

Hire purchase facility

As at 30 June 2010, the Company had breached one of the covenants of the Master Asset Finance Facility which governs the hire purchase agreements. Subsequent to balance date, National Australia Bank Limited provided the Company with a letter waiving its right to take any further action in respect of the breach. As a result of the breach, however, all liabilities in respect of the hire purchase agreements as at 30 June 2010 have been classified as current liabilities in the balance sheet.

7. IMPAIRMENT

Impairment loss

The total impairment loss for the 2010 financial year of $1,763,896 (2009: $245,959) comprised impairment of goodwill, equipment and consumables associated with the Company’s reproductive services business ($1,264,603, $115,413 and $6,232, respectively) and equipment acquired under the Supply Agreement with Applera Corporation ($377,648) (“Applera”). No other classes of goodwill or equipment were impaired during the 2010 financial year.

The impairment charges relating to the Company’s reproductive services business arose following a decision by the Company to divest itself of that business and to focus on the provision of animal genetic tests, rather than the services that were acquired as part of the acquisition of the Frozen Puppies Dot Com business in 2008.

The impairment charges relating to the equipment acquired under the Supply Agreement with Applera arose following an exchange of surplus laboratory equipment with a subsidiary of Applera.

As at balance date, the Company believes that the carrying values of the remaining assets of $1,329,024 is fair and reasonable.

	Consolidated 2010 2009 $ $	Consolidated 2010 2009 $ $
8. ACCUMULATED LOSSES Balance at the beginning of the financial year Add: net loss attributable to members of Genetic Technologies Limited Balance at the end of the financial year	(59,030,262) (9,343,766) (68,374,028)	(51,189,189) (7,841,073)
		(59,030,262)

9. CONTINGENT LIABILITIES

The Group had no contingent liabilities as at 30 June 2010.

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

10. SEGMENT INFORMATION

Identification of reportable segments

The Group has identified three reportable operating segments based on the similarity of the products produced and sold and/or the services provided, as these represent the sources of the Group’s major risks and have the greatest effect on the rates of return. The separate groups of similar products and services are then divided into operating businesses, the performances of which are reported to the Chief Executive Officer, the Senior Management Team and the Board of Directors on a monthly basis. The segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The Group also separately reports the corporate headquarter function to clearly identify costs associated with that function. The corporate function is not considered to be an operating or reportable segment.

The Group’s three operating segments can be described as follows:

Operations – involves the provision of a range of genetic testing and reproductive services. Licensing – involves the out-licensing of the Group’s “non-coding” technology. Research – involves the undertaking of a range of research and development projects in the field of genetics and related areas.

The Corporate disclosures below include all revenues, costs, assets and liabilities associated with the headquarter function.

Business segments

Business segments
Segment Operations 2010 2009 Licensing 2010 2009 Research 2010 2009 Sub-total 2010 2009 Corporate 2010 2009 Totals 2010 2009 Segment Operations 2010 2009 Licensing 2010 2009 Research 2010 2009 Sub-total 2010 2009 Corporate 2010 2009 Totals 2010 2009		Revenues and income Profit / (loss) Assets Liabilities Amortisation Sales Other Totals after tax /depreciation $ $ $ $ $ $ $ 5,805,558 - 5,805,558 (4,720,180) 3,885,395 (1,646,160) (783,826) 5,382,089 98,867 5,480,956 (2,923,258) 5,711,113 (1,453,352) (872,897) - 3,739,747 3,739,747 (186,856) 674,373 (274,602) (2,771,907) - 5,391,714 5,391,714 1,373,993 3,035,475 (309,312) (2,899,432) - - - (1,576,503) 165,523 (81,442) (111,412) - 369,337 369,337 (2,645,438) 861,838 (866,214) (157,796)
		5,805,558 3,739,747 9,545,305 (6,483,539) 4,725,291 (2,002,204) (3,667,145) 5,382,089 5,859,918 11,242,007 (4,194,703) 9,608,426 (2,628,878) (3,930,125)
		- 425,239 425,239 (2,871,670) 3,554,281 (559,672) (39,185) - 939,625 939,625 (3,663,618) 8,369,305 (1,236,808) (57,871)
		5,805,558 4,164,986 9,970,544 (9,355,209) 8,279,572 (2,561,876) (3,706,330) 5,382,089 6,799,543 12,181,632 (7,858,321) 17,977,731 (3,865,686) (3,987,996)
		Impairment Purchases of Net cash flows (used in) / from losses/ write downs equipment operating activities investing activities financing activities $ $ $ $ $ (1,786,533) 345,801 1,959,837 (1,331,408) (214,838) (72,066) 2,453,760 (1,246,503) (224,511) (156,692) - 6,477 (794,777) (6,477) - - - 2,658,848 - - - - (2,115,625) - - - - (2,882,972) - (26,400) (1,786,533) 352,278 (950,565) (1,337,885) (214,838) (72,066) 2,453,760 (1,470,627) (224,511) (183,092) - 5,793 (3,352,315) 298,402 1,001,081 (245,959) 130,625 (3,452,864) (128,680) (9,499) (1,786,533) 358,071 (4,302,880) (1,039,483) 786,243 (318,025) 2,584,385 (4,923,491) (353,191) (192,591)

Note: Other revenues and income - corporate includes interest received of $211,431 (2009: $589,594).

Expenses - corporate includes employee benefits expenses of $1,649,169 (2009: $1,864,632). Assets - corporate includes cash of $3,306,311 (2009: $7,826,902).

Liabilities - corporate includes trade and other payables of $373,043 (2009: $666,630) and provisions of $173,607 (2009: $546,585). There were no intersegment sales.

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GENETIC TECHNOLOGIES LIMITED

ASX Appendix 4E – 30 June 2010

10. SEGMENT INFORMATION (cont.)

Geographic information

Australia – is the home country of the parent entity and the location of the Company’s operations and licensing activities. China – is the home of Genetic Technologies (Beijing) Limited.

Canada – is the home of Gtech International Resources Limited.

Switzerland – is the home of GeneType AG.

USA – is the home of GeneType Corporation and Phenogen Sciences Inc.

Revenues are allocated on the basis of the geographical location of the entities which earn them. The following table presents sales and other income and revenue on the basis of geographical locations for the years ended 30 June 2010 and 30 June 2009.

Segment Australia 2010 2009 China 2010 2009 Canada 2010 2009 Switzerland 2010 2009 Totals 2010 2009	Sales revenue $ 5,683,060 5,331,248 122,498 50,841 - - - - 5,805,558 5,382,089	Other $ 3,739,652 5,858,787 90 41 - 1,083 5 7 3,739,747 5,859,918	Totals $ 9,422,712 11,190,035 122,588 50,882 - 1,083 5 7
			9,545,305 11,242,007

The total of the non-current assets located in Australia is $3,694,456 (2009: $7,768,174). The total of the non-current assets located in other countries is $82,955 (2009: $106,391). Segment non-current assets are allocated to countries based on the location of the respective assets.

Segment products and locations

The three principal business segments of the Group are operations, licensing and research. The principal geographic segment is Australia, with the Company’s headquarters being located in Melbourne in the State of Victoria.

Segment accounting policies

Segment information is prepared in conformity with the accounting policies of the entity and Accounting Standard IFRS 8 (AASB 8) Operating Segments which was adopted by the Company in 2009. As a result, the primary reporting segments now reflect more closely the information that Management uses to make decisions about operating matters. Specifically, segment information is disclosed for the licensing, genetic testing and research operations which were previously disclosed within the biotechnology segment.

Interest received and finance costs are allocated under the heading Corporat e as they are not part of the core operations of any other segment.

Major customers

The Group has a number of major customers to which it provides both products and services. During the year ended 30 June 2010, there were no customers from whom the Group generated revenues representing more than 10% of the total consolidated revenue from operations.

11. SUBSEQUENT EVENTS

On 8 July 2010, the Company granted a total of 12,000,000 options over ordinary shares in the Company to members of its Senior Management Team. Apart from this, there have been no other transactions involving ordinary or potential ordinary shares between the reporting date and the date of this Financial Report.

Apart from this transaction, there have been no other events that have occurred subsequent to balance date.

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