HOLISTA COLLTECH LIMITED — Annual Report 2015

Aug 27, 2015

Appendix 4E Preliminary Final Report 30 June 2015

Appendix 4E

PRELIMINARY FINAL REPORT 12 MONTHS ENDED 30 JUNE 2015

Details of the reporting period and the previous corresponding period

Name of entity

Name of entity
Holista CollTech Limited
ABN	Reporting period	Previous corresponding period
24 094 515 992	12 months ended 30/06/15	12 months ended 30/06/14

Results for announcement to the market

Results for announcement to the market	Results for announcement to the market	Results for announcement to the market	Results for announcement to the market
Revenues from continuing activities Increase 9.0% to $6,788,953 Profit from ordinary activities after tax attributable to owners of the parent Total comprehensive profit for the year attributable to owners of the parent Increase Increase 101.0% 100.9% to to $33,488 $28,204
Dividends	Amount per security		Franked amount per security
Interim dividend Final Dividend		Nil Nil	Nil Nil
Record date for determining entitlements to the dividend N/A Revenue increased by 9.0% as compared to previous year. Profit from ordinary activities after tax attributable to owners of parent has increased by 101.0%. Total comprehensive profit for the year attributable to owners of the parent has increased by 100.9%.

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Appendix 4E Preliminary Final Report 30 June 2015

REVIEW OF OPERATIONS

Your directors are pleased to present their report, together with the financial statements of the Group, being the company and its controlled entities, for the financial period ended 30 June 2015.

Principal Activities

The principal activities of the entities within the consolidated Group remain unchanged during the year which involves the production and sale of high-grade sheep collagen and other biomaterials from animal sources in Australia. Its subsidiaries in Malaysia are principally engaged in importing, exporting, branding, trading, marketing, retailing and wholesaling of Dietary Supplements and ingredients.

Review of Operations

During the financial year, the Group remained focused on its three (3) core areas:-

• Dietary Supplements

• Sheep Collagen (Ovine)

• Healthy Food Ingredients

Dietary Supplements

This remains as the Group’s main income contributor during the year. Its revenue continues to grow despite challenging market condition faced by its subsidiaries in Malaysia. Market conditions in Malaysia have changed during the past 12 months mainly due to lower consumer purchasing power caused by inflations, systematic removal of subsidies on essential goods and most recently, the introduction of Goods and Service Tax (GST) by the Government of Malaysia. However, customers remain loyal to the Company’s dietary supplements despite a growing number of competitors in not only the intense pharmacy business but also with the Multi Level Marketing.

Revenue in this area has increased by 8.6% as compared to previous year. The company has also successfully launched five (5) new products in Malaysia to cater for the market demand and to increase its market presence in the dietary supplement market. Furthermore, the company has also generated new source of revenue by supplying raw materials to Multi Level Marketing companies. The Group will continue to source for more new potential products for the coming year.

Prudent cost management in this dietary supplement business in Malaysia has resulted in cost reduction from $3,587,119 to $3,403,458 (5.1%) in the same time frame.

Sheep Collagen (Ovine)

This area of business has continued to register steady growth year on year with the delivery of 3,596kg during this financial year as compared to 2,095kg in the previous reporting period.

While the company continues to seek for new potential customer in the Asia Pacific region, it continues to spend on the research and development of its food grade collagen formulation focusing on yield and quality. The Company has managed to produce small size samples during this financial period and will be investing on some major essential equipment for the commercialization of this new range of product to support its existing cosmetic grade collagen. The potential of our food grade collagen is huge as it is the only mammalian collagen in the market which is neutral to all religious groups and cultures. This is also an appeal of being “Australian source” and “disease free”.

The company is also working with a European R&D partner to develop variants of highly absorbed collagen for food and cosmetic applications.

Healthy Food Ingredients

The Group’s key focuses are:-

• Low Sodium Salt

• Low Fat Chip

• Low Glycemic Index (“GI”)

• • Low Calorie Sugar

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Appendix 4E Preliminary Final Report 30 June 2015

During the year, Litefood Inc. (“Litefood”) which was incorporated in the United States of America (“USA”) continues to focus on the commercialisation of this new market segment. USA are well known to be the home of large fast food chains and by being close to the market will present opportunity for the Group to generate income from this area in the near future. (www.litefoodsinc.com).

The Group has begun to sell its Low Sodium Salt and Low Calorie sugar albeit in lower scale in one of its subsidiaries in Malaysia. The demand has been quite encouraging but has been quite limited as it is a Business to Consumer (B2C) market which requires huge capital to promote. The Group believes that Business to Business (B2B) will be the most appropriate method to launch this business. Currently, the Group is conducting final trial on its Low G.I with one of its potential European customer in University of Sydney.

In the United States, it is working with several fast food companies.

Operating results for the year

The Group has recorded 9% increase in revenue from $6,227,814 to $6,788,953 mainly from the Dietary Supplements and Sheep Collagen. The Group managed to record a Profit from ordinary activities after tax attributable to owners of the parent of $33,488 as compared to loss of $3,280,822 last year, despite the unfavourable currency fluctuations cause by the strengthening of US Dollars against Australian Dollars and Malaysia Ringgit. The Group’s investment in LiteFood to commercialise its Healthy Food Ingredient business has also prevented the Group from recording better results.

For the past three (3) years, revenue generated from our cosmetic grade sheep collagen has been growing consistently with sales recorded at $187,715 this financial year. Cosmetic collagen will continue to contribute steady growth of income to the Group despite the declining trend of animal based cosmetic product in the world.

The Group believes that its yet to be launched food grade collagen is expected to contribute better revenue as compared to its existing cosmetic based collagen. When it comes to food grade collagen, some of the benefits of the Company’s ovine collagen become obvious:

• Free of cultural and religious issues (compared to pig and cow sources)

• Australia is the only nation certified to have sheep that is disease free

• Warm blooded source (compared to fish)

Based on the above, the Group is optimistic that its new Food Grade Collagen will be ready for commercialisation in the near future once the required machine and equipments are commissioned in its plant in Collie, Australia. From scientific studies, the recommended minimum dosage for food grade collagen is 5gm a day (equivalent to 150gm a month). Compare this against 1gm of cosmetic collagen per bottle, Food Grade Collagen is expected to provide the Group with much higher return in the future.

The Group’s Dietary supplements business is targeted to continue its uptrend growth in the coming financial year with the launch of more new exciting supplements in the market. The positive development in both the Healthy Food Ingredients in the United States and Food Grade Collagen in Australia is expected to contribute positively to the Group in this coming financial year.

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Appendix 4E Preliminary Final Report 30 June 2015

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015

Revenue from continuing operations Other Income Change in inventories of finished goods and work in progress Raw Materials and consumables used Employee benefits expense Depreciation and amortisation expenses Impairment Finance costs Share based payments Other expenses Loss before income tax expense Income tax benefit Loss after tax from continuing operations Loss for the year Other comprehensive income Exchange differences on translation of foreign operations Total comprehensive loss for the year Profit/(loss) attributable to :- Owners of the parent Non-controlling interest Total comprehensive profit/(loss) attributable to :- Owners of the parent Non-controlling interest Basic profit/(loss) per share (cents per share) Diluted profit/(loss) per share (cents per share)	2015 $ 2014 $ 6,788,953 6,227,814 63,636 45,669 287,788 72,934 (2,616,483) (2,043,635) (2,180,081) (2,127,737) (221,368) (187,560) - (927,287) (159,287) (330,985) - (2,172,994) (2,143,914) (2,344,892)
	(180,756) (3,788,673) 137,771 414,942
	(42,985) (3,373,731)
	(42,985) (3,373,731)
	(22,759) (31,443)
	(65,744) (3,405,174)
	33,488 (3,280,822) (76,473) (92,909)
	(42,985) (3,373,731)
	28,204 (3,306,330) (93,948) (98,844)
	(65,744) (3,405,174)
	0.022 (2.415) 0.018 (2.415)

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Appendix 4E Preliminary Final Report 30 June 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015

Current Assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Total Current Assets Non-Current Assets Property, plant and equipment Intangible assets Other financial assets Deferred Tax asset Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Borrowings Other liabilities Deferred tax liability Tax payable Total Current Liabilities Non-Current Liabilities Borrowings Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total parent entity interest Non-controlling interest Total Equity	2015 $ 2014 $ 497,766 1,511,648 1,782,631 1,225,409 1,010,682 695,700 179,613 186,673
	3,470,692 3,619,430
	1,305,455 1,374,843 189,190 188,921 16,271 23,585 - 36,802
	1,510,916 1,624,151
	4,981,608 5,243,581
	1,126,154 637,410 322,861 1,101,023 - 69,162 826 - 114,082 -
	1,563,923 1,807,595
	1,126,481 1,906,594
	1,126,481 1,906,594
	2,690,404 3,714,189
	2,291,204 1,529,392
	9,424,203 8,596,647 2,196,280 2,201,564 (9,136,762) (9,170,250)
	2,483,721 1,627,961 (192,517) (98,569)
	2,291,204 1,529,392

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Appendix 4E Preliminary Final Report 30 June 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015

Balances as at 1 July 2013 (Loss) for the year Exchange differences arising on translation of foreign operations Total comprehensive loss for the year Non-controlling interest Shares issued during one year Options issued Equity raising cost Balance as at 30 June 2014 Balance as at 1 July 2014 Profit/(loss) for the year Exchange differences arising on translation of foreign operations Total comprehensive profit/(Loss) for the year Shares issued during the year Balance as at 30 June 2015	Issued Capital Compound Financial Instrument Accumulated Losses Option Reserve Foreign Currency Translation Non- controlling interest Total $ $ $ $ $ $ $ 7,554,145 412,502 (5,889,428) - (15,922) - 2,061,297 - - (3,280,822) - - (92,909) (3,373,731) - - - - (25,508) (5,935) (31,443)
	- - (3,280,822) - (25,508) (98,844) (3,405,174)
	- - - - - 275 275 700,000 - - - - - 700,000 - - - 2,242,994 - - 2,242,994 (70,000) - - - - (70,000)
	8,184,145 412,502 (9,170,250) 2,242,994 (41,430) (98,569) 1,529,392
	8,184,145 412,502 (9,170,250) 2,242,994 (41,430) (98,569) 1,529,392 - - 33,488 - - (76,473) (42,985) - - - - (5,284) (17,475) (22,759)
	- - 33,488 - (5,284) (93,948) (65,744)
	1,102,557 (275,001) - - - - 827,556
	9,286,702 137,501 (9,136,762) 2,242,994 (46,714) (192,517) 2,291,204

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Appendix 4E Preliminary Final Report 30 June 2015

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax received Net cash (used in) operating activities Cash flows from investing activities Proceeds from the sale of property, plant and equipment Purchase of intellectual property Purchase of property, plant and equipment Loan payments made to related parties Net cash (used in) investing activities Cash flows from financing activities Repayment of borrowings Proceeds from issue of shares Net cash (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of exchange rate fluctuations on cash held Cash and cash equivalents at end of year	2015 $ 2014 $ 5,704,848 6,110,166 (6,027,297) (6,815,024) 17,281 49,410 (5,907) (1,872) 306,842 381,228
	(4,233) (276,092)
	1,700 18,442 (5,319) (57,662) (113,142) (16,789) - (283,074)
	(116,761) (339,083)
	(699,525) (1,655,778) - 700,000
	(699,525) (955,778)
	(820,519) (1,570,953) 1,326,477 2,864,983 (8,192) 32,447
	497,766 1,326,477

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Appendix 4E Preliminary Final Report 30 June 2015

Reconciliation to Statement of Cash Flows :

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and at bank and investments in money market instruments, net of outstanding bank overdrafts.

Cash and cash equivalents as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:

statement of financial position as follows:
	2015	2014
	$	$
Cash and cash equivalents	70,404	422,895
Bank overdraft	-	(185,170)
Security deposits	427,362	1,088,752
Cash and cash equivalents as per statement of cash flow 497,766 1,326,477

Security deposits are restricted cash. In order to obtain various financing facilities, banks in Malaysia require cash to be deposited if other collateral is not available. These deposits are interest bearing and the interest is compounded and added to the principal

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Appendix 4E Preliminary Final Report 30 June 2015

NOTES

1 BASIS OF PREPARATION

The preliminary final report of Holista CollTech Limited for the year ended 30 June 2015 does not include all notes and other disclosures of the type normally included within the annual financial report and therefore does not provide a full understanding of the financial performance, financial position and cash flow of the company as the full financial report.

(a) Basis of accounting

This preliminary final report is a general purpose financial report, which has been prepared in accordance with the measurement and recognition requirements of the Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the law. As noted above, this preliminary report does not contain all disclosures required by Australian Accounting Standards.

The preliminary final report has also been prepared on a historical cost basis, except for available-for-sale investments, which have been measured at fair value. Cost is based on the fair values of the consideration given in exchange for assets.

Unless otherwise detailed in this note, accounting policies have been consistently applied by the Company and are consistent with those applied in the 30 June 2014 annual report.

2 REVENUE

Operating activities Sale of goods Interest received on deposits	2015 $ 2014 $ 6,771,672 6,178,404 17,281 49,410
	6,788,953 6,227,814

3 FINANCIAL RESULTS

The group recorded net loss after tax from continuing operations of $42,985 for the year ended 30 June 2015 compared to a net loss of $3,373,731 for the year ended 30 June 2014. The significant losses during the previous financial year are mainly due to fair value of warrants using Black & Scholes model of $2,172,994, and impairment of Collie plant of $927,287 as detailed in the previous year Annual Report.

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Appendix 4E Preliminary Final Report 30 June 2015

4 RECONCILIATION OF CASH FLOW FROM OPERATIONS WITH (LOSS) AFTER INCOME TAX

Reconciliation of (loss) for the year to net cash flows operatingactivities :	2015	2014
	$	$
(loss)for theyear after tax	(42,985)	(3,373,731)
Adjustments for non-cash items :
Foreign exchange inprofit & loss	5,260	(103,380)
Depreciation and amortisation	221,368	187,560
Impairment losses	-	927,287
Share basedpayment	-	2,72,994
Finance costs	84,442	330,526
Write off Non-controllingInterest Share capital	-	274
Impairment of intangibles	-	57,948
-(Increase)in receivables	(557,222)	(77,573)
-(Increase)in inventories	(324,982)	(51,865)
-Increase /(decrease)inpayables	488,744	(346,132)
-Increase in taxprovision	114,082	-
-Increase inprepayment	7,060	-
Net cash(used in)operatingactivities	(4,233)	(276,092)

5 DISCONTINUED OPERATIONS

There were no entities over which control was gained or lost during the year.

6 DETAILS OF INDIVIDUAL AND TOTAL DIVIDENDS AND DIVIDEND PAYMENTS

Date the final dividend is payable	N/A
Record date to determine entitlements to the dividend	N/A
Has the dividend been declared	N/A
Other disclosures in relation to dividends

The Directors have not declared any dividend and no dividends have been paid during the year.

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Appendix 4E Preliminary Final Report 30 June 2015

7 NET ASSET BACKING

7 NET ASSET BACKING
	2015	2014
	Cents per	Cents per
	share	share
Net tangible assets per share	1.3649	0.9489

8 CONTINGENT LIABILITY

There are no known contingent liabilities.

9 SEGMENT REPORTING

General Information

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

Types of products and services by segment

(i) Food supplements

This operating segment organizes wholesale of supplements throughout Malaysia

(ii) Sheep collagen

This operating segment is involved in the manufacture and distribution of cosmetic grade collagen.

(iii) Healthy Food Ingredients

This operating segment is involved in marketing of food ingredients.

Basis of accounting for purposes of reporting by operating segments

(a) Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating decision makers with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

(b) Intersegment transactions

The two segments operate independently and there are no intersegment sales.

(c) Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of the economic value from the asset. In most instances, segment assets are clearly identifiable on the basis of their nature and physical location.

(d) Segment liabilities

Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Segment liabilities include trade and other payables and certain direct borrowings.

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Appendix 4E Preliminary Final Report 30 June 2015

9 SEGMENT REPORTING (continued)

(e) Segment Information

(i) Segment performance

30 June 2015 REVENUE External sales Interest revenue Total segment revenue Reconciliation of segment revenue to group revenue Total group revenue Segment net profit/(loss) from continuing operations before tax Net (loss) before tax from continuing operations 30 June 2014 REVENUE External sales Interest revenue Total segment revenue Reconciliation of segment revenue to group revenue Total group revenue Segment net profit/(Loss) from continuing operations before tax Net profit/(Loss) before tax from continuing operations	Supplements Sheep Collagen Food Ingredients Corporate $ $ $ $ 6,583,957 187,715 - - 17,281	Total $ 6,771,672 17,281
	6,583,957 187,715 - 17,281	6,788,953
	1,610,522 (387,459) (10,797) (1,393,022)	6,788,953
		(180,756)
	6,063,334 115,070 - - - - - 49,410	(180,756)
		6,178,404 49,410
	6,063,334 115,070 - 49,410	6,227,814
	1,410,703 (1,314,726) (28,868) (3,855,782)	6,227,814
		(3,788,673)
		(3,788,673)

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Appendix 4E Preliminary Final Report 30 June 2015

9 SEGMENT REPORTING (continued)

Supplements Sheep Collagen Food Ingredients $ $ $ 30 June 2015 Segment assets 5,259,123 3,063,781 1,133 Reconciliation of segment assets to group assets Intersegment eliminations Total group assets 30 June 2014 Segment assets 4,720,993 3,086,399 3,638 Reconciliation of segment assets to group assets Intersegment eliminations Total group assets (iii) Segment liabilities Supplements Sheep Collagen Food Ingredients $ $ $ 30 June 2015 Segment liabilities 2,072,055 1,172,251 741,583 Reconciliation of segment liabilities to group liabilities Intersegment eliminations Total group liabilities 30 June 2014 Segment liabilities 2,379,280 1,540,819 349,644 Reconciliation of segment liabilities to group liabilities: Intersegment eliminations Total group liabilities	Total $ 8,324,037 (3,342,429)
	4,981,608
	7,811,030 (2,567,449)
	5,243,581
	Total $ 3,985,889 (1,295,485)
	2,690,404
	4,269,743 (555,554)
	3,714,189

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Appendix 4E Preliminary Final Report 30 June 2015

9 SEGMENT REPORTING (continued)

(iv) Revenue by geographical region

Revenue, including revenue from discontinued operations, attributable to external customers is disclosed below, based on the location of the external customer:

Australia Malaysia Total revenue (v)Assets by geographical region The location of segment assets by geographical location of the assets is disclosed below: Australia Malaysia United States Total assets	2015 2014 $ $ 187,715 115,070 6,583,957 6,063,334
	6,771,672 6,178,404
	367,313 783,497 4,613,163 4,456,401 1,132 3,683
	4,981,608 5,243,581

(vi) Major customers

The Group has a number of customers to whom it provides both products and services. Within Supplement segment, the Group supplies to a number of retailers through one single external distributor who account for 75% of total revenue for this segment. The Group supplies to few external customer for the Sheep Collagen segment, where the major customer accounts for 97% of revenue for this segment.

10 ISSUED AND QUOTED SECURITIES AT END OF CURRENT PERIOD

Category of securities Total number Number quoted Ordinary securities 154,001,549 154,001,549 11 EARNINGS PER SHARE (EPS) 2015 Reconciliation of earnings to profit or loss Profit/(loss) 33,488 Earnings used to calculate basic EPS 33,488 Earnings used in the calculation of dilutive EPS 33,488 No. of shares Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS 151,036,656	2014 (3,280,822)
	(3,280,822)
	(3,280,822)
	No. of shares 135,868,121

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Appendix 4E Preliminary Final Report 30 June 2015

12 CONTROL OVER ENTITIES WHICH HAS BEEN GAINED OR LOST DURING THE YEAR

The Company has no entities which has been gained or lost during the year .

13 ASSOCIATES AND JOINT VENTURES

The Company has no associates and joint ventures.

14 OTHER SIGNIFICANT INFORMATION

The Company does not have other significant information.

15 FOREIGN ENTITIES

The Company is an Australian entity and reports under Australian accounting standards.

16 AUDIT DISPUTES AND QUALIFICATIONS

There are no known audit disputes or qualifications.

17 STATEMENTS IN RELATION TO ACCOUNTS AND AUDIT

This report is based on accounts to which one of the following applies.

 The accounts have been audited  The accounts have been subject (refer audit attached report). to review (refer attached review report).  The accounts are in the process  The accounts have not yet been of being audited or subject to audited or reviewed. review.

Sign here: Date: 28th August 2015

(Company Secretary)

Print name: JAY STEPHENSON

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