HOLISTA COLLTECH LIMITED — Annual Report 2016

Aug 30, 2016

Appendix 4E Preliminary Final Report 30 June 2016

Appendix 4E

PRELIMINARY FINAL REPORT 12 MONTHS ENDED 30 JUNE 2016

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 30/06/16	12 months ended 30/06/15

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 Decrease 7.4% to $6,285,543 Loss from ordinary activities after tax attributable to owners of the parent Total comprehensive loss for the year attributable to owners of the parent Increase Increase 1,318% 2,033% to to ($407,930) ($545,208)
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 decreased by 7.4% as compared to previous year. Loss from ordinary activities after tax attributable to owners of parent has increased by 1,318%. Total comprehensive loss for the year attributable to owners of the parent has increased by 2,033%.

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Appendix 4E Preliminary Final Report 30 June 2016

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 2016.

Principal Activities

The principal activities of the entities within the consolidated Group, which remain unchanged during the year, involve the production and sale of ingredients for foods and cosmetics as well as food supplements. In addition, the Group was also involved in the following activities:

• Marketing Panatura®GI (GI reducer for white bread)

• Upgrading the collagen plant in Perth to produce food-grade sheep collagen

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

• Healthy Food Ingredients (including Panatura®GI) Sheep Collagen (Ovine)

Dietary Supplements

This remains the Group’s main income contributor during the year.

Revenue from dietary supplements has decreased by 9% as compared to previous year due to challenging market conditions faced by its subsidiaries Total Health Concept, Alterni and Medi Botanics in Malaysia.

In response to this, the Group has implemented initiatives to increase its presence in the dietary supplement market. The Company has successfully launched two (2) new products in Malaysia, which it believes to meet market needs. The products are: PRISTIN MOPL and GINSENG

The Company has generated a 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.

Healthy Food Ingredients

The Group’s key focuses are:

• Glycemic Index (“GI”) Reducer

• Low Sodium Salt

• Low Fat Chip

• Low Calorie Sugar

The Group made significant progress with its low-GI formula. On January 12, 2016, we announced our scientific breakthrough in achieving the world’s first low-GI white bread in partnership with Veripan Ingredients AG (“Veripan”), the largest independent bakery supplier based in Europe. This generated significant Malaysian and international media coverage, including Bloomberg and Australia’s Today Tonight on Channel 7, as well as significant investor interest.

We have since signed four (4) non-disclosure agreements with leading bread makers in the Asia Pacific region. Major launches are expected with these brands in the first quarter of 2017.

We are now also in co-development work with Veripan to improve the product offering and profit margins.

Having achieved significant progress with our GI Reducer, we will now go forward with a focus on low-GI sugar and low-sodium salt.

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Joint Venture with Nadja Foods LLC

Subsequently, to the financial year end, our U.S. subsidiary Litefood Inc. (“Litefood”) formed a 51-49 joint venture company, Holista Foods, with Nadja Foods LLC, to distribute our low-GI product in North America.

Holista Foods, which has food manufacturing operations in the U.S. and Canada, is run by Nadja Piatka as CEO. An industry veteran for more than 23 years, Nadja Piatka heads Nadja Foods which supplies healthy snacks and desserts to the food service industry, restaurant chains and retail stores under private label and brand products. Customers have included: Subway Restaurants®, McDonald’s®, Sodexo®, Wegmans®, Price Copper, Tops, and more. She made her name with low-fat muffins which has been an ever stay on the McDonald’s Canada menu for 23 years. Nadja Piatka is very media-savvy and has appeared on The Oprah Winfrey Show. (https://www.youtube.com/watch?v=rczuqy0Yygo)

Holista Foods is also in discussions with Veripan to exclusively distribute Panatura®, the No. 1 selling sourdough in Europe, in North America.

North America is well known to be the home of fast-food chains and entering this market will present opportunity for the Group to generate income from this area in the near future. (www.holistafoods.com).

Sheep (Ovine) Collagen

This area of business registered growth of 70.1%, during the financial year, propelled by the delivery of 6,143kg of collagen compared with 3,596kg in the previous reporting period.

While the Company continues to seek new potential customers for cosmetic collagen in the Asia Pacific region, it continues to spend on research and development of its food grade collagen formulation focusing on yield and quality. Food grade collagen has big potential. According to the biotechnology market research group, Meticulous Research of UK, the global collagen market is expected to grow at a compounded annual growth rate of 6.3% from 2015 to reach a market size of US$3.97 billion by 2020. Growth rates in Asia, particularly in China, are even faster.

The growing trend towards increased protein consumption of the general population drives the collagen market as collagen offers a balanced amino acid profile. Collagen is also a big part of Traditional Chinese Medicine.

The potential of our food grade collagen is huge as it is the only mammalian collagen in the market which is Halal-certified by the Islamic Association of Katanning. This makes it neutral to major religious groups and cultures. Our collagen product also leverages on being “Australian-sourced”. Australia is the only country certified by the United States Department of Agriculture (USDA) to have sheep that are disease-free The Company has produced small-size samples during this financial period and started investing in essential equipment for the commercialization of a new range of food-grade collagen.

Food grade collagens samples are expected to be ready in October 2016 and ready for commercial sale in January 2017. The Company is also working with a European research and development partner, Palma Biosciences, to develop variants of highly absorbed collagen for food and cosmetic applications with liposome technology.

Operating results for the year

The Group’s revenue declined 8% to $6,263,671 versus $6,771,672, mainly derived from Dietary Supplements. The Group recorded a loss from ordinary activities after tax attributable to owners of the parent of $545,208. The weaker performance was due, amongst others, to the strengthening of the US Dollar against the Australian Dollar and Malaysian Ringgit.

For the past three (3) years, revenue generated from our cosmetic-grade sheep collagen has been growing consistently with sales recorded at $302,359 this financial year. Cosmetic collagen will continue to contribute steady growth of income to the Group despite the declining trend of animal-based cosmetic products in the world.

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The Group believes that its food grade collagen is expected to contribute better revenue as compared to its existing cosmetic-based collagen.

From scientific studies, the recommended minimum dosage for food grade collagen is 5 grams a day (equivalent to 150 grams a month compared to 1 gram of cosmetic collagen per bottle). Food Grade Collagen offers significantly greater opportunity.

Based on the above, the Group is optimistic that its new Food Grade Collagen will be ready for commercialization in the near future once the required equipment is commissioned in its plant in Collie, Australia in November 2016.

The Group’s dietary supplements business is targeted to continue growing in the coming financial year with the launch of new products. The positive development of both the Healthy Food Ingredients in the U.S. and Food Grade Collagen in Australia are expected to contribute positively to the Group in this coming financial year.

Future Plans

The biggest opportunity in the next six (6) months is the low-GI patent applications in bakeries. This is an enormous market of US$170 billion where we have a sustainable competitive edge as the “world’s clean label low-GI white bread”. This was described as “the holy grail of bread” by Professor Jeanie Brand Miller of the University of Sydney in her interview on Australia’s Channel 7 on 25[th] February 2016.

Six (6) major global bread players from Europe and Asia Pacific have signed non-disclosure agreements with the Group to incorporate Panatura®GI. This is expected to take off on the first quarter of 2017.

We are looking at bakery applications apart from bread. This includes muffins, bagels, croutons, biscuits, crackers and soon, noodles. As a next stage, we are developing products for the diabetic market. Following this, we want to develop products for making breads at home.

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Appendix 4E Preliminary Final Report 30 June 2016

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016

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 Finance costs Other expenses Profit/(Loss) before income tax expense Income tax benefit/(expense) (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)	2016 $ 2015 $ 6,285,543 6,788,953 484,038 352,163 62,184 287,788 (2,710,339) (2,616,483) (2,301,194) (2,180,081) (209,718) (221,368) (116,484) (159,287) (2,029,244) (2,143,914)
	(535,214) 107,771 126,843 (150,756)
	(408,371) (42,985)
	(408,371) (42,985)
	(143,854) (22,759)
	(552,225) (65,744)
	(407,930) 33,488 (441) (76,473)
	(408,371) (42,985)
	(545,208) 28,204 (7,017) (93,948)
	(552,225) (65,744)
	(0.26) 0.02 (0.26) 0.02

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Appendix 4E Preliminary Final Report 30 June 2016

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

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 Deferred tax liability Current tax liability 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	2016 $ 2015 $
	348,434 63,605 1,363,220 1,782,314 1,021,325 1,010,682 961,677 613,773
	3,694,656 3,470,374
	1,069,574 1,305,455 75,728 189,190 259,759 16,271 141,381 -
	1,546,442 1,510,916
	5,241,098 4,981,291
	1,272,059 1,126,154 305,611 773,015 - 826 50,119 114,081
	1,627,789 2,014,076
	605,283 676,011
	605,283 676,011
	2,233,072 2,690,087
	3,008,026 2,291,204
	10,670,515 9,424,203 2,081,737 2,196,280 (9,544,692) (9,136,762)
	3,207,560 2,483,721 (199,534) (192,517)
	3,008,026 2,291,204

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Appendix 4E Preliminary Final Report 30 June 2016

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016

Balances as at 1 July 2014 (Loss) for the year Exchange differences arising on translation of foreign operations Total comprehensive loss for the year Shares issued during one year Balance as at 30 June 2015 Balance as at 1 July 2015 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 Equity raising costs Balance as at 30 June 2016	Issued Capital Compound Financial Instrument Accumulated Losses Option Reserve Foreign Currency Translation Non- controlling interest Total $ $ $ $ $ $ $ 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
	9,286,702 137,501 (9,136,762) 2,242,994 (46,714) (192,517) 2,291,204 - - (407,930) - - (441) (408,371) - - - - (137,279) (6,576) (143,855)
	- - (407,930) - (137,279) (7,017) (552,225)
	1,414,235 (137,501) - - - - 1,276,734 (30,422) - - 22,737 - - (7,685)
	10,670,515 - (9,544,692) 2,265,731 (183,993) (199,534) 3,008,027

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Appendix 4E Preliminary Final Report 30 June 2016

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Net income tax received Net cash provided by/ (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 Purchase of other investment Net cash provided by/ (used in) investing activities Cash flows from financing activities Repayment of borrowings Proceeds from issue of shares Withdrawal of fixed deposits Net cash provided by/ (used in) financing activities Net (decrease)/ 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	2016 $ 2015 $
	Inflows/(Outflows)
	6,844,165 5,704,848 (6,760,418) (6,027,297) 21,872 17,281 (9,255) (5,907) 298,380 306,842
	394,744 (4,233)
	33 1,700 (93,877) (5,319) (264,288) (113,142) (251,064) -
	(609,196) (116,761)
	(84,340) (699,525) 769,050 - 5,413 654,591
	690,123 (44,934)
	475,671 (165,929) 63,604 237,725 (190,841) (8,193)
	348,434 63,604

Reconciliation to Statement of Cash Flows:

For the purposes of the statement of cash flows, 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:

Cash and cash equivalents Cash and cash equivalents as per statement of cash flows	348,434 63,604
	348,434 63,604

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Appendix 4E Preliminary Final Report 30 June 2016

NOTES

1 BASIS OF PREPARATION

The preliminary final report of Holista CollTech Limited for the year ended 30 June 2016 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 2015 annual report.

2 REVENUE

Operating activities Sale of goods Interest received on deposits	2016 $ 2015 $ 6,263,671 6,771,672 21,872 17,281
	6,285,543 6,788,953

3 FINANCIAL RESULTS

The group recorded net loss after tax from continuing operations of $408,371 for the year ended 30 June 2016 compared to a net loss of $42,985 for the year ended 30 June 2015. The significant losses during the financial year are mainly due to challenging market conditions faced by its subsidiaries in Malaysia.

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Appendix 4E Preliminary Final Report 30 June 2016

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

Reconciliation of (loss) for the year to net cash flows operatingactivities:	2016	2015
	$	$
(loss)for theyear after tax	(408,371)	(42,985)
Adjustments for non-cash items:
Foreign exchange inprofit & loss	5,550	(5,057)
Depreciation	209,718	221,368
Finance costs(non cash)	61,521	84,442
Decrease /(Increase)in receivables	431,454	(556,905)
(Increase)in inventories	(10,643)	(314,982)
Increase inpayables	4,721	488,744
(Decrease)/ Increase in taxprovision	(110,876)	114,082
Decrease inprepayment	211,670	7,060
Net cashprovided by/(used in)operatingactivities	394,744	(4,233)

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.

7 NET ASSET BACKING

7 NET ASSET BACKING
	2016	2015
	Cents per	Cents per
	share	share
Net tangible assets per share	1.7292	1.3649

8 CONTINGENT LIABILITY

There are no known contingent liabilities.

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Appendix 4E Preliminary Final Report 30 June 2016

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) Supplements

This operating segment is involved in the manufacture and wholesale distribution of dietary supplements.

(ii) Sheep collagen

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

(ii) Food ingredients

This operating segment is involved in the manufacture and wholesale distribution of healthy 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 three 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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9 SEGMENT REPORTING (continued)

(e) Segment Information

(i) Segment performance

Supplements Sheep Collagen Food Ingredients Corporate $ $ $ $ 30 June 2016 REVENUE External sales 5,961,312 302,359 - - Interest revenue - - - 21,872 Total segment revenue 5,961,312 302,359 - 21,872 Reconciliation of segment revenue to group revenue Total Group revenue Segment net loss from continuing operations before tax 751,467 (404,472) - (882,209) Net profit before tax from continuing operations 30 June 2015 REVENUE External sales 6,583,957 187,715 - - Interest revenue - - - 17,281 Total segment revenue 6,583,957 187,715 - 17,281 Reconciliation of segment revenue to group revenue Total Group revenue Segment net loss from continuing operations before tax 1,610,522 (387,459) (10,797) (1,104,495)	Supplements Sheep Collagen Food Ingredients Corporate $ $ $ $ 5,961,312 302,359 - - - - - 21,872	Total $ 6,263,671 21,872
	5,961,312 302,359 - 21,872	6,285,543
		6,285,543
		(535,214)
	6,583,957 187,715 - - - - - 17,281	(535,214)
		6,771,672 17,281
	6,583,957 187,715 - 17,281	6,788,953
		6,788,953
		107,771

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Appendix 4E Preliminary Final Report 30 June 2016

9 SEGMENT REPORTING (continued)

Supplements Sheep Collagen Food Ingredient $ $ $ 30 June 2016 Segment assets 5,227,613 3,533,158 897 Reconciliation of segment assets to Group assets: Intersegment eliminations Total Group assets 30 June 2015 Segment assets 5,258,806 3,063,781 1,133 Reconciliation of segment assets to Group assets: Intersegment eliminations Total Group assets (iii) Segment liabilities Supplements Sheep Collagen Food Ingredients $ $ $ 30 June 2016 Segment liabilities 2,046,171 864,587 768,334 Reconciliation of segment liabilities to Group liabilities: Intersegment eliminations Total Group liabilities 30 June 2015 Segment liabilities 2,071,739 1,172,251 741,582 Reconciliation of segment liabilities to Group liabilities: Intersegment eliminations Total Group liabilities	Total $ 8,761,668 (3,520,570)
	5,241,098
	8,323,720 (3,342,429)
	4,981,291
	Total $ 3,679,092 (1,446,020)
	2,233,072
	3,985,572 (1,295,485)
	2,690,087

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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 United States 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	30 June 2016 30 June 2015 $ $ 302,359 187,715 5,961,312 6,583,957 - - 6,263,671 6,771,672
	768,630 367,313 4,471,571 4,612,846 897 1,132 5,241,098 4,981,291

(vi) Major customers

The Group has a number of customers to whom it provides both products and services. Within the Food Ingredients and Supplement segment, the Group supplies to a number of retailers through one single external distributor who account for 65% of total revenue for this segment. The Group supplies to a few external customers for the Sheep Collagen segment, where the major customer accounts for 99.6% of revenue for this segment.

10 ISSUED AND QUOTED SECURITIES AT END OF CURRENT PERIOD

Category of securities	Total number	Number quoted
Ordinary securities	169,572,421	169,572,421

11 EARNINGS PER SHARE (EPS)

11 EARNINGS PER SHARE (EPS) Reconciliation of earnings to profit or loss Profit/(loss) Earnings used to calculate basic EPS Earnings used in the calculation of dilutive EPS Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS	2016 (407,930) (407,930) (407,930) No. of shares 159,711,568 ______	2015 33,488 33,488 33,488 No. of shares 151,036,656 ______

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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.

==> picture [82 x 58] intentionally omitted <==

Sign here: ............................................... Date: 31[st] August 2016 (Company Secretary)

Print name: JAY STEPHENSON

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