INVION LIMITED — Interim / Quarterly Report 2011

Aug 30, 2011

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CBio Limited ACN 76 094 730 417

Appendix 4E Preliminary Final Report 30 June 2011

Contents

Results for Announcement to the Market Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to Financial Information Compliance Statement 20

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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RESULTS FOR ANNOUNCEMENT TO THE MARKET

Reporting Period
Report for the financial year end:	30 June 2011
Previous corresponding reporting period :	30 June 2010

Summary of Financial Information

The loss after tax of the Company for the year ended 30 June 2011 was $13,679,994 (2010: $16,787,189 loss).

Total revenue during the year decreased to $209,125 (2010: $225,521), primarily due to reduced interest receipts.

CBio Limited incurred total expenses of $13,668,307 during the year ended 30 June 2011 (2010: $17,606,959).

Research and development activities, including the phase IIa clinical trial in Rheumatoid Arthritis (RA), accounted for the bulk of the expenses incurred during the year. Expenses of $5,144,075 were incurred on research and development during the year (2010: $5,429,117) . Borrowing costs ($1,665,638), capital raising costs ($260,990), share-based payments expenses ($16,396) and business development costs ($399,706) were all significantly lower than those incurred in the prior year.

The net deficiency in assets of the Company was reduced during the year by $2,634,477 to $2,142,416 (2010: Net deficiency $4,776,893). Total assets have increased to $4,729,684, of which $3,909,426 is cash (2010: $3,433,448). The Company’s Issued Capital has increased from $68,291,037 to $84,302,952 during the year, with new capital raised from a variety of sources, including a Rights Issue, share placement, the exercise of share options and the conversion of Convertible Notes.

The Company has not gained or lost control of any entity during the reporting period. There were no associated or joint venture entities during the reporting period.

		Percentage
		increase/(decrease) over
		previous corresponding
Results	$	period
Revenue from ordinary activities	209,125	(7.3%)
Profit/(loss) from ordinary activities after tax attributable to members	(13,679,994)	(18.5%)
Net profit/(loss) for the period attributable to	(13,679,994)	(18.5%)
members
Net Tangible Asset Backing	2011	2010
Net tangible asset backing per ordinary security	(0.01)	(0.06)

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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Dividends	Amount per security	Franked amount per security
Final dividend	Nil	Nil
Interim dividend	Nil	Nil

The Company is not yet profitable and therefore there can be no assurance that CBio will become profitable or will pay dividends in the near future. Should any dividends be paid in the future, no assurances can be given as to the level of franking credits attaching to such dividends.

Statement of accumulated losses	2011	2010
Balance at the beginning of the year	(92,167,828)	(75,380,639)
Net loss attributable to members of the parent entity	(13,679,994)	(16,787,189)
Balance at end of the year	(105,847,822)	(92,167,828)

Audit Report

The financial report is in the process of being audited. There are no likely disputes or qualifications to the accounts. The auditor has however indicated the audit report for 30 June 2011 will contain an emphasis of matter titled “Material Uncertainty Regarding Continuation as a Going Concern” consistent with prior periods.

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2010 1

Note Continuing Operations Interest received Rental revenue Total revenue Fair value movement of derivatives Unrealised / realised foreign exchange gain Other income Capital raising costs 2a Borrowing costs expense 2b Administration & corporate expenses Depreciation & amortisation 2c Staff costs 2d Rent & occupancy expense Share based payment expense Research and development costs 2e Patent costs Business development Loss before income tax from continuing operations Income tax expense 3 Loss from continuing operations after income tax Other comprehensive income Total comprehensive income for the year (Loss)/gain per share (cents per share) Basic/Diluted – Continuing operations 14	2011 $ 2010 $
	66,173 85,261 142,952 140,260
	209,125 225,521 (564,049) 569,583 341,044 - 2,203 24,666 (260,990) (1,764,430) (1,665,638) (3,173,145) (1,794,792) (1,766,199) (144,420) (232,689) (3,092,805) (3,293,734) (605,945) (572,653) (16,396) (373,655) (5,144,075) (5,429,117) (543,550) (293,920) (399,706) (707,417)
	(13,679,994) (16,787,189) - -
	(13,679,994) (16,787,189)
	- - (13,679,994) (16,787,189)
	(11.32) (24.90)

The Statement of Comprehensive Income is to be read in conjunction with the notes to the Appendix 4E.

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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STATEMENT OF FINANCIAL POSITION

As at 30 June 2011

Notes Current assets Cash and cash equivalents 15a Trade and other receivables 4a Other current assets 5 Total current assets Non-Current Assets Property, plant and equipment 6 Trade and other receivables 4b Intangible assets 7 Other non-current assets 5 Total Non-Current Assets Total Assets Current Liabilities Trade and other payables 8 Financial liabilities 9 Short-term provisions 10a Unearned income 11 Total current liabilities Non-Current Liabilities Long-term provisions 10b Total Non-Current Liabilities Total Liabilities Net Deficiency Equity Issued Capital 12 Reserves 13 Accumulated Losses Total Deficiency in Equity	2011 $ 2010 $
	3,909,426 3,433,448 28,030 55,807 340,598 271,403
	4,278,054 3,760,658
	132,556 232,856 150,000 155,967 - - 169,074 338,148
	451,630 726,971
	4,729,684 4,487,629
	1,369,158 2,195,305 2,326,681 3,616,921 219,369 158,851 2,805,736 3,182,848
	6,720,944 9,153,925
	151,156 110,597
	151,156 110,597
	6,872,100 9,264,522
	(2,142,416) (4,776,893)
	84,302,952 68,291,037 19,402,454 19,099,898 (105,847,822) (92,167,828)
	(2,142,416) (4,776,893)

The Statement of Financial Position is to be read in conjunction with the notes to the Appendix 4E.

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 20101

Note ISSUED CAPITAL Balance at 1 July Gross issue of share capital Cost of capital raising Balance at 30 June 12 ACCUMULATED LOSSES Balance at 1 July Loss for the year Other comprehensive income Total comprehensive income for the year Balance at 30 June RESERVES Balance at 1 July Net convertible note issuance/conversion to equity Equity-based compensation Balance at 30 June 13	2011 $ 2010 $
	68,291,037 47,947,588 17,657,658 22,308,111 (1,645,743) (1,964,662)
	84,302,952 68,291,037
	(92,167,828) (75,380,639) (13,679,994) (16,787,189) - -
	(13,679,994) (16,787,189)
	(105,847,822) (92,167,828)
	19,099,898 16,628,240 286,160 2,098,003 16,396 373,655
	19,402,454 19,099,898

The Statement of Changes in Equity is to be read in conjunction with the notes to the Appendix 4E.

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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STATEMENT OF CASH FLOWS

For the year ended 30 June 2010

Notes Cash flows from/(used in) operating activities Payments to suppliers and employees Cash received in the course of operations Interest received Interest paid Net cash used in operating activities 15b Cash flows from/(used in) investing activities Purchase of Plant and equipment Net cash (used in)/provided by investing activities Cash flows from/(used in) financing activities Proceeds from issue of shares Proceeds from issue of convertible notes Repayment of convertible notes Repayment of borrowings Share issue costs Proceeds from borrowings Net cash provided by financing activities Net increase/(decrease) in cash held Net foreign exchange differences Cash at beginning of the financial period Cash at the end of the financial period 15a	2011 $ 2010 $
	(13,203,838) (16,375,922) 340,964 1,549,259 66,173 85,261 (659,410) (460,633)
	(13,456,111) (15,202,035)
	(44,120) (10,719)
	(44,120) (10,719)
	14,611,362 15,066,717 1,650,000 5,550,000 (1,475,000) - (300,000) (146,000) (1,130,884) (2,240,965) 300,000 376,115
	13,655,478 18,605,867
	155,247 3,393,113 320,731 - 3,433,448 40,335
	3,909,426 3,433,448

The Statement of Cash Flows is to be read in conjunction with the notes to the Appendix 4E.

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

1. BASIS OF PERPARATION

This preliminary financial report has been prepared in accordance with ASX Listing Rule 4.3A and has been derived from the unaudited financial report. The financial report has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The preliminary financial report does not include all notes of the type normally included in an annual report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2010, the half-year report for the period ended 31 December 2010 and any public announcements made by the Company during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. These policies have been consistently applied to all the years presented except as noted below.

This report is based on the Financial Report which is in the process of being audited.

The current reporting period in the preliminary financial report is the year ended 30 June 2011 while the previous corresponding period is the year ended 30 June 2010.

2. EXPENSES (a) Capital Raising Costs Advisor fees Initial public offer costs Commission expense (b) Borrowing Costs Interest expense on Convertible notes: - Related entities - External Non cash interest on convertible notes Other borrowing costs (c) Depreciation and amortisation Depreciation of non-current assets: - Leasehold improvements - Plant and equipment	2011 $ 2010 $
	260,990 - - 1,303,422 - 461,008
	260,990 1,764,430
	- 24,717 659,452 476,897 794,828 2,391,429 211,358 280,102
	1,665,638 3,173,145
	22,636 22,436 121,784 210,253
	144,420 232,689

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

2. EXPENSES (cont’d) (d) Staff Costs Salaries, wages & fees Superannuation Payroll tax Employee entitlements Other staff costs (e) Research and development Clinical trial costs Drug production and supply Other research and development costs 3. INCOME TAX (a) Statement of comprehensive income Current income tax Current income tax benefit Deferred income tax Relating to origination and reversal of temporary differences Deferred tax assets (not recognised)/recognised Income tax expense reported on the statement of comprehensive (b) A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the company’s applicable income tax rate is as follows: Accounting Profit (Loss) before income tax At the Company’s statutory income tax rate of 30%: Additional deductions – Research and Development Non tax deductible items Non-assessable items Movement in temporary differences not recorded Tax assets not recognised Income tax expense	2011 $ 2010 $
	2,557,030 2,835,839 224,686 223,627 149,427 165,638 101,076 42,821 60,586 25,809
	3,092,805 3,293,734
	3,107,971 2,949,545 1,580,497 2,156,379 455,607 323,193
	5,144,075 5,429,117
	4,488,243 5,080,313 (146,191) (787,614) (4,342,052) (4,292,699)
	- -
	(13,679,994) (16,787,189) (4,103,998) (5,036,156) (549,353) (786,838) 457,490 913,556 - (170,875) (146,191) 787,614 4,342,052 4,292,699
	- -

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION For the year ended 30 June 2011

3. INCOME TAX (cont’d) Tax assets (At 30%) Domestic tax losses Temporary differences – including balances in equity Total unrecorded tax assets	2011 $ 2010 $
	28,504,079 24,162,028 3,333,290 3,179,899
	31,837,369 27,341,927

At 30 June 2011 the Company has significant estimated, unconfirmed and un-recouped losses as disclosed above. No future income tax benefit for the tax losses incurred by the company has been recognised as an asset. Because of the complexity of the Company’s changing shareholder base and operations, combined with income tax legislation, the amount of the Company’s available tax losses as at 30 June 2011 which are available for carry forward use can not be determined with a sufficient degree of probability. Management will undertake a detailed review of the ability to carry forward and use these losses on a needs basis. As a result of this the losses disclosed as available below may not be available in full.

(c) Temporary differences Capital raising costs Patent costs Research licence Unearned income Provisions and accruals	793,712 548,815 1,015,863 852,798 405,000 450,000 838,067 954,854 280,648 373,432
	3,333,290 3,179,899

The losses disclosed as at 30 June 2011 will only be obtained in future periods if:

• Future assessable income of a nature and of an amount sufficient to enable the benefit to be realised;

• The conditions for deductibility imposed by tax legislation continue to be complied with; and

• No changes in tax legislation adversely affect the Company in realising the benefit.

4. TRADE & OTHER RECEIVABLES

(a) Current

Trade debtors 28,030 55,807

Terms and conditions

All receivables are non-interest bearing and are usually settled on terms of between 30 and 45 days. Credit risk is assessed as low on all receivables as CBio only deals with recognised credit worthy third parties. Credit risk assessments on an individual transaction basis are made by management. At 30 June 2011, $2,997 of trade debtors are past due but not impaired (2010: $8,780).

(b) Non-current

Bank Guarantee Deposit (i)

150,000 155,967

(i) Guarantee deposit lodged with the Company’s bank as support for the building lease of the facility at Eight Mile Plains which was tenanted by the company in April 2005.

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

5. OTHER ASSETS Current – Prepayments Non current – Prepayments 6. PROPERTY, PLANT & EQUIPMENT Total property, plant & equipment - At Cost - Accumulated Depreciation Total written down value Leasehold Improvements At cost Provision for depreciation Movement in carrying value Carrying value at the beginning of the year - Additions - Depreciation Carrying value at the end of the year Plant & Equipment At cost Provision for depreciation Movement in carrying value Carrying value at the beginning of the year - Additions - Depreciation Carrying value at the end of the year	2011 $ 2010 $
	340,598 271,403 169,074 338,148
	509,672 609,551
	1,872,457 1,828,337 (1,739,901) (1,595,481)
	132,556 232,856
	152,056 147,201 (125,898) (103,262)
	26,158 43,939
	43,939 66,375 4,855 - (22,636) (22,436)
	26,158 43,939
	1,720,401 1,681,136 (1,614,003) (1,492,219)
	106,398 188,917
	188,917 388,451 39,265 10,719 (121,784) (210,253)
	106,398 188,917

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION For the year ended 30 June 2011

7. INTANGIBLE ASSETS Intellectual property Provision for recoverability (i)	2011 $ 2010 $
	4,125,000 4,125,000 (4,125,000) (4,125,000)
	- -

(i) The Directors have provided against the notional book value of the intellectual property purchased given the risks and uncertainties associated with the continued research and development and ultimate commercialisation of this asset.

8. TRADE & OTHER PAYABLES

Trade payables Accrued expenses Director and Director related payables (i)	793,968 1,123,605 564,890 996,735 10,300 74,965
	1,369,158 2,195,305

• (i) The Director and Director related payables relates to fees and expense reimbursements payable at 30 June 2011.

Terms and conditions of Payables

Trade creditors are non-interest bearing and are normally settled on 30-day terms. Director and Director related entity payables are non-interest bearing and are payable for services provided in the ordinary course of operations.

9. FINANCIAL LIABILITIES

Convertible notes (i) Embedded derivative in convertible notes (i) Interest payable on Convertible Notes	1,780,006 3,227,740 497,360 338,838 49,315 50,343
	2,326,681 3,616,921

(i) SpringTree Notes

During the year the Company issued 11 Convertible Notes (SpringTree Notes) under a Convertible Loan Agreement dated 17 May 2010, raising a total of $1,650,000. These notes have a face value of $150,000 each and are non-interest bearing. The notes are repayable on the following terms:

• On maturity, the Note shall convert into new Ordinary Shares of the Company determined by dividing the Principal Amount to be converted by the lesser of:

• 140% of the average of the daily VWAPs per Share for the twenty (20) consecutive Trading Days immediately prior to 16 May 2010; and

• 90% of the lowest daily VWAP per Share during the twenty (20) Trading Days immediately prior to the Repayment Date of that Repayment, (the Conversion Price)

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

9. FINANCIAL LIABILITIES (cont’d)

Under certain conditions, the Note is also repayable in cash. The penalty for repaying the note in cash is equal to 5% (Jul-Feb) and 2.5% (Mar-Jun) of the Note face value.

On each repayment date, the Company shall grant the Investor, Options in the number equal to 20% of the number of the new Ordinary Shares issued or issuable on that repayment date, exercisable at a price equal to 130% of the Conversion Price applicable to the repayment.

During the year, 3 SpringTree Notes were converted to equity (one of which was outstanding at 30 June 2010) and 9 SpringTree Notes were repaid in cash. There were no Notes outstanding at the balance date. The facility has mandatory monthly draw down amounts of $150,000 to be converted/repaid in one month. A liability of $250,000 was recorded in the prior year to represent the fair value of this obligation.

Other Notes

During prior years, the Company issued a number of Convertible Notes (“Other Notes”) under a Convertible Note Deed dated 30 August 2007. The notes had varying face values and interest of between 10% and 20% per annum is payable monthly. In addition, notes may be converted to shares and options in CBio Limited in accordance with the terms of each note.

Notes have a life of no greater than six months unless extended for a further period if agreed by CBio and the Note holder. During the year, one Note, with a face value of $125,000, was repaid in cash. On 30 June 2011, the Company received a notice from the holder of two Notes, with a face value of $2,000,000, electing to convert their Notes to equity. Subsequent to the Balance Date, 4,000,000 shares and 2,500,000 share options were issued in relation to these notes. These notes were recorded as equity at 30 June 2011. Two other notes, with a combined face value of $2,000,000, remain outstanding at the balance date.

(a) Key convertible note terms

Face Value $ Conversion Rate $ Shares issued if converted Options issued if converted Option exercise price $ Note expiry	Face Value $ Conversion Rate $ Shares issued if converted Options issued if converted Option exercise price $ Note expiry
2,000,000 0.286 7,000,000 (b) Financial Liability reconciliation Opening balance at 1 July 2010 Issue of convertible notes Interest accretion Conversion of convertible notes Repayment of convertible notes Interest charge on convertible notes Interest paid on convertible notes Fair value adjustment	2,500,000 1.00 31/12/11 Convertible Note Embedded Derivative Interest Accrual
	3,227,740 338,838 50,343 1,650,000 - - 794,828 - - (2,450,000) (258,966) - (1,475,000) (1,661) - - - 606,301 - - (607,329) 32,438 419,149 -
	1,780,006 497,360 49,315

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

10. PROVISIONS (a) Short-term employment provisions (i) (b) Long-term employment provisions (ii) Movement in carrying value At 1 July Accrued in the period Used in the period At 30 June	2011 $ 2010 $
	219,369 158,851 151,156 110,597
	370,525 269,448
	269,448 226,627 222,331 247,945 (121,254) (205,124)
	370,525 269,448

• (i) Short Term Provisions represent the estimated costs in respect of current employment benefits payable to Company employees. The provision for current employment benefits includes accrued annual and long-service leave and related on-costs payable on the accrued entitlements. It is expected these costs will be settled by 30 June 2012.

• (ii) Long Term Provisions represent the estimated costs in respect of non-current employment benefits payable to Company employees. The provision for non-current employment benefits includes accrued long-service leave and related on-costs payable on the accrued entitlements. Due to the nature of the provision, the company is unable to determine a date by which these costs will be settled, however no costs are expected to be settled prior to 30 June 2012.

11. UNEARNED INCOME Option agreement (i) Other	2011 $ 2010 $
	2,793,556 3,182,848 12,180 -
	2,805,736 3,182,848

(i) Unearned income represents the fees received from Novo Nordisk A/S in relation to the agreement with CBio in 2007. The amount will not be recorded as income until the terms contained in the agreement are satisfied.

12. ISSUED CAPITAL Ordinary shares fully paid	2011 Number 2011 $ 2010 Number 2010 $
	159,854,762 84,302,952 80,104,905 68,291,037

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

12. ISSUED CAPITAL (cont’d) Movements in shares on issue As at 1 July SpringTree convertible loan agreement (i) Exercise of share options (ii) Consideration for provision of services (iii) Consideration for payment of capital raising costs (iv) Share placement (v) Rights issue (vi) Information memorandum IPO Share Purchase Plan Repayment of loan Consideration for accrued interest on convertible notes Conversion of convertible notes (vii) Transaction costs As at 30 June	2011 Number 2011 $ 2010 Number 2010 $
	80,104,905 68,291,037 41,258,424 47,947,588 2,316,093 551,882 2,777,778 686,000 611,367 168,994 51,282 33,846 900,000 400,000 2,854,770 460,569 700,250 535,125 11,627,687 5,116,182 - - 58,288,658 9,326,185 - - - - 15,126,000 7,563,000 - - 7,101,717 7,101,717 - - 1,148,566 401,998 - - 520,590 260,295 - - 397,578 198,789 4,000,000 2,000,000 10,174,002 5,161,187 - (1,645,743) - (1,964,662)
	159,854,762 84,302,952 80,104,905 68,291,037

(i) 2,316,093 shares were issued at prices of between $0.1774 and $0.2354 pursuant to a Convertible Loan Agreement with SpringTree Special Opportunities Fund LP.

(ii) 611,367 shares were issued upon the exercise of share options at exercise prices of between $0.2323 and $0.3510.

• (iii) 51,282 shares were issued to a supplier for the provision of service at $0.195 per share

• (iv) 2,826,100 shares were issued as commission in connection with the Rights Issue conducted by the company at $0.16 per share with the remaining 28,670 shares issued as commission at $0.2927 per share.

• (v) 11,627,687 shares were issued at $0.44 per share in a share placement

• (vi) 58,288,658 shares were issued at $0.16 in a Rights Issue.

• (vii) 4,000,000 shares were issued at $0.50 in accordance with convertible note terms. These shares were recognised in equity at 30 June in accordance with Accounting Standards, however the shares were not issued until 7 July 2011.

Terms and conditions of ordinary shares

Ordinary shares have the right to receive dividends as declared, and in the event of winding up of the Company, to participate in the proceeds from the sale of all surplus assets.

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

12. ISSUED CAPITAL (cont’d)

Capital Management

The Board controls the capital of the company in order to ensure that it can fund its operations and continue as a going concern. The company’s debt and capital includes ordinary share capital and convertible notes and financial liabilities, supported by financial assets.

There are no externally imposed capital requirements.

The Board effectively manages the company’s capital by assessing the company’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels and share issues.

There have been no changes in the strategy adopted by the Board to control the capital of the company since the prior year. The gearing ratios for the year ended 30 June 2011 and 30 June 2010 are as follows:

Total borrowings (at face value) Trade and other payables Less cash and cash equivalents Net debt Total equity (including liabilities at face value) Total net debt plus equity Gearing ratio 13. RESERVES Equity reserve Balance at 1 July Convertible note issue Repayment of convertible notes Share option expense Adjustment to convertible notes on modification Balance at 30 June	2011 $ 2010 $
	2,000,000 4,275,000 1,369,158 2,195,305 (3,909,426) (3,433,448)
	(540,268) 3,036,857 (1,865,050) (5,485,315)
	(2,405,318) (2,448,458)
	(22%) (124%)
	19,099,898 16,628,240 286,160 1,221,419 - (21,690) 16,396 846,758 - 425,171
	19,402,454 19,099,898

Nature and purpose of equity reserve

The equity reserve records items:

(i) Recognised as an expense with respect to share-based consideration (ii) The equity component of convertible notes

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

14. EARNINGS PER SHARE Basic/Diluted (loss) per share (cents per share) – continuing operations Basic/Diluted (loss)/earnings per share (cents per share) – attributable to the members of the company Income and share data used in the calculation of basic & diluted earnings per share: Loss from continuing operations after income tax expense Loss attributable to members of the parent entity Weighted average number of ordinary shares outstanding during the year used in calculation of basic & diluted EPS Effect of dilutive securities: - Share options -Convertible Notes Adjusted weighted average number of ordinary shares outstanding during the year used in calculation of basic & diluted EPS (i)

2011 $ 2010 $

(11.32) (24.90) (11.32) (24.90) (13,679,994) (16,787,189) (13,679,994) (16,787,189) 120,891,672 67,425,696 - - - - 120,891,672 67,425,696

(i) As at the balance date, there were 37,084,849 share options on issue, 7,000,000 potential shares and 2,500,000 potential options which may be issued upon conversion of outstanding Convertible Notes, giving a total potential shares which may be issued of 46,584,849. These potential ordinary shares have not been taken into account when calculating the diluted loss per share due to their anti-dilutive nature.

(ii) In addition to amounts disclosed in note (i) additional shares and options may be issued under the SpringTree facility as disclosed in Note 12(a). The facility is a $12.45 million AUD facility. Given the formula required to determine shares and options to be issued relies on future share prices, estimates of issuable shares and options cannot be made and will depend on future use of the facility. 800,000 shares have been issued as security for this facility. These shares will be cancelled on the completion of the facility unless SpringTree elects to make a payment to CBio in accordance with the terms of the Agreement.

15. CASH AND CASH EQUIVALENTS

(a) Reconciliation of cash

For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial period as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:

Cash at bank

3,909,426 3,433,448

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

15. CASH AND CASH EQUIVALENTS (cont’d) (b) Reconciliation of net cash flows from operating activities to operating loss after income tax Operating loss after taxation Non cash items Interest Transaction cost Termination fee Depreciation Equity based compensation Capital raising costs Realised/ Unrealised foreign exchange gain Change in assets and liabilities (Increase)/decrease in receivables and prepayments Increase/(decrease) in payables Increase/(decrease) in provisions Increase/(decrease) in unearned income Net cash flows used in operating activities	2011 $ 2010 $
	(13,679,994) (16,787,189) 794,828 2,391,429 211,400 - - 250,000 144,420 232,698 16,396 373,655 - 535,125 (341,044) 68,543 133,623 (376,037) (824,637) (3,781,843) 101,077 42,820 (12,180) 1,096,690
	(13,456,111) (15,202,035)

16. SUBSEQUENT EVENTS

The Company issued a $150,000 Convertible Notes on 6 July pursuant to the funding agreement with SpringTree Special Opportunities Fund, LP. The Note was repaid in cash on 3 August.

In July the Company issued 100,000 shares to entities associated with Dr Michael Monsour as commission on the firm commitment to subscribe for shares under the Rights Issue conducted by the Company in 2010. The share issue was approved by shareholders in general meeting on July 15.

In July the Company issued 1,900,000 performance rights to employees of the Company and 1,200,000 performance rights to Non-Executive Directors of the Company. The issue of performance rights was approved by shareholders in general meeting on July 15.

In July the Company announced the headline results from its phase IIa clinical trial in Rheumatoid Arthritis.

In July, SpringTree Special Opportunities Fund, LP exercised 200,000 of 1,900,000 options issued upon the signing of the funding agreement at $0.517 per share.

In August, the Company announced the termination of the Convertible Loan facility with the SpringTree Special Opportunities Fund, LP. On termination of the facility, SpringTree made a payment of $180,160 to CBio in lieu of the cancellation of the Collateral Shares issued in the prior year pursuant to the Agreement.

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

17. CORPORATE INFORMATION

CBio Limited is a company limited by shares that is Incorporated and domiciled in Australia. CBio Limited is listed on the Australian Securities Exchange. During the year ending 30 June 2011 there were no controlled entities.

The registered office and principal place of business is:

CBio Limited 85 Brandl St Eight Mile Plains, QLD, 4113

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CBio Limited Preliminary Financial Report For the year ended 30 June 2011

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NOTES TO FINANCIAL INFORMATION

For the year ended 30 June 2011

COMPLIANCE STATEMENT

1. This Appendix 4E has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

2. This Appendix 4E, and the accounts upon which the Appendix 4E is based, use the same accounting policies.

3. This Appendix 4E does give a true and fair view of the matters disclosed.

4. This Appendix 4E is based on financial statements which are in the process of being audited.

5. The entity has a formally constituted audit committee.

6. In the directors opinion, there are reasonable grounds to believe that the company is able to pay its debts as and when they become due and payable.

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STEPHEN JONES

Executive Chairman

31 August 2011

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