NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Annual Financial Report for the year ended 30 June 2011

Directors‟ Report	3
Corporate Governance Statement	12
Consolidated Statement of Comprehensive Income	18
Statement of Financial Position	19
Statement of Changes in Equity	20
Statement of Cash Flows	21
Notes to the Consolidated Financial Statements	22
Directors‟ Declaration	51
Auditor‟s Independence Declaration	52
Independent Audit Report to the Members	53
Shareholder Information	56

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

Your Directors present their report, together with the financial statements of the Group, being the company and its controlled entities, for the financial year ended 30 June 2011.

Directors

Unless indicated otherwise, the following persons were Directors of NuSep Holdings Ltd during the whole of the financial year and until the date of this report:

Names, Qualifications, Experiences, Special Responsibilities and Shareholding Interest in Shares and Options* John Manusu B.Com, F.Fin. Executive Chairman Mr Manusu became the Executive Chairman of NuSep Holdings Ltd in September 2008. Prior to this Direct 3,385,944 he was the Managing Director. Age 52. Mr Manusu has over 20 years experience running ordinary shares, biotechnology companies. Throughout this period he has been involved with start ups, turnarounds and 687,366 35c mature organisations in the biotechnology space. Mr Manusu has undertaken a number of significant Listed Share acquisitions and divestures, as well as raising over $100 million in public funding and $10 million of Options. peer reviewed government R&D grants. Mr Manusu was a Director of Gradipore and Life Therapeutics Indirect 508,923 (October 1987 to June 2007), an ASX listed company, culminating in the sale of this business to ordinary shares, Kedrion for $100m. Mr Manusu has a degree in Commerce and is a Fellow of the Financial Services 135,349 35c Listed Institute of Australasia. Mr Manusu has worked in the Australia and U.S. Biotechnology markets and is Share Options. best described as a biotechnology entrepreneur. Dr. Hari Nair BSc (Hons), PhD (Med & Clin Sci), MAIboil, MOIF (Cambridge) Managing Director, Chief Executive Officer Non-executive Director between September 2006 and September 2008. Since then Managing Director Direct 1,088,680 and Chief Executive Officer. Age 54. Dr Nair has a PhD in Medicine and Clinical Science from the ordinary shares, Australian National University with his specialty in cardiovascular medicine and haematology. Dr Nair 416,667 35c Listed has received a number of awards from international organisations including being specially recognised Share Options. for his role in coagulation research by the ACT government. He has run biotechnology companies in Australia and the US. Dr Nair has been heavily involved in mergers and acquisitions especially in the US and Europe and has US financial experience. Dr Nair was a Director of Life Therapeutics (2004 – 2007), an ASX listed company, culminating in the sale of this business to Kedrion for $100m. Dr Nair has served on the boards of a number of international biotechnology companies and US state Commercialisation Boards. Iain Howard Sorrell HND, LiBiol Non-executive Director Chairman of Remuneration Committee, Member of Audit Committee Non-executive Director since September 2006. Age 54. Mr Howard-Sorrell is based in the USA and has over 20 years experience in the Life Sciences arena. He has held senior sales and marketing Direct 951,328 positions in both corporate and start up businesses both in Europe and the USA. In addition to his ordinary shares, extensive knowledge of the separations industry he has also set up and operated a successful import and 479,167 35c Listed distribution organisation in the USA. No other directorships have been held in a listed company during Share Options. the last 3 years. He is a graduate of the University of Plymouth in Applied Biology. In addition to ongoing consultative roles he is also actively involved on the board of trustees for non-profit organisations. He is best recognised for his ability to develop new markets and co-ordinate international distribution. William Spee Non-executive Director Chairman of Audit Committee, Member of Remuneration Committee Non-executive Director since 1 July 2009. Age 64. Mr Spee brings 30 years experience in running Direct 130,721 Manufacturing, Retail and Investment operations. He has a lifetime passion for science and technology ordinary shares, and in addition to running his own Commercial Property Investment company has direct investment 556,667 35c Listed interests in several growing ventures. Mr Spee was a Flying Officer in the RAN, and completed his Share Options. training in the US Navy. Mr Spee has run several retail food businesses, has studied computer science Indirect 2,521,109 at Macquarie and Canberra Universities before running a scale electronic manufacturing venture. No ordinary shares, other directorships have been held in a listed company during the last 3 years. Mr Spee is passionate 500,000 35c Listed about the environment and is currently designing a new 6 green star commercial building in Northern Share Options. Australia.

The directors holding as at the date of this report.

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

Company Secretary

The Company Secretary is Mr Prakash Patel, CPA. Mr Patel has held the position of Company Secretary since the appointment of the NuSep Holdings Ltd Board in September 2006. Mr Patel has been the Chief Financial Officer of NuSep Holdings Ltd since September 2006 and was appointed the Chief Operating Officer in May 2010. Mr Patel has a degree in Commerce, is a CPA (Certified Practising Accountant) and is an affiliated member of CSA (Chartered Secretaries Australia).

Meetings of Directors

The following table sets out the numbers of meetings of the company‟s Board of Directors and meetings of each Board committee held during the year ended 30 June 2011 and the number of meetings attended by each Director.

Director	Full meetings of Directors	Full meetings of Directors	Meetings of committees	Meetings of committees	Meetings of committees	Meetings of committees
			Audit		Remuneration
	A	B	A	B	A	B
John Manusu	22	22	-	-	-	-
Dr Hari Nair	22	22	-	-	-	-
Iain Howard Sorrell	22	22	3	3	1	1
William Spee	22	22	3	3	1	1

A = Number of meetings attended

B = Number of meetings held during the time the Director held office or was a member of the committee during the year.

CORPORATE INFORMATION

Corporate Structure

NuSep Holdings Ltd is a company limited by shares, incorporated and domiciled in Australia with its registered office at 324 Burns Bay Road, Lane Cove, NSW 2066. It has prepared a consolidated financial report incorporating the entities it controlled during the financial year. Refer to note 24 for the list of entities it controlled during the financial year. All press releases, financial reports and other information are available on our website at www.NuSep.com

Principal Activities

During the year the principal continuing activities of the consolidated group consisted of the development, manufacture and sale of pre-cast electrophoresis gels, separations equipment and consumables, analytical software and other biological products for the Life Science market. There have been no significant changes in the nature of those activities during the year.

Dividends

No dividends were paid during the year and no dividend is recommended.

REVIEW OF OPERATIONS

The company produced a net loss of $6.32m for the year to 30th June 2011. This result represents a $6m impairment charge against intangible assets, $3.1m gain on write-off of contingent liability and significant expenditure for the PrIME Biologics project in Singapore.

NuSep Holdings Ltd‟s Total Equity has decreased to $6.9m from $11.2m in the previous financial year which is largely due the valuation adjustment for Intangible assets. Overall the operational results for the period have been in line with company expectation.

Operating results for the year

A summary of consolidated revenues and results by significant business segment is set out below:

Consumable products Separations & Development Software Total	Segment revenues Segment results 2011 $ 2010 $ 2011 $ 2010 $ 979,734 1,490,610 138,755 115,488 436,737 701,939 (3,265,693) 31,314 3,510,650 3,181,909 (3,194,159) 3,144,907
	4,927,121 5,374,458 (6,321,097) 3,291,709

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

Financial Position

The net assets of the consolidated group at 30 June 2011 have decreased to $6,995,083 from the previous period of $11,249,119. This decreased is due to the impartment of intangible assets , significant expenditure for the PrIME Biologics project in Singapore and development of new products during the year.

Likely Developments, Prospects and Business Strategies

Likely developments, future prospects and business strategies of the operations of the group and the expected results of those operations have not been included in this report as the directors believe, on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the consolidated group.

Significant Change in State of Affairs

Significant changes in the state of affairs of the consolidated group during the financial year were as follows:

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The company has made a significant investment in the setup of for the PrIME Biologics project in Singapore.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

The following events occurred subsequent to 30 June 2011:

a) The Company on 31 August 2011 announced it had raised $1.8m through the share purchase offer which closed on 26 August 2011.

Except for the items discussed above no other matters or circumstances have arisen since 30 June 2011 that have significantly affected, or may significantly affect:

(a) The consolidated entity‟s operations in future financial years, or

(b) The results of those operations in future financial years, or

SHARE OPTIONS

During the year 4,333,888 listed options were issued to shareholders. The listed options have an exercise price of 35 cents and expire on 1 September, 2012.

Option holders do not have any right, by virtue of the option, to participate in any share issues of the company or any related body corporate.

ENVIRONMENTAL ISSUES

The consolidated group has assessed whether there are any particular or significant environmental regulations which apply. It has determined that the risk of non-compliance is low and has not identified any compliance breaches during the year.

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

INDEMNIFYING OFFICERS

During or since the financial year, the company has paid premiums to insure all directors and officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the company, other than conduct involving a wilful breach of duty in relation to the company. In accordance with common commercial practice, the insurance policy prohibits disclosure of the nature of the liability insured against and the amount of the premium.

The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer of the company or any related body corporate against a liability incurred by such an officer.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.

The company was not a party to any such proceedings during the year.

AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor‟s independence declaration for the year ended 30 June 2011 has been received and can be found on page 53 of the Annual Report.

NON-AUDIT SERVICES

The board of directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor‟s independence for the following reasons:

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all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

No fees for non-audit services were paid/payable to the external auditors during the year ended 30 June 2011.

REMUNERATION REPORT

Outlined below are the guiding principles used by NuSep Holdings Ltd to set the remuneration of the organisation. While NuSep Holdings Ltd has adopted these guiding principles it also sensitive to the overall business environment and NuSep Holdings Ltd‟s financial wellbeing.

The Company has made significant progress during the year including the PrIME Biologics project in Singapore and development and sale of new products. This achievement has been a direct result of the efforts of the Board and senior executive of the company.

Principles used to determine the nature and amount of remuneration

The objective of the Company‟s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and confirms with market best practice for delivery of reward. The Board Remuneration Committee evaluates the executive directors and the CEO reviews the senior executive team. In general the Board and specifically the Remuneration Committee ensures that executive reward satisfies the following key criteria for good reward governance practices:

Competitiveness and reasonableness
Acceptability to shareholders Performance linkage/alignment of executive compensation Transparency Capital management

The Company has structured an executive remuneration framework that is market competitive and complimentary to the reward strategy of the organisation. Specifically the remuneration policy has been structured to provide:

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

Alignment to shareholders‟ interest:

Has economic profit as a core component of plan design
Focuses on sustained growth in share price and delivering constant return on assets as well as focusing the executive on key non financial drivers of value
Attracts and retains high calibre executives

Alignment to program participants‟ interest:

Rewards capability and experience
Reflects competitive reward for contribution to shareholder growth Provides a clear structure for earning rewards Provides recognition for contribution

The framework provides a mix of fixed and variable pay, and a blend of short and long term incentives. As executives gain seniority with the group, the balance of this mix shifts to a higher proportion of “at risk” rewards.

Company performance, shareholder wealth and director and executive remuneration.

The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. There have been two methods applied in achieving this aim, the first being a performance bonus based on key performance indicators, and the second being the issue of options to the majority of directors and executives to encourage the alignment of personal and shareholder interests.

The Company has also been able to complete two successful capital raisings during the period. The company continuous to increase awareness of the Company and regularly holds investor presentations and market updates. The share price as at 30 June 2011 was 9.5 cents and 30 June 2010 was 21 cents.

Director Remuneration additional points

There are no other employment agreements or consultancy agreements between non executive Directors and the Company. The Board does not have any termination payments, other than statutory entitlements for retiring non-executive Directors.

On 1st June 2010 the executive director Mr John Manusu and Dr Hari Nair signed 3 year employment contracts. This contract includes employment terms, performance clauses and termination payments

Employment contracts

The Executive Chairman, Mr Manusu, is employed under contract. The current employment contract commenced on 1st June 2010 and terminates on 31st May 2013. The Company shall commence discussion on renewal of the contract, one (1) year prior to the expiration of the initial term. Under the terms of the current contract:

Mr Manusu may resign from his position and thus terminate this contract by giving 4 weeks written notice. On resignation any options will be forfeited.
For reasons of illness or bankruptcy, the Company may terminate this agreement by providing one (1) months‟ written notice or provide payment in lieu of the notice period (based on the fixed component of Mr Manusu‟s remuneration).
The Company may terminate this contract for whatever reason (such as redundancy), with or without notice. In this event, the Executive Chairman is entitled to 1 years‟ salary including all entitlements and bonuses otherwise payable.
The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs the Executive Chairman is only entitled to that portion of remuneration which is fixed, and only up to the date of termination. On termination with cause any unvested options will immediately be forfeited.

The Managing Director, Dr Nair, is employed under contract. The current employment contract commenced on 1st June 2010 and terminates on 31st May 2013. The Company shall commence discussion on renewal of the contract, one (1) year prior to the expiration of the initial term. Under the terms of the current contract:

Dr Nair may resign from his position and thus terminate this contract by giving 4 weeks written notice. On resignation any options will be forfeited.

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

For reasons of illness or bankruptcy, the Company may terminate this agreement by providing one (1) months‟ written notice or provide payment in lieu of the notice period (based on the fixed component of Dr Nair‟s remuneration).
The Company may terminate this contract for whatever reason (such as redundancy), with or without notice. In this event, the Managing Director is entitled to 1 years‟ salary including all entitlements and bonuses otherwise payable.
The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs the Managing Director is only entitled to that portion of remuneration which is fixed, and only up to the date of termination. On termination with cause any unvested options will immediately be forfeited.

The CFO, Mr Patel, is employed under contract. The current employment contract commenced on 1st June 2010 and terminates on 31st May 2013. The Company shall commence discussion on renewal of the contract, one (1) year prior to the expiration of the initial term. Under the terms of the current contract:

Mr Patel may resign from his position and thus terminate this contract by giving 4 weeks written notice. On resignation any options will be forfeited.
For reasons of illness or bankruptcy, the Company may terminate this agreement by providing one (1) months‟ written notice or provide payment in lieu of the notice period (based on the fixed component of Mr Patel‟s remuneration).
The Company may terminate this contract for whatever reason (such as redundancy), with or without notice. In this event, the CFO is entitled to 1 years‟ salary including all entitlements and bonuses otherwise payable.
The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs the CFO is only entitled to that portion of remuneration which is fixed, and only up to the date of termination. On termination with cause any unvested options will immediately be forfeited.

Non Executive Directors

Fees and payments to non executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. Non Executive Directors fees and payments are reviewed annually by the Board. The Board also has agreed to the advice of independent remuneration consultants to ensure Non Executive Directors‟ fees and payments are appropriate and in line with the market. The Chairman‟s fees are determined independently to the fees of Non Executive Directors based on comparative roles in the external market. The Chairman is not present at any discussions relating to determination of his remuneration. Non Executive Directors may opt each year to receive a percentage of their remuneration in NuSep Holdings Ltd shares.

Directors’ Fees

The current base remuneration was last reviewed effective 11 February 2010. Non Executive Directors‟ fees are determined within an aggregate fee pool limit, which is periodically recommended for approval by shareholders. The maximum non executive Directors fee pool limit is $250,000 per year.

Retirement Allowance for Directors

In line with recent guidance on Non Executive Directors‟ remuneration, the Board has resolved not to have any retirement allowances for Non Executive Directors.

Executive Pay

The executive pay and reward framework has four components:

Base pay and benefits

Short term performance incentives Long term incentives Other remuneration such as superannuation.

The combination of these comprises the executive‟s total remuneration. The Company also has long term equity linked to their performance incentives.

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

Base Pay

Structured as a total employment cost package which may be delivered as a mix of cash and prescribed non financial benefits at the executives‟ discretion.

Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. External remuneration consultants provide analysis and advice to ensure base pay is set to reflect the market for a comparable role in a similar sized biopharmaceutical company to the Remuneration Committee for its consideration. Base pay for senior executives is reviewed annually to ensure the executive‟s pay is competitive with the market.

Retirement Benefits

Retirement benefits are delivered under the NuSep Holdings Ltd employee superannuation fund.

Short Term Incentives

It is planned that should NuSep Holdings Ltd achieve financial targets set by the remuneration committee, then a pool of short term incentives (STI) will be available for executives to allocate during the annual review. Under the planned scheme, cash incentives (bonuses) are payable in cash during September each year. Using the above targets will ensure rewards are only available when value has been created for shareholders and when the results are consistent with the business plan. The incentive pool is to be leveraged for performance above the threshold to provide an incentive for executives to out perform their budgets. The incentive is designed to represent a significant percentage of the executive‟s salary, up to 50% in any one year.

Each executive is to attract a target STI opportunity depending on the accountabilities of the role and impact on the organisation or business unit performance.

Each year, the remuneration committee considers the appropriate targets and key performance indicators (KPIs) to link the STI plan and the level of payout if targets are met for the executive directors. The CEO conducts the same assessment in conjunction for the senior executive team. These KPI‟s and linked STI will be reviewed by the remuneration committee. This includes setting any maximum payout under the STI plan, and minimum levels of performance to trigger payment of STI.

KPIs linked to short term incentive plans will be based on group, individual business and personal objectives. The KPIs will require performance in increasing sales, reducing operating costs and achieving specific targets in relation to return on assets and economic value added (EVA), as well as other key, strategic non-financial measures linked to drivers of performance in future reporting periods.

The short term bonus payments may be adjusted up or down in line with under or over achievement against the target performance levels. This is at the discretion of the remuneration committee. The STI targets and bonuses are reviewed annually.

Long Term Incentives

The objective of the Company is to reward senior management in a manner which aligns elements of remuneration with the creation of shareholder wealth. The long term incentive grants to executives are delivered in the form of share options.

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

Details of Remuneration

Details of the nature and amount of each element of the emoluments of each Director of NuSep Holdings Ltd and specified executive of the Company and the consolidated entity with the highest authority levels for the year ended 30 June 2011 are set out in the following tables.

Directors of NuSep Holdings Ltd

2011	Short-Term	Short-Term	Short-Term	Post- employment	Post- employment	Equity settled share based payments
Name	Cash Salary and Fees $	Bonus $	Non- monetary benefits, and Allowances $	Super- annuation $	Retireme nt Benefits $	Value of Options $	Total $	% perfom ance related
John Manusu Dr Hari Nair Iain Howard Sorrell William Spee	300,000 300,000 50,000 50,000	150,000 150,000 - -	31,119 30,756 - -	15,199 15,199 - -	- - - -	- - - -	496,318 495,955 50,000 50,000	- - - -
Total	700,000	300,000	61,875	30,398	-	-	1,092,273	-

2010	Short-Term	Short-Term	Short-Term	Post-employment	Post-employment	Equity settled share based payments
Name	Cash Salary and Fees $	Bonus $	Non-monetary benefits, and Allowances $	Super- annuation $	Retirement Benefits $	Value of Options $	Total $	% perfom ance related
John Manusu Dr Hari Nair Iain Howard Sorrell William Spee	262,500 262,500 31,250 31,250	- - - -	24,250 30,500 - -	14,461 14,461 - -	- - - -	- - - -	301,211 307,461 31,250 31,250	- - - -
Total	587,500	-	54,750	28,922	-	-	671,172	-

Senior Executive Employment Agreements

All of NuSep Holdings Ltd senior executive team are under employment contracts. These contracts include employment terms, remuneration, performance clauses and termination payments. Under the general terms of the current executive contracts:

the executive may resign from their position and thus terminate the contract by giving 4 weeks written notice. On resignation any options will be forfeited.
the agreement will automatically terminate unless the agreement is renewed by the parties, in writing, prior to the expiration of the initial term. Employee‟s employment will automatically continue on an at-will basis on the same terms here-in, meaning that it may be terminated at any time, by either party, with or without cause and with or without notice.

Executives of NuSep Holdings Ltd

2011	Short-Term	Short-Term	Short-Term	Post-employment	Post-employment	Equity settled share based payments
Name	Cash Salary $	Bonus $	Non- monetary benefits, and Allowances $	Super- annuation $	Retirement Benefits $	Value of Options $	Total $	% perform ance related
Prakash Patel Dr John Andrews	180,000 125,000	54,000 18,750	9,000 12,793	15,200 13,747	- -	- -	258,200 170,290	- -
Total	305,000	72,750	21,793	28,947	-	-	428,490

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

rectors’ Report
2010	Short-Term			Post-employment		Equity settled share based payments
Name	Cash Salary $	Bonus $	Non- monetary benefits, and Allowances $	Super- annuation $	Retirement Benefits $	Value of Options $	Total $	% perform ance related
Prakash Patel Dr John Andrews Barry Holman**	170,003 130,000 109,398	- - -	15,192 9,302 8,430	15,101 12,537 -	- - -	- - -	200,296 151,839 117,828	- - -
Total	409,401	-	32,924	27,638	-	-	469,963

Prakash Patel is Chief Operating Officer, CFO and Company Secretary. Dr John Andrews is Chief Scientific Officer.

**Barry Holman was VP Sales USA and resigned in 2010.

Share options granted to Directors and the specified executives

No share options were issued during the year to the Directors and executives.

Shares Under Option

The number of options over ordinary shares in NuSep Holdings Ltd issued to directors and executives during the year is as follows:

Directors

There were no share options on issue during the 2011 and 2010 financial year.

Executives

There were no share options on issue during the 2011 and 2010 financial year.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of NuSep Holdings Ltd support and have adhered to the principles of corporate governance. The company’s corporate governance statement is contained in the following section of the annual report.

This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors.

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John Manusu Chairman

Sydney 30 September 2011

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

CORPORATE GOVERNANCE STATEMENT 30 June 2011

The Directors of NuSep Holdings Ltd are committed to achieving and demonstrating the highest standards of corporate governance. The Directors have noted carefully the guidelines on the principles of corporate governance issued by the Australian Stock Exchange Limited (“ASX”) in March 2003, and revised in August 2007, and the ASX Corporate Governance Council guidance on principle 7 and support their intent. The Company‟s framework is largely consistent with the recommendations and exceeded them in some areas. Changes have been made to the Company‟s governance arrangements to further refine and align the Company‟s Corporate Governance with the ASX 8 point guidelines. The Company and its controlled entities together are referred to as the NuSep Group in this statement.

The relationship between the Board and the senior management is critical to NuSep Holdings Ltd‟s long term success. The Directors are responsible to the shareholders for the performance of NuSep Holdings Ltd in both the short and the longer term and seek to balance these sometime competing objectives in the best interests of NuSep Holdings Ltd as a whole. Their focus is to enhance the interests of shareholders and other key stakeholders and to ensure NuSep Holdings Ltd including its controlled entities are properly managed.

Day to day management of the Group‟s affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the Board to the Managing Director/CEO and the Chief Financial Officer (CFO) as set out in the Board Charter. These delegations are reviewed on an annual basis.

A description of NuSep Holdings Ltd main Corporate Governance practices are set out below. All of these practices, unless otherwise stated, have been in effect throughout the last financial year. NuSep Holdings Ltd has used the ASX 8 Corporate Governance principles as a framework against which to report its Corporate Governance principles.

1. Lay solid foundations for management and oversight

The NuSep Holdings Ltd Board Charter and Corporate Governance Guidelines states in section 3.3 that the Company “Recognise the need for a clear division of the roles between the executive and non executive Board members”.

The Board has adopted a formal charter that sets out the responsibilities reserved by the Board and those delegated to the Managing Director/CEO. The charter is reviewed annually to ensure it remains consistent with accepted practice in the context of the Board‟s objectives and responsibilities.

Specifically, the Board is charged with: setting the strategic direction of the organisation and monitoring management‟s performance within that framework; reviewing whether there are adequate resources available to meet Group objectives; appointing and removing the Managing Director and overseeing succession plans for the senior executive team; approving and monitoring financial reporting and capital management; approving and monitoring the progress of business objectives; assessing the risk management framework and whether appropriate procedures are being followed; ensuring that the Group has appropriate corporate governance structures in place including standards of ethical behaviour and promoting a culture of corporate and social responsibility; and monitoring whether the Board is appropriately skilled to meet the changing needs of the company. The Board and its sub committees have no involvement in the operational role of the organisation.

The roles of Chairman and Managing Director are separated.

The Chairman is responsible for leading the Board in its duties, facilitating effective discussions at board meetings and ensuring procedures are in place to evaluate board performance. The Managing Director is responsible for the efficient and effective operation of the organisation, and for bringing material and other relevant matters to the attention of the Board in an accurate and timely matter.

2. Structure the board to add value

The NuSep Holdings Ltd Board Charter and Corporate Governance guideline states in section 4.1 that the Company “ shall have a Board of an effective composition, size and commitment to adequately discharge its responsibilities and duties”.

Skills

A fundamental requirement of NuSep Holdings Ltd Directors is an understanding of the markets that the Company services. All Directors meet this threshold requirement. They also bring a diverse range of skills and backgrounds including accountancy, clinical trial, drug development, process development and international business skills. At 30 June 2011, the Board consists of four Directors (two non-executive and two executive). The experience and qualifications of each Director and their terms of office are further discussed on pages 2-4 and pages 6-12.

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Experience

The Directors have an appropriate mix of tenure, blending experience with new membership. The Board considers this mix invaluable. NuSep Holdings Ltd‟s business involves, converting the Company from an Australian based manufacturing and research organisation into the leading supplier to the BioSeparations market. Experience in mergers & acquisitions, managing cross border business, international licensing, joint ventures and manufacturing in the BioSeparations field is highly desirable. Such experience and judgment is required for effective decision-making. The Board considers that these Directors continue to exercise independent judgment in the task of enhancing shareholder value.

Appointment and removal

Board succession planning is considered an important part of the governance process. Progressive and orderly renewal of board membership is important. The appointment and removal of Directors is governed by the constitution, and by sections 4 & 5 of the Board Charter. The Board has not adopted a specific tenure threshold.

Independence

The Board has adopted a policy that generally a majority of its Director‟s must be independent using the definition of independence from the Guidelines which is set out below.

An independent Director is a non-executive Director and:

Is not a substantial shareholder of the company or an officer of, or directly or indirectly associated with, a substantial shareholder of the company;
Within the last three years has not been employed in an executive capacity by the company or another group member, or been a Director after ceasing to hold any such employment;
Within the last three years has not been a principal of a material professional adviser or a material consultant to the company or another group member, or an employee materially associated with the service provided;
Is not a material supplier or customer of the company or other group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer;
Has no material contractual relationship with the company or another group member other than as a Director of the company;
Has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director‟s ability to act in the best interests of the company;

The Board employs a materiality threshold in judging whether customer, supplier, consultant, shareholder or professional adviser relationships affect the independence of NuSep Holdings Ltd Directors.

The Board has adopted AASB standard 1031 to determine levels of materiality. A relationship is presumed immaterial when it represents less than 5% of NuSep Holdings Ltd issued capital or group revenue, and presumed material when it generates more than 10% of issued capital or group revenue during a twelve-month period in the absence of evidence or convincing argument to the contrary. In considering such evidence or argument NuSep Holdings Ltd considers the strategic value and other material but non-quantitative aspects of the relationship in question.

The Board has considered each relationship between its non-executive Directors and any shareholder, customer, supplier, consultant or professional adviser to NuSep Holdings Ltd. The Board has determined that none of these past or present relationships of Directors breaches the materiality threshold or otherwise compromises the independence of Directors.

The threshold for the purpose of assessing the materiality of relationships between a non-executive Director and NuSep Holdings Ltd (other than as a Director) is set according to the significance of that relationship to the Director in the context of their activities as a whole. No Director has a relationship considered significant enough to compromise their independence on the NuSep Holdings Ltd Board.

A list of each Director‟s commitments outside NuSep Holdings Ltd is set out on pages 3 and 4 of this report. A brief analysis of each non-executive Director‟s relationships with entities that have an association with NuSep Holdings Ltd is provided below.

Mr Iain Howard Sorrell - non-executive Director. Mr Sorrell has no commercial association with any customer or supplier to NuSep Holdings Ltd. Mr Sorrell is not a substantial shareholder in NuSep Holdings Ltd.
Mr William Spee - non-executive Director. Mr Spee has no commercial association with any customer or supplier to NuSep Holdings Ltd. Mr Spee is not a substantial shareholder in NuSep Holdings Ltd.

At each meeting of the Board, Directors table their current outside interests, if any. If it was considered that a Director had a material potential conflict, it would be noted and where appropriate the relevant Director absents himself or herself for that specific item of business. That decision is minuted.

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Board Committees

The Board has established two committees, an Audit Committee and a Remuneration Committee. These committees have been established to assist the Board perform its duties. Each committee is constituted in accordance with a charter. These committees meet to discuss issues delegated to them and then make recommendations back to the Board. The Board considers these recommendations, but is not bound to accept the recommendations of the committees. The establishment of and delegation of tasks to the committees does not dilute the responsibilities of the Board as a whole.

The Nomination and Remuneration Committee of the Board comprises the independent non-executive Directors. The Committee‟s responsibilities cover all the matters recommended in the Guidelines, which included setting Director competence standards, reviewing succession plans, evaluating the Board‟s performance, making recommendations for the appointment and removal of Director‟s, making recommendations to the Board on executive director remuneration and incentive policies and the remuneration packages of non-executive directors. The committee also reviews NuSep Holdings Ltd recruitment; retention and termination policies; incentive schemes; superannuation arrangements and other Company remuneration policies. The Nomination and Remuneration Committee leads the process of selecting new Directors for consideration by the whole Board.

Directors are required to advise the Chairman, before accepting additional external directorships and give assurance that any new responsibilities will not interfere with the proper execution of their responsibilities to NuSep Holdings Ltd Holdings Inc.

The Audit Committee is discussed below under point 4 on the next page.

Membership of the Board‟s committees and attendance by Directors at meetings is outlined on page 4.

Independent advice

NuSep Holdings Ltd Directors may seek external professional advice at the expense of the company on matters relating to their role as Directors of NuSep Holdings Inc. However, they must first request approval from the Chairman which must not unreasonably be withheld. If permission is withheld the matter may be referred to the whole Board. No such request was made during the last year.

Independent review

The Board commissioned an independent review of the Board in December 2010. This report was considered by the Board in March 2011. The objective of the review was to provide the Board with an analysis of the skill sets required for NuSep Holdings Ltd to become an ASX 300 company. Following on from this review the Board has undertaken a search of potential new Board members and short listed a number of potential candidates

3 Promote ethical and responsible decision-making

NuSep Holdings Inc Board Charter and Corporate Governance Guidelines states in section 1.1 that Directors “ seek to ensure that NuSep Holdings Ltd operates ethically, safely and profitably in the interest of all stakeholders ”.

Code of Ethics and Conduct

NuSep Holdings Ltd‟ Board Charter promotes ethical and responsible decision-making by Directors and employees. The Charter requires high standards of honesty, integrity, fairness and equity in all aspects of employment with NuSep Holdings Ltd. The Charter also sets the task for management of delivering shareholder value, with the oversight of the Board, through the sustainable and efficient operation of the company. Specific obligations regarding fitness for office also apply to NuSep Holdings Ltd Directors and management by virtue of its role as a developer, a manufacturer and supplier of medical devices, diagnostic products, and potentially therapeutic products. NuSep Holdings Ltd has comprehensive policies and procedures in place for observing these requirements.

Employees sign acceptance of this code of ethics as part of their employment with NuSep Holdings Ltd.

Share Dealing Rules

NuSep Holdings Ltd also has formal Share Dealing Rules that set the parameters for dealing in the securities of NuSep Holdings Ltd and prohibit insider trading. While Directors and employees are encouraged to be long term shareholders in NuSep Holdings Ltd, the company has a policy on insider trading to prohibit short term trading.

The policy provides a trading blackout period around the release of the financial results, clinical trials and other significant events. These blackout periods conclude on the release of the relevant information including prospectus, financial results and the announcement of the significant events. Share transactions can be undertaken at any other time.

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Corporate Governance Education

All of NuSep Holdings Ltd corporate governance policies are available to staff on NuSep Holdings Ltd internal and external websites. To increase awareness and understanding of all these policies, NuSep Holdings Ltd incorporated a corporate governance section into the established induction program for new employees.

4. Safeguard integrity in financial reporting

NuSep Holdings Ltd Board Charter and Corporate Governance Guidelines states in section 7.3.3 that the Audit Committees‟ role is to “ establish and maintain a structure to independently verify and safeguard the integrity of the Company’s financial reporting ”.

NuSep Holdings Ltd believes its practices satisfy this principle.

NuSep Holdings Ltd has a highly structured six-monthly reporting process, culminating in Board sign-off and release of financial results to the market. Further, the Chief Executive Officer and Chief Financial Officer provide letters of assurance to the Board for each half-year and full-year result.

NuSep Holdings Ltd Audit Committee is constituted in accordance with the Guidelines, and its responsibilities and composition requirements are set out in the Audit Committee Charter.

The Audit Committee‟s primary responsibilities are to establish and maintain a structure to independently verify and safeguard the integrity of the company‟s financial reporting. In addition the committee reviews NuSep Holdings Ltd financial and external reporting; review and assess the external auditors‟ activities, scope and independence; review the management processes for the identification of significant business risks and exposures and oversee the monitoring of internal control structures, including controls against conflicts of interest and fraud. The Committee also has specific responsibility for recommending the appointment or dismissal of external auditors and monitoring any non-audit work carried out by the external audit firm. The procedures for appointment of an external auditor are outlined in the charter. No Director has any association, past or present, with NuSep Holdings Ltd external auditor.

Mr William Spee is the Chairman of the Audit Committee. The Audit Committee consists of all the non-executive directors and the CFO reports to this committee, although is not a member of the committee. The Committee may meet whenever necessary, and subsequently relays a summary of discussions and any significant matters arising to the Board followed by meeting minutes.

External audits

NuSep Holdings Ltd is scrutinized and audited by government, regulators, customers and investors. We view this scrutiny as a further validation of our efforts to maintain and promote the integrity of our markets, as well as the prudential operation of our systems.

During the period NuSep Holdings Ltd underwent seven regulatory and one supplier audit. These audits are undertaken in order to provide assurances to the market regulators and NuSep Holdings Ltd customers regarding the operational integrity of NuSep Holdings Ltd systems and processes.

No changes were made to the Audit Committee charter during the year.

5 Make timely and balanced disclosure

NuSep Holdings Ltd Board Charter and Corporate Governance Guidelines states in section 20.1 that the Company “ will at all times provide timely and balanced disclosure of all material matters concerning the Company to its stakeholders ”.

NuSep Holdings Ltd fulfills its disclosure responsibilities absolutely and is proud of its disclosure record.

NuSep Holdings Ltd endeavours to keep stakeholders informed of developments through its quarterly newsletters. NuSep Holdings Ltd also offers all stakeholders the opportunity to receive announcements via email once they have been disclosed to the ASX.

The Senior Executives have ultimate authority and responsibility for approving market disclosure, which in practice is exercised in consultation with the Chairman. The Board reviews public announcements at each meeting, and considers disclosure obligations in the context of each item of business which comes before it.

NuSep Holdings Ltd considers its disclosed discussion of financial results meets the standards outlined in the Guidelines. This disclosure includes availability of materials on the NuSep Holdings Ltd website and provision of all information necessary for investors to make informed decisions about an investment in NuSep Holdings Ltd securities.

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

6 Respect the rights of shareholders

NuSep Holdings Ltd Board Charter and Corporate Governance Guidelines states in section 1.1 that the “ Directors act in the best interests of NuSep Holdings Ltd as a whole and with honesty and in good faith ”.

NuSep Holdings Ltd has adopted a shareholder communication approach that identifies disclosure and transparency as important qualities for NuSep Holdings Ltd shareholders and prospective investors. NuSep Holdings Ltd therefore aims to provide good quality, clear communication with shareholders, using available methods and technologies.

A newsletter/ or updates are sent to all shareholders and other interested stakeholders on a regular basis. This newsletter updates developments over the last quarter and reports against the company‟s strategic goals.

NuSep Holdings Ltd views shareholder meetings as an opportunity for shareholders to meet with and question the Board and management of NuSep Holdings Ltd. NuSep Holdings Ltd external auditor attends all annual general meetings and is available to answer shareholder questions. For the annual general meeting to be held in November 2011, NuSep Holdings Ltd will also accept prior to the meeting, written questions from shareholders for the Chairman or auditors to answer at the meeting. Written answers to these questions will be available at the meeting and published on the website.

A copy of all investor presentations given in the last year are also available on the website.

NuSep Holdings Ltd website, www.NuSep.com, is a key source of information for NuSep Holdings Ltd shareholders and prospective shareholders. NuSep Holdings Ltd places all company announcements on the site immediately following confirmation of their release to the market. Analyst briefing material is released as a company announcement. NuSep Holdings Ltd also displays annual and half-year reports to shareholders, speeches and presentations given by the Chairman, Managing Director and management and other useful business indicators including press releases and quarterly shareholder newsletters. Email is also an important method of communication for investors. All public announcements can be received by email when shareholders and other stakeholders provide their details to NuSep Holdings Ltd at www.NuSep.com.

7 Recognise and manage risk

NuSep Holdings Ltd Board Charter and Corporate Governance Guidelines states in section 7.3.5 that the Audit Committee “ regularly reviews the adequacy, security and objectivity of the internal control framework and internal control and audit plan and assesses significant business risks identified by the executive management team through the committee ”.

NuSep Holdings Ltd takes this responsibility seriously and has committed to put in place appropriate procedures for risk management.

Financial Risks

The Audit Committee has responsibility for reviewing the risk management framework within NuSep Holdings Ltd. It receives presentations from the heads of each division on risks of each business unit and risk containment measures adopted. Risk is broadly considered as anything that may impede the achievement of NuSep Holdings Ltd strategic goals.

The Audit Committee receives periodic reports that monitor compliance with existing statutory requirements.

CEO and CFO sign-off

NuSep Holdings Ltd has a Managing Director/CEO and Chief Financial Officer (CFO) sign off. As of June 30, 2011, the sign off was done by Dr Hari Nair (CEO) and Mr Prakash Patel (CFO). This sign-off states to the Board in writing that to the best of their knowledge the integrity of the financial statements is founded on a sound system of risk management and internal compliance and control which operates efficiently and effectively in all material respects.

Operational Risks

NuSep Holdings Ltd operates in a highly regulated environment. The Company must meet all of the Governmental and regulatory requirements of the markets into which it operates, manufactures, distributes and sells. To ensure compliance, the company has a regulatory affair and quality assurance framework that has been accepted by Governmental organisations, regulatory bodies, partners, customers, and staff.

Senior executive officers play an important role in maintaining a company-wide commitment to compliance with applicable requirements and regulations. The regulatory and quality functions report directly to the CEO.

Support for NuSep Holdings Ltd regulatory compliance and quality assurance principles is achieved throughout the Company by:

Educating employees about all applicable government rules and regulations that affect the operation of the Company;

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Monitoring and Auditing compliance to all applicable rules and regulations that affect the operation of the Company;
Identifying, investigating, and reporting (in a timely manner) any detected deviations, errors, and/or accidents from applicable requirements and regulations that affect the operation of the Company. Included in these investigations is a root-cause analysis and a corrective action/preventive action (CAPA) system to prevent recurrence of the problem;
Incorporating regulatory and quality endpoints into the KPI‟s of all employees.

Ensuring compliance to the regulatory and quality assurance principles is demonstrated by the employment of regulatory and quality assurance staff who report directly to the CEO, performing internal audits, and auditing performed by the regulatory bodies including, the ISO9000 Quality Management Systems registrar and the Australian Therapeutic Goods Administration.

8 Remunerate fairly and responsibly

NuSep Holdings Ltd Board Charter and Corporate Governance Guidelines states in section 7.4.2 that the Remuneration and Nomination Committee will “ ensure that procedures are in place to remunerate Directors, senior executives and staff sufficiently and reasonable and that this reward is tied to the corporate and individuals performance ”.

NuSep Holdings Ltd Board has put in place a number of measures to implement this principle as disclosed and demonstrated by the public future sales and profit projections.

Discussion on NuSep Holdings Ltd remuneration policies of non-executive Directors, executive Directors and senior executives of the company and the relationship between such policy and the company‟s performance is provided in the Directors‟ report.

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Consolidated Statement of Comprehensive Income For the year ended 30 June 2011

Notes	CONSOLIDATED GROUP 2011 2010 $ $	CONSOLIDATED GROUP 2011 2010 $ $
Continuing operations Revenue 3 Cost of sales 4 Gross Profit Other Income 3 Marketing expenses General and Administration expenses Research and Development expenses Finance cost expenses 4 Amortisation of Intangible Assets Other expenses - Impairment of Intangible Assets Profit/(Loss) before income tax Income tax expense 5 Profit/(loss) after tax from continuing operations Net profit/(loss) for the period Net profit/(loss) attributable to members of parent Other comprehensive income/ (expense) Exchange translation difference Other comprehensive income from continuing operations for the period Total comprehensive income / (expense) for the period Earnings per share 6 – basic for profit/(loss) for the year – diluted for profit/(loss) for the year	1,799,710 (684,551)	2,403,548 (921,903)
	1,115,159 3,127,411 (1,313,943) (2,281,256) (404,438) (5,509) (502,648) (6,055,873)	1,481,645 2,970,910 (507,880) (535,455) (5,520) (111,991) - -
	(6,321,097) -	3,291,709 -
	(6,321,097)	3,291,709
	(6,321,097)	3,291,709

	(6,321,097)	3,291,709
	91,084	16,962 16,962 3,308,671
	91,084
	(6,230,013)
	Cents (10) (10)	Cents 15.0 15.0

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Consolidated Statement of Financial Position As at 30 June 2011

Notes	2011 2010 Restated $ $*
*ASSETS* CURRENT ASSETS Cash and cash equivalents 7 Trade and other receivables 9 Inventories 10 Other current assets 11 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Financial assets 12 Property, plant and equipment 13 Intangible assets 14 TOTAL NON-CURRENT ASSETS TOTAL ASSETS *LIABILITIES* CURRENT LIABILITIES Trade and other payables 15 Short-term provisions 16 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Other liabilities 17 Long-term provisions 18 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS *EQUITY* Issued capital 19 Reserves 20 Retained losses TOTAL EQUITY	29,009 1,200,641 825,720 1,899,368 426,740 387,065 34,343 82,557
	1,315,812 3,569,631
	300,000 450,000 1,564,390 1,372,615 7,391,062 12,324,820
	9,255,452 14,147,435
	10,571,264 17,717,066
	2,914,916 2,460,159 217,351 157,835
	3,132,267 2,617,994
	377,286 3,800,518 66,628 49,435
	443,914 3,849,953
	3,576,181 6,467,947
	6,995,083 11,249,119
	21,891,153 19,765,176 1,102,532 1,161,448 (15,998,602) (9,677,505)
	6,995,083 11,249,119

The above statement of financial position should be read in conjunction with the accompanying notes. * As disclosed in Note 27 of the financial statements, the prior period figures have been rested as a result of a prior period error. The error had no impact on any periods prior to June 2010, and consequently, no additional disclosure has been made in this regard.

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Statement of Changes in Equity For the year ended 30 June 2011

Consolidated Group 2010 Balance 1 July 2009 Movement Profit for the period Currency translation difference Total comprehensive income for the period Issue of share capital Transaction costs on share issue Revaluation of investment Prior period error Balance 30 June 2010 Consolidated Group 2011 Balance 1 July 2010 Movement Profit for the period Currency translation difference Total comprehensive income for the period Issue of share capital Shares buy back Transaction costs on share issue Revaluation of investment Balance 30 June 2011*	Issued Capital Foreign currency translation Reserve Share options Reserve Financial Assets Reserve Accumulated Losses Total Equity $ $ $ $ $ $
	11,021,258 (4,694) 235,617 1,318,563 (12,969,214) (398,470)
	- - - - 3,291,709 3,291,709 - 16,962 - - - 16,962
	- 16,962 - - 3,291,709 3,308,671 11,266,451 - - - - 11,266,451 (928,614) - - - - (928,614) (405,000) (405,000) (1,593,919) - - - (1,593,919)
	19,765,176 12,268 235,617 913,563 (9,677,505) 11,249,119
	$ $ $ $ $ $
	19,765,176 12,268 235,617 913,563 ,(9,677,505) 11,249,119
	- - - - (6,321,097) (6,321,097) - 91,084 - - - 91,084
	- 91,084 - - (6,321,097) (6,230,013) 2,280,558 - - - - 2,280,558 (20,898) (20,898) (133,683) - - - - (133,683) - - - (150,000) - (150,000)
	21,891,153 103,352 235,617 763,563 (15,998,602) (6,995,083)

The above statement of changes in equity should be read in conjunction with the accompanying notes. *See Note 27 for additional information in respect of the prior period error

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Statement of Cash Flows For the year ended 30 June 2011

Notes	CONSOLIDATED GROUP 2011 2010 $ $
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Government grants Interest received Finance costs Net cash flows used in operating activities 8 (a) Cash flows from investing activities Proceeds on sale of property, plant & equipment Purchase of property, plant and equipment Purchase of other non-current assets Payment for investment in wholly owned subsidiary 8 (b) Net cash flows used in investing activities Cash flows from financing activities Proceeds from issue of shares Shares Buy Back Share issue costs Proceeds from borrowings Repayment of borrowings Net cash flows provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 7	1,022,620 1,574,109 (4,015,722) (4,284,599) 1,267,341 157,544 34,628 9,494 (5,509) (85,413)
	(1,696,642) (2,628,865)
	- 7,438 (567,786) (50,151) (1,624,760) (1,148,960) - (1,829,268)
	(2,192,546) (3,020,941)
	2,505,458 7,364,805 (15,557) - (133,683) (294,406) 438,219 150,000 (76,881) (403,355)
	2,717,556 6,817,044
	(1,171,632) 1,167,238 1,200,641 33,403
	29,009 1,200,641

The above statement of cash flows should be read in conjunction with the accompanying notes.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

1. CORPORATE INFORMATION

This financial report includes the consolidated financial statements and notes of NuSep Holdings Ltd and controlled entities („Consolidated Group‟). NuSep Holdings Ltd is a listed public company, incorporated and domiciled in Australia. The separate financial statements and notes of NuSep Holdings Ltd as an individual parent entity („Parent Entity‟) have not been presented within this financial report as permitted by the Corporations Act 2001.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

Reporting Basis and Conventions

The financial report has been prepared on an accruals basis and is based on historical costs modified where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

Accounting Policies

a) Going Concern

The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.

As disclosed in the financial statements, the company and consolidated entity incurred losses of $5,098,743 and $6,321,097 respectively and had net cash outflows from operating activities of $1,696,642, and net cash outflows from investing activities of $2,192,546 for the year ended 30 June 2011. As at that date the consolidated entity had net current liabilities of $1,816,455. The ability of the company and consolidated entity to continue as going concerns is dependent on a combination of a number of factors the most significant of which is the ability of the company to raise additional capital in the following 12 months and/or the ability of the company to achieve its projected cash collections for the 2012 financial year. These factors indicate significant uncertainty as to whether the company and consolidated entity will continue as going concerns and therefore whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report.

The Directors believe that there are reasonable grounds to believe that the company and consolidated entity will be able to continue as going concerns, after consideration of the following factors:

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The company announced by way of an Appendix 3B issued on 14 September 2011 that it has issued 17,097,267 Ordinary Fully Paid Shares at $0.10c per share raising $1,709,726 less capital raising costs.
The company announced by way of an Appendix 3B issued on 30 September 2011 that it has issued:
(a) 600,000 Ordinary Fully Paid Shares at $0.10c per share raising $60,000 under the Share Purchase Offer to Directors as approved by shareholders at the General Meeting held on 9 September 2001;
(b) 774,000 Ordinary Fully Paid Shares at $0.10c per share raising $77,400 as balance of the Share Purchase Offer and related Underwriting; and
(c) 833 Ordinary Fully Paid Shares on the exercise of 833 listed options at $0.35c per share raising $292

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The consolidated result includes a non cash $6m impairment charge against intangible assets and a non cash $3.1m gain on release of a contingent purchase liability for the acquisition of BioInquire;
The consolidated result includes an expenditure of $1.2m spent on the PrIME Biologics project in Singapore and $0.4m on legal expenditure;

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

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Management has reviewed the company and consolidated entity‟s cashflow requirements and has satisfied themselves that there are adequate resources in place to meet the planned operational and development activities for at least 12 months following the date of this report.

Accordingly, the Directors believe that the company and consolidated entity will be able to continue as going concerns and that it is appropriate to adopt the going concern basis in the preparation of the financial report. The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the company and consolidated entity do not continue as going concerns.

b) Principles of Consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by NuSep Holdings Ltd at the end of the reporting period. A controlled entity is any entity over which NuSep Holdings Ltd has the power to govern the financial and operating policies so as to obtain benefits from the entity‟s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered.

A list of controlled entities is contained in Note 24 to the financial statements. All controlled entities have a June financial year-end.

As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. Where controlled entities have entered or left the consolidated group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Business combinations

Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination one of the combining entities must be identified as the acquirer (ie parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured.

The acquisition may result in the recognition of goodwill or a gain from a bargain purchase (refer to note 3).

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.

Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss.

Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair value through the statement of comprehensive income unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive income.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

Goodwill

Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of:

i. the consideration transferred
ii. any non-controlling interest; and
iii. the acquisition date fair value of any previously held equity interest;

over the acquisition date fair value of net identifiable assets acquired.

The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds less than a 100% interest will depend on the method adopted in measuring the non-controlling interest. The Group can elect in most circumstances to measure the non-controlling interest in the acquiree either at fair value (full goodwill method) or at the non-controlling interest's proportionate share of the subsidiary's identifiable net assets (proportionate interest method). In such circumstances, the Group determines which method to adopt for each acquisition and this is stated in the respective notes to these financial statements disclosing the business combination.

Under the full goodwill method, the fair value of the non-controlling interest is determined using valuation techniques which make the maximum use of market information where available. Under this method, goodwill attributable to the non-controlling interests is recognised in the consolidated financial statements.

c) Income Tax

The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

d) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct labour and an appropriate portion of variable and fixed overheads. Overheads are applied on the basis of normal operating capacity. Costs are assigned on the basis of standard cost.

e) Property, plant and equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Plant and equipment

Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(g).

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset‟s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Plant and equipment 10% - 33% Leasehold improvements 14% - 20%

The assets‟ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.

An asset‟s carrying amount is written down immediately to its recoverable amount if the asset‟s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

f)

Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

g) Financial Instruments

Initial Recognition and Measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (ie trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified „at fair value through profit or loss‟, in which case transaction costs are expensed to profit or loss immediately.

Classification and Subsequent Measurement

Finance instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

(i) the amount at which the financial asset or financial liability is measured at initial recognition;

(ii) less principal repayments;

(iii) plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method ; and

(iv) less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.

The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at cost.

(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

(iii) Financial Liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at cost.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm‟s length transactions and reference to similar instruments.

Impairment

At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the statement of comprehensive income.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

h) Impairment of Assets

At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset‟s fair value less costs to sell and value in use, is compared to the asset‟s carrying value. Any excess of the asset‟s carrying value over its recoverable amount is expensed to the statement of comprehensive income.

Impairment testing is performed annually for intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

i) Investments

Interest in controlled entities are carried at the lower of cost or net realisable amount and reviewed at each balance date to reflect the parent entity‟s interest in the underlying net assets of the controlled entity.

Interest in non-controlled entities are carried at the estimated fair value amount and reviewed at each balance date to reflect the parent entity‟s interest in the underlying net assets of the non-controlled entity.

j) Intangible Assets

a) Research and Development Costs

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.

b) Patents and Trademarks

Costs associated with Patents and Trademarks are expensed in the year in which they are incurred, unless the expenditure will generate future economic benefits. Patents and Trademarks capitalised are included in internal development costs and have a finite useful life and are carried at cost less any accumulated amortisation and impairment losses. Patents and Trademarks are amortised over their useful ranging up to 20 years.

k) Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the group‟s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity‟s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive income.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of comprehensive income.

Group companies

The financial results and position of foreign operations whose functional currency is different from the group‟s presentation currency are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group‟s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of comprehensive income in the period in which the operation is disposed.

l) Employee Benefits

Provision is made for the company‟s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cashflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

Equity-settled Compensation

The Group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

m)

Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

n) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank overdrafts. Bank overdrafts would be shown within short-term borrowings in current liabilities on the statement of financial position.

o)

Revenue and Other Income

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. Revenue is recognised for the major business activities as follows:

a) Sale of goods

A sale is recorded when goods or services have been despatched to a customer pursuant to a sales order and the associated risks and rewards of ownership have passed to the customer. Where cash is received for goods not yet despatched revenue is deferred until risk and rewards of ownership is transferred to the customer.

b) Interest Income

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.

c) Management fees

Management fees are charged to the subsidiaries for applicable head office expenses incurred. Management fees are eliminated on consolidation.

All revenue is stated net of the amount of goods and services tax (GST).

p) Trade and Other Payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the Group during the reporting period which remains unpaid. The balance is recognised as a current liability with the amount being normally paid within 30 days of recognition of the liability.

q) Government Grants

Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a straight-line basis.

r)

Borrowing costs

Borrowing costs are recognised in income in the period in which they are incurred.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

s) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST amount except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

t)

Comparatives figures

When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

u) Critical Accounting Estimates and Judgments

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key Estimates – Impairment

The group assesses impairment at each reporting date by evaluating conditions and events specific to the group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.

With respect to cahflow projections for Intangible Assets, growth rates of 30-40% have been factored into valuation models for the next five years on the basis of management‟s expectations around the Group‟s continued ability to capture market share from competitors and open new markets for its products. Software sales following the launch of the critical updates in May 2011 and the new pricing structure has seen steady sales growth and with a new sales strategy now in place, current trends indicate that there will be significant sales growth in the coming year.

A claim has been filed against NxGen Pharmaceuticals Pty Limited under the terms of the Implementation Deed dated 28 November 2008 for the costs related to the NxGen acquisition by NuSep. Management has relied on expert advice as to the ability of the recovery of this claim.

v) New Accounting Standards for Application in Future Periods

The AASB has issued new and amended accounting standards and interpretations that have mandatory application dates for future reporting periods. The Group has decided against early adoption of these standards. A discussion of those future requirements and their impact on the Group follows:

• AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013).

This Standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. The Group has not yet determined any potential impact on the financial statements.

The changes made to accounting requirements include:

simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
simplifying the requirements for embedded derivatives;
removing the tainting rules associated with held-to-maturity assets;
removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost; - allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument; and
reclassifying financial assets where there is a change in an entity's business model as they are initially classified based on: a. the objective of the entity's business model for managing the financial assets; and

b. the characteristics of the contractual cash flows.

requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity‟s own credit risk in other comprehensive income, except when that would create an

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss.

• AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4,

5, 15, 17, 127, 129 & 1052] (applicable for annual reporting periods commencing on or after 1 July 2013).

AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements for those entities preparing general purpose financial statements:

Tier 1: Australian Accounting Standards; and
Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.

Tier 2 of the framework comprises the recognition, measurement and presentation requirements of Tier 1, but contains significantly fewer disclosure requirements.

The following entities are required to apply Tier 1 reporting requirements (ie full IFRS):

for-profit private sector entities that have public accountability; and
the Australian Government and state, territory and local governments.

Since the Group is a for-profit private sector entity that has public accountability, it does not qualify for the reduced disclosure requirements for Tier 2 entities.

• AASB 2009–12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052] (applicable for annual reporting periods commencing on or after 1 January 2011).

This standard makes a number of editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of International Financial Reporting Standards by the IASB. The standard also amends AASB 8 to require entities to exercise judgment in assessing whether a government and entities known to be under the control of that government are considered a single customer for the purposes of certain operating segment disclosures. These amendments are not expected to impact the Group.

• AASB 2009–14: Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement [AASB Interpretation 14] (applicable for annual reporting periods commencing on or after 1 January 2011). This Standard amends Interpretation 14 to address unintended consequences that can arise from the previous accounting requirements when an entity prepays future contributions into a defined benefit pension plan. This Standard is not expected to impact the Group.

• AASB 2010–4: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101 & AASB 134 and Interpretation 13] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard details numerous non-urgent but necessary changes to Accounting Standards arising from the IASB‟s annual improvements project. Key changes include:

clarifying the application of AASB 108 prior to an entity‟s first Australian-Accounting-Standards financial statements;
adding an explicit statement to AASB 7 that qualitative disclosures should be made in the context of the quantitative disclosures to better enable users to evaluate an entity‟s exposure to risks arising from financial instruments;
amending AASB 101 to the effect that disaggregation of changes in each component of equity arising from transactions recognised in other comprehensive income is required to be presented, but is permitted to be presented in the statement of changes in equity or in the notes;
adding a number of examples to the list of events or transactions that require disclosure under AASB 134; and
making sundry editorial amendments to various Standards and Interpretations. This Standard is not expected to impact the Group.

The financial report was authorised for issue in accordance with a resolution of the Directors on 30 September 2011.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

2. Parent Information

The following information has been extracted from the books and records of the parent and has been prepared in accordance with Accounting Standards.

STATEMENT OF FINANCIAL POSITION ASSETS Current assets TOTAL ASSETS LIABILITIES Current liabilities TOTAL LIABILITIES EQUITY Issued capital Retained earnings Options reserve TOTAL EQUITY STATEMENT OF COMPREHENSIVE INCOME Total profit/(loss) Total comprehensive income/(loss)	2011 $ 2010 $ 6,425,729 7,444,796
	9,508,161 16,640,481
	2,058,753 1,583,445
	2,473,939 5,383,963
	21,891,153 19,765,176 (15,092,548) (8,744,275) 235,617 235,617
	7,034,222 11,256,518
	(6,348,273) 2,612,043
	(6,348,273) 2,612,043

Guarantees

NuSep Holdings Ltd has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its subsidiaries.

Contingent liabilities

At 30 June 2011, NuSep Holdings Ltd had no contingent liabilities. (2010: $4,292,499 relating to the acquisition of BioInquire, Inc.)

Contractual commitments

At 30 June 2011, NuSep Holdings Ltd had not entered into any contractual commitments for the acquisition of property, plant and equipment (2010: $0).

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

3. Revenue

		Consolidated	Group
		2011	2010
		$	$
	Revenue
	Revenue from sales or services	1,081,093	1,589,911
	Government grants	718,617	813,637
		1,799,710	2,403,548
	Finance and other revenue
	Interest received from other persons	32,606	11,516
	Gain on sale of assets	-	6,907
	Gain on bargain purchase	-	2,952,487
	Gain on release of contingent consideration no longer payable	3,094,805	-
		3,127,411	2,970,910
	Total Revenue	4,927,121	5,374,458
4.	Profit/(loss) for the Year

Profit/(loss) for the Year
	Consolidated	Group
	2011	2010
	$	$
Expenses
Cost of sales of goods	684,551	921,903
Depreciation and amortisation:
- Plant and equipment	236,148	233,887
- Leasehold improvements	139,733	129,782
- Intangible assets	502,648	5,520
Total depreciation and amortisation	878,529	369,189
Finance costs:
Interest expense – other than related parties	5,509	111,991
Exchange gains	(461,225)	(122,865)
Salaries and wages including benefits	2,836,229	2,026,684
Rental expense relating to operating leases	229,618	166,827
Write-off of obsolete stock	25,170	15,018
Other expenses - Impairment of Intangible Assets	6,055,873	-

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

5. Income Tax Expense

The major components of income tax expense are:

Income tax

Accounting profit/(loss) before tax from continuing operations Accounting profit/(loss) before income tax The prima facie tax on profit/(loss) from ordinary activities before income tax is reconciled to the income tax as follows: Prima facie tax receivable on profit/(loss) from ordinary activities before income tax at 30% (2010: 30%) Add: Tax effect of: Reverse research and development Less: Tax effect of: Gain on bargain purchase Section 40-880 deduction - legal Research and development @125% Adjustments for current tax of prior periods Income tax benefit not reported in the consolidated statement of comprehensive income Income tax expense recorded in Statement of comprehensive income	Consolidated Group 2011 $ 2010 $ (6,321,097) 3,291,709
	(6,321,097) 3,291,709
	(1,896,329) 987,513 571,190 344,688 - (885,746) (112,151) (112,151) (713,988) (430,860)
	(2,151,277) (96,556) (357,458) 59,540
	(1,793,819) (37,016)
	- -

Deferred income tax

Deferred income tax at 30 June 2011 relates to the following:

Deferred Tax Liabilities Other Total Deferred Tax Liability Deferred Tax Assets Provisions and employee benefits Other Total Deferred Tax Asset	Consolidated Group 2011 $ 2010 $ 4,647 41,855
	4,647 41,855
	85,193 63,932 468,025 169,036
	553,218 232,968

within each tax jurisdiction.

At 30 June 2011, the Group did not recognise any deferred tax assets or deferred tax liabilities.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

6. Earnings per share

The following reflects the income and share data used in the basic and diluted earning per share computation:

Profit/(Loss) after tax from continuing operations Net profit/(loss) for the year Earnings per share – basic for profit(loss) for the year – diluted for profit/(loss) for the year Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share	Consolidated Group 2011 $ 2010 $ (6,321,097) 3,291,709
	(6,321,097) 3,291,709
	Consolidated Group 2011 Cents 2010 Cents (10) 15 (10) 15 61,237,673 21,984,747
	61,237,673 21,984,747

Information concerning the classification of securities

Options

Options granted under the NuSep Holdings Ltd Directors, Employee and Consultants Share Option Plan is considered to be potential ordinary shares and have not been included in the determination of diluted earnings per share as they are considered anti-dilutive. There were no options on issue during the 2011 and 2010 financial years. Details relating to the options are set out in note 22.

7. Current Assets – Cash and Cash Equivalents

Cash at bank	Consolidated Group 2011 $ 2010 $ 29,009 1,200,641

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

8. (a) Reconciliation of operating profit/(loss) to net cash provided by operating activities

Profit/(Loss) from ordinary activities after income tax expense: Adjustment for non-cash items: Depreciation & Amortisation Net (gain)/loss on sale/disposal of assets Lease liability increase/(decrease) Director loans interest & expenses Intercompany transactions Gain on bargain purchase Gain on release of contingent consideration Impairment of intangible assets Other receivable (grants) Unrealised gain on other non current liability FX translation reserve Net exchange differences on changes in operating assets & liabilities Change in operating assets and liabilities: Decrease/(Increase) in inventories Decrease/(Increase) in trade debtors Decrease/(Increase) in other operating assets Increase/(Decrease) in trade creditors Increase/(Decrease) in short term provisions Increase/(Decrease) in other operating liabilities Increase/(Decrease) in long term provisions Net cash inflows/(outflows) from operating activities	Consolidated Group 2011 $ 2010 $ (6,321,097) 3,291,709 878,529 369,189 - (6,907) - (842,776) - 155,824 - 3,482 (2,952,487) (3,094,805) - 6,055,873 - - (535,758) (472,917) (121,430) (480,293) (115,895) 750,208 132,712
	(2,684,502) (622,337) (39,675) (94,328) 375,061 118,972 48,214 (43,682) 656,613 (843,000) 59,516 (123,092) (129,062) (1,002,078) 17,193 (19,320)
	(1,696,642) (2,628,865)

Profit/(Loss) from ordinary activities after income tax expense:
Adjustment for non-cash items:
Depreciation & Amortisation
Net (gain)/loss on sale/disposal of assets
Lease liability increase/(decrease)
Director loans interest & expenses
Intercompany transactions
Gain on bargain purchase
Gain on release of contingent consideration
Impairment of intangible assets
Other receivable (grants)
Unrealised gain on other non current liability
FX translation reserve
Net exchange differences on changes in operating assets & liabilities
Change in operating assets and liabilities:
Decrease/(Increase) in inventories
Decrease/(Increase) in trade debtors
Decrease/(Increase) in other operating assets
Increase/(Decrease) in trade creditors
Increase/(Decrease) in short term provisions
Increase/(Decrease) in other operating liabilities
Increase/(Decrease) in long term provisions
Net cash inflows/(outflows) from operating activities

Consolidated Group
2011
$
2010
$ (6,321,097)
3,291,709
878,529
369,189
-
(6,907)
-
(842,776)
-
155,824
-
3,482
(2,952,487)
(3,094,805)
-
6,055,873
-
-
(535,758)
(472,917)
(121,430)
(480,293)
(115,895)
750,208
132,712

(2,684,502)
(622,337)
(39,675)
(94,328)
375,061
118,972
48,214
(43,682)
656,613
(843,000)
59,516
(123,092)
(129,062)
(1,002,078)
17,193
(19,320)

(1,696,642)
(2,628,865)

(b) Acquisition of Entity

During the 2010 financial year 100% ownership interest in the assets of BioInquire Inc were acquired. Details of this transaction are:

Purchase consideration Consisting of: Cash consideration Deferred cash consideration Deferred share capital consideration Total consideration Cash consideration Amount due under contract of sale Net cash paid Assets and liabilities held at acquisition date: Non-current assets Less: gain on bargain purchase Information regarding the acquisition is disclosed in Note 24	Consolidated Group 2011 $ 2010 $ - 1,829,268 - 4,413,929 - 1,593,919
	- 7,837,116
	- 6,243,197 - (4,413,929)
	- 1,829,268
	- 9,195,684 - (2,952,487)
	6,243,197

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

At 30 June 2011, a $5,653,469 impairment was done for the above non currents assets. There was also a write off for $3,094,805 on the deferred contingent consideration to be paid in cash and shares.

(c) Non-cash financing and investing activities

Non-cash financing and investing activities are outlined below.

	Consolidated
	2011	2010
	$	$
Shares issued in lieu of services
Shares issued in lieu of services	-	781,816

9. Current Assets – Trade and Other Receivables

Current Assets – Trade and Other Receivables
Trade receivables Other receivables	Consolidated Group 2011 $ 2010 $ 109,812 92,364 715,908 1,807,004
	825,720 1,899,368

Included in trade receivables are receivables to the value of US$ 41,587 converted at an exchange rate of 1.0739.

Credit Risk — Trade and Other Receivables

The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than those receivables specifically provided for and mentioned within Note 9. The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the Group.

On a geographical basis, the Group has significant credit risk exposures in Australia and the United States of America given the substantial operations in those regions.

The following table details the Group‟s trade and other receivables exposed to credit risk (prior to collateral and other credit enhancements) with aging analysis and impairment provided for thereon. Amounts are considered as „past due‟ when the debt has not been settled, with the terms and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are specific circumstances indicating that the debt may not be fully repaid to the Group.

The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high credit quality.

Consolidated

Consolidated
	Gross Amount	Past Due and Impaired		Past due but not impaired (days overdue)			Within initial trade terms
			<30	31-60	61-90	>90
2011
Trade Receivables	109,812	-	19,496	512	2,627	-	87,177
Other Receivables	715,908	-	-	-	-	*651,556 **	64,352
Total	825,720	-	19,496	512	2,627	*651,556 **	151,529
2010
Trade Receivables	92,364	-	18,863	7,750	-	-	65,751
Other Receivables	1,807,004	-	-	-	-	651,556*	1,155,448
Total	1,899,368	-	18,863	7,750	-	651,556*	1,221,199

As stated in Note 1(t), a claim has been filed against NxGen Pharmaceuticals Pty Limited under the terms of the Implementation Deed dated 28 November 2008 for the costs related to the NxGen acquisition by NuSep. Management has relied on expert advice as to the ability of the recovery of this claim.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

10. Current Assets – Inventories

Raw materials – at cost Finished goods – at cost Less: provision for obsolete inventory	Consolidated Group 2011 $ 2010 $ 252,930 227,180 185,001 170,944 (11,191) (11,059)
	426,740 387,065

11. Current Assets – Other Assets

Cash deposit rental bond Prepaid expenses Cash deposit rental bond Non Current Assets – Financial Assets Available-for-sale financial assets Shares in unlisted corporation		Consolidated Group 2011 $ 2010 $ 33,343 33,255 - 49,302 34,343 82,557 Consolidated Group 2011 $ 2010 $ 300,000 450,000

12. Non Current Assets – Financial Assets

Available-for-sale financial assets comprise investments in the ordinary issued capital of an unlisted public company. There are no fixed returns or fixed maturity dates attached to this investment.

The fair value of the unlisted investments has been estimated using valuation techniques that may not be supported by observable market prices or rates. Management have also relied on a prior expert independent valuation report of the investment and believes the estimated fair value recorded in the statement of financial position and the related changes in fair value recorded in equity are reasonable and the most appropriate at the statement of financial position date.

13. Non-current Assets – Property, plant and equipment

Plant and equipment – at cost Less: accumulated depreciation Total property, plant and equipment Leasehold improvements – at cost Less: accumulated amortisation Total leasehold improvements Total property, plant and equipment	Consolidated Group 2011 $ 2010 $ 1,669,804 1,120,936 (474,280) (238,133)
	1,195,523 882,803
	638,382 619,594 (269,515) (129,782)
	368,867 489,812

	1,564,390 1,372,615

Movements in Carrying Amounts

Movement in the carrying amounts of each class of property, plant and equipment at the beginning and end of the current financial year are set out below.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

Plant & Equipment Leasehold Improvements $ $ Consolidated 2010 Carrying amount at 1 July 2009 1,088,438 598,298 Additions 28,855 21,296 Revaluation - - Disposals - - Depreciation & amortisation expense (233,887) (129,782) Unrealised foreign exchange adjustment (603) - Carrying amount at 30 June 2010 882,803 489,812 Consolidated 2011 Carrying amount at 1 July 2010 882,803 489,812 Additions 548,868 18,788 Revaluation Disposals Depreciation expense (236,148) (139,733) Unrealised foreign exchange adjustment Carrying amount at 30 June 2011 1,195,523 368,867 14. Non-current Assets – Intangible Assets Internal development and acquired through acquisition– at cost Impairment charges Less: accumulated amortisation Total intangible assets	Plant & Equipment Leasehold Improvements $ $ 1,088,438 598,298 28,855 21,296 - - - - (233,887) (129,782) (603) -	Total $ 1,686,736 50,151 - - (363,669) (603) 1,372,615 1,372,615 567,656 (375,881) 1,564,390 Consolidated Group 2011 $ 2010 $ 13,949,583 12,330,340 (6,055,873) - (502,648) (5,520)
	882,803 489,812
	882,803 489,812 548,868 18,788 (236,148) (139,733)
	1,195,523 368,867
		7,391,062 12,324,820

Reconciliations

Reconciliations of the carrying amounts of intangible assets at the beginning and end of the current financial year are set out below.

Consolidated 2010 Carrying amount at 1 July 2009 Additions Acquisition assets Internal development Disposals Amortisation expense Carrying amount at 30 June 2010 Consolidated 2011 Carrying amount at 1 July 2010 Additions Acquisition assets Internal development Disposals Impairments Amortisation expense Carrying amount at 30 June 2011	$ 1,985,696 - 9,195,685 1,148,959 - (5,520)
	12,324,820
	$ 12,324,820 - 1,624,763 (6,055,873) (502,648)
	7,391,062

Intangible assets have finite useful lives. Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.

The following useful life is being used in the calculation of amortisation:

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

Capitalised Development 20 years.
- Capitalised Licenses 20 years.

Impairment Losses

The total impairment loss recognised in the statement of comprehensive income during the period amounted to $6,055,873 and is separately presented in the statement of comprehensive income as Impairment of Intangible Assets.

$402,404 of the impairment loss relates to the development costs of the MF10 instrument. The revenue projection for instrument for the period was not achieved and the Company has for the interim period diverted resources to other cash generation business units. Although the instrument is still available for sales and marketing, sales efforts have been allocated to other product areas. The instrument is expected to be relaunched for sales in the future. The impairment loss has been included in the separations segment for segmental reporting purposes.

The balance of $5,653,469 in impairment loss relates to the IQ software intangible assets. The revenue projection for the period were not achieved by the division as per the earnout agreement. An independent valuation was done for the asset valuation of the IQ software as at 30 June 2011. The software is deemed as “best in case” and a new sales and marketing strategy was implemented in May 2011 which has seen revenue grow. Further sales and marketing efforts continue to be implemented and customer interest and lead generation remains strong. The remaining intangible assets value is carried at fair value. The fair value was determined using the value in use model with a discount rate of approximately 10% (2010: 20%). Revenue was poor in 2011 and sales for 2012 are projected to grow by 600% from the 2011 results. The revenue is then projected to grow by a further 94% in 2013. The impairment loss has been included in the software segment for segmental reporting purposes.

15. Current liabilities – Trade and Other Payables

Unsecured Liabilities Trade payables Government grants refundable Lease liability Payable to Directors Acquisition price payable Other creditors and accruals	Consolidated Group 2011 $ 2010 $ 1,616,345 1,014,730 295,504 353,761 - 100,000 150,000 12,500 349,677 491,981 503,390 487,187
	2,914,916 2,460,159

Trade creditors represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Included in other creditors is the advance by the directors of the company (refer 22(e)).

Included in trade payables are creditors to the value of US$ 56,460 converted at an exchange rate of 1.074. Included in the acquisition price payable is US$ $368,750 (2010:US$500,000) converted at 1.054. For further comments on the contingent consideration please refer to Note 8 (b).

16. Current liabilities – Provisions

Provision for employee benefits	Consolidated Group 2011 $ 2010 $ 217,351 157,835

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

17. Non-current liabilities – Other Payables and Liabilities

	Consolidated Group
	2011	2010
	$	$
Unsecured Liabilities
Convertible Notes #	377,286	-
Contingent consideration*		3,800,518
	-
	377,286	3,800,518

On maturity the convertible notes will redeem in full and the funds from this redemption will be used to subscribe to NuSep Ltd shares. For the period of 10 business days prior to 1 May 2013 the VWAP is calculated. Should this price less 10% be greater than A$ 0.18 then holders can convert at the lower price of A$ 0.18. Should this price be less than A$ 0.18 then convertible holders will automatically redeem the convertible notes and purchase ordinary shares at this price.

*In acquiring BioInquire, the Group incurred a contingent consideration liability consisting of an additional US$3,100,000 in the purchase consideration if budgeted profits were achieved. The directors expected the new subsidiary to achieve the projected results, and consequently, the entire contingent consideration was raised as a liability in terms of the business combination.

18. Non-current liabilities – Provisions

Non-current liabilities – Provisions
Provision for employee benefits Provision for employee benefits Opening balance 1 July Provision utilised Provision expense Closing balance 30 June (Notes 16 & 18) Analysis of Total Provisions Current provision for employee benefits (note 16) Non-current provision for employee benefits (note 18) Aggregate employee benefit and related on-costs liabilities	Consolidated Group 2011 $ 2010 $ 66,628 49,435
	Consolidated Group 2011 $ 2010 $ 207,270 243,420 13,409 (99,844) 63,300 63,694
	283,979 207,270
	Consolidated Group 2011 $ 2010 $ 217,351 157,835 66,628 49,435
	283,979 207,270

19. Issued Capital

(a) Share Capital Ordinary Shares – fully paid	Consolidated Group and Parent Entity Consolidated Group and Parent Entity 2011 Shares 2010 Shares 2011 $ 2010 $ 73,051,172 59,411,744 21,891,153 19,765,176

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

(b) Movements in ordinary share capital of the company during the period were as follows:

Balance at 1 July Share issue under share placement/ offer Shares issue - BioInquire Shares issue 24 January 2011 # Shares buy back Share issue in lieu of fees Less - transaction costs arising on share issues Balance at 30 June Balance at 1 July Share issue under share placement/ offer Shares issue - BioInquire Shares issue 24 January 2011 # Shares buy back Share issue in lieu of fees Balance at 30 June	30 June 2011 30 June 2010 30 June 2010 $ $ $ Restated 19,765,176 11,021,258 11,021,258 1,905,458 10,484,635 10,484,635 375,100 (1,593,919) - - - - (20,898) - - - 781,816 781,816
	22,024,836 20,693,790 22,287,709
	(133,683) (928,614) (928,614)
	21,891,153 19,765,176 21,359,095
	30 June 2011 30 June 2010 30 June 2010 Number of Shares Number of Shares Number of Shares Restated 59,411,744 2,298,907 2,298,907 8,972,513 49,184,490 53,827,337 - 4,642,847 - 4,761,905 - - (94,990) - - - 3,285,500 3,285,500
	73,051,172 59,411,744 59,411,744

Refer Note 27 Prior Period Adjustment. This includes to 4,642,847 shares which had previously been reflected issued at 30 June 2010 in lieu of the BioInquire acquisition milestone payment. These shares were issued to NuSep Holdings Ltd for nil consideration in breach of s259A the Corporations Act These shares have not been cancelled as at 30 June 2011.The Company is however in the process of advising ASIC and is seeking appropriate advice to reduce the issued capital figures by 3,011,824 shares. The balance of 1,631,023 shares have been issued to BioInquire shareholders at 31 December 2010 at an issue price of $0.23.

It was noted that the shares issued on 24 January 2011 were issued in breach of s259A the Corporations Act in that the shares were issued to NuSep for nil consideration. The Company has sought advice on this matter and is proactively advising ASIC of this oversight. The Company is presently in consultation with ASIC to ratify the share issue and is likely to cancel these shares.

(c) Ordinary Shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(d) Listed Options

During the year 4,333,888 listed options were issued to shareholders. The listed options have an exercise price of 35 cents and expire on 1 September, 2012.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

(e) Unlisted Options

There were no share options on issue during the 2011 and 2010 financial years.

(f) Capital Management

Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern. The group‟s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements.

Management effectively manages the group‟s capital by assessing the group‟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 management to control the capital of the group since the prior year.

20. Reserves

Nature and purpose of reserves

Share options reserve

This option reserve records items recognised as expenses on valuation of employee share options.

Financial Assets Reserve

The financial assets reserve records revaluation of financial assets.

Foreign currency translation reserve

The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary.

21. Auditors’ Remuneration

uditors’ Remuneration
Amounts receivable or due and receivable by RSM Bird Cameron Partners for: Audit & Assurance services Audit and review of financial reports Other services Tax compliance services Total remuneration for services	Consolidated Group 2011 $ 2010 $ 60,000 43,000 - -
	60,000 43,000

22. Directors and executive disclosures

(a) Details of Key Management Personnel

(i) Directors

*Directors*
John Manusu	Executive Chairman
Dr Hari Nair	Managing Director/CEO
Iain Howard Sorrell	Non-executive Director
William Spee	Non-executive Director
*Executives*
Prakash Patel	Chief Operating Officer, CFO and Company Secretary
Dr John Andrews	Chief Scientific Officer

(ii) Executives

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

(b) Remuneration of Key Management Personnel

Short-term employee benefits Post-employment benefits Share-based payments	Consolidated Group 2011 $ 2010 $ 1,461,418 1,084,575 59,345 56,560 - -
	1,520,763 1,141,135

(c) Share based compensation - Options

Options remuneration has been calculated in accordance with the fair value measurements provisions of AASB 2 “Share Based Payments” in line with transitioning NuSep Holdings Ltd accounting policies and financial reporting from current Australian Standards to Australian equivalents of IFRS (AIFRS).

The fair value of each option is estimated on grant date using Black-Scholes option pricing model.

The amount of options remuneration is determined on a pro rata basis, by expensing the fair value estimate of each option over the vesting period and the individual option grant. The share based expenses for options remuneration has been recognised as an expense in the statement of comprehensive income and held as part of the share options reserve in the statement of financial position.

During the financial year no options were granted as equity compensation benefits.

(i) Options holding of directors and executives

Directors

There were no share options on issue during the 2011 and 2010 financial year.

Executives

There were no share options on issue during the 2011 and 2010 financial year.

(ii) Options granted & vesting period

Directors and Executives

No options were exercised during the 2011 and 2010 financial year.

(iii) Options exercised during the year

No options were exercised during the 2011 and 2010 financial year.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

(d) Shareholding of directors and executives

The numbers of shares in the company held during the financial year by each current Director, and executives of NuSep Holdings Ltd and its subsidiaries are set out below. There were no shares granted during the reporting period as compensation.

Directors

ectors
Name	Balance at start of the year	Ordinary shares issued resulting on the exercise of options	Other changes	Balance at the end of the year
John Manusu Dr Hari Nair Iain Howard Sorrell William Spee	2,168,032 1,038,680 799,650 2,529,152	- - - -	174,835 - 102,678 122,678	2,342,867 1,038,680 902,328 2,651,830
Total	6,535,514	-	400,191	6,935,705
ecutives
Name	Balance at start of the year	Ordinary shares issued resulting on the exercise of options	Other changes	Balance at the end of the year
Prakash Patel	2,446	-	-	2,446
Total	2,446	-	-	2,446

Executives

(e) Other transactions with key management personnel

i) The current Directors partially underwrote the share purchase offer under the prospectus dated 5 July 2011. Underwriting fees would be paid on normal commercial terms and conditions.
ii) At 30 June 2011 $150,000 was payable to current directors for Director fee and other payables as outlined in note 15.

23. Related party transactions

(a) Ultimate Parent

NuSep Holdings Ltd (incorporated in Australia) is the ultimate parent entity.

(b) Wholly-owned group transactions

Transactions between NuSep Holdings Ltd and other entities in the wholly-owned group during the year ended 30 June 2011 consist of the distribution of electrophoresis gels, biological products and provision of marketing services by NuSep Inc and provision of management services and loans advanced by NuSep Holdings Ltd.

(c) Key management personnel

Disclosures relating to key management personnel are set out in note 22.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

24. Controlled entities

ontrolled entities
Share in controlled entities – at cost Name of entity Country of Incorporation Class of share Subsidiaries of NuSep Holdings Ltd: NuSep Pty Ltd (previously Prime BioSeparations Ltd) Australia Ordinary SpermGen Pty Limited Australia Ordinary NuSep Inc United States Ordinary InqSep Inc United States Ordinary Singapharm Pte Ltd Singapore Ordinary	Cost of Parent Entity’s investment 2011 $ 2010 $
	- -
	Equity Holding 2011 % 2010 % 100 100 100 100 100 100 100 100 100 -

In June 2010 the parent entity acquired the assets of BioInquire Inc, and incorporated Inqsep Inc which commenced trading in June2010.

In July 2010 the parent incorporated Singapharm Pte Ltd, a company based in Singapore, to commercialise the PriMe technology.

25. Financial Risk Management Policies

The group‟s financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable, and loans to and from subsidiaries.

(a) Credit Risk Exposures

The carrying amounts of financial assets included in the consolidated statement of financial position represent the economic entity‟s maximum exposure to credit risk in relation to these assets. The company minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with strong, creditworthy customers across all business segments.

(b) Liquidity Risk

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:

preparing forward-looking cash flow analysis in relation to its operational, investing and financing activities;
monitoring undrawn credit facilities;
obtaining funding from a variety of sources;
maintaining a reputable credit profile;
managing credit risk related to financial assets;
only investing surplus cash with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.

The table below reflects an undiscounted contractual maturity analysis for financial liabilities. Cash flows realised from financial assets reflect management‟s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management‟s expectations that banking facilities will be rolled forward.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

Financial liability and financial asset maturity analysis

Consolidated Group Financial liabilities due for payment Trade and other payables Amounts payable to related parties Convertible Notes Total expected outflows Financial assets – cash flows realisable Cash and cash equivalents Trade, term and loan receivables Other investments Total anticipated inflows Net (outflow)/ inflow on financial instruments	Within 1 Year 1 to 5 Years Total 2011 2010 2011 2010 2011 2010 $ $ $ $ $ $ 2,674,914 1,685,681 90,000 269,997 2,764,914 1,955,678 150,000 12,500 - - 150,000 12,500 2,286 - 375,000 - 377,286 -
	2,827,200 1,698,181 465,000 269,997 3,292,200 1,968,178
	29,009 1,200,641 - - 29,009 1,200,641 826,720 1,899,368 - - 825,720 1,899,368 300,000 450,000 300,000 450,000
	854,729 3,100,009 300,000 450,000 1,154,729 3,550,009
	(1,972,471)1,401,828 (165,000) 180,003(2,137,471) 1,581,831

(c) Foreign Exchange Risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity‟s functional currency.

A significant portion of the Company‟s customers are either US based or are billed in US dollars. This creates a natural hedge against foreign exchange risk. Inventory is held in the US and the statement of financial position can be affected by movements in the US$/A$ exchange rates.

At 30 June 2011, had the Australian Dollar moved as illustrated in the table below, with all other variables held constant, the post tax loss and equity would have been affected as follows:

Judgments on reasonably possible movements:
	Post tax loss Higher/(Lower)
	2011	2010
	$	$
Consolidated Group
AUD/USD +10%	(646,665)	(464,840)
AUD/USD – 10%	646,665	464,840

(d) Net Fair Value of Financial Assets and Liabilities

(i) On-Statement of financial position

The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities of the consolidated entity approximates their carrying amounts.

The net fair value of other monetary financial assets and financial liabilities is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles.

(ii) Off-Statement of financial position

There are no off statement of financial position financial assets and liabilities as at 30 June 2011.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

26. Capital and Leasing Commitments

(a) Capital commitments

There are no commitments for the acquisition of plant and equipment contracted for at the reporting date but not recognised as liabilities.

(b) Operating Lease Commitments

Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities, payable: Within one year Later than one year but not later than 5 years Later than 5 years Representing: Non-cancellable operating leases	Consolidated 2011 $ 2010 $ 213,210 204,671 69,420 268,717 - -
	282,630 473,388
	282,630 473,388
	282,630 473,388

At 30 June 2011 the Group has two operating leases for its commercial properties. These are non-cancellable leases. The lease in Lane Cove - Australia has remaining a non-cancellable lease term of 1 year. The lease in Georgia - US has remaining a non-cancellable lease term of 2-5 years. The commercial property leases also includes a clause to enable upward revision of the rental charge on commercially negotiated terms.

27. Prior Period Adjustment

The following prior period adjustment relates to business combination entries for the BioInquire acquisition in June 2010. At 30 June 2010 as part of the earnout agreement there was a total contingent consideration amount of $4,413,929 (USD3,600,000) if revenue milestones were achieved. $613,046 (USD500,000) of this contingent consideration was payable in shares at 31 December 2010. Furthermore it was expected that $980,873 (USD800,000) of the contingent consideration would also be issued in shares. On 30 June 2010 the Company reflected that it issued 4,642,847 shares at AU$0.35c per share reducing contingent consideration by this amount and increasing equity by the same. These shares were in fact issued to NuSep Holdings Ltd for nil consideration which is a contravention of s259A the Corporations Act.

These shares should not have been issued at 30 June 2010 but issued when the contingent consideration was payable and thus it was incorrectly recognised in the Statement of Financial Position at 30 June 2010. In accordance with AASB 108 the 30 June 2010 Statement of Financial Position has been restated to reflect this error. This adjustment has resulted in the net equity at 30 June 2010 decreasing by $1,593,919 to $11,249,119 and total liabilities increasing by $1,593,919 to $6,467,947. This adjustment did not affect the basic and diluted earnings per share at 30 June 2010.

28. Segment Reporting

a) Business segments

The consolidated entity is organised on a global basis into the following divisions by product and service type.

Consumable Products

The development, manufacture and distributes of pre-cast electrophoresis gels and other biological products into the marketplace. Distribution is based in Atlanta, Munich and Sydney with manufacturing in Sydney. Separations

Develops and markets the PrIME technology in both the commercial and research markets, including the ProteomeSep and SpermSep devices. The business unit is based in Sydney.

Software

Develops and markets the ProteoIQ software which supports the entire proteomic data analysis pipeline from identification to quantification. The business unit is based in Atlanta.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

b) Geographical segments

Although the consolidated entity‟s divisions are managed on a global basis they operate in 3 main geographical areas:

Australia - The home country of the parent entity which is also the main operating entity. USA - A focus market with distribution channels in place across all divisions. - Europe Comprises mainly of operations from the Consumable products division. Other countries - Comprises of sales to countries in addition to USA, Australia and Europe.

Further comments on the operations and the results of those operations are set out in the Directors‟ report.

2011 Revenues from sales or services Revenues from outside the operating activities: Interest Write off contingent consideration Total segment revenue Profit/(Loss) from ordinary activities Profit /(Loss) from ordinary activities after income tax expense Depreciation and amortisation expense Segment assets Segment liabilities Acquisition of capital assets Cash flow information Net cash flow from Operating activities Net cash flow from Investing activities Net cash flow from Financing activities	Consumable products Separations Software Consolidated $ $ $ $ 979,734 404,131 415,845 1,799,710 - - 32,606 - - 3,094,805 32,606 3,094,805
	979,734 436,737 3,510,650 4,927,121
	138,755 (3,265,693) (3,194,159) (6,321,097)
	138,755 (3,265,693) (3,194,159) (6,321,097)
	261,399 150,030 467,100 878,529
	4,045,345 3,280,626 3,245,293 10,571,264
	1,910,817 1,025,303 640,061 3,576,181
	527,854 42,373 6,801 576,308 (650,427) (251,485) (794,731) (1,696,643)
	(1,580,029) (611,715) (801) (2,192,545)
	931,073 855,410 931,073 2,717,556

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

2010 Revenues from sales or services Revenues from outside the operating activities: Interest Gain on sale of assets Gain on bargain purchase Total segment revenue Profit from ordinary activities Profit from ordinary activities after income tax expense Depreciation and amortisation expense Segment assets Segment liabilities Acquisition of capital assets Cash flow information Net cash flow from Operating activities Net cash flow from Investing activities Net cash flow from Financing activities	Consumable products Separations Software Consolidated $ $ $ $ 1,490,610 683,516 229,422 2,403,548 - - - 11,516 6,907 - - - 2,952,487 11,516 6,907 2,952,487
	1,490,610 701,939 3,181,909 5,374,458
	115,488 31,314 3,144,907 3,291,709
	115,488 31,314 3,144,907 3,291,709
	292,444 76,745 - 369,189
	3,754,087 4,577,638 9,385,341 17,717,066
	1,447,291 718,624 4,302,032 6,467,947
	108,449 81,941 9,195,685 9,386,075 (1,118,786) (1,713,338) 203,259 (2,628,865)
	(31,487) (1,160,186) (1,829,268) (3,020,941)
	2,272,348 2,272,348 2,272,348 6,817,044

Geographical segments

Although the consolidated entity‟s divisions are managed on a global basis they operate in the following geographical areas being Australia, USA and Europe.

Australia USA Europe Other countries	Segment revenues Segment assets 2011 $ 2010 $ 2011 $ 2010 $ 911,008 992,261 7,231,605 8,090,126 787,004 1,342,084 3,327,287 9,626,940 79,163 67,334 - 22,535 1,869 12,372 -
	1,799,710 2,403,548 10,571,264 17,717,066

Segment accounting policies

Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 1 and accounting standard, AASB 114 Segment Reporting. Segment revenue, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis.

Segment assets include all assets used by a segment and consist primarily of receivables, inventory, plant & equipment and deposits.

NuSep Holdings Ltd and its Controlled Entities Notes to Financial Statements For the year ended 30 June 2011

29. Events after Balance Date

The following events occurred subsequent to 30 June 2011:

a) The Company on 31 August 2011 announced it had raised $1.8m through the share purchase offer which closed on 26 August 2011.

Except for the items discussed above no other matters or circumstances have arisen since 30 June 2011 that have significantly affected, or may significantly affect:

(a) The consolidated entity‟s operations in future financial years, or
(b) The results of those operations in future financial years, or
(c) The consolidated entity‟s state of affairs in future financial years.

30. Company Details

The registered office of the company is: 324 Burns Bay Road Lane Cove, NSW 2066 Australia

Directors’ Declaration

The directors of the company declare that:

(a) the attached financial statements and notes thereto are in accordance with the Corporations Act 2001 and
(i) comply with Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and
(ii) give a true and fair view of the financial position as at 30 June 2011 and of the performance for the year ended on that date of the company and consolidated group;
(b) the Chief Executive Officer and Chief Finance Officer have each declared that:
(i) the financial records of the company for the financial year have been properly maintained in accordance with s 286 of the Corporations Act 2001 ;
(ii) the financial statements and notes for the financial year comply with Accounting Standards; and
(iii) the financial statements and notes for the financial year give a true and fair view; and
(c) in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

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John Manusu Chairman

Sydney 30 September 2011

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RSM Bird Cameron Partners Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 2 9233 8933 F +61 2 9233 8521

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of NuSep Holdings Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.

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RSM BIRD CAMERON PARTNERS Chartered Accountants

G N SHERWOOD Partner

Sydney, NSW Dated: 30 September 2011

Liability limited by a Major Offices in: RSM Bird Cameron Partners is an independent member firm of RSM scheme approved Perth, Sydney, Melbourne, International, an affiliation of independent accounting and consulting firms. under Professional Adelaide and Canberra RSM International is the name given to a network of independent accounting Standards Legislation ABN 36 965 185 036 and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

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RSM Bird Cameron Partners Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 2 9233 8933 F +61 2 9233 8521

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF

NUSEP HOLDINGS LIMITED

Report on the Financial Report

We have audited the accompanying financial report of NuSep Holdings Limited, which comprises the consolidated statement of financial position as at 30 June 2011 , and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements comply with International Financial Reporting Standards .

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Liability limited by a Major Offices in: scheme approved Perth, Sydney, Melbourne, under Professional Adelaide and Canberra Standards Legislation ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of NuSep Holdings Limited, would be in the same terms if given to the directors as at the time of this auditor's report .

Opinion

In our opinion:

(a) the financial report of NuSep Holdings Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1(a) in the financial report, which indicates that the consolidated entity incurred a loss of $6,321,097 and had net cash outflows from operating activities of $1,696,642, and net cash outflows from investing activities of $2,192,546 for the year ended 30 June 2011. As at that date the consolidated entity had net current liabilities of $1,816,455. These conditions, along with other matters as set forth in Note 1(a), indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern and therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of business.

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Report on the Remuneration Report

We have audited the Remuneration Report included in pages 6 to 11 of the directors’ report for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of NuSep Holdings Limited for the year ended 30 June 2011 complies with section 300A of the Corporations Act 2001 .

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RSM BIRD CAMERON PARTNERS

Chartered Accountants

G N SHERWOOD

Partner Sydney, NSW Dated: 30 September 2011

Shareholder Information

The shareholder information set out below was applicable as at 26 September 2011.

A. Distribution of Equity Securities

Analysis of numbers of equity security holders by size of holding:

1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – Over	Number of Ordinary Shares 178 268 76 297 138
	957

There were 125 holders of less than a marketable parcel of ordinary shares, total shares held is 16,550 and represents 0.02% of total issued capital.

B. Equity Security Holders

Twenty Largest Quoted Equity Security Holders

The name of the twenty largest holders of quoted equity securities are listed below:

Mr Andrew Ernest Goodall NuSep Holdings Ltd Mr Ernest Alfred Goodall & Ms Marjorie Anne Goodall Mr Ying Ming Chiu NuSep Holdings Ltd Bookman Pty Ltd Gaston Renard Pty Ltd Spee Nominees Pty Ltd Mr Andrew Winston Doyle Mr John Manusu Mr John Pericles Manusu Ms Natalie Rose-Anne Doyle Mr Anthony Mark Loughnan Balmain Securities Pty Ltd Hammond Royce Corporation Pty Ltd Mr Chenicheri Nair Mr Andrew Winston Doyle Mr Iain Howard-Sorrell Nutsville Pty Ltd Ms Doris Mcnamara	Ordinary Shares Number Held Percentage of issued shares 17,000,000 18.89 4,302,385 4.78 3,461,195 3.85 3,096,883 3.44 3,011,833 3.35 2,400,000 2.67 2,400,000 2.67 2,071,428 2.30 1,932,130 2.15 1,802,900 2.00 1,491,000 1.66 1,455,000 1.62 1,191,419 1.32 1,119,618 1.24 1,015,071 1.13 1,002,511 1.11 970,000 1.08 901,376 1.00 650,000 0.72 550,000 0.61
	51,824,749 57.59

Mr Andrew Ernest Goodall
NuSep Holdings Ltd
Mr Ernest Alfred Goodall & Ms Marjorie Anne Goodall
Mr Ying Ming Chiu
NuSep Holdings Ltd
Bookman Pty Ltd
Gaston Renard Pty Ltd
Spee Nominees Pty Ltd
Mr Andrew Winston Doyle
Mr John Manusu
Mr John Pericles Manusu
Ms Natalie Rose-Anne Doyle
Mr Anthony Mark Loughnan
Balmain Securities Pty Ltd
Hammond Royce Corporation Pty Ltd
Mr Chenicheri Nair
Mr Andrew Winston Doyle
Mr Iain Howard-Sorrell
Nutsville Pty Ltd
Ms Doris Mcnamara

Ordinary Shares
Number Held Percentage of
issued shares
17,000,000
18.89
4,302,385
4.78
3,461,195
3.85
3,096,883
3.44
3,011,833
3.35
2,400,000
2.67
2,400,000
2.67
2,071,428
2.30
1,932,130
2.15
1,802,900
2.00
1,491,000
1.66
1,455,000
1.62
1,191,419
1.32
1,119,618
1.24
1,015,071
1.13
1,002,511
1.11
970,000
1.08
901,376
1.00
650,000
0.72
550,000
0.61

51,824,749
57.59

C. Substantial Shareholders as at 26 September 2011.

Ordinary shares Mr Andrew Ernest Goodall D. Unquoted Equity Securities NuSep Holdings Ltd Directors, Employee and Consultants Option Plan	Number held Percentage 17,000,000 18.89 Number on Issue Number of Holders - -
	- -

E. Voting Rights

The voting rights attaching to each class of equity securities are set out below:

(a) Ordinary Shares

On a show of hands, one vote for every member or proxy of a member present and entitled to vote. On a poll, every member shall have one vote for each fully paid share held.

(b) Options

No voting rights.

Corporate Directory

NuSep Holdings Ltd ABN 33 120 047 556

Directors

John Manusu (Executive Chairman) Dr Hari Nair (Managing Director) Iain Howard Sorrell (Non-executive Director) William Spee (Non-executive Director)

Company Secretary Prakash Patel

Registered Office

324 Burns Bay Road Lane Cove, NSW 2066 Australia

Tel: 61 2 8415 7300 Fax: 61 2 8415 7399 Email: [email protected] Website: www.NuSep.com

Share Registry Boardroom Pty Limited Level 7, 207 Kent Street Sydney, NSW 2000

Solicitors

Bartier Perry 18/133 Castlereagh Street Sydney, NSW 2000

Auditors

RSM Bird Cameron Partners Level 12, 60 Castlereagh Street Sydney, NSW 2000

AI assistant

MEMPHASYS LIMITED. — Annual Report 2011

65314_rns_2011-09-29_8c9b8008-b69e-4e85-b55b-22a536d4613e.pdf

Contents

Directors’ Report

Directors

Directors’ Report

Company Secretary

Meetings of Directors

CORPORATE INFORMATION

Corporate Structure

Principal Activities

Dividends

REVIEW OF OPERATIONS

Operating results for the year

Directors’ Report

Financial Position

Likely Developments, Prospects and Business Strategies

Significant Change in State of Affairs

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

SHARE OPTIONS

ENVIRONMENTAL ISSUES

Directors’ Report

INDEMNIFYING OFFICERS

PROCEEDINGS ON BEHALF OF THE COMPANY

AUDITOR’S INDEPENDENCE DECLARATION

NON-AUDIT SERVICES

REMUNERATION REPORT

Principles used to determine the nature and amount of remuneration

Directors’ Report

Alignment to shareholders‟ interest:

Alignment to program participants‟ interest:

Company performance, shareholder wealth and director and executive remuneration.

Director Remuneration additional points

Employment contracts

Directors’ Report

Non Executive Directors

Directors’ Fees

Retirement Allowance for Directors

Executive Pay

Directors’ Report

Base Pay

Retirement Benefits

Short Term Incentives

Long Term Incentives

Directors’ Report

Details of Remuneration

Directors of NuSep Holdings Ltd

Senior Executive Employment Agreements

Executives of NuSep Holdings Ltd

Directors’ Report

Shares Under Option

Directors

Executives

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE STATEMENT 30 June 2011

1. Lay solid foundations for management and oversight

2. Structure the board to add value

Skills

Experience

Appointment and removal

Independence

Board Committees

Independent advice

Independent review

3 Promote ethical and responsible decision-making

Code of Ethics and Conduct

Share Dealing Rules

Corporate Governance Education

4. Safeguard integrity in financial reporting

External audits

5 Make timely and balanced disclosure

6 Respect the rights of shareholders

7 Recognise and manage risk

Financial Risks

CEO and CFO sign-off

Operational Risks

8 Remunerate fairly and responsibly

Consolidated Statement of Comprehensive Income For the year ended 30 June 2011

Consolidated Statement of Financial Position As at 30 June 2011

MEMPHASYS LIMITED. Annual Report 2011