Notice of Annual General Meeting and Explanatory Memorandum

Circadian Technologies Limited ACN 006 340 567

Date: 29 November 2013 Time: 11.00 am Location: Computershare Conference Centre Yarra Falls 452 Johnston Street Abbotsford, Melbourne, Victoria

Notice of Annual General Meetin g

Notice is given that the Annual General Meeting ( AGM ) of the Shareholders of Circadian Technologies Limited ( Company ) will be held at Computershare Conference Centre, Yarra Falls, 452 Johnston Street, Abbotsford, Melbourne, Victoria on Friday, 29 November 2013 at 11.00 am.

This Notice should read in conjunction with the accompanying Notes, Explanatory Memorandum and Proxy Form all of which are incorporated in, and comprise part of, this Notice of AGM.

Ordinary Business

1. Financial statements and reports

To receive and consider:

(a) the financial report;
(b) the directors' report; and
(c) the auditor's report,

of the Company for the year ended 30 June 2013.

Note that this item of business does not require Shareholders to vote on a resolution or adopt the received reports.

2. Remuneration Report (Resolution 1)

To consider and, if thought fit, pass the following as an advisory and non-binding ordinary resolution:

'That, for the purposes of section 250R(2) of the Corporations Act, the Remuneration Report as set out in the Annual Report for the financial year ended 30 June 2013 be adopted.'

Note that this resolution is advisory only and does not bind the Company or its Directors. The Directors will consider the outcome of the vote and comments made by Shareholders on the Remuneration Report at the meeting when reviewing the Company's remuneration policies.

3. Re-election of Mr Don Clarke as a director (Resolution 2)

To consider and, if thought fit, pass the following as an ordinary resolution:

'That Mr Don Clarke, a Director retiring by rotation in accordance with clause 58 of the Company's constitution, and being eligible, be re-elected as a Director of the Company.'

4. Other business

To transact any other business which may legally be brought before the meeting.

By order of the Board

28 October 2013

Mark Pryn Company Secretary

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Notes

Proxies

A Shareholder entitled to attend and vote at the meeting has a right to appoint a proxy to attend and vote in the Shareholder's place.
The proxy need not be a Shareholder of the Company.
Shareholders who intend to the appoint the Company’s chairperson as proxy (including an appointment by default) should have regard to the important information below under the heading 'Appointing the chair as your proxy'.
The proxy form included in this Notice of AGM must be signed by the Shareholder or the Shareholder’s attorney and, in the case of a joint holding, by each of the joint holders.
A Shareholder who is entitled to cast two or more votes may appoint up to two proxies to attend and vote at the meeting and, in the case of such an appointment, should specify the proportion or number of votes each proxy is appointed to exercise. If no such proportion or number is specified, each proxy may exercise half of the votes. Fractions of votes will be disregarded.
Where a Shareholder appoints two proxies, on a show of hands neither proxy may vote if more than one proxy attends and on a poll each proxy may only exercise votes in respect of those Shares or voting rights the proxy represents.
The appointment of one or more duly appointed proxies will not preclude a Shareholder from attending this meeting and voting personally. If the member votes on a resolution, the proxy must not vote as the member’s proxy on that resolution.
Any instrument appointing a proxy in which the name of the appointee is not completed is regarded as given in favour of the chairman of the meeting.
In the case of joint holders of Shares, if more than one holder votes at any meeting, only the vote of the first named of the joint holders in the share register of the Company will be counted.
To be valid, the form appointing the proxy and the power of attorney or other authority (if any) under which it is signed (or a certified copy of it) must be lodged with the Share Registry - Computershare Investor Services Pty Limited at Yarra Falls, 452 Johnston Street, Abbotsford, Victoria 3067, using the reply paid envelope supplied or by facsimile to 1800 783 447 (within Australia) or +61 3 9473 2555 (outside Australia) as soon as possible and in any event not later than 48 hours prior to the time appointed for the meeting.
Proxies given by a corporation must be signed either under seal or under the hand of a duly authorised attorney. In addition, should the constitution of a corporation permit the execution of documents without using a common seal, the documents must be signed by two directors or a director and a company secretary, or for a proprietary company that has a sole director who is also a company secretary, that director.
If a body corporate is appointed as proxy, please write the full name of that body corporate (e.g. Company X Pty Ltd). Do not use abbreviations. The body corporate will need to ensure that it:
a. appoints an individual as its corporate representative to exercise its powers at meetings, in accordance with section 250D of the Corporations Act; and
b. provides satisfactory evidence of the appointment of its corporate representative prior to commencement of the meeting.

If no such evidence is received before the meeting, then the body corporate (through its representative) will not be permitted to act as your proxy.

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Notes

Body Corporate Representatives

A corporation, by resolution of its directors, may authorise a person to act as its representative to vote at the meeting.
A representative appointed by a corporation may be entitled to execute the same powers on behalf of the corporation as the corporation could exercise if it were an individual shareholder of the Company.
To evidence the authorisation, either a certificate of body corporate representative executed by the corporation or under the hand of its attorney or an equivalent document evidencing the appointment will be required.
The certificate or equivalent document must be produced prior to the meeting.

Appointing the chair as your proxy

The proxy form accompanying this Notice of AGM contains detailed instructions regarding how to complete the proxy form if a Shareholder wishes to appoint the chair of the meeting as his or her proxy. You should read those instructions carefully.

Resolution 1

By appointing the chair of the meeting as your proxy in relation to Resolution 1, you expressly authorise the chair to vote in favour of Resolution 1 unless:

you expressly authorise the chair to vote against or abstain from voting on the Resolution; or
you are a member of the Key Management Personnel (KMP) or a Closely Related Party of a KMP (see further the section under the heading 'Voting Exclusion and Restriction Statements' for persons who will be considered to be a KMP).

The chair intends to exercise all available proxies by voting in favour of Resolutions 1 and 2..

Definitions

Words that are defined in the Glossary have the same meaning when used in this Notice of AGM unless the context requires, or the definitions in the Glossary provide, otherwise.

Voting entitlements

In accordance with section 1074E(2)(g)(i) of the Corporations Act and Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) for the purposes of the meeting, persons holding shares at 7.00 pm (Melbourne time) on 27 November 2013 will be treated as Shareholders. This means that if you are not the registered holder of a relevant Share at that time, you will not be entitled to attend and vote in respect of that Share at the meeting.

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Notes

Voting Exclusion and Restriction Statements

Resolution 1:

The Company will disregard all votes cast on Resolution 1, by or on behalf of:

a. a KMP, details of whose remuneration are included in the Remuneration Report for the year ended 30 June 2013; or
b. a Closely Related Party of a KMP,

whether the votes are cast as a Shareholder, proxy or in any other capacity.

However, the Company will not disregard a vote cast on Resolution 1 by a KMP or a Closely Related Party of a KMP if it is cast as a proxy and it is not cast on behalf of a KMP or a Closely Related Party of a KMP and either:

a. the proxy is appointed by writing that specifies how the proxy is to vote on Resolution 1; or
b. the proxy is the chair of the meeting and the appointment of the chair as proxy does not specify the way the proxy is to vote on Resolution 1 and expressly authorises the chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a KMP for the Company or, if the Company is part of a consolidated entity, for the entity.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, whether directly or indirectly. Members of key management personnel include its directors and certain senior executives.

A Closely Related Party of a member of the key management personnel means any of the following:

a spouse, child or dependent of the member;
a child or dependent of the member's spouse;
anyone else who is one of the member's family and may be expected to influence, or be influenced by, the member in the member's dealings with the Company;
a company the member controls; or
a person prescribed by regulations (as at the date of this Notice of AGM, no additional persons have been prescribed by regulation).

Shareholders who intend to appoint the chairperson as proxy (including by default) should have regard to the important information above under the heading 'Appointing the chair as your proxy'.

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Notes

Questions and comments by Shareholders at the meeting

In accordance with the Corporations Act, a reasonable opportunity will be given to Shareholders - as a whole - to ask questions about or to make comments on the Company's management or its Remuneration Report for the year ended 30 June 2013 at the meeting. Similarly, a reasonable opportunity will be given to Shareholders - as a whole - to ask the Company's auditor, Deloitte Touche Tohmatsu, questions about:

the conduct of the audit;
the preparation and content of the auditor’s report;
the accounting policies adopted by the Company in relation to the preparation of its financial statements; and
the independence of the auditor in relation to the conduct of the audit.

Shareholders may also provide written questions to the auditor concerning the content of the auditor's report or the conduct of the audit of the Company's financial report for the financial year ended 30 June 2013 in advance of the meeting. Written questions must be submitted to the Company no later than 5.00pm on Friday 22 November 2013, and should be addressed as follows:

The Company Secretary Circadian Technologies Limited Level 0403, 650 Chapel Street South Yarra VIC 3141

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Ex lanator Memorandum p y

1. Purpose of information

The purpose of this Explanatory Memorandum (which is included in and forms part of the Notice of AGM) is to provide Shareholders with an explanation of the business of the meeting and of the resolutions to be proposed and considered at the AGM to be held on 29 November 2013, at 11.00am at Computershare Conference Centre, Yarra Falls, 452 Johnston Street, Abbotsford, Melbourne, Victoria, and to assist Shareholders to determine how they wish to vote on each resolution.

2. Financial statements and reports

Pursuant to the Corporations Act, the directors of a public company that is required to hold an annual general meeting must table the financial statements and reports of the Company (including the directors' report and auditor's report) for the previous year before the shareholders at the annual general meeting.

Shareholders have been provided with all relevant information concerning the Company's financial statements, directors' report and auditor's report in the Annual Report of the Company for the year ended 30 June 2013 ( Annual Report ). A copy of the Annual Report has been forwarded to each Shareholder other than those Shareholders who have previously notified the Company that they elect not to receive the Annual Report, whether in paper form or electronically. Any Shareholder who had made this election and now wishes to receive a paper or electronic copy of the Annual Report should contact the Company's office by phone on +61 3 9826 0399 to arrange receipt. The Annual Report can also be viewed, printed and downloaded from the Company's website www.circadian.com.au. A copy of the financial statements, the directors' report and the auditor's report will also be tabled at the meeting.

Shareholders should note that the sole purpose of tabling the financial statements and the reports of the Company at the AGM is to provide the Shareholders with the opportunity to be able to ask questions or discuss matters arising from the financial statements or the reports at the meeting. It is not the purpose of the meeting that the financial statements or reports be accepted, rejected or modified in any way. Further, as it is not required by the Corporations Act, no resolution to adopt, receive or consider the Company's financial statements or reports other than the Remuneration Report will be put to Shareholders at the meeting.

Shareholders will be given a reasonable opportunity at the meeting to ask questions and make comments on the financial statements and the reports. The Company's auditor will be available to receive questions and comments from Shareholders about the preparation and content of the auditor's report and conduct of the audit.

3. Remuneration Report (Resolution 1)

The directors' report for the year ended 30 June 2013 contains the Remuneration Report, which sets out the policy for remuneration of the Directors, company secretary and senior managers.

The Corporations Act requires that a resolution be put to the vote that the Remuneration Report be adopted.

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Ex lanator Memorandum p y

The purpose of Resolution 1 is to lay before the Shareholders, the Remuneration Report so that Shareholders may ask questions about or make comments on the management of the Company in accordance with the requirements of the Corporations Act and vote on an advisory and non-binding resolution to adopt the Remuneration Report.

The Board will consider the outcome of the vote made by Shareholders on the Remuneration Report at the meeting when reviewing the Company’s remuneration policies.

The full Remuneration Report is included in the Annual Report which is available on the Company's website www.circadian.com.au.

The vote on the resolution for adoption of the Remuneration Report is advisory only and does not bind the Directors or the Company. However, under the Corporations Act, if at least 25% of the votes cast on the resolution at the AGM are against adoption of the Remuneration Report, then:

if comments are made on the Remuneration Report at the AGM, the Company's remuneration report for the financial year ending 30 June 2014 will be required to include an explanation of the Board's proposed action in response or, if no action is proposed, the Board's reasons for this; and
if, at the Company's 2014 annual general meeting, at least 25% of the votes cast on the resolution for adoption of the remuneration report for the relevant financial year are against its adoption, the Company will be required to put to Shareholders a resolution proposing that a general meeting ( Spill Meeting ) be called to consider the election of Directors ( Spill Resolution ). The Spill Meeting must be held within 90 days of the date of the 2014 annual general meeting. For any Spill Resolution to be passed, more than 50% of the votes cast on the resolution must be in favour of it. If a Spill Resolution is passed, all of the Directors (other than any managing director) will cease to hold office immediately before the end of the Spill Meeting unless re-elected at that meeting.

The Company encourages all Shareholders to cast their votes on Resolution 1.

The chair of the meeting will vote all undirected proxies in favour of this resolution. If you wish to vote “against” or “abstain” you should mark the relevant box in the attached proxy form.

The Remuneration Report forms part of the Annual Report which has unanimously been adopted by resolution of the Board.

4. Re-election of Mr Don Clarke as director (Resolution 2)

Introduction

Clause 58 of the Company's constitution requires that at each AGM one-third of the Directors (excluding the Managing Director) must retire from office, or if their number is not a multiple of three, then the number nearest to, but not exceeding one-third of the Directors must retire from office. Mr Don Clarke is the Director who has been longest in office and therefore will retire by rotation at the AGM and is eligible for re-election. Mr Don Clarke seeks re-appointment as a Director.

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Ex lanator Memorandum p y

Biography of Mr Don Clarke

Don Clarke was appointed a non-executive director of Circadian in September 2005. He is Chairman of the Remuneration Committee and a member of the Audit and Risk Committee. He has been a partner of the law firm Minter Ellison since 1988, having joined that firm in 1980. Mr Clarke has a broad commercial practice (involving predominantly ASX listed companies in the SME sector and larger private companies) and experience across a broad sector of industries. He is also a non-executive director of ASX listed companies Webjet Limited (appointed as a director in January 2008 and Deputy Chairman in April 2011) and Phosphagenics Limited, and a former director of Calzada Limited (formerly Metabolic Pharmaceuticals Limited).

5. How to Vote

To vote on the Resolutions to be put to the AGM follow these steps:

EITHER 1. Complete and return the proxy form so that it is received by Computershare Investor Services Pty Limited, at Yarra Falls, 452 Johnston Street, Abbotsford, Victoria, 3067 (hand delivery) or at GPO Box 242, Melbourne, Victoria, 3001 (postal delivery) or on facsimile number 1800 783 447 (within Australia) or +61 3 9473 2555 (outside Australia), as soon as possible and in any event, not later than 48 hours prior to the time appointed for the AGM.
OR 2. Attend the AGM.

The sending of a proxy form will not prevent you from attending and voting at the AGM.

6. Glossary

AGM means the annual general meeting of the Shareholders convened by the Notice of AGM to be held at Computershare Conference Centre, Yarra Falls, 452 Johnston Street, Abbotsford, Melbourne, Victoria on Friday, 29 November 2013 at 11.00 am.

ASX means ASX Limited ACN 008 624 691 or, as the context requires, the financial market operated by it.

Annual Report means the annual report of the Company for the year ended 30 June 2013.

Board means the Board of Directors.

Closely Related Party means, in relation to a member of a KMP, any of the following:

(a) a spouse, child or dependent of the member;
(b) a child or dependant of the member's spouse;
(c) anyone else who is one of the member's family and may be expected to influence, or be influenced by, the member in the member's dealings with the Company;
(d) a company the member controls; or
(e) a person prescribed by regulations (as at the date of this Notice of AGM, no additional persons have been prescribed by regulation).

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Ex lanator Memorandum p y

Company means Circadian Technologies Limited ACN 006 340 567.

Corporations Act means Corporations Act 2001 (Cth).

Directors means the directors of the Company and Director means any of them.

Glossary means this glossary.

KMP means those persons having authority and responsibility for planning, directing and controlling the activities of the Company, whether directly or indirectly. Members of key management personnel include its directors and certain senior executives.

Notice of AGM means this Notice of Annual General Meeting.

Resolution means a resolution set out in the Notice of AGM.

Share means a fully paid ordinary share of the Company.

Shareholder means a holder of at least one Share.

If you have any questions about the AGM, the Resolutions to be put to the AGM or the proposals being considered, please contact the Company Secretary on 03 9826 0399.

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Circadian Technologies Ltd

ABN 32 006 340 567

Lodge your vote:



By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

T 000001 000 CIR MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For Intermediary Online subscribers only (custodians) www.intermediaryonline.com

For all enquiries call:

(within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000

Proxy Form

 For your vote to be effective it must be received by 11.00am (AEDT) Wednesday, 27 November 2013

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and forward to the company by 5.00pm Friday 22 November 2013.

Turn over to complete the form 



View your securityholder information, 24 hours a day, 7 days a week:

www.investorcentre.com

Review your securityholding

Update your securityholding

Your secure access information is:

SRN/HIN: I9999999999

 PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

Samples/000001/000001/i

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ’ X ’) should advise your broker of any changes.



I 9999999999 I ND

Proxy Form

Please mark to indicate your directions

Appoint a Proxy to Vote on Your Behalf XX I/We being a member/s of Circadian Technologies Limited hereby appoint the Chairman  PLEASE NOTE: Leave this box blank if OR you have selected the Chairman of the of the Meeting Meeting. Do not insert your own name(s).

XX

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the Meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, and to the extent permitted by law, as the proxy sees fit) at the Annual General Meeting of Circadian Technologies Limited to be held at Computershare Conference Centre, Yarra Falls, 452 Johnston Street, Abbotsford Victoria on Friday, 29 November 2013 at 11.00am (AEDT) and at any adjournment or postponement of that Meeting.

Chairman authorised to exercise undirected proxies on remuneration related resolutions : Where I/we have appointed the Chairman of the Meeting as my/our proxy (or the Chairman becomes my/our proxy by default), I/we expressly authorise the Chairman to exercise my/our proxy on Item 2 (except where I/we have indicated a different voting intention below) even though Item 2 is connected directly or indirectly with the remuneration of a member of key management personnel, which includes the Chairman.

Important Note: If the Chairman of the Meeting is (or becomes) your proxy you can direct the Chairman to vote for or against or abstain from voting on Item 2 by marking the appropriate box in step 2 below.

Items of Business  PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

		r	ainst	stain
ORDINARY BUSINESS		Fo	Ag	Ab
Item 2	Adoption of the Remuneration Report
Item 3	Re-election of Mr Don Clarke as a director

The Chairman of the Meeting intends to vote all available proxies in favour of each item of business.

SIGN

Signature of Securityholder(s) This section must be completed.

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Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime / /
Name Telephone Date
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C I R

1 7 3 4 2 9 A

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2013 AnnuAl RepoRt

InsIde thIs report

2 Directors’ Report
2 Board of Directors
6 Overview of Operations
20 Management Team
22 Corporate Governance Statement
28 Financial Report
29 Auditor’s Independence Declaration
30 Consolidated Statement of Financial Position
31 Consolidated Statement of Profit or Loss and Other Comprehensive Income
32 Consolidated Statement of Changes in Equity
34 Consolidated Statement of Cash Flows
35 Notes to the Consolidated Financial Statements
88 Directors’ Declaration
89 Independent Auditor’s Report
91 ASX Additional Information 92 Corporate Information

“During the year, we were approached by leading breast cancer clinicians and key opinion leaders to explore the concept of using VGX-100 as a treatment for women with breast cancer treatment related lymphedema.

Emerging data indicates that VEGF-C may be up-regulated in women with breast cancer related lymphedema and involved in the pathophysiology of the condition. Thus, VGX-100 may have potential to become the first treatment for breast cancer related lymphedema.

Breast cancer related lymphedema is a major unmet clinical need with very limited treatment options … it is a disease with significant physical, functional and quality of life issues for affected patients.”

cASH AnD EXPEnDITUrE As of 30 June $ Million

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2011 2012 2013
9.4
8.4
7.2
5.5 5.6 5.5
2.7
2.1 2.0
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CASH USED IN OPERATING ACTIVITIES
R&D EXPENDITURE
ADMINISTRATIVE EXPENDITURE
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TOTAL OPErATInG cOSTS

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RESEARCH & DEVELOPMENT 68%
PATENTS 6%
ADMINISTRATIVE 24%
OTHER 02%
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MILESTONES

More than 35 patients have received weekly doses of VGX-100, ranging from 1 to 30 mg/kg, as part of our ongoing Phase I clinical trials in the United States.

PLANNING

We identified a major potential therapeutic application for VGX-100 as a treatment for breast cancer related lymphedema.

TECHNOLOGY

The US FDA designated our VEGF-D assay kit as a humanitarian use device (HUD) for “the detection of circulating VEGF-D intended to monitor patients who have been diagnosed with lymphangioleiomyomatosis (LAM) for disease progression and response to therapeutic intervention”.

LEADERSHIP

Our collaborators at Harvard University presented important new data identifying a major role for VGX-300 in treating age-related macular degeneration.

2013 circadian annual report 1

Directors’ Report

FOr THE YEAr EnDED 30 JUnE 2013

The Board of Directors of circadian Technologies Limited (circadian or company) submits its report for the year ended 30 June 2013 for circadian and its subsidiaries (the Group).

DIRECTORS

The names of the company’s Directors in office during the financial year and until the date of this report are as follows:

Dominique Fisher non-executive chairman

robert Klupacs Managing Director and chief Executive Officer Don clarke non-executive director Tina McMeckan non-executive director Errol Malta non-executive director (resigned 1 October 2012)

DIRECTORS wERE IN OffICE fOR THIS ENTIRE PERIOD uNLESS OTHERwISE STATED.

The qualifications, experience and special responsibilities of the company’s Directors are as follows:

Dominique FisheR, BA(hons), mAiCD NoN-ExEcutivE chAirMAN

Dominique Fisher was appointed a non-executive director of circadian in September 2005. She became chairman of the Board in the subsequent month and is a member of the company’s Audit and risk committee. She has extensive business experience in the corporate area, including the commercialisation of new technologies. Ms Fisher is Principal and Executive Director of Ec Strategies Pty Ltd, which advises local and offshore companies on technology strategies and major commercial transactions. She is Managing Director of Helix Digital Pty Ltd and is the Executive chairman of careerLounge Pty Ltd. Her past appointments have included a non-executive director of Pacific Brands Limited and membership of its Audit and risk committee, chairman of Sky Technologies Pty Ltd, councillor of the Australia council of the Arts, and chairman of its Dance Board, Insurance Australia Group Limited (IAG), member of the Prostate cancer Foundation Victoria, nrMA, the Malthouse Theatre, Sydney Opera House and member of the IcT Advisory Board, advising the Federal Government on key issues affecting the development of the information technology and communications sector.

2 2013 circadian annual report

RoBeRt KlupACs,

Bsc(hons), Grad Dip ip law, mAipA

MANAgiNg DirEctor AND chiEf ExEcutivE officEr

robert Klupacs joined circadian Technologies Limited as an Executive in August 2005 and was appointed as Managing Director of the company on 1 March 2008. He is also an executive director of all of the company’s wholly owned subsidiaries and chairman of subsidiary company Syngene Limited. Mr Klupacs is a registered Australian patent attorney and has been involved in the biotechnology industry for over 20 years. He has significant expertise in technology commercialisation and corporate structuring and has negotiated and closed a number of major licensing transactions with international pharmaceutical and biotechnology companies throughout his career. Prior to his position at circadian, Mr Klupacs was cEO of ES cell International Pte Ltd (ESI), a pioneering company in the development of human embryonic stem cell technologies based in Singapore. Prior to his role at ESI, he spent two and a half years running the Monash Institute of reproduction and Development (MIrD) in Melbourne as its chief Operating Officer, where he founded six start-up companies, and before that was employed for over 11 years by Zenyth Therapeutics Limited (formerly Amrad corporation Ltd), with the last four years in that company as a member of the executive team and Director of Intellectual Property. He is a member of the Victorian Government’s Biotechnology Advisory committee.

Don ClARKe, llB(hons) NoN-ExEcutivE DirEctor

Don clarke was appointed a non-executive director of circadian in September 2005. He is chairman of the remuneration committee and a member of the Audit and risk committee. He has been a partner of the law firm Minter Ellison since 1988, having joined that firm in 1980. Mr clarke has a broad commercial practice (involving predominantly ASX listed companies in the SME sector and larger private companies) and experience across a broad sector of industries. He is also a non-executive director of ASX listed companies, Webjet Limited (appointed as a director in January 2008 and Deputy chairman in April 2011) and Phosphagenics Limited, and a former director of calzada Limited (formerly Metabolic Pharmaceuticals Limited).

tinA mCmeCKAn, BlibArts&sc, mBA, FAiCD NoN-ExEcutivE DirEctor

Tina McMeckan was appointed a non-executive director of circadian in January 2008 and is chairman of the Audit and risk committee. Her specific skills are in the commercialisation of science and technology and the energy sector. Ms McMeckan is presently a Director of crc for Spatial Information, SP Ausnet Limited, Global carbon capture and Storage Institute and was the chairman of centre for Eye research Australia until november 2012 and a Director of Metlink Pty Ltd until April 2012. She is a past Member of the Funds Management committee of the AusIndustry research and Development Board and has held senior investment management positions with the Australian Industry Development corporation and Amrad corporation Ltd (acquired by cSL Limited) focusing on capital raisings for innovation-based ventures. She also has extensive board expertise in public and private utility infrastructure, including power production, networks and retailing business in the gas and electricity industries. She was formerly the chairman of nanoVentures Australia Ltd and a member of the national Board of norton rose law firm. Her other appointments as a director have included United Energy, Snowy Hydro Trading, the Westar and Kinetik Energy Group, Victorian Power Exchange, Vision cooperative research centre, Solaris Power and the formerly listed company Alinta Limited (October 2003 to August 2007).

eRRol mAltA, Bsc(hons) phD (pharmacology) NoN-ExEcutivE DirEctor (resigned 1 october 2012)

COMPANY SECRETARY

steven ZAmmit, BBus(Acc), post Grad Dip (Acc), mBus, (Banking & Fin), CpA

Steven Zammit was appointed as the company’s chief Financial Officer and company Secretary of circadian Technologies Limited on 25 February 2013, following the resignation of Susan Madden on 28 February 2013. Prior to holding this position, Mr Zammit was the chief Financial Officer of Oliver Hume real Estate Group and prior to that was the General commercial Manager and assistant company Secretary at Molopo Energy Limited. Prior to these roles Mr Zammit has held senior finance positions with ASX listed and US multinational companies and has over 25 years’ commercial experience. Mr Zammit is also the company Secretary for Syngene Limited, Vegenics Pty Ltd and all other circadian subsidiary companies.

2013 circadian annual report 3

DIRECTORS’ REPORT ContinueD

DIRECTORSHIPS Of OTHER LISTED COMPANIES

Directorships of other listed companies held by directors in the years immediately before the end of the financial year are as follows:

Name	company	Period of directorship
Ms D. Fisher	Pacifc Brands Limited	Mar 2007 to Oct 2010
Mr D. clarke	Webjet Limited	Since 2008
	Phosphagenics Limited	Since 2010
	calzada Limited	Apr 2007 to nov 2009
Ms T. McMeckan	SP Ausnet	Since 2010

DIRECTORS’ INTERESTS

At the date of this report, the interests of each director of the company in the contributed equity and conditional rights of the company are as follows:

as follows:
			Number of conditional
	Number of shares held directly	Number of shares held indirectly	rights over ordinaryshares
Dominique Fisher	-	167,500	-
robert Klupacs	480,453	-	520,000
Don clarke	-	80,000	-
Tina McMeckan	-	100,000	-

SHARE OPTIONS AND PERfORMANCE RIGHTS

unissued shares

As at balance date and the date of this report, details of circadian’s unissued ordinary shares, conditional rights or interests under option are as follows:

Unissued ordinary shares:

number of unissued ordinary shares

nil

During the year the following options expired and were not exercised:

issuing entity for all options		circadian	technologies Limited
class of shares	ordinary	ordinary	ordinary
number of shares under option	77,144	780,982	100,000
Exercise prices	$1.00	$1.00	$1.00
Vesting date^	26/6/2012	15/9/2011	15/12/2011
Expiry date	26/6/2013	15/9/2012	15/12/2012

^ These dates are the first exercise date if the options vest. The vesting dates are the dates when share price hurdles are met for the options granted, which are $1.25, $1.50 and $1.75 (see the remuneration report for further details). The offer price for the company’s shares at 30 June 2013 was $0.23.

no options were exercised during or since the end of the financial year.

Conditional rights:

Conditional rights:
issuing entity for all rights	circadian technologies Limited
class of shares	ordinary
number of conditional rights	1,510,000
Exercise price	nil
Vesting date^
Expiry date	31/3/2015

^ Under the terms of the conditional rights Scheme, the rights will vest if certain milestones are met. One of the key overriding conditions of the Scheme is that if the 10-day volume weighted average price (VWAP) is not less than $1.75 at any time, then 100% of the conditional rights will vest.

4 2013 circadian annual report

During and since the end of the financial year, no conditional rights were granted.

Directors and senior	Number of conditional	issuing entity	Number of ordinary shares under
management	rightsgranted		conditional right or option
Dominique Fisher	-	circadian Technologies Limited	-
robert Klupacs	-	circadian Technologies Limited	520,000
Don clarke	-	circadian Technologies Limited	-
Tina McMeckan	-	circadian Technologies Limited	-
Megan Baldwin	-	circadian Technologies Limited	200,000
richard chadwick	-	circadian Technologies Limited	180,000
Mike Gerometta	-	circadian Technologies Limited	160,000
Ian Leitch	-	circadian Technologies Limited	150,000
Sue Madden*	-	circadian Technologies Limited	-

*The 200,000 conditional rights issued to Susan Madden were cancelled on 28 February 2013.

refer to the section in this report headed remuneration report for details on the terms and conditions of the rights offered under the company’s conditional rights plan and options granted under the company’s option plan.

DIVIDENDS

no cash dividends have been paid, declared or recommended during or since the end of the financial year by the company.

PRINCIPAL ACTIVITIES Of THE CONSOLIDATED ENTITY

circadian Technologies Limited’s principal activity is to develop and commercialise therapies primarily for cancer as well as for other serious diseases, in particular eye disease. These development activities are based on the extensive intellectual property portfolio covering key targets (Vascular Endothelial Growth Factors c and D and r3) for the treatment of diseases associated with angiogenesis, which has been accumulated in circadian’s 100% owned unlisted subsidiary Vegenics Pty Ltd. The therapeutic applications for the VEGF technology, which functions in regulating blood supply (angiogenesis), are substantial and broad. As outlined in the Operations report, considerable progress has been made with bringing circadian’s therapeutic development products to clinical testing stage.

OPERATING AND fINANCIAL REVIEw

Results

Financial Performance

The results for the period predominantly reflect the Group’s investment in advancing its cancer and ocular treatment programs VGX-100, VGX-200 and VGX-300.

A summary of the results is as follows:

› The consolidated net loss of the Group for the year was $5,004,506 after an income tax benefit of $1,558,009 (2012: loss of $4,906,456 after an income tax benefit of $2,402,070).
› Direct r&D expenditure (excluding personnel costs) amounted to $3,436,660 (2012: $3,595,677). Including personnel costs and other r&D support costs which are recognised through the administrative cost centre, total expenditure in r&D amounted to $5,592,694 (2012: $5,128,559).
› royalty income of $622,701 (2012: $510,270).
› Patent costs of $459,999 (2012: $577,697).

commensurate with the Group’s strategy, the major expenditure of the company has been in relation to r&D, in particular costs associated with the Phase I clinical trial of VGX-100 in oncology and pre-clinical evaluation of VGX-300 in animal models for eye disease.

Financial Position

The circadian Group statement of financial position includes the following key balances:

› consolidated cash balances as at 30 June 2013 amounted to $11,003,941 (2012: $16,439,225).
› receivables at balance date of $2,324,016 include the circadian Group’s expected refund of r&D tax incentives for the year to June 2013 of $1,960,206 (2012: $1,392,581).
› Available for sale financial assets amount to $2,280,517 (2012: $3,651,785) at balance date.
› The Group has a net current asset surplus of $11,561,144 (2012: $16,044,381).
› At 30 June 2013 the circadian Group’s net Equity was $14,358,946 (2012: $20,196,855).
› The net tangible asset backing per share as at 30 June 2013 was $0.33 (2012: $0.41) whereas circadian’s share price was $0.23 (2012: $0.35).
› The Group retains interests in various listed investments; the largest of these is in Antisense Therapeutics Limited. The combined market value of these investments as at 30 June 2013 was $2,280,517 (2012: $3,651,785).

STRATEGIC REVIEw

Our strategy is to commercially develop our extensive intellectual property (IP) platform in respect of VEGF-c, VEGF-D and VEGFr-3 as therapeutic and diagnostic products in cancer and eye disease.

2013 circadian annual report 5

DIRECTORS’ REPORT ContinueD

In contrast to small molecule pharmaceuticals, therapeutic

antibodies and soluble receptor molecules have been shown to have at least two major advantages. They are much more specific than small molecules, enabling them to target specific pathways involved in disease, and secondly, have been shown to have much less toxicity as a class than traditional small molecules. Over the past 10 years, therapeutic antibodies and receptor molecules, such as Avastin[®] , Herceptin[®] , Erbitux Mabthera[®] , Lucentis[®] and EYLEA[®] have had a major impact in the treatment of cancer and eye disease.

The key components of the company’s strategy continue to be:

› advancing our drug-development pipeline to show clinically meaningful efficacy and safety in appropriately designed human clinical trials;
› building partnerships for the commercialisation and ongoing development of our therapeutic and diagnostic products; and
› selectively exploiting and commercialising other aspects of the portfolio, namely:
therapeutics outside the oncology and eye disease area; and
clinical diagnostics and reagents for potential early revenues.

circadian’s product pipeline comprises:

› drug-development programs, including two monoclonal antibody products (VGX-100 and IMc-3c5) and a soluble receptor (VGX-300), both targeting different mediators of the process of angiogenesis and lymphangiogenisis as treatments for cancer and eye disease;
› a diagnostic test for cancers of Unknown Primaries; and
› blood-based diagnostic tests for VEGF-c and VEGF-D as predictive and prognostic tests in LAM and cancer patients.

Significant events demonstrating the implementation of our strategy during the year in review include:

› restructuring of our oncology, ophthalmology and diagnostic & reagent programs into three 100% owned subsidiary companies – ceres Oncology Pty Ltd to develop VGX-100 as a therapeutic in cancer and related supportive care indications; Opthea Pty Ltd to develop VGX-300 as a therapeutic in eye diseases, particularly age-related macular degeneration (AMD); and Precision Diagnostics to develop our biomarker-based diagnostic tests for VEGF-c and VEGF-D, commercialise our cancers of Unknown Primary (cUP) diagnostic on a worldwide basis and to expand the marketing of our research reagents. This restructure provides improved flexibility for deal-making and capital raising for each of these separate activities;
› selection of VGX-100 (our human antibody targeting VEGF-c ) as one of the Top 10 Oncology Projects to Watch in 2013 by the influential Windhover conferences, a division of Elsevier Business Intelligence;
› publication of data at the European Organisation for research and Treatment of cancer (EOrTc-ncI-AAcr) annual conference in Dublin, Ireland, in november 2012, demonstrating that VGX-100 when combined with any of the three FDA-approved tyrosine kinase inhibitor molecules – Sutent[®] , nexavar[®] and Votrient[®] – was able to improve tumour growth reduction in mouse models of colorectal cancer;
› publication of data in collaboration with Schepens Eye research Institute at Harvard University, at the Association for research in Vision and Ophthalmology (ArVO) 2013 conference in Seattle, showing that circulating blood plasma levels of VEGF-c are markedly increased in AMD patients and that VGX-300, an inhibitor of VEGF-c, works comparably to the marketed agent EYLEA[®] in the laser-induced mouse model of “wet” AMD;
› excellent progress in the conduct of our Phase Ia and Ib clinical trials of VGX-100 in late-stage cancer patients when used either as a monotherapy or in combination with Avastin[®] . An interim update was published at the 49th Annual Meeting of the American Society of clinical Oncology (AScO) in chicago in June. Patient enrolment in these clinical studies is expected to be completed by Q3 2013;
› entering into two further research reagent partnerships with the leading international suppliers of research products – Santa cruz Biotechnologies and Bio-rad Laboratories;
› grant of a further US patent covering the use and development of diagnostics to VEGFr-3. This could have important implications for therapy monitoring in both the oncology and eye disease settings;
› the designation by the US FDA of our VEGF-D assay kit as a humanitarian use device (HUD), for “the detection of circulating VEGF-D intended to monitor patients who have been diagnosed with lymphangioleiomyomatosis (LAM) for disease progression and response to therapeutic intervention”; and
› launch of a range of unique VEGF-c and VEGF-D Vegenics branded products as research reagents for sale directly to the worldwide life science research community.

OVERVIEw Of OPERATIONS

During the year, we created two new 100% owned subsidiaries – ceres Oncology Pty Ltd and Opthea Pty Ltd – to enable the development of our oncology and ophthalmology applications, and increased our investment in our existing 100% owned subsidiary Precision Diagnostics Pty Ltd.

The creation of separate businesses, each focused on different therapeutic and development areas, with focused management dedicated to each entity supported by the circadian team, is designed to provide greater transparency to each development program and enable the inherent value in each program to be released. Additionally, we believe it will also enable further investment from therapeutic area focused investors.

We believe this approach will allow the respective parts of our business to be separately valued, which should manifest in an increased circadian share price.

6 2013 circadian annual report

It also allows us greater flexibility, as follows:

› dealing with specific assets without potentially degrading value in others;
› allowing shareholders to participate in each part of our business. For example, by allowing shareholders to invest in the new entity in private or listed form, or participate in royalty flows from a specific subsidiary; and
› allowing us to contract or expand resourcing into particular subsidiaries based on data, third party interest and state of capital markets.

ADVANCING OuR THERAPEuTIC PRODuCT PIPELINE

Advancement of the vGX-100 (veGF-C antibody) program for oncology and oncology supportive care

Ceres oncology pty ltd

We filed an InD with the FDA in September 2011 for our fully human monoclonal antibody, VGX-100, in oncology indications. This enabled us to commence Phase I clinical trials at two leading oncology centres in the United States – UcLA (Santa Monica, california) and MD Anderson cancer centre (Houston, Texas) – in patients with advanced or metastatic solid tumours in January 2012.

The first in human clinical investigations will enrol approximately 40 patients in two dose escalation arms evaluating VGX-100 monotherapy (Arm A) and the combination of VGX-100 with the FDA approved drug Avastin[®] (Arm B). The primary objective is to establish the safety profile and optimal biological dose of VGX-100 alone and when combined with Avastin[®] . Secondary objectives include determination of anti-tumour responses, biomarker activity and the pharmacokinetics of VGX-100.

Good progress was made during the year, with patient enrolment expected to complete by Q3 2013.

We presented an interim update of the Phase I clinical study at the 49th Annual Meeting of the American Society of clinical Oncology (AScO) in chicago in June.

We reported that single agent VGX-100 had been successfully administered in patients at increasing dose levels ranging from 1 to 20 mg/kg given weekly without any investigator reported Dose Limiting Toxicities (DLTs). Patient enrolment for the highest dose level cohort of single agent VGX-100 at weekly doses of 30 mg/kg is nearing completion.

In addition, we reported at AScO that VGX-100 at weekly doses of 2.5 mg/kg in combination with Avastin[®] given every 2 weeks at doses of 5 or 10 mg/kg completed accrual with only one reported protocol specified DLT in the lowest combination dose level.

Further combination dose escalation cohorts have since completed and, currently, patient enrolment for the highest dose cohort combination of VGX-100 at weekly doses of 20 mg/kg with Avastin[®] at 10 mg/kg given every 2 weeks is nearing completion.

To date, more than 35 patients have received weekly doses of VGX-100 ranging from 1 to 30 mg/kg. Interim analysis of tumour response data on the first 25 patients enrolled and receiving VGX-100 indicates that about one third of patients had a best response of stable disease, including some patients who are refractory to standard treatments, showing a durable response for greater than 15 weeks. Further detailed evaluation of VGX-100 alone or in combination with Avastin[®] is ongoing.

During the year, we were approached by leading breast cancer clinicians and key opinion leaders to explore the concept of using VGX-100 as a treatment for women with breast cancer treatment related lymphedema.

Emerging data indicates that VEGF-c may be up-regulated in women with breast cancer related lymphedema and involved in the pathophysiology of the condition. Thus, VGX-100 may have potential to become the first treatment for breast cancer related lymphedema.

Breast cancer related lymphedema is a major unmet clinical need with very limited treatment options estimated to cost the United States healthcare system US$1–2 billion per annum based on the need for continuous physical and compression therapy, and the impact of the disease on patients’ ability to work. It is a disease with significant physical, functional and quality of life issues for affected patients.

Breast cancer related lymphedema is the most common form of secondary lymphedema, occurring in breast cancer patients who undergo surgery, axillary lymph node dissection and/or radiotherapy. Data from the US national cancer Institute indicated that there were approximately 230,000 new cases of breast cancer in the United States in 2011. The reported incidence of secondary lymphedema in this population ranges from 13–65%, depending on the population studied, the surgical technique utilised, measurement criteria used and the reported length of follow-up.

ceres continues to undertake extensive analysis and clinical development planning for VGX-100. Based on the patient data emerging from the ongoing VGX-100 Phase Ia trial, ceres expects to initiate a Phase IIa proof of concept clinical trial of single agent VGX-100 in women with breast cancer related lymphedema at leading centres in the United States in Q1, 2014. Initial interim results are expected to be available within 6 to 9 months after the study start.

We also continue to evaluate VGX-100 in a range of pre-clinical cancer models. We published data at the European Organisation for research and Treatment of cancer (EOrTc-ncI-AAcr) annual conference in Dublin, Ireland, in november 2012, demonstrating that VGX-100 when combined with any of the three FDA approved tyrosine kinase inhibitor molecules – Sutent[®] , nexavar[®] and Votrient[®] – was able to demonstrate improved tumour growth reduction in mouse models of colorectal cancer.

This data further indicated that VGX-100 can act in combination with a range of anti-angiogenic approved drugs and therefore opens up possibilities for VGX-100 to be used in a range of new therapeutic combinations across a range of tumour types.

2013 circadian annual report 7

DIRECTORS’ REPORT ContinueD

A number of international pharmaceutical and biotechnology companies have expressed interest in the partnering of ongoing development of VGX-100 in oncology indications. These interactions were accelerated following the selection of VGX-100 as one of the Top 10 Oncology Projects to Watch in 2013 by the influential Windhover conferences, a division of Elsevier Business Intelligence. Discussions with these parties are continuing.

After consultation with retinal specialists throughout the world, we have identified that our technology, particularly VGX-300 (soluble VEGFr-3), has the potential to become an effective treatment for patients with age-related macular degeneration (AMD), particularly in those who do not exhibit visual gains with existing treatments that target VEGF-A such as Lucentis[®] or EYLEA[®] or Avastin[®] .

Advancement of the vGX-300 (soluble veGFR-3) program for eye disease

opthea pty ltd

AMD is a medical condition that usually results in a loss of vision in the centre of the visual field (the macula) because of damage to the retina. The macula is the central area of the retina, which provides the most detailed central vision. AMD occurs in “dry” and “wet” (or neovascular) forms and is a major cause of blindness and visual impairment in older adults (>50 years).

The wet form of advanced AMD (also known as neovascular or exudative AMD) causes vision loss due to abnormal blood vessel growth (choroidal neovascularisation) in the back of the eye, ultimately leading to blood and protein leakage below the macula. Bleeding, leaking and scarring from these blood vessels and sequelae eventually cause irreversible damage to the photoreceptors and rapid vision loss if left untreated.

VEGF-A has been shown to have a role in the proliferation of abnormal blood vessels in the retina of AMD patients. In a proportion of patients, anti-angiogenic agents that target VEGF-A can cause regression of the abnormal blood vessels and improve vision when injected directly into the vitreous humour of the eye. The injections must be repeated monthly or bi-monthly. Lucentis[®] and EYLEA[®] are agents that target VEGF-A and have been approved for treatment of wet AMD by the FDA and regulatory agencies in other countries.

At present, AMD is estimated to affect 1.75 million people in the United States, with approximately 200,000 new cases diagnosed each year. Despite the availability of Lucentis[®] and recently EYLEA[®] as anti-VEGF- A agents, there remains an unmet need for wet AMD treatments that can:

› treat anti-VEGF-A sub-responders (30–50% of all patients);
› prevent progression of wet AMD;
› reduce frequency of treatments; and
› reduce side-effects.

Published studies have indicated that VEGF-c may act as an alternative stimulus to VEGF-A for resistant patients.

We have been evaluating VGX-300 in industry accepted animal models of AMD with collaborators worldwide.

With one of our collaborators at Schepens Eye research Institute at Harvard University, we published data at the Association for research in Vision and Ophthalmology (ArVO) 2013 conference in Seattle, showing that circulating blood plasma levels of VEGF-c are markedly increased in AMD patients and that VGX-300, an inhibitor of VEGF-c, works comparably to the marketed agent EYLEA[®] in the laser-induced mouse model of wet AMD.

This data strongly implicates VEGF-c in the pathogenesis of wet AMD and confirms the potential of VGX-300 as a novel therapeutic for this disease either as a single agent or as an adjunct to existing agents targeting VEGF-A. We are continuing to evaluate VGX-300 in a range of animal models.

In parallel, we have commenced pre-clinical and manufacturing activities of VGX-300 to support an InD filing with the FDA to undertake clinical trials in AMD patients. Opthea aims to file this InD in the second half of 2014.

Given the significant impact of AMD in the world’s ageing population and the limited ability of existing therapies to improve vision in a significant number of treated patients, there has been very strong interest expressed in our VGX-300 program by major pharmaceutical companies.

While these companies have indicated a preference for human clinical data before committing to partnership, a number have identified the competitive risk of waiting and are exploring potential earlier partnering with us. These discussions are continuing.

licensed therapeutics

veGFR-3 therapeutic antibody (imC-3C5) – imClone, an eli lilly Company

In April 2011, circadian announced that our licensee, Imclone Systems, had commenced a Phase I clinical trial in cancer patients in the United States. IMc-3c5 is an antibody which neutralises VEGFr-3. The Phase I trial is designed to identify an appropriate, safe and tolerable dose level for future Phase II studies. The Phase I trial is expected to be completed in the second half of 2013.

Imclone has exclusive rights from Vegenics to develop the VEGFr-3 antibody in return for annual licence fees and royalties on potential future product sales.

DIAGNOSTICS AND REAGENTS

precision Diagnostics pty ltd

Cancer of unknown primary (Cup) origin diagnostic

In February 2009, we entered into a strategic partnership with Healthscope Limited, one of Australia’s largest healthcare providers, to commercialise a diagnostic technology for cUP. The technology was jointly developed through a research partnership between circadian, the Peter Maccallum cancer centre and nIcTA (national IcT Australia).

Under the terms of the agreement, Healthscope will fully fund the development, clinical validation and marketing of the cUP test throughout Australia, new Zealand, Singapore and Malaysia. As part of this partnership, circadian received an upfront fee and will earn development milestones and royalties on sales of the test.

8 2013 circadian annual report

cUP is generally less well known and publicised than other cancer types. However, it is actually more common than leukaemia and is the fourth most common cause of cancer deaths in Australia. cUP refers to a complex form of cancer in which the site of origin of a tumour cannot be identified using standard techniques. The inability to identify a primary site of cancer poses many challenges, given that the primary site of cancer usually dictates the treatment, expected outcome and overall survival.

Healthscope, in collaboration with circadian, Peter Maccallum cancer centre and nIcTA, has continued to invest considerable time and effort into the development of this product.

We have published that the cUP test is able to detect the primary tumour type in cUP patients with 93% accuracy and 98.5% specificity across 15 different tumour types.

The cUP test was launched by Healthscope under the brand name cUPGUIDE[TM] 2012, with a number of doctors and hospitals undertaking ongoing internal assessments as part of their annual procurement planning process. Sales are expected to commence from the second half of 2013 onward.

circadian retains all rights to the cUP test throughout the remainder of the world. We are currently working with our partners to generate further data to support filings for FDA registration and European cE marking in the next 12–18 months and in parallel seeking marketing partnerships for these territories.

veGF-D based lAm diagnostic

In February 2011, we announced a partnership with cincinnati children’s Hospital Medical centre to offer a VEGF-D based LAM diagnostic to patients in the United States as a laboratory test compliant with cAP (college of American Pathologists)/cLIA regulations.

This is the first blood-based diagnostic test for

lymphangioleiomyomatosis (LAM). The diagnostic was developed by cincinnati children’s Hospital Medical centre, using circadian’s VEGF-D technology, following the discovery that high levels of VEGF-D holds the key to detecting the disease. LAM is a serious lung disease that causes shortness of breath and lung collapse. It affects mostly women, often striking in their 30s or child-bearing years. It is estimated to affect between 1,000–3,000 women in the United States and 100–300 in Australia. VEGF-D circulating in the blood has been shown to be a unique biomarker of this disease.

Although only a small number of patients have been diagnosed with LAM to date, the recent discovery of a link between LAM and the genetic abnormality causing the disease, referred to as Tuberous Sclerosis complex (TSc), has led scientists to estimate that more than 250,000 women worldwide are unaware they have LAM. The availability of the test, and subsequent increasing knowledge of the disease amongst the general medical community, is predicted to increase screening for LAM in patients, with the number of tests estimated to exceed 25,000 per annum within the next few years.

Doctors in the United States are now ordering this test through the Translational Trials Development and Support Laboratory of cincinnati children’s Hospital Medical centre. While the test numbers remain small, they have grown over the financial year and we receive royalties on revenues received by cincinnati’s conduct of VEGF-D testing.

We expect continuing growth in test numbers as the use of the diagnostic becomes a routine procedure endorsed by increasing numbers of key opinion leaders and the continuing flow of scientific publications confirming the validity of VEGF-D as a biomarker in the clinical setting.

In addition, throughout the year a number of scientific publications implicated VEGF-D as a biomarker that could be used to monitor ongoing efficacy of a certain class of drugs known as mTOr inhibitors, and also implicated VEGF-D as a biomarker for certain types of autoimmune diseases. We have opened a series of collaborations with groups around the world to generate data to support the further use of VEGF-D diagnostics in these settings.

In late June, the US FDA designated our VEGF-D assay kit as a humanitarian use device (HUD) for “the detection of circulating VEGF-D intended to monitor patients who have been diagnosed with lymphangioleiomyomatosis (LAM) for disease progression and response to therapeutic intervention.”

Similar in concept to the FDA’s designation of orphan drug status to therapeutic drugs, an HUD is defined by the FDA as a medical device intended to benefit patients in the treatment or diagnosis of a disease or condition that affects or is manifested in fewer than 4,000 individuals in the United States per year. HUD designation enables formal approval of a HUD using a regulatory approval process known as a Humanitarian Device Exemption (HDE).

The HDE process greatly accelerates marketing approval in the United States compared to conventional routes (PMA and 510(k)) as formal clinical studies to show effectiveness in the approved indication are not required to be submitted. We are currently completing the development of kits to be manufactured under current Good Manufacturing Practice (cGMP) and plan to submit our HDE application later this year.

Research reagents

We have existing non-exclusive licensing relationships in place with a number of the world’s leading research reagent suppliers to provide VEGF-c/-D/-r3 related reagents. These relationships include r&D Systems Inc, Millipore-Merck, Perkin Elmer and reliatech GmbH. During the year, we entered into two additional relationships with leading players, Santa cruz Biotechnologies and Bio-rad Laboratories.

All of these relationships provide upfront payments as well as royalty on sales. royalty income from these relationships increased in the period.

In addition, during the year we launched a range of unique VEGF-c and VEGF-D Vegenics branded products for sale as research reagents directly to the worldwide life science research community. The first products launched were recombinant human VEGF-D and VEGF-c that have been developed as part of circadian’s ongoing therapeutic development programs. These products have improved and complementary properties compared to commercially available VEGF-c and VEGF-D research reagents and will expand the range of reagents currently available to investigators researching angiogenesis and lymphangiogenesis.

2013 circadian annual report 9

DIRECTORS’ REPORT ContinueD

Direct marketing of research reagents is an important part of our ongoing strategy to increase revenues into the company. Given the ever-increasing number of laboratories studying angiogenesis and lymphangiogenesis worldwide, and the need to provide investigators with highly specialised reagents, we anticipate that our research reagents will become an ongoing revenue source over the next few years.

In 2013/14, Precision Diagnostics is aiming to achieve product development and marketing partnerships for cUPGUIDE™ in the northern hemisphere; have expanded the number of entities distributing our licensed research reagents worldwide and to have developed appropriate data packages to seek registration of our VEGF-c and/or VEGF-D clinical diagnostic products in major territories.

syngene limited (51.7% owned)

Syngene is undertaking development of a unique peptide therapeutic technology originally developed by Dr Andrea robinson of Monash University’s Department of chemistry. Development of the technology has been supported by circadian since 2006. Syngene has also increased its spread of investments to include other ASX listed biotech companies.

As at June 30 2013, Syngene had cash assets of $139,248 and investments in ASX listed biotech companies worth $681,491.

Syngene is currently undertaking pre-clinical studies on modified forms of insulin and insulin analogues in collaboration with groups across Australia. Initial results have indicated that Syngene’s technology is capable of significantly improving the stability of insulin and long and short acting forms of insulin, without loss of activity in vitro or in vivo . results in industry-recognised large animal models of metabolic disease indicate that our modified insulins appear to have advantages over currently marketed forms. We are currently developing large-scale production processes to enable formal pre-clinical studies to be undertaken and designing the pathway for clinical development.

Over the next 12 months, Syngene is targeting the completion of at least one major development partnership for aspects of its modified peptide therapeutic platform.

COMPANY OuTLOOK NEXT 12 MONTHS

circadian believes that we have enormous value in our intellectual property and product development assets that have not been or are yet to be recognised by the markets.

We strongly believe that the achievement of the goals we have set out for each of the parts of our business, namely oncology, eye disease, diagnostics and reagents as well as the ongoing activities in Syngene, will drive shareholder value.

circadian has a solid balance sheet, as shown by approximately $11.0M in cash holdings as well as investments in other ASX listed biotechnology companies worth approximately $2.2M as of June 30 2013. These resources enable us to continue our efficient drug- and diagnostic-development activities.

We recognise, however, that – in order to negotiate properly valued partnership deals and/or to provide flexibility to continue to invest in our own development activities to maximise the value of our assets for shareholders – our balance sheet should always retain reasonable levels of cash to support our ongoing activities.

As such, in addition to ongoing strong expense management, we will seek during 2013/14 to supplement our cash reserves by any one, or a combination of, IP licensing, sale of part or all of our investments or sale of equity in the parent company and/or subsidiaries.

We are targeting the following key events for the next 12 months:

› completion of Phase Ia and Ib clinical trials with VGX-100 in cancer patients;
› commencement of a Phase II clinical trial with VGX-100 monotherapy as a treatment for breast cancer related lymphedema with interim results being available in the second half of 2014;
› the generation of proof of principal of efficacy of VGX-300 in animal models of age related macular degeneration (AMD);
› commencement of InD enabling studies with VGX-300 to support clinical development in AMD;
› filing of an InD for VGX-300 to enable clinical trials in AMD patients in the second half of 2014;
› filing of an FDA registration dossier and subsequent FDA approval for the use of VEGF-D kit to assist in the ongoing monitoring of therapy in patients with LAM;
› a product development and marketing partnership for cUPGUIDE™ in the northern hemisphere;
› the expansion of the number of licensed research reagent relationships with consequent increase in licence fees and royalty income;
› the expansion of our own marketed research reagents product catalogue and sales revenues;
› executing a partnering development agreement for VGX-100 or VGX-300 with reputable third parties; and
› supplementing our balance sheet by capital raising into the circadian parent company and/or our subsidiaries.

OuR TECHNOLOGY

veGF proteins

circadian’s technology is centred on two members of the Vascular Endothelial Growth Factor (VEGF) family of proteins, VEGF-c and VEGF-D, and their activation of the VEGF receptors. These proteins promote the key biological processes of blood vessel development (VEGFr-2) and lymphatic vessel development (VEGFr-3), known as angiogenesis and lymphangiogenesis, respectively.

10 2013 circadian annual report

Angiogenesis and lymphangiogenesis

The growth of tumours is known to depend on the formation of new blood vessels to carry nutrients and oxygen to the new tissue. Targeting the process of angiogenesis has been a major breakthrough in anti-cancer therapeutics – an approach that led to the commercialisation of multi-billion dollar drug Avastin[®] , a monoclonal antibody against VEGF-A. While Avastin[®] has been demonstrated to be effective in fighting cancer, clinical results indicate that its effect in inhibiting angiogenesis is only partial. Hence there is a need for auxiliary or improved anti-angiogenesis agents. In addition to regulating fluid levels in the body, the lymphatic system plays an important role in cancer progression. Lymph is filtered in the lymph nodes, trapping cancer cells that leave the site of a primary cancer. recent evidence suggests that new lymphatic vessels formed by certain tumours (for example, breast cancer) are a major means of spreading cancer to other sites in the body. Tumour spread is often the primary cause of cancer mortality, and inhibiting lymphangiogenesis may therefore represent a powerful approach to preventing cancer spread.

About veGF-C, veGF-D and veGFR-3

closely related to VEGF-A (the target of Avastin[®] ), proteins VEGF-c and VEGF-D bind to VEGF receptors promoting both angiogenesis and lymphangiogenesis. VEGFr-3 is a receptor protein embedded in the plasma membrane of the cells that form lymphatic capillaries. Studies by circadian’s scientists and its collaborators have shown that these proteins play an essential role in lymphatic and blood vessel development. These studies have led to a surge of interest in VEGF-c, VEGF-D and VEGFr-3 as potential new targets for anti-cancer therapy.

The applications for the VEGF technology are substantial and broad. circadian’s internal product development programs are primarily focused on developing VGX-100 (a human antibody against VEGF-c) as a treatment for lymphedema resulting from breast cancer treatment and solid tumours, in particular glioblastoma and colorectal cancer through its subsidiary ceres Oncology, as well as developing VGX-300 (soluble VEGFr-3) for “back of the eye” disease such as “wet” age-related macular degeneration through its subsidiary Opthea Pty Ltd. circadian has also licensed rights to some parts of its intellectual property portfolio for the development of other products to Imclone Systems, a wholly-owned subsidiary of Eli Lilly and company, including the anti-lymphatic antibody-based drug IMc-3c5 targeting VEGFr-3.

intellectual property

circadian owns the world’s most extensive IP portfolio related to VEGF-c, VEGF-D and VEGFr-3. These rights were originally licensed or assigned from a variety of parties, including the Ludwig Institute for cancer research Ltd, the University of Helsinki and Human Genome Sciences. circadian’s rights to develop biological inhibitors to these proteins are protected worldwide and some as far into the future as 2033.

INHERENT RISKS Of INVESTMENT IN BIOTECHNOLOGY COMPANIES

Some of the risks inherent in the development of a product to a marketable stage include the uncertainty of patent protection and proprietary rights, whether patent applications and issued patents will offer adequate protection to enable product development, the obtaining of the necessary drug regulatory authority approvals and difficulties caused by the rapid advancements in technology. Also, a particular compound may fail the clinical development process through lack of efficacy or safety. companies such as circadian are dependent on the success of their research and development projects and technology investments. Investment in research and development projects and technology-related companies cannot be assessed on the same fundamentals as trading and manufacturing enterprises. Thus investment in these areas must be regarded as speculative, taking into account these considerations.

This annual report may contain forward-looking statements regarding the potential of the Group’s projects and interests and the development and therapeutic potential of the Group’s research and development projects. Any statement describing a goal, expectation, intention or belief of the Group is a forward-looking statement and should be considered an at-risk statement. Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing and commercialising drugs that are safe and effective for use as human therapeutics and the financing of such activities.

There is no guarantee that the Group’s research and development projects and interests (where applicable) will be successful or receive regulatory approvals or prove to be commercially successful in the future.

Actual results of further research could differ from those projected or detailed in this report. As a result, you are cautioned not to rely on forward-looking statements. consideration should be given to these and other risks concerning the Group’s research and development program referred to in this annual report for the period ended 30 June 2013.

Review of operations

The Operating and Financial review report, which forms part of this Directors’ report, provides information regarding the consolidated entity’s key corporate activities and the progress achieved during the 30 June 2013 financial year.

SIGNIfICANT CHANGES IN THE STATE Of AffAIRS

Total equity attributable to the owners of the company reduced from $18,911,393 to $13,451,613, primarily as a result of ongoing operational expenditure as the Group progressed its research and development program.

SIGNIfICANT EVENTS AfTER BALANCE DATE

no matters or circumstances have arisen since the end of the reporting period, not otherwise disclosed in this report, that significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

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CORPORATE OBJECTIVES AND LIKELY DEVELOPMENTS

The Group’s objective is to develop therapeutic products primarily to treat cancer and other serious diseases based on its intellectual property relating to Vascular Endothelial Growth Factors (VEGF) c, D and r3.

Two clinical drug-development programs are underway in oncology. One of these candidates IMc-035, an antibody to VEGFr-3, is being developed and funded by licensee Imclone Systems Inc (100% owned subsidiary of Eli Lilly & co) and is currently in Phase I clinical studies in cancer patients. The other, VGX-100, an antibody to VEGF-c, is being developed internally by circadian and is also in Phase I clinical studies in cancer patients.

The commercialisation objective is to:

› secure development partnerships for one or more of the Group’s therapeutic programs;
› retain development of one selected therapeutic to proof of efficacy in humans and partner thereafter; and
› selectively exploit/commercialise other aspects of the portfolio, namely:
therapeutics outside the oncology area; and
clinical diagnostics and reagents for early revenues.

The IP property accumulated by the Group has applications not just in cancer, the primary therapeutic development focus, but also in a number of other areas such as eye disease.

The Group will continue to expand its IP property rights and product portfolio around the core area of cancer as well as in other disease areas.

The likely developments in the Group’s operations, to the extent that such matters can be commented upon, are covered in the Operating and Financial review report.

ENVIRONMENTAL REGuLATIONS

The Group is not subject to significant environmental regulations.

INDEMNIfICATION AND INSuRANCE

During the financial year ended 30 June 2013, the company indemnified its directors, the company secretary and executive officers in respect of any acts or omissions giving rise to a liability to another person (other than the company or a related party) unless the liability arose out of conduct involving a lack of good faith. In addition, the company indemnified the directors, the company secretary and executive officers against any liability incurred by them in their capacity as directors, company secretary or executive officers in successfully defending civil or criminal proceedings in relation to the company. no monetary restriction was placed on this indemnity.

amount of the premium. Accordingly, the company relies on section 300(9) of the Corporations Act 2001 to exempt it from the requirement to disclose the nature of the liability insured against and the premium amount of the relevant policy.

DIRECTORS’ MEETINGS

The number of meetings of directors and meetings of committees of the Board held during the year are set out below. Attendance by the directors at these meetings as relevant to each of them is as shown. Where a director did not attend all meetings of the Board or relevant committee, the number of meetings for which the director was eligible to attend is shown in brackets. It is the company’s practice to invite all directors to committee meetings irrespective of whether they are members.

	Directors’		Meetings
	meetings		of committees
		Audit and risk	remuneration	PDrc
number of
meetings held:	9	3	1	-
number of
meetings attended:
Dominique Fisher robert Klupacs	9 9	3 3	1 -	- -
Don clarke	9	3	1	-
Tina McMeckan Errol Malta	9 4	3 -	1 -	- -

COMMITTEE MEMBERSHIP

During the year, the company had an Audit and risk committee and a remuneration committee. The Product Development review committee (PDrc) did not meet during 2013 and has ceased.

Members acting on the committees of the Board during the year were:

	were:
	Audit and risk	remuneration
	T. McMeckan	D. clarke
	(chairman)	(chairman)
	D. Fisher D. clarke	D. Fisher E. Malta1
	1 Eric Malta resigned effective 1 October 2012.

AuDITOR INDEPENDENCE

The directors have obtained a declaration of independence from Deloitte Touche Tohmatsu, the Group’s auditors, which is contained in the financial report.

NON-AuDIT SERVICES

The company has insured its directors, the company secretary and executive officers for the financial year ended 30 June 2013. Under the company’s Directors’ and Officers’ Liabilities Insurance Policy, the company shall not release to any third party or otherwise publish details of the nature of the liabilities insured by the policy or the

Taxation advice was also provided by the entity’s auditor, Deloitte Touche Tohmatsu.

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PROCEEDINGS ON BEHALf Of THE COMPANY

There were no persons applying for leave under section 237 of the Corporations Act 2001 to bring, or intervene in, proceedings on behalf of the company.

REMuNERATION REPORT (AuDITED)

This remuneration report forms part of the Directors’ report and has been prepared in accordance with section 300A of the Corporations Act 2001 for the company and the consolidated entity for the year ended 30 June 2013.

This report provides a summary of the remuneration policies and practices adopted by circadian during the 2013 financial year for directors and key management personnel as defined by the Accounting Standards AASB124: Related Party Disclosures . Key management personnel includes persons having authority and responsibility for planning, directing and controlling the major activities of the company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes all the executives in the parent and the Group.

Details of key management personnel

The details of key management personnel of the company and the Group are provided below:

(i) Directors

Dominique Fisher chairman (non-executive) robert Klupacs Managing Director and chief Executive Officer Don clarke Director (non-executive) Tina McMeckan Director (non-executive) Errol Malta Director (non-executive) (resigned 1 October 2012)

(ii) Executives

Megan Baldwin Head of Pre-clinical Development/ cEO Opthea Pty Ltd richard chadwick Head of Intellectual Property Mike Gerometta Head of cMc Development Ian Leitch Director – clinical research Steven Zammit cFO and company Secretary (commenced 25 February, 2013)

Except as noted, the above-named persons held their current position for the whole of the financial year and since the end of the financial year.

Diversity

In April 2011, the company established a Diversity Policy in accordance with recommendation 3.2 of the ASX corporate Governance Principles and recommendations. As part of that policy, the remuneration committee has the responsibility to, at least annually, report on the relative proportion of women and men in the workforce at all levels of the company.

As at 30 June 2013, women comprise 50% of our workforce, 29% of our senior management positions and 50% of the non-executive positions on our Board.

The Board considers that these figures represent a sound level of diversity within the organisation and aims to at least maintain these levels. Appointments will continue to be based on merit as the circadian Board aims to attract and maintain a team that has an appropriate and diverse mix of skills, experience and expertise.

Remuneration Committee

The remuneration committee assesses the appropriateness of the nature and amount of compensation of key management personnel on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum shareholder benefit from the retention of a high-quality Board and executive team.

Remuneration policy

The remuneration of key management personnel is designed to enable the Group to attract, motivate and retain non-executive officers and executive officers who will create value for shareholders and to fairly and responsibly remunerate them, having regard to their performance, the performance of the Group and the general pay environment.

To this end, the Group has adopted the following principles in its remuneration framework: provide competitive rewards to attract high-calibre executives; link executive rewards to shareholder value; and establish appropriate, demanding performance hurdles for variable executive remuneration.

Remuneration structure

In accordance with best practice corporate governance, the structure of non-executive director and executive compensation is separate and distinct.

non-executive director remuneration

Objective

The Board seeks to set aggregate remuneration at a level that provides the company with the ability to attract and retain directors of the highest calibre, while incurring a cost that is acceptable to shareholders.

structure and performance

The company’s constitution and the ASX Listing rules specify that the aggregate compensation of non-executive directors will be determined from time to time by a general meeting. An amount (not exceeding the amount approved at the General Meeting) is determined by the Board and then divided between the nonexecutive directors as agreed. The latest determination was at the Annual General Meeting on 6 October 2005 when shareholders approved the aggregate maximum sum to be paid or provided

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DIRECTORS’ REPORT ContinueD

as compensation to the non-executive directors as a whole (therefore excluding the Managing Director and any executive director) for their services as $500,000 per annum. currently, non-executive directors are compensated to an aggregate of $237,902 per annum (2012: $308,846), which is inclusive of superannuation. The 2013 director fees are below 50% of the aggregate maximum sum approved by shareholders.

The manner in which the aggregate compensation is apportioned amongst non-executive directors is reviewed periodically.

Each director receives a fee for being a director of the company (currently ranging between $46,000 to $75,000 per annum) and an additional annual fee of $5,000 per committee is also paid for each Board committee on which a director sits. The chairman Ms Fisher is not paid a fee for her position on the remuneration committee. The payment of additional fees for serving on a committee recognises the additional time commitment required by directors who serve on one or more sub committees.

non-executive directors were not compensated by way of issue of securities in the company during the year ended 30 June 2013. It is at a director’s discretion as to whether they will purchase shares in the company, on market, during the appropriate trading windows available throughout the year. The holdings of the directors are disclosed under the Directors’ Interests section of the Directors’ report.

The Board is responsible for reviewing its own performance. Board performance is monitored on an informal basis throughout the year with the objective of annual formal performance evaluation (although this may occur every 12 to 20 months). The performance evaluation of the non-executive directors is aligned with their responsibilities under the Board charter and includes areas such as: board structure, board role and responsibilities, strategy and planning, monitoring of company performance and Board culture and relationships (amongst each director and with management). The compensation of non-executive directors for the years ended 30 June 2013 and 30 June 2012 are detailed in Table 1 of this report.

executive remuneration

Objective

The company aims to fairly and responsibly remunerate executives with a level and mix of remuneration commensurate with their position and responsibilities within the company and so as to:

› reward executives for company performance;
› link reward with the strategic goals of the company;
› align the interest of executives with those of shareholders; and
› ensure total compensation is competitive by market standards.

Structure and performance

In determining the level and make-up of executive remuneration, the remuneration committee engages external consultants as needed to provide independent advice and/or may also perform its own market research by accessing relevant remuneration reports prepared by third parties. no external consultants were engaged in the current or previous financial year.

compensation consists of the following key elements, the relative proportions of which are market based (note that short-term incentives were introduced for the first time during the 30 June 2007 financial year):

› fixed remuneration (base salary and superannuation); and
› variable remuneration:
short-term incentive (STI); and
long-term incentive (LTI)

The non-executive directors are responsible for evaluating the performance of the Managing Director and of the other management. The Managing Director also evaluates the performance of the other management. The performance evaluation of the management involves an assessment of the company’s business performance, whether short-term operational targets and individual performance objectives are being achieved and whether long-term strategic objectives are being achieved. Specific and measurable qualitative and quantitative performance criteria are used. Due to the nature of the company’s activities and the stage that it is at with respect to these activities, profitability is not a performance measure for STIs, although effective management of the company’s resources in achieving value for shareholders is expected. LTIs are linked to share price appreciation and KPIs for STIs are linked to activities/milestones that are expected to create value for shareholders.

The performance of the Managing Director and the other management is monitored on an informal basis throughout the year, with the objective of performing a formal evaluation once a year. The last remuneration committee that included a review of remuneration structure for the management was held in May 2013. The key performance indicators for the financial year ending 30 June 2014 are expected to be approved by early September.

Table 1 of this report sets out the remuneration of key management personnel (KMP) of the company for the years ended 30 June 2013 and 30 June 2012, showing the proportion of fixed remuneration and variable remuneration.

The remuneration committee determined not to grant any STI or LTI to any of the KMP.

Fixed remuneration

Objective

The level of fixed compensation is set so as to provide a base level of compensation that is both appropriate to the position and is competitive in the market. As noted above, the remuneration committee has access to external advice independent of management.

Structure

KMP fixed compensation comprises salary and superannuation and is reviewed every 12 months by the remuneration committee.

14 2013 circadian annual report

variable remuneration – short-term incentive (sti)

Objective

The objective of the STI program is to link the achievement of the Group’s operational targets with the remuneration received by the executives charged with meeting those targets. The total potential STI available is set at a level so as to provide sufficient incentive to the executive to achieve the operational targets and such that the cost to the Group is reasonable in the circumstances.

Structure

Actual STI payments in the form of cash bonuses to KMP depends on the extent to which specific targets set at the beginning of the financial year (or shortly thereafter) are met. The targets consist of a number of key performance indicators (KPIs) covering corporate objectives and individual measures of performance. Individual KPIs are linked to the company’s strategy and drug-development annual business plan.

On an annual basis, after consideration of performance against KPIs, the remuneration committee, in line with its responsibilities, determines the amount, if any, of the STI to be paid to KMP. This process occurs within one month after the relevant financial year end.

The maximum annual STI bonus available for KMP is subject to the approval of the remuneration committee. Payments of the STI bonus are made in the following reporting period.

The maximum annual STI bonus available for each other member of management is determined by the Managing Director.

sti bonus for the 2013 financial year

The remuneration committee considered the STI payment for the 2013 financial year within the first two months after the end of that year. The remuneration committee has determined there will be no STI bonus for the 2013 financial year.

variable remuneration – long-term incentive (lti)

In valuing transactions settled by way of issue of options or conditional rights, no account is taken of any performance conditions, other than market conditions linked to the price of the shares of circadian Technologies Limited. All options and conditional rights issued have market performance conditions so as to align shareholder return and reward for the company’s KMP.

Hedging of unvested options

The company prohibits executives from entering into arrangements to protect the value of unvested options. The prohibition includes entering into contracts to hedge their exposure to options awarded as part of their remuneration package.

The company has ensured adherence to this policy by requesting each KMP to sign a declaration of compliance with the hedging policy.

Options issued in financial years 2007 to 2009

In January 2007, a circadian Senior Management Option Plan (Option Plan) was implemented to offer options that are subject to performance hurdles. The options issued to employees (including KMP) in 2007, 2008 and 2009 pursuant to this Option Plan were divided equally into three tranches.

The number of options in each tranche will vest on the satisfaction of the following performance conditions during the relevant option period (2007 options within five years of the grant date; 2008 and 2009 options within approximately four years of grant date) (Performance Hurdles). The 2007 options issued have an exercise price of $1.50; the 2008 options issued have an exercise price of $1.30 and the 2009 options issued have an exercise price of $1.00 (Exercise Price).

› Tranche 1 – a market price for a circadian share (Share Price) achieves not less than 125% of the Exercise Price;
› Tranche 2 – the Share Price achieves not less than 150% of the Exercise Price; and
› Tranche 3 – the Share Price achieves not less than 175% of the Exercise Price.

Objective

The objective of the LTI plan is to reward KMP in a manner that aligns this element of compensation with the creation of shareholder wealth.

As such, LTI grants are made to KMP who are able to influence the generation of shareholder wealth and thus have a direct impact on the company’s performance against the relevant long-term performance hurdle.

Structure

LTI grants to KMP are delivered in the form of options and conditional rights.

The remuneration committee has determined there will be no LTI grants to (KMP) for the 2013 financial year.

The Share Price is to be calculated as the volume weighted average share price of circadian shares traded on the ASX over a consecutive 15-day trading period.

The options issued in the 2008 financial year were to robert Klupacs, pursuant to an Executive contract dated 20 December 2007. These options expired in February 2012.

Vested options may only be exercised at any time in the last 12 months of the relevant option period.

The Exercise Price is subject to any adjustment that is required under the ASX Listing rules as a consequence of a capital reorganisation or a pro-rata rights issue of shares that occurs after the grant of the options but prior to the exercise of the options.

The Board has residual discretion to accelerate vesting (i.e. reduce or waive the Performance Hurdles) and exercise of options in the event of a takeover or merger or any other circumstance in accordance with the terms of the Option Plan.

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DIRECTORS’ REPORT ContinueD

Options in relation to which performance conditions have not been satisfied (i.e. that do not vest) will lapse and will not be able to be exercised, except in circumstances as described below.

Options which have not vested will lapse where an option holder ceases employment with circadian other than on retirement, redundancy, death or total and permanent disablement, or unless as otherwise determined by the Board in its absolute discretion.

Where an option holder has ceased employment with circadian as a result of resignation, retirement, redundancy, death or total and permanent disablement prior to the end of a performance period but not before the first anniversary of grant date, options (whether vested or not) may be retained by the option holder on a pro-rata basis (the pro-rata being calculated over the period from grant date).

As at 30 June 2013, all options issued in 2007, 2008 and 2009 pursuant to the Option Plan have expired. This Option Plan has now been replaced by the Employee conditional rights Scheme below.

conditional rights issued in financial year 2011

In november 2010, at the Annual General Meeting, the shareholders of circadian approved the implementation of the Employee conditional rights Scheme. The purposes of the Scheme and the issue of rights are to provide a long-term incentive to circadian staff as part of a focus on transforming remuneration to link to the achievement of performance benchmarks, encourage direct involvement and interest in the performance of the company, and enable the acquisition of a long-term equity interest by its staff.

In March 2011, circadian issued 1,560,000 conditional rights to shares that were taken up by employees. The company issued a further 150,000 conditional rights in May 2012. For each conditional right, an employee is entitled to require that circadian issues one free share to them, subject to the achievement of certain milestones, as described in the notice of meeting issued to shareholders on 11 October 2010. The exercise of the rights is conditional on the Group achieving the following milestones:

› Milestone 1 – 33% of the rights will vest if either of the following occurs within 18 months:
the share price based on a 10-day Volume Weighted Average Price (VWAP) at any time exceeds $1.50 within 90 days of the date of the offer, which is 4 March 2011;
completion of necessary studies to have enabled the VGX-200 or VGX-300 series of molecules to be designated “formal drug development candidates”;
identification of a putative biomarker/clinical profile to enable patient selection into Phase II clinical trials; or
annualised sales royalty income exceeds $5 million.
› Milestone 3 – 100% of the rights will vest if any three of the following occurs within 48 months:
if the Board determines that a material commercial licensing, joint venture, partnering or similar agreement is entered into and completed;
the share price based on a 10-day Volume Weighted Average Price (VWAP) at any time exceeds $1.75 within 90 days of the date of the offer, which is 4 March 2011;
completion of necessary studies to have enabled the VGX-200 or VGX-300 series of molecules to be designated “formal drug development candidates”;
identification of a putative biomarker/clinical profile to enable patient selection into Phase II clinical trials; or
annualised sales royalty income exceeds $7.5 million.

notwithstanding the vesting timetable above, 100% of the conditional rights will crystallise and be able to be exercised if:

› the 10-day Volume Weighted Average Price (VWAP) of the shares is not less than $1.75 at any time;
› in the event of a sale, merger or takeover or other similar event as determined by the Board, provided that the sale, merger or takeover effective offer price per share as determined by the Board exceeds:
$1.30 per share, if within 12 months of 4 March 2011;
$1.50 per share if within 24 months of 4 March 2011;
if the Board determines that a material commercial licensing, joint venture, partnering or similar agreement is entered into and completed; or
$1.75 per share if within 36 months of 4 March 2011; or
$2.00 per share if within 48 months of 4 March 2011.
annualised royalty income exceeds $2 million.
› Milestone 2 – 67% of the rights will vest if any three of the following occurs within 36 months:
if the Board determines that a material commercial licensing, joint venture, partnering or similar agreement is entered into and completed;

16 2013 circadian annual report

The conditional rights that have been issued have an expiry date of 31 March 2015. conditional rights in relation to which performance conditions have not been satisfied (i.e. that do not vest) will lapse and will not be able to be exercised.

Further information regarding the conditional rights Scheme can be obtained from Table 2 of the remuneration report and note 26(b) of the financial statements.

shareholder returns/value

The following is a summary of the consolidated entity’s earnings and shareholder returns/value for the current year and in the previous four financial years:

fnancial years:
	2013	2012	2011	2010	2009
	$	$	$	$	$
revenue	1,153,687	1,485,832	1,834,467	2,251,462	3,030,335
Loss before tax	(6,562,515)	(7,308,526)	(11,043,282)	(6,838,738)	(9,875,803)
Loss after tax	(5,004,506)	(4,906,456)	(10,265,346)	(6,948,240)	(9,921,670)
	2013	2012	2011	2010	2009
	$	$	$	$	$
Basic (loss)/earnings per share	(0.10)	(0.10)	(0.22)	(0.15)	(0.22)
capital return per share	-	-	-	-	-
Dividends per share	-	-	-	-	-
nTA backing per share @ 30 June	0.33	0.41	0.47	0.70	0.86
circadian share price @ 30 June	0.23	0.35	0.58	0.52	0.73

Due to the nature of the Group’s activities (being in the biotechnology industry) as described under Principal Activities, results year to year do fluctuate. The factors contributing to this year’s and last year’s financial results are described under Operating and Financial review of this report.

employment contracts

Mr robert Klupacs, who was appointed Managing Director effective 1 March 2008, is employed under an ongoing contract. The current employment contract commenced on 1 December 2007. Under the terms of the present contract (including any subsequent Board approvals relating to fixed remuneration):

› Mr Klupacs receives fixed remuneration of $397,572 per annum.
› Mr Klupacs may resign from his position and thus terminate this contract by giving three months’ notice.

On resignation, any unvested LTI options or conditional rights will be forfeited.

› The company may terminate this employment agreement by providing:
six months’ notice; or
payment in lieu of the notice period (as detailed above) based on the fixed component of Mr Klupacs’ remuneration and a pro-rata of that part of the annual STI (if any) that is payable in cash at the time of termination. As stated earlier in this report, STIs are payable on the achievement of KPIs.

On termination notice by the company, any LTI options that have vested or that will vest during the notice period will be released. LTI options that have not yet vested will be forfeited.

The company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs, Mr Klupacs is only entitled to that portion of remuneration

that is fixed, and only up to the date of termination. On termination with cause, any unvested options will immediately be forfeited.

Mr Klupacs was also granted 500,000 options under the terms of the initial contract and as part of his ongoing remuneration, 500,000 LTI options were granted in February 2008. refer to “Options issued in financial years 2007 to 2009” above, for terms and conditions of the options granted. These options have now since lapsed. At the Annual General Meeting held on 11 november 2010, the shareholders gave approval for the grant of 520,000 conditional rights to Mr Klupacs under the company’s Employee conditional rights Scheme, resolved to be granted by the Board in October 2010 and, upon exercise of those conditional rights, the acquisition of 520,000 ordinary shares underlying those rights, in accordance with the terms of the scheme. refer to “conditional rights issued in financial year 2011” for terms and conditions of the rights granted.

All executives have ongoing contracts. The company may terminate the executive’s employment agreement by providing written notice or providing payment in lieu of the notice period (based on the fixed component of the executive’s remuneration). The notice period is determined by the employment agreement for each executive. On termination on notice by the company, any LTI options that have vested or that will vest during the notice period will be released. LTI options that have not yet vested will be forfeited. The company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs, the executive is only entitled to that portion of remuneration that is fixed and only up to the date of termination. On termination with cause, any unvested options or conditional rights will immediately be forfeited.

2013 circadian annual report 17

DIRECTORS’ REPORT ContinueD

table 1: Remuneration of key management personnel for the year ended 30 June 2013 (Consolidated)

		Short	Term	Employment	Term	Benefts	Benefts	Payment	Payment		Performance
											Related
								Op	ons/
		Salary &	Cash	Super-	Long Service	Termina	on	Condi	onal
		Fees	Bonus	annua on	Leave	Pay		Rights
		$	$	$	$	$		$		$	%
Non-Execu ve Directors:
D Fisher	2013	80,004	-	7,200	-	-			-	87,204	-
	2012	80,004	-	7,200	-	-			-	87,204	-
D Clarke	2013	56,004	-	5,040	-	-			-	61,044	-
	2012	56,004	-	5,040	-	-			-	61,044	-
T McMeckan	2013	51,000	-	4,590	-	-			-	55,590	-
	2012	51,000	-	4,590	-	-			-	55,590	-
E Malta (1)	2013	31,251	-	2,813	-	-			-	34,064	-
	2012	80,004	-	7,200	-	-			-	87,204	-
C Montagner (2)	2013	-	-	-	-	-			-	-	-
	2012	16,334	-	1,470	-	-			-	17,804	-
Sub-total
Non-Execu ve	2013	218,259	-	19,643	-	-			-	237,902	-
Directors	2012	283,346	-	25,500	-	-			-	308,846	-
Execu ve Directors:
R Klupacs	2013	397,572	-	35,781	-	-		26,013		459,366	5.66%
	2012	397,572	84,484	43,385	-	-			7,697	533,138	17.29%
Other Key Management
Personnel:
I Leitch	2013	181,896	-	16,371	-	-			4,720	202,987	2.33%
	2012	146,540	22,313	14,366	-	-			3,517	186,736	13.83%
M Baldwin	2013	241,969	-	20,946	-	-		12,373		275,288	4.49%
	2012	185,304	30,639	19,435	-	-			7,420	242,798	15.68%
M Gorme a	2013	182,232	-	16,401	-	-			9,838	208,471	4.72%
	2012	175,224	26,339	18,141	-	-			4,698	224,402	13.83%
M Sullivan (3)	2013	-	-	-	-	-			-	-	-
	2012	189,363	-	-	-	-			-	189,363	-
R Chadwick	2013	167,966	-	15,117	-	-		11,143		194,226	5.74%
	2012	199,513	17,707	19,550	-	-			6,258	243,028	9.86%
S Madden (4)	2013	121,264	-	10,914	-	-			-	132,178	0.00%
	2012	170,003	26,005	17,641	-	-			3,662	217,311	13.65%
S Zammit (5)	2013	62,769	-	5,649	-	-			-	68,418	-
	2012	-	-	-	-	-			-	-	-
Sub-total	2013	1,355,668	-	121,179	-	-		64,087		1,540,934
Execu ve KMP	2012	1,463,519	207,487	132,518	-	-		33,252		1,836,776
Totals	2013	1,573,927	-	140,822	-	-		64,087		1,778,836
	2012	1,746,865	207,487	158,018	-	-		33,252		2,145,622

18 2013 circadian annual report

table 1: Remuneration for the year ended 30 June 2013 (Consolidated) (continued)

E. Malta resigned on 1 October, 2012.
c. Montagner resigned from the board effective 14 October 2011.
M. Sullivan resigned on 15 December, 2012.
S. Madden resigned on 28 February, 2013.
S. Zammit was appointed chief Financial Officer and company Secretary on 25 February, 2013.

For the year ended 2012 of the $207,487 paid for bonuses the amount of $50,722 was cash sacrificed by the Executives and Key Management Personal and was paid via the issue of ordinary shares in the company.

no options have been exercised by the executive directors and other executives in the last eight years.

As at 30 June 2013, no options had vested or were exercised during the year as all options were “out-of-the-money” (exercise prices range between $1.00 and $1.50 whereas the company’s share price at 30 June 2013 was 23 cents).

The value of the options and conditional rights attributed to compensation of certain key management personnel for the current financial year represent the expensing of options and conditional rights that were granted in the 2007, 2008, 2009, 2011 and 2012 financial years, and has been determined by allocating the fair value of the options and conditional rights equally over their respective vesting periods.

refer to note 26 of the financial report for details on the valuation of options and conditional rights.

table 2: share base payment arrangements in existence during the year (Consolidated)

			grant date
conditional right series	grant date	Expirydate	fair value	vestingdate
1. Issued 22/3/2011	7/3/2011	31/3/2015	$0.25	Vest at date of grant
2. Issued 22/3/2011	8/3/2011	31/3/2015	$0.20	Vest at date of grant
3. Issued 22/3/2011	8/3/2011	31/3/2015	$0.25	Vest at date of grant
4. Issued 22/3/2011	17/3/2011	31/3/2015	$0.25	Vest at date of grant
5. Issued 22/3/2011	18/3/2011	31/3/2015	$0.25	Vest at date of grant
6. Issued 22/3/2011	2/10/2011	31/3/2015	$0.11	Vest at date of grant

table 3: Compensation conditional rights: Granted and vested during the year (Consolidated)

		granted					vested
		during year		terms and conditions for eachgrant			during year
				fair value per
				conditional	Exercise price
			grant	right at grant	per conditional	Expiry
		No.	date	date (note 26)	right (note 26)	date	No.
Executives
I. Leitch	2013	-	-	-	-	-	-
	2012	150,000	2/10/2011	$0.11	$0.00	31/3/2015	-
Total options	2013	-	-	-	-	-	-
	2012	150,000	2/10/2011	$0.11	$0.00	31/3/2015	-

refer to note 26 of the financial statements for further details of the share-based payment plans. There were no options or conditional rights granted or shares issued to key management personnel since the end of the financial year.

This report has been signed in accordance with a resolution of the Directors made pursuant to S.298 (2) of the Corporations Act 2001 on 26 August 2013.

For and on behalf of the Board:

==> picture [97 x 35] intentionally omitted <==

robert Klupacs Director Melbourne 26 August 2013

==> picture [129 x 50] intentionally omitted <==

Dominique Fisher Director

2013 circadian annual report 19

RoBeRt KlupACs, Bsc(hons), Grad Dip ip law, mAipA MANAgiNg DirEctor AND chiEf ExEcutivE officEr

robert Klupacs joined circadian Technologies Limited as an executive in August 2005 and was appointed as Managing Director of the company on 1 March 2008. He is also an executive director of all of the company’s wholly owned subsidiaries and chairman of subsidiary company Syngene Limited. Mr Klupacs is a registered Australian patent attorney and has been involved in the biotechnology industry for over 20 years. He has significant expertise in technology commercialisation and corporate structuring and has negotiated and closed a number of major licensing transactions with international pharmaceutical and biotechnology companies throughout his career. Prior to his position at circadian, Mr Klupacs was cEO of ES cell International Pte Ltd (ESI), a pioneering company in the development of human embryonic stem cell technologies based in Singapore. Prior to his role at ESI, he spent two and a half years running the Monash Institute of reproduction and Development (MIrD) in Melbourne as its chief Operating Officer, where he founded six start-up companies, and before that was employed for over 11 years by Zenyth Therapeutics Limited (formerly Amrad corporation Ltd), with the last four years in that company as a member of the executive team and Director of Intellectual

RiChARD ChADWiCK, phD hEAD of iNtELLEctuAL ProPErtY

richard chadwick, who joined circadian in February 2008, is qualified as both a European and Australian patent attorney. richard joined circadian from FB rice & co, where he had been working for five years in the Biotechnology Group. Prior to that, richard had 10 years’ experience in intellectual property in the United Kingdom. This included working as an inhouse attorney at Dow corning Limited and five years working as an in-house attorney at Unilever.

Property.

management team

20 2013 circadian annual report

iAn leitCh, phD DirEctor – cLiNicAL rESEArch

meGAn BAlDWin, phD hEAD of PrE-cLiNicAL r&D AND cEo oPthEA PtY LtD

Megan Baldwin joined circadian Ian Leitch has been Director of in January 2008 and is responsible clinical research of circadian for research and development Technologies Ltd since September of circadian’s product pipeline 2011. He has over 15 years of and team leader of circadian’s research and management ophthalmology program. Prior experience from drug discovery to joining circadian, she was through clinical development in employed at Genentech (now biotechnology/pharmaceutical roche), the world leader in the companies. For the five years field of angiogenesis-based prior to joining circadian, he therapies for cancer and other was a member of the Medical diseases. Her experience included Sciences group at Amgen Inc several years as a researcher in the in Thousand Oaks, california, group of leading angiogenesis involved in the development of expert napoleone Ferrara, novel therapeutics in Amgen’s before moving to Genentech’s oncology pipeline. In his role commercial division and having as Senior Manager in the responsibility for corporate Early Development Oncology competitive intelligence activities. Therapeutic Area, he had In these roles, she developed responsibility for the oversight, extensive commercial and design, management and scientific knowledge in the field execution of Phase I–II clinical of anti-angiogenic and oncology studies in oncology. Prior to drug development. Megan joining Amgen, he spent eight has a scientific background of years at Miravant Medical more than 15 years, focused on Technologies in Santa Barbara, angiogenesis and therapeutic california. He held positions of strategies for cancer and increasing responsibility, including ophthalmological indications. She Senior Program Manager for holds a PhD in Medicine from the cardiovascular research and University of Melbourne, having clinical Study Director for conducted her doctoral studies Ophthalmology. At Miravant he at the Ludwig Institute for cancer managed pre-clinical efficacy research. studies, developed relationships with Key Opinion Leaders and designed Phase I–II clinical studies in collaboration with the cardiovascular device company Guidant Inc. He previously held the position of nHMrc Senior research Officer at the University of newcastle, and was based at the John Hunter Hospital in Australia. He received his PhD from the Department of Pharmacology, Faculty of Medicine, at Monash University in 1993 and completed part of the degree at the University of california, Santa Barbara, as part of an Education Abroad Program Scholarship.

steven ZAmmit,

BBus(Acc), post Grad Dip (Acc), mBus, (Banking & Fin), CpA chiEf fiNANciAL officEr AND coMPANY SEcrEtArY

2013 circadian annual report 21

Corporate Governance statement

INTRODuCTION

The corporate Governance framework for circadian Technologies Limited (circadian) and its subsidiaries (the Group) is set by the circadian Board, having regard to compliance with legal requirements, the particular circumstances of the Group and the best interests of the shareholders.

On 2 August 2007, the Australian Securities Exchange (ASX) corporate Governance council released the Corporate Governance Principles and Recommendations (2nd edition) with the change in the reporting requirements applying to the Group’s first financial year commencing on or after 1 July 2008. The corporate Governance Statement details circadian’s corporate governance practices, including its compliance with the aforementioned requirements. This statement is current as at 26 August 2013 and should be read in conjunction with the Directors’ report within this annual report.

circadian’s corporate Governance Statement is structured with reference to the corporate Governance council’s principles and recommendations, which are as follows:

Principle 1 Lay solid foundations for management and oversight Principle 2 Structure the Board to add value Principle 3 Promote ethical and responsible decision-making Principle 4 Safeguard integrity in financial reporting Principle 5 Make timely and balanced disclosure Principle 6 respect the rights of shareholders Principle 7 recognise and manage risk Principle 8 remunerate fairly and responsibly

circadian’s corporate governance practices were in place throughout the year ended 30 June 2013 and were fully compliant with the council’s best practice recommendations, except for the recommendation regarding the establishment of a nomination committee. The reason for not establishing this committee is explained in the section of this report headed “Structure of the Board”.

For further information on corporate governance policies adopted by circadian, refer to its website: www.circadian.com.au.

PRINCIPLE 1 – LAY SOLID fOuNDATIONS fOR MANAGEMENT AND OVERSIGHT

The Board of Directors is in place to represent and protect the interests of the company’s shareholders. It is responsible for the corporate governance of the Group and guides and monitors the business and affairs of circadian on behalf of its shareholders.

Board functions and charter

The Board charter sets out the function and responsibilities of the Board in order to facilitate Board and management accountability for circadian’s performance and strategic direction. The matters reserved for the Board and what has been delegated to senior executives are described in the Board charter, which is available on circadian’s website: www.circadian.com.au.

To ensure that the Board is well equipped to discharge its responsibilities, it has established guidelines for the nomination and selection of directors and for the operation of the Board. Upon appointment of a new director, a formal letter of appointment is provided, as well as an induction pack, which includes details pertaining to the company and the obligations of the individual acting in their capacity as a director.

The responsibility for the operation and administration of the company is delegated by the Board to the cEO, who in turn may further delegate to senior executive management. The Board ensures that the Senior Executive Management Team (which includes the cEO) is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the cEO and the senior executive management.

Whilst at all times the Board retains full responsibility for guiding and monitoring the company, in discharging its stewardship it makes use of committees. Specialist committees are able to focus on a particular responsibility and provide informed feedback to the Board.

To this end, the Board has established the following committees:

› Audit and risk (see Principle 4);
› remuneration (see Principle 8); and
› Product Development review (which has now ceased).

The roles and responsibilities of these committees are discussed throughout this corporate Governance Statement.

22 2013 circadian annual report

The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks.

The Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risks identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved, including:

› Board approval of a strategic plan designed to meet stakeholders’ needs and manage business risk;
› ongoing development of the strategic plan and approving initiatives and strategies designed to ensure the continued growth and success of the entity; and
› implementation of budgets by management and monitoring progress against budget – via the establishment and reporting of both financial and non-financial key performance indicators.

Other functions reserved to the Board include:

› approval of the annual and half-yearly financial reports;
› approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures;
› ensuring that any significant risks that arise are identified, assessed, appropriately managed and monitored; and

The non-executive directors are responsible for evaluating the performance of the Managing Director and of the other senior executives. The Managing Director also evaluates the performance of the other senior executives and other management (management). The performance evaluation of management involves an assessment of the company’s business performance, whether short-term operational targets and individual performance objectives are being achieved and whether long-term strategic objectives are being achieved. Specific and measurable qualitative and quantitative performance criteria are used.

Due to the nature of the company’s activities and the stage that it is at with respect to these activities, profitability is not a performance measure for short-term incentives (STIs), although effective management of the company’s resources in achieving value for shareholders is expected. Long-term incentives (LTIs) are linked to share price appreciation and key performance indicators (KPIs) for STIs are linked to activities/milestones that are expected to create value for shareholders.

The performance of the Managing Director and management is monitored on an informal basis throughout the year with the objective of performing a formal evaluation once a year. A review of the remuneration structure for management was performed in May 2012 by the remuneration committee. This review was in accordance with the aforementioned process. A review of performance against KPIs occurred in July 2012 in accordance with the described policy. Further information on the remuneration committee can be found in the “remuneration report” section of the Directors’ report.

› reporting to shareholders.

The separation of responsibilities between the Board and management is clearly understood and respected.

executive performance evaluation

The remuneration committee of the Board of Directors of the company is responsible for determining and reviewing compensation arrangements for the executive and non-executive directors and other senior executive personnel. The remuneration committee assesses the appropriateness of the nature and amount of compensation of senior executives on a periodic basis by reference to relevant employment market conditions, with the overall objective of ensuring maximum shareholder benefit from the retention of a high-quality Board and executive team.

The Board charter and the Performance Evaluation Process Policy are available from circadian’s website: www.circadian.com.au.

PRINCIPLE 2 – STRuCTuRE THE BOARD TO ADD VALuE

structure of the Board

The Board as of 26 August 2013 consists of four directors, one of whom is an executive (robert Klupacs, cEO) and three of whom are non-executives. The skills, experience and expertise relevant to the position of director held by each director in office at the date of this report are included in the Directors’ report under the section headed “Directors”. Directors of circadian are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement.

2013 circadian annual report 23

CORPORATE GOVERNANCE STATEMENT ContinueD

In the context of director independence, to be considered independent, a non-executive director may not have a direct or indirect material relationship with the company. The Board has determined that a material relationship is one that impairs or inhibits, or has the potential to impair or inhibit, a director’s exercise of judgement on behalf of the company and its shareholders.

From a quantitative perspective, an item is considered to be quantitatively immaterial if it is equal to or less than 5% of the relevant base amount. It is considered to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the relevant base amount.

In accordance with the definition of independence above, and the materiality thresholds described, the following directors of circadian are considered to be independent (being the majority of the directors) at the date of this report:

Name	Position
D. Fisher	chairman, non-executive director
D. clarke	non-executive director
T. McMeckan	non-executive director

The term in office held by each director in office at the date of this report is as follows:

Name	term in offce
D. Fisher	8 years
r. Klupacs D. clarke T. McMeckan	5 years, 6 months 8 years 5 years, 7 months

To ensure the Board is well equipped to discharge its responsibilities, it has guidelines for the nomination and selection of directors and for the operation of the Board. The existing size of the Board and the frequency of Board meetings are such that the Board’s role in assisting in the appointment process can be undertaken in an efficient manner by the Board itself, without the need for a separate nomination committee. The charter of the nomination committee has been incorporated into the Board charter and, as such, the Board of Directors considers all matters that would be relevant for a nomination committee. For additional details, please refer to the company’s Board charter on its website.

Directors’ access to independent professional advice

The Board has procedures to allow directors, in the furtherance of their duties, to seek independent professional advice at the company’s expense.

Board and committee performance

Board and committee performance is monitored on an informal basis throughout the year with the objective of annual formal performance evaluation (although this may occur every 12 to 20 months). directors participated in an evaluation that was conducted in March 2012 of the Board’s and committees’ performance against specific qualitative performance criteria, some of which are measurable. The evaluation was performed with the use of questionnaires, self-evaluations and one-on-one interviews with

directors and was designed to cover both the Board and also its committees. This was performed in accordance with the company’s Performance Evaluation Process policy (as contained on the company’s website). The next evaluation is planned to be performed before the end of the 2014 financial year. The performance evaluation of the non-executive directors is aligned with their responsibilities under the Board charter and includes areas such as: Board structure, Board role and responsibilities, strategy and planning, monitoring of company performance and Board culture and relationships (amongst each director and with management).

Appointment of directors

To be considered for membership on the Board, a candidate should meet the following criteria:

› be of proven integrity with a history of relevant achievements that reflect high standards;
› demonstrate intelligence, wisdom and thoughtfulness in decisionmaking that usually will be based on broad experience;
› be able and willing to commit the time and energy necessary to attend to the company’s affairs, including attending Board and Board committee meetings;
› be committed to building sound, long-term growth in the value of the company; and
› be able to objectively review and evaluate management’s performance and implementation of strategy.

It is the Board’s policy to determine the terms and conditions relating to the appointment and retirement of non-executive directors on a case-by-case basis and in conformity with requirements of the ASX Listing rules and the Corporations Act 2001 . As circadian is not a large company, a separate nomination committee has not been created. Appointment and retirement of directors will be in accordance with the following:

› the Board will consider from time to time changes that the Board believes to be desirable to the size of the Board or any committee thereof;
› where a Board vacancy exists (including a vacancy created by an increase in size of the Board), the Board will identify individuals believed to be qualified to become Board members to stand for election as directors at the Annual General Meeting of shareholders. In nominating candidates, the Board shall take into consideration the qualifications of the candidate and the characteristics of the candidate to ensure that directors are of the highest standard. These factors may include judgement, skill, diversity, experience with businesses and other organisations of comparable size, the interplay of the candidate’s experience with the experience of other Board members, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board. The Board may consider candidates proposed by management, but is not required to do so; and
› where a vacancy exists on any Board committee, the Board will appoint a director to that committee, taking into consideration the factors set forth in the charter of the committee, if any, as well as any other factors it deems appropriate, including, without limitation, applicable legislative requirements, the consistency of

24 2013 circadian annual report

the candidate’s experience with the goals of the committee and the interplay of the candidate’s experience with the experience of other committee members.

The Board is responsible for ensuring that an effective induction process is in place for new directors appointed to the Board as discussed above.

The Board charter was reviewed and updated with minor modifications in March 2012 and can be found on circadian’s website: www.circadian.com.au.

PRINCIPLE 3 – PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

Code of Conduct

The circadian code of conduct as approved by the Board sets out circadian’s commitment and practices to successfully conduct our business in accordance with all applicable laws while demonstrating and promoting the highest ethical standards. It sets out the standards of conduct in employees’ and directors’ relationships with each other, with the employer and with all those with whom the directors and employees deal in their work. The code provides a framework for decision-making and business behaviour that builds and maintains circadian’s corporate integrity and reputation, and identifies responsibilities for reporting and investigating breaches. The code applies to all employees and directors. The code of conduct was reviewed in March 2012 and can be found on circadian’s website: www.circadian.com.au.

securities trading policy

The company has in place a Securities Trading Policy that details the trading policy with respect to the buying and selling of shares by directors and relevant employees.

Under the company’s Securities Trading Policy for the buying and selling of company securities, an executive, director or other employee must not trade in any securities of the company at any time when they are in possession of unpublished, price sensitive information in relation to those securities.

A Designated Officer should not deal in securities of circadian without receiving clearance from an Approving Officer(s) who has ensured that there is no unpublished price sensitive information.

A Designated Officer means a director or person engaged in the management of the Group, whether as an employee or consultant.

An Approving Officer means:

(a) for a Designated Officer who is not a director, the chief Executive Officer (cEO);
(b) for a director (except the chairman of the Board), the chairman of the Board and the cEO; and
(c) for the chairman of the Board, the chairman of the Audit committee and the cEO.

Generally, a Designated Officer must not be given clearance to deal in any securities of circadian during:

(a) any closed period (that is for the period of one month before the publication of annual and half-yearly financial results);
(b) any period when there exists any matter that constitutes unpublished price sensitive information in relation to circadian’s securities; or
(c) any period when the person responsible for the clearance otherwise has reason to believe that the proposed dealing is in breach of this policy.

As required by the ASX Listing rules, the company notifies the ASX of any transaction conducted by directors in the securities of the company. The Securities Trading Policy was reviewed in March 2012, a copy of which is available on circadian’s website: www.circadian.com.au.

Diversity policy

In April 2011, the company established a separate Diversity Policy in accordance with recommendation 3.2 of the ASX corporate Governance Principles and recommendations. The policy was reviewed in March 2012 and a copy of the policy is available on the company’s website.

circadian’s policy is to leverage diversity through the attraction, retention and development of a diverse team of talented people in the company at all levels, including the Board. This means using diversity to contribute to the achievement of the company’s strategic objectives and corporate goals.

The remuneration committee has the responsibility to, at least annually, report on the relative proportion of women and men in the workforce at all levels of the company. Details of the company’s diversity statistics can be found in the “remuneration report” section of the Directors’ report.

PRINCIPLE 4 – SAfEGuARD INTEGRITY IN fINANCIAL REPORTING

Audit and Risk Committee

The Audit and risk committee operates under a charter approved by the Board. It is the Board’s responsibility to ensure that an effective control framework exists within the entity. This includes ensuring that there are internal controls to deal with both the effectiveness and efficiency of significant business processes. This includes the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information as well as non-financial considerations. The Board has delegated the responsibility for the establishment and maintenance of a framework of internal control and ethical standards for the management of the consolidated entity to the Audit and risk committee.

The Audit and risk committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial statements. All members of the Audit and risk committee are independent non-executive directors. The members who served on the Audit and risk committee during the 2013 financial year were Ms Tina McMeckan, Ms Dominique Fisher and Mr Don clarke.

2013 circadian annual report 25

CORPORATE GOVERNANCE STATEMENT ContinueD

The Audit and risk committee is also responsible for nomination of the external auditor and reviewing the adequacy of the scope and quality of the annual statutory audit and half-year statutory review. The Audit and risk committee charter was reviewed in March 2012. It can be found on the company’s website (www.circadian.com.au) and contains the procedures for the selection, appointment and rotation of external audit engagement partners.

qualifications of Audit and Risk Committee members

Ms McMeckan has chaired the Audit and risk committee since 21 August 2008. Her specific skills are in the commercialisation of science and technology and the energy sector. Ms McMeckan, who has an MBA, is presently a director of crc for Spatial Information, SP Ausnet Limited, Global carbon capture and Storage Institute and was the chairman of the centre for Eye research Australia until november 2012 and a director of Metlink Pty Ltd until April 2012. She is a past member of the Funds Management committee of the AusIndustry research and Development Board and has held senior investment management positions with the Australian Industry Development corporation and Amrad corporation Ltd (acquired by cSL Limited), focusing on capital raisings for innovation-based ventures. She also has extensive board expertise in public and private utility infrastructure, including power production, networks and retailing business in the gas and electricity industries. She was formerly the chairman of nanoVentures Australia Ltd and a member of the national Board of norton rose law firm. Her other appointments as a director have included United Energy, Snowy Hydro Trading, the Westar and Kinetik Energy Group, Victorian Power Exchange, Vision cooperative research centre, Solaris Power and the formerly listed company Alinta Limited (October 2003 to August 2007).

Ms Dominique Fisher has extensive business experience in the corporate area, including the commercialisation of new technologies. She is Principal and Executive Director of Ec Strategies Pty Ltd, which advises local and overseas companies on technology strategies and major commercial transactions and chairman of Sky Technologies Pty Ltd, Managing Director of Helix Digital Pty Ltd and is a member of the Prostate cancer Foundation Victoria. From 2007 to 2010, she was a non-executive director of Pacific Brands Limited and was a member of its Audit and risk committee. She is a former director of Insurance Australia Group (IAG) and was a member of its risk Management and compliance committee from 2000 to 2004.

Mr Don clarke has been a partner with the law firm Minter Ellison since 1988, having joined that firm in 1980. He has broad commercial practice (involving predominantly ASX listed companies in the SME sector and larger private companies) and experience across a broad sector of industries. He is also a non-executive director of listed companies Webjet Limited (appointed January 2008) and Phosphagenics Limited (appointed August 2010), and a former director of calzada Limited (formerly Metabolic Pharmaceuticals Limited).

For details on the number of meetings of the Audit and risk committee held during the year and the attendees at those meetings, refer to the Directors’ report under the section headed “Directors’ Meetings”.

PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSuRE

The circadian continuous Disclosure Policy as approved by the Board sets out the key obligations of the Board and management to ensure compliance under the disclosure obligations under the ASX listing rules and the Corporations Act 2001 , and ensures that the obligation of employees and directors with respect to the continuous Disclosure Policy are clear.

The Board has overall responsibility for supervision of the company and must ensure that the company meets its disclosure obligations. The Board has appointed the company Secretary as Disclosure Officer to ensure that continuous disclosure requirements of the ASX Listing rules and the Corporations Act 2001 are adhered to.

The general rule, contained in the Listing rules, requires the company to immediately notify the ASX of any information concerning the company that a reasonable person would expect to have a material effect on the price or value of securities of the company. In certain circumstances, however, the applicable Listing rules permit the company not to disclose material information.

The continuous Disclosure Policy was reviewed in March 2012 and is available on circadian’s website: www.circadian.com.au.

PRINCIPLE 6 – RESPECT THE RIGHTS Of SHAREHOLDERS

The circadian communications Policy, as approved by the Board, is designed to describe the processes circadian has in place to promote communication with its investors and encourage shareholder participation at AGMs. The policy advocates communication with shareholders and other stakeholders in an open, regular and timely manner to ensure that all stakeholders have sufficient information to make informed decisions on the operations and results of the company. The policy provides for the use of systems involving technologies that ensure a regular and timely release of information about the company. Mechanisms employed include:

› all information released to the ASX (including annual reports, half-yearly reports, and notices of general meetings and their associated explanatory material) is posted on circadian’s website as soon as practicable following confirmation of receipt by the ASX;
› annual reports (if requested) and notices of general meetings with explanatory material are emailed or mailed to investors; and
› briefings provided to investors and analysts, with whom circadian acknowledges the importance of its relationship. A copy of any presentation material provided at briefings will be posted on circadian’s website.

The communications Policy, which was reviewed in March 2012, is available on circadian’s website: www.circadian.com.au.

PRINCIPLE 7 – RECOGNISE AND MANAGE RISK

Risk

The Board determines the company’s risk profile and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control. This process is designed to manage the company’s material business risks and report on whether those risks are being managed effectively.

26 2013 circadian annual report

Material business risks are those risks that are the most significant areas of uncertainty or exposure that could adversely impact on the achievement of company objectives.

Management, as part of their responsibility for the operations of the company, is also responsible for ensuring that risks are identified in a prospective manner, controls implemented to mitigate those risks and appropriate review procedures established to ensure that the controls in place are operating effectively. If new material risks are identified or if controls over existing risks are not operating effectively, these should be reported to the Board for consideration along with recommendations by management, covering new or existing controls and review processes that would mitigate the risks.

The Board oversees an annual assessment of the effectiveness of risk management and internal compliance and control. The responsibility for undertaking and assessing risk management and internal control effectiveness is delegated to management. At the company’s Audit and risk committee meeting held in December 2012, management presented their annual risk review. As is required by the Board, management is required to assess risk management and associated internal compliance and control procedures and report back on the efficiency and effectiveness of these controls and processes. The report was considered by the Audit and risk committee and noted by the Board at the Board meeting held in December 2012. Management, with the assistance of its insurance broker, undertook an annual review, in november 2012, of the company’s insurance requirements to ensure appropriate coverage.

The Board and senior management continue to identify the general areas of risk, including:

› economic outlook and share market activity;
› changing government policy (Australian and overseas);
› competitors’ products/research and development programs;
› market demand and market prices for therapeutics/diagnostics;
› legal proceedings commenced against the company (if any);
› environmental regulations;
› ethical issues relating to pharmaceutical research and development;
› other government regulations, including those specifically relating to the biotechnology and health industries; and
› occupational health and safety and equal opportunity law.

To this end, comprehensive practices are in place that are directed towards achieving the following objectives:

› effectiveness and efficiency in the use of the company’s resources;
› compliance with applicable laws and regulations; and
› preparation of reliable published financial information.

Ceo and CFo certification

In accordance with section 295A of the Corporations Act 2001 , the cEO and chief Financial Officer (cFO) have provided a written statement to the Board that:

› their view provided on the company’s financial report is founded on a sound system of risk management and internal compliance and control that, in all material respects, implements the financial policies adopted by the Board; and
› the company’s risk management and internal compliance and control systems are operating effectively in all material respects.

The risk Management Policy, which was reviewed in March 2012, is available on circadian’s website: www.circadian.com.au.

PRINCIPLE 8 – REMuNERATE fAIRLY AND RESPONSIBLY

performance

Policies and procedures in place with respect to monitoring the performance of the Board are set out in the Directors’ report under the section headed “remuneration report” as well as under “Principle 2 – Structure the Board to add value” in this report. Also see details under “remuneration committee” below.

Remuneration Committee

It is the company’s objective to provide maximum stakeholder benefit from the retention of a high-quality Board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant market conditions. To assist in achieving this objective, the remuneration committee remunerates directors and executives having regard to their performance and the performance of the company. The expected outcomes of the remuneration policies and practices are to enable the company to motivate, retain and attract directors and executives who will create value for shareholders.

Details relating to policy for performance evaluation, policy for remuneration and the amount of remuneration (monetary and non-monetary) paid to each director and to the non-director executives are set out in the Directors’ report under the section headed “remuneration report”.

There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive directors.

At no time have any directors or management of the company limited the risk of participating in unvested entitlements under an equity-based remuneration scheme. A policy to this effect was incorporated into the Securities Trading Policy and adopted by the Board on 14 September 2009. This policy can be found on the company’s website.

The members of the remuneration committee during the year were Mr Don clarke (chairman), Dr Errol Malta (until 1 October 2012) and Ms Dominique Fisher.

Details relating to performance evaluation are set out in the section of the Directors’ report headed “remuneration report”. For details on the number of meetings of the remuneration committee held during the year and the attendees at those meetings, refer to the Directors’ report under the section headed “Directors’ Meetings”.

The remuneration committee charter, which was reviewed in March 2012, can be found on circadian’s website: www.circadian.com.au.

2013 circadian annual report 27

InsIde thIs report

28 Financial Report
29 Auditor’s Independence Declaration
30 Consolidated Statement of Financial Position

31 Consolidated Statement of Profit or Loss and Other Comprehensive Income

32 Consolidated Statement of Changes in Equity
34 Consolidated Statement of Cash Flows
35 Notes to the Consolidated Financial Statements

88 Directors’ Declaration

89 Independent Auditor’s Report

Financial Report

28 2013 circadian annual report

Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

Tel: +61 3 9671 7000 Fax: +61 3 9671 7001 www.deloitte.com.au

The Board of Directors Circadian Technologies Limited Suite 403, Level 4, 650 Chapel Street SOUTH YARRA VIC 3000

26 August 2013

Dear Board Members

Circadian Technologies Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Circadian Technologies Limited.

As lead audit partner for the audit of the financial statements of Circadian Technologies Limited for the financial year ended 30 June 2013, 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.

Yours sincerely

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DELOITTE TOUCHE TOHMATSU

==> picture [119 x 28] intentionally omitted <==

G J McLean Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

2013 circadian annual report 29

ConsoLIdAted stAteMent of fInAnCIAL posItIon AS At 30 JUNE 2013

Note ASSETS CurrentAssets Cashandcashequivalents 11 Receivables 12 Prepayments TotalCurrentAssets Non�CurrentAssets Available�for�salefinancialassets 13 Investmentsinassociates 14 Deferredtaxassets 9 Plantandequipment 16 Intangibleassets 32 TotalNon�CurrentAssets TOTALASSETS LIABILITIES CurrentLiabilities Payables 17 Provisions 18 TotalCurrentLiabilities Non�CurrentLiabilities Deferredtaxliability 9 Provisions 19 TotalNon�CurrentLiabilities TOTALLIABILITIES NETASSETS EQUITY Contributedequity 20 AccumulatedLosses 21 Reserves 21 EquityattributabletoownersoftheCompany Non�controllinginterests 31 TOTALEQUITY	2013 2012 $ $ 11,003,941 16,439,225 2,324,016 1,656,352 143,554 74,155
	13,471,511 18,169,732
	2,280,517 3,651,785 � � 77,385 176,581 82,546 106,896 500,000 500,000
	2,940,448 4,435,262
	16,411,959 22,604,994
	1,598,782 1,937,364 311,585 187,987
	1,910,367 2,125,351
	77,385 176,581 65,261 106,207
	142,646 282,788
	2,053,013 2,408,139
	14,358,946 20,196,855
	39,453,733 39,395,603 (19,243,579) (14,488,786) (6,758,541) (5,995,424)
	13,451,613 18,911,393
	907,333 1,285,462
	14,358,946 20,196,855

The�above�consolidated�statement�of�financial�position�should�be�read�in�conjunction� with�the�accompanying�notes.

30 2013 circadian annual report

ConsoLIdAted stAteMent of profIt or Loss And other CoMprehensIve InCoMe FOR tHE YEAR ENDED 30 JUNE 2013

	Note	2013	2012
		$	$
Financerevenue		530,986	975,563
Otherrevenue		622,701	510,270
Revenue	6	1,153,687	1,485,832
Otherincome	7	466,991	253,728
Researchanddevelopmentexpenses	23	(3,436,660)	(3,595,677)
Patentexpenses		(459,999)	(577,697)
Intellectualpropertycosts		(155,512)	(963,107)
Administrativeexpenses	8(c)	(3,943,288)	(3,925,175)
Occupancyexpenses	8(b)	(161,516)	(152,504)
Impairmentlosses	8(a)	(26,218)	�
Shareofnetprofit/(loss)ofassociates	14(b)	�	166,073
Netforeignexchangegains/(loss)		�	�
Lossbeforeincometax		(6,562,515)	(7,308,526)
Incometax(expense)/benefit	9	1,558,009	2,402,070
Lossfortheperiod		(5,004,506)	(4,906,456)
Othercomprehensiveincome
Itemsthatmaybereclassifiedsubsequentlytoprofitorloss:
Netunrealisedgains/(losses)onnon�currentlistedinvestments
fortheperiod		(1,242,214)	1,227,286
NCIshareofmovementininvestmentsrevaluationreserve	31	(133,426)	(6,583)
Incometaxonitemsofothercomprehensiveincome	21	412,690	(369,477)
Othercomprehensiveincomefortheperiod,netoftax		(962,950)	851,226
Totalcomprehensiveincomefortheperiod		(5,967,456)	(4,055,230)
Lossfortheperiodisattributableto:
Non�controllinginterest	31	(249,713)	(69,203)
Ownersoftheparent	21	(4,754,793)	(4,837,253)
		(5,004,506)	(4,906,456)
Totalcomprehensiveincomefortheperiodis
attributableto:
Non�controllinginterest		(383,139)	(75,786)
Ownersoftheparent		(5,584,317)	(3,979,444)
		(5,967,456)	(4,055,230)
Earningspershareforlossattributabletotheordinaryequity
holdersoftheparent:
�Basicanddilutedlosspershare(cents)	10	(9.79)	(10.39)

The�above�consolidated�statement�of�profit�or�loss�and�other�comprehensive�income�

�should�be�read�in�conjunction�with�the�accompanying�notes.

2013 circadian annual report 31

ConsoLIdAted stAteMent of ChAnges In equIty FOR tHE YEAR ENDED 30 JUNE 2013

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==> picture [509 x 392] intentionally omitted <==

----- Start of picture text -----

Note equity reserve reserve reserve
$ $ $ $
0
0 58,130
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32 2013 circadian annual report

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==> picture [441 x 392] intentionally omitted <==

----- Start of picture text -----

reserve parent Losses
$ $ $ $ $ $ $
055,230)
0 0
----- End of picture text -----

2013 circadian annual report 33

ConsoLIdAted stAteMent of CAsh fLows FOR tHE YEAR ENDED 30 JUNE 2013

	Note	2013	2012
		$	$
Cashflowsfromoperatingactivities:
Interestreceived		630,989	921,214
Royaltyandlicenceincomereceived		615,876	528,636
Grantincome		13,500	134,524
SalesofReagents		5,481	�
Paymentstosuppliers,employeesandforresearch&
developmentandintellectualpropertycosts(inclusiveofGST)		(8,202,698)	(9,337,688)
Incometaxpaid		�	(43,390)
Incometaxrefund		1,323,856	622,800
Netcashflowsusedinoperatingactivities	22(b)	(5,612,996)	(7,173,904)
Cashflowsfrominvestingactivities:
Acquisitionoffinancialinvestments		(370,199)	(310,737)
Proceedsfromsaleofinvestments		606,144	49,169
Purchaseofplantandequipment		(2,989)	(38,497)
Netcashinflowonacquisitionofsubsidiaries	33	�	701,085
Otherdividendsreceived		�	1,500
Netcashflowsprovidedbyinvestingactivities		232,957	402,520
Proceedsfromissueofshares		�	1,021,510
Netcashflowsprovidedbyfinancingactivities:		�	1,021,510
Netdecreaseincashandcashequivalents		(5,380,040)	(5,749,874)
Netforeignexchangedifferences		(55,244)	84,685
Cashandcashequivalentsatbeginningofyear		16,439,225	22,104,414
Cashandcashequivalentsatendofyear	11	11,003,941	16,439,225

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

34 2013 circadian annual report

notes to the ConsoLIdAted fInAnCIAL stAteMents FOR tHE YEAR ENDED 30 JUNE 2013

1.��CORPORATE�INFORMATION�

The�consolidated�financial�report�of�Circadian�Technologies�Limited�for�the�year�ended�30�June�2013� was�authorised�for�issue�in�accordance�with�a�resolution�of�the�directors�on�26 August�2013.�

Circadian�Technologies�Limited�(the�Parent)�is�a�company�limited�by�shares�incorporated�in�Australia� whose�shares�are�publicly�traded�on�the�Australian�Securities�Exchange.�Circadian�also�operates�an� American�Depositary�Receipt�(ADR)�program�where�one�ADR�is�the�equivalent�of�5�shares.��ADRs�are� publicly�traded�on�the�QTCQX�in�the�United�States�of�America.�

The�nature�of�the�operations�and�principal�activities�of�the�Group�are�described�in�the�Directors'�report.�

2.��SUMMARY�OF�SIGNIFICANT�ACCOUNTING�POLICIES�

Table�of�Contents�

Basis�of�preparation�

(a)� Compliance�with�IFRS�
(b)��New�accounting�standards�and�interpretations�
(c)��Basis�of�consolidation�
(d)��Foreign�currency�translation�
(e)��Cash�and�cash�equivalents�
(f)��Current�receivables�
(g)��Investments�and�other�financial�assets�
(h)��Impairment�of�financial�assets�
(i)��Acquisition�of�non�controlling�interests��premium�on�acquisition�
(j)��Investments�in�subsidiaries�
(k)��Investments�in�associates�
(l)��Interest�in�a�jointly�controlled�operation�
(m)��Plant�and�equipment�
(n)��Leases�
(o)��Impairment�of�non�financial�assets�other�than�goodwill�
(p)��Intangible�assets�
(q)��Intellectual�property�costs�
(r)��Research�and�development�costs�
(s)��Payables�
(t)��Loans�and�borrowings�
(u)��Provisions�and�employee�benefits�
(v)��Share�based�payment�transactions�
(w)�Contributed�equity�
(x)��Revenue�recognition�
(y)��Income�tax�
(z)��Other�taxes�
(aa)��Government�grants�
(ab)��Earnings�per�share�
(ac)��Comparatives�

2013 circadian annual report 35

notes to the ConsoLIdAted fInAnCIAL stAteMents (ContInued) FOR tHE YEAR ENDED 30 JUNE 2013

Basis�of�preparation�

The�financial�report�is�a�general�purpose�financial�report,�which�has�been�prepared�in�accordance� with�the�requirements�of�the� Corporations�Act�2001 ,�Australian�Accounting�Standards�and�other� authoritative�pronouncements�of�the�Australian�Accounting�Standards�Board.��The�financial�report� has�also�been�prepared�on�a�historical�cost�basis,�except�for�investments�classified�as�available�for� sale,�which�have�been�carried�at�fair�value�and�investment�in�associate,�which�has�been�equity� accounted�for.�These�accounting�policies�have�been�consistently�applied�throughout�the�Group.��

The�financial�report�is�presented�in�Australian�dollars.�

(a)��Compliance�with�IFRS�

The�financial�report�also�complies�with�International�Financial�Reporting�Standards�(IFRS)�as�issued� by�the�International�Accounting�Standards�Board.�For�the�purposes�of�preparing�the�consolidated� financial�statements,�the�Company�is�a�for�profit�entity.�

(b)��New�accounting�standards�and�interpretations��

(i) Standards�affecting�presentation�and�disclosure�

The�following�new�and�revised�Standards�and�Interpretations�have�been�adopted�in�the�current�year� and�have�affected�the�amounts�reported�in�these�financial�statements.�Details�of�other�Standards� and�Interpretations�adopted�in�these�financial�statements�but�that�have�had�no�effect�on�the� amounts�reported�are�set�out�in�section�(ii)�below.�

Amendments�to�AASB�101� The�amendment�(part�of�AASB�2011�9�‘Amendments�to�Australian�Accounting� ‘Presentation�of�Financial� Standards��Presentation�of�Items�of�Other�Comprehensive�Income’)�introduce� Statements’� new�terminology�for�the�statement�of�comprehensive�income�and�income� statement.�Under�the�amendments�to�AASB�101,�the�statement�of� comprehensive�income�is�renamed�as�a�statement�of�profit�or�loss�and�other� comprehensive�income�and�the�income�statement�is�renamed�as�a�statement�of� profit�or�loss.�The�amendments�to�AASB�101�retain�the�option�to�present�profit� or�loss�and�other�comprehensive�income�in�either�a�single�statement�or�in�two� separate�but�consecutive�statements.�However,�the�amendments�to�AASB�101� require�items�of�other�comprehensive�income�to�be�grouped�into�two� categories�in�the�other�comprehensive�income�section:�(a)�items�that�will�not�be� reclassified�subsequently�to�profit�or�loss�and�(b)�items�that�may�be�reclassified� subsequently�to�profit�or�loss�when�specific�conditions�are�met.�Income�tax�on� items�of�other�comprehensive�income�is�required�to�be�allocated�on�the�same� basis�–�the�amendments�do�not�change�the�option�to�present�items�of�other� comprehensive�income�either�before�tax�or�net�of�tax.�The�amendments�have� been�applied�retrospectively,�and�hence�the�presentation�of�items�of�other� comprehensive�income�has�been�modified�to�reflect�the�changes.�Other�than� the�above�mentioned�presentation�changes,�the�application�of�the� amendments�to�AASB�101�does�not�result�in�any�impact�on�profit�or�loss,�other� comprehensive�income�and�total�comprehensive�income.�

36 2013 circadian annual report

(i) Standards�affecting�presentation�and�disclosure�(continued)�

Amendments�to�AASB�101� The�amendments�(part�of�AASB�2012�5�‘Further�Amendments�to�Australian� ‘Presentation�of�Financial� Accounting�Standards�arising�from�Annual�Improvements�2009�2011�Cycle’)� Statements’� requires�an�entity�that�changes�accounting�policies�retrospectively,�or�makes�a� retrospective�restatement�or�reclassification�to�present�a�statement�of�financial� position�as�at�the�beginning�of�the�preceding�period�(third�statement�of� financial�position),�when�the�retrospective�application,�restatement�or� reclassification�has�a�material�effect�on�the�information�in�the�third�statement� of�financial�position.�The�related�notes�to�the�third�statement�of�financial� position�are�not�required�to�be�disclosed.�

(ii) Standards�and�Interpretations�affecting�the�reported�results�or�financial�position�

There�are�no�new�and�revised�Standards�and�Interpretations�adopted�in�these�financial�statements� affecting�the�reporting�results�or�financial�position.�

(iii) Standards�and�interpretations�in�issue�not�yet�adopted��

Australian�Accounting�Standards�and�Interpretations�that�have�recently�been�issued�or�amended�but� are�not�yet�effective�and�have�not�been�adopted��by�the�Group�for�the�annual�reporting�period� ended�30�June�2013,�are�outlined�in�the�table�below.�

ended30June2013,areoutlinedinthetable	below.

Standard/Interpretation	Effectiveforannualreporting periodsbeginningonorafter	Expectedtobe initiallyappliedin theyearending
AASB9‘FinancialInstruments’,andthe relevantamendingstandards	1January2015	30June2016
AASB10‘ConsolidatedFinancialStatements’ andAASB2011�7‘AmendmentstoAustralian AccountingStandardsarisingfromthe consolidationandJointArrangements standards’	1January2013	30June2014
AASB11‘JointArrangements’andAASB2011�7 ‘AmendmentstoAustralianAccounting Standardsarisingfromtheconsolidationand JointArrangementsstandards’	1January2013	30June2014
AASB12‘DisclosureofInterestsinOther Entities’andAASB2011�7‘Amendmentsto AustralianAccountingStandardsarisingfrom theconsolidationandJointArrangements standards’	1January2013	30June2014

2013 circadian annual report 37

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(iii)�Standards�and�interpretations�in�issue�not�yet�adopted�(continued)�


Standard/Interpretation	Effectiveforannualreporting periodsbeginningonorafter	Expectedtobe initiallyappliedin theyearending
AASB127‘SeparateFinancialStatements’ (2011)andAASB2011�7‘Amendmentsto AustralianAccountingStandardsarisingfrom theconsolidationandJointArrangements standards’	1January2013	30June2014
AASB128‘InvestmentsinAssociatesandJoint Ventures’(2011)andAASB2011�7 ‘AmendmentstoAustralianAccounting Standardsarisingfromtheconsolidationand JointArrangementsstandards’	1January2013	30June2014
AASB13‘FairValueMeasurement’andAASB 2011�8‘AmendmentstoAustralianAccounting StandardsarisingfromAASB13’	1January2013	30June2014
AASB119‘EmployeeBenefits’(2011)andAASB 2011�10‘AmendmentstoAustralian AccountingStandardsarisingfromAASB119 (2011)’	1January2013	30June2014
AASB2011�4‘AmendmentstoAustralian AccountingStandardstoRemoveIndividualKey ManagementPersonnelDisclosure Requirements’	1July2013	30June2014
AASB2012�5‘AmendmentstoAustralian AccountingStandardsarisingfromAnnual Improvements2009–2011Cycle’	1January2013	30June2014
AASB2012�10‘AmendmentstoAustralian AccountingStandards–TransitionGuidance andOtherAmendments’	1January2013	30June2014

(c)��Basis�of�consolidation�

The�consolidated�financial�statements�comprise�the�financial�statements�of�Circadian�Technologies� Limited�and�its�controlled�entities�(as�outlined�in�note�24)�as�at�and�for�the�period�ended�30�June� each�year�(the�Group).��Interests�in�associates�are�equity�accounted�and�are�not�part�of�the� consolidated�Group�(see�note�(k)�below).�

38 2013 circadian annual report

Controlled�entities�are�those�entities�over�which�the�Group�has�the�power�to�govern�the�financial� and�operating�policies�so�as�to�obtain�benefits�over�their�activities.��The�existence�and�effect�of� potential�voting�rights�that�are�currently�exercisable�or�convertible�are�considered�when�assessing� whether�a�group�controls�another�entity.�

Entities�over�which�the�Group�has�no�ownership�interest�but�in�effect�the�substance�of�the� relationship�is�such�that�the�Group�controls�the�entity�so�as�to�obtain�the�majority�of�benefits�from� its�operation�are�also�consolidated.�

The�financial�statements�of�the�controlled�entities�are�prepared�for�the�same�reporting�period�as�the� parent�company,�using�consistent�accounting�policies.�In�preparing�the�consolidated�financial� statements,�all�intercompany�balances�and�transactions,�income�and�expenses�and�profit�and�losses� resulting�from�intra�group�transactions�have�been�eliminated�in�full.�

Controlled�entities�are�fully�consolidated�from�the�date�on�which�control�is�obtained�by�the�Group� and�cease�to�be�consolidated�from�the�date�on�which�control�is�transferred�out�of�the�Group.�

On�8�February�2012,�Syngene�became�a�subsidiary�of�Circadian.�During�the�year�an�additional�100,000�shares� were�issued�by�Syngene�Limited.�The�Group�owns�51.54%�of�Syngene�Limited�as�at�30�June�2013.�

Therefore,�non�controlling�interest�represents�the�portion�of�net�profit/loss�after�tax�and�net�assets� in�Syngene�Limited,�which�is�not�attributable�to�the�Group,�and�is�presented�separately�as�an�item�in� the�statement�of�comprehensive�income�and�within�equity�in�the�consolidated�statement�of�financial� position.��Refer�note�(i)�below�for�acquisition�of�non�controlling�interests.�

(d)��Foreign�currency�translation�

(i)�Functional�and�presentation�currency�

Both�the�functional�and�presentation�currency�of�Circadian�Technologies�Limited�and�its�Australian� subsidiaries�is�Australian�dollars�($).�The�Finland�subsidiary,�which�was�incorporated�during�the� previous�financial�year,�and�has�not�made�any�transactions�and�is�in�the�process�of�being�closed.� Refer�note�24(a).��

(ii)�Transactions�and�balances�

Transactions�in�foreign�currencies�are�initially�recorded�in�the�functional�currency�by�applying�the� exchange�rates�ruling�at�the�date�of�the�transaction.��Monetary�assets�and�liabilities�denominated�in� foreign�currencies�are�retranslated�at�the�rate�of�exchange�ruling�at�the�reporting�date.�

Non�monetary�items�that�are�measured�in�terms�of�historical�cost�in�a�foreign�currency�are� translated�using�the�exchange�rate�as�at�the�date�of�the�initial�transaction.�Non�monetary�items� measured�at�fair�value�in�a�foreign�currency�are�translated�using�the�exchange�rates�at�the�date� when�the�fair�value�was�determined.�

2013 circadian annual report 39

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(e)��Cash�and�cash�equivalents��refer�note�11�

Cash�and�cash�equivalents�in�the�statement�of�financial�position�comprise�cash�at�bank�and�in�hand� and�short�term�deposits�with�an�original�maturity�of�three�months�or�less�that�are�readily�convertible� to�known�amounts�of�cash�and�which�are�subject�to�an�insignificant�risk�of�changes�in�value.�

For�the�purposes�of�the�statement�of�cash�flows,�cash�and�cash�equivalents�consist�of�cash�and�cash� equivalents�as�defined�above.�

(f)��Current�receivables��refer�note�12�

Receivables�generally�comprise�bank�interest�receivable,�other�receivable�from�external�parties�and� GST�credits�receivable,�and�are�recognised�and�carried�at�original�invoice�amount�less�an�allowance� for�any�uncollectible�amounts.�The�amounts�are�usually�received�within�30�60�days�of�recognition.�

Collectability�of�receivables�is�reviewed�on�an�ongoing�basis.��Debts�that�are�known�to�be� uncollectible�are�written�off�when�identified.��An�impairment�provision�is�recognised�when�there�is� objective�evidence�that�the�Group�will�not�be�able�to�collect�the�receivable.�

(g)��Investments�and�other�financial�assets��refer�note�13��

Investments�and�financial�assets�are�classified�as�available�for�sale�investments,�or�loans�and� receivables�as�appropriate,�in�accordance�with� AASB�139�Financial�Instruments:�Recognition�and� Measurement.� The�classification�depends�on�the�purpose�for�which�the�investments�were�acquired� or�originated.�Designation�is�re�evaluated�at�each�reporting�date,�but�there�are�restrictions�on� reclassifying�to�other�categories.�

When�financial�assets�are�recognised�initially,�they�are�measured�at�fair�value,�plus,�in�the�case�of� assets�not�at�fair�value�through�profit�or�loss,�directly�attributable�transaction�costs.��

Recognition�and�derecognition�

Purchases�and�sales�of�financial�assets�that�require�delivery�of�assets�within�the�time�frame�generally� established�by�regulation�or�convention�in�the�market�place�are�recognised�on�the�trade�date�i.e.�the� date�that�the�Group�commits�to�purchase�the�asset.��Financial�assets�are�derecognised�when�the� right�to�receive�cash�flows�from�the�financial�assets�has�expired�or�when�the�entity�transfers� substantially�all�the�risks�and�rewards�of�the�financial�assets.�If�the�entity�neither�retains�nor� transfers�substantially�all�of�the�risks�and�rewards,�it�derecognises�the�asset�if�it�has�transferred� control�of�the�assets.�

40 2013 circadian annual report

Subsequent�measurement�

(i)�Available�for�sale�investments��refer�note�13�

Available�for�sale�investments�comprise�of�the�Group's�non�current�investments�in�listed�companies.�� After�initial�recognition,�available�for�sale�investments�are�measured�at�fair�value�with�gains�or� losses�being�recognised�as�a�separate�component�of�equity�until�the�investment�is�sold,�collected�or� otherwise�disposed�of,�or�until�the�investment�is�determined�to�be�impaired,�at�which�time�the� cumulative�gain�or�loss�previously��reported�in�equity�is�recognised�in�profit�or�loss.�

The�fair�values�of�available�for�sale�investments�that�are�actively�traded�in�organised�financial� markets�is�determined�by�reference�to�quoted�market�bid�prices�at�the�close�of�business�on�the� reporting�date.�

(ii)�Loans�and�receivables�

Loans�and�receivables�are�non�derivative�financial�assets�with�fixed�or�determinable�payments�that� are�not�quoted�in�an�active�market.��Such�assets�are�carried�at�amortised�cost�using�the�effective� interest�method�and�have�been�calculated�by�discounting�the�principal�amounts�over�the�relevant� term�using�the�relevant�LIBOR�rate�which�matches�that�term�as�closely�as�possible.��Gains�and�losses� are�recognised�in�the�statement�of�comprehensive�income�when�the�loans�and�receivables�are� derecognised�or�impaired.�These�are�included�in�current�assets,�except�for�those�with�maturities� greater�than�12�months�after�balance�date,�which�are�classified�as�non�current.�

Non�current�receivables�comprise�loans�receivable�from�subsidiaries�which�are�not�interest�bearing.�� The�parent�has�agreed�that�the�loans�with�its�subsidiaries�will�not�be�recalled�for�a�period�of�12� months�from�the�date�the�directors�adopt�the�relevant�annual�financial�statements�of�the�Group,� parent�and�subsidiaries.�

(h)��Impairment�of�financial�assets��

The�Group�assesses�at�each�reporting�date�whether�a�financial�asset�or�group�of�financial�assets�is� impaired.�

(i)�Available�for�sale�investments��refer�note�13�

If�there�is�objective�evidence�(i.e.�significant�or�prolonged�decline�in�quoted�market�bid�prices)�that� an�available�for�sale�investment�is�impaired,�an�amount�comprising�of�the�difference�between�its� cost�and�its�current�fair�value,�less�any�impairment�loss�previously�recognised�in�profit�or�loss�is� transferred�from�equity�to�profit�or�loss.��Reversals�of�impairment�losses�for�equity�instruments� classified�as�available�for�sale�are�not�recognised.�

(ii)�Financial�assets�carried�at�amortised�cost�

Loans�receivable�from�subsidiaries�in�the�parent's�accounts�are�financial�assets�carried�at�amortised� cost.��If�there�is�objective�evidence�that�an�impairment�loss�on�intercompany�loans�receivable�carried� at�amortised�cost�has�been�incurred,�the�amount�of�the�loss�is�measured�as�the�difference�between� the�asset's�carrying�amount�and�the�present�value�of�estimated�future�cash�flows�(excluding�future� credit�losses�that�have�not�been�incurred)�discounted�at�the�financial�asset's�original�effective� interest�rate�(i.e.�the�effective�interest�rate�computed�at�initial�recognition).��The�carrying�amount�of� the�asset�is�reduced�either�directly�or�through�use�of�an�allowance�account.��The�amount�of�the�loss� is�recognised�in�the�statement�of�comprehensive�income.�

2013 circadian annual report 41

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

The�Group�firstly�assesses�whether�objective�evidence�of�impairment�exists�individually�for�financial� assets�that�are�individually�significant,�and�secondly�individually�or�collectively�for�financial�assets� that�are�not�individually�significant.��If�it�is�determined�that�no�objective�evidence�of�impairment� exists�for�an�individually�assessed�financial�asset,�whether�significant�or�not,�the�asset�is�included�in�a� group�financial�assets�with�similar�credit�risk�characteristics�and�that�group�of�financial�assets�is� collectively�assessed�for�impairment.��Assets�that�are�individually�assessed�for�impairment�and�for� which�an�impairment�loss�is�or�continues�to�be�recognised�are�not�included�in�a�collective� assessment�of�impairment.�

If,�in�a�subsequent�period,�the�amount�of�the�cumulative�impairment�loss�decreases�and�the� decreases�can�be�related�objectively�to�an�event�occurring�after�the�impairment�was�recognised,�the� previously�recognised�impairment�loss�is�reversed.��Any�subsequent�reversal�of�an�impairment�loss�is� recognised�in�profit�or�loss,�to�the�extent�that�the�carrying�value�of�the�asset�does�not�exceed�its� amortised�cost�at�the�reversal�date.�

(i)��Acquisition�of�non�controlling�interests��premium�on�acquisition��refer�note�21(b)(vi)�

The�premium�paid�on�the�acquisition�of�the�non�controlling�interests�is�measured�at�the�excess�of� the�consideration�paid�over�the�Group's�interest�in�the�net�assets�acquired�from�the�acquiree�on�the� date�of�the�acquisition.��The�premium�is�treated�as�an�equity�transaction�and�recognised�in�the� "Equity�reserve�attributable�to�parent"�account.�

(j)��Investments�in�subsidiaries��refer�note�24�

Investments�in�subsidiaries�are�carried�at�cost.��If�there�is�objective�evidence�that�an�impairment�loss� has�been�incurred�on�investments�in�subsidiaries,�the�amount�of�the�loss�is�measured�as�the� difference�between�the�asset's�carrying�amount�and�the�present�value�of�estimated�future�cash� flows,�discounted�at�the�current�market�rate�of�return�for�a�similar�financial�asset.��Any�subsequent� reversal�of�an�impairment�loss�is�recognised�in�profit�or�loss.�

(k)��Investments�in�associates��refer�note�14�

The�Group's�investment�in�its�associates�is�accounted�for�using�the�equity�method�of�accounting�in�the� consolidated�financial�statements.��The�associates�are�entities�in�which�the�Group�has�significant�influence� and�which�is�neither�a�subsidiary�nor�a�joint�venture.�

Under�the�equity�method,�investments�in�the�associates�are�carried�in�the�consolidated�statement�of� financial�position�at�cost�plus�post�acquisition�changes�in�the�Group's�share�of�net�assets�of�the�associates.�� After�application�of�the�equity�method,�the�Group�determines�whether�it�is�necessary�to�recognise�any� additional�impairment�loss�with�respect�to�the�Group's�net�investment�in�the�associates.��Impairment�loss� arises�where�the�carrying�value�of�the�investment�exceeds�its�recoverable�amount.��Where�the�investment� in�associate�is�a�listed�investment,�the�recoverable�amount�is�the�quoted�market�bid�price�for�that�asset�at� balance�date.��The�amount�of�impairment�loss�is�the�difference�between�the�recoverable�amount�and� carrying�value.��

42 2013 circadian annual report

Where�the�investment�is�an�unquoted�investment,�such�as�Syngene�Limited,�the�amount�of�the�loss�is� recognised�in�profit�or�loss�and�its�share�of�post��acquisition�movements�in�equity�and�reserves�is� recognised�in�reserves.��The�cumulative�post�acquisition�movements�are�adjusted�against�the�carrying� amount�of�the�investment.��This�was�the�case�until�8�February�2012�when�Syngene�Limited�became�a� subsidiary.�

When�the�Group's�share�of�losses�in�an�associate�equals�or�exceeds�its�interest�in�the�associate,�including� any�unsecured�long�term�receivables�and�loans,�the�Group�does�not�recognise�further�losses,�unless�it�has� incurred�obligations�or�made�payments�on�behalf�of�the�associate.�

The�reporting�dates�of�the�associates�and�the�Group�are�identical�and�the�associates'�accounting�policies� conform�to�those�used�by�the�Group�for�like�transactions�and�events�in�similar�circumstances.�

Cessation�of�equity�accounting��

Upon�cessation�of�equity�accounting,�the�Group�recognises�in�profit�or�loss,�any�difference�between�the�fair� value�of�the�retained�investment�and�proceeds�from�disposing�of�the�part�interest�and�the�carrying�value�of� the�investment�at�the�date�in�which�significant�influence�is�lost.��

(l)��Interest�in�a�jointly�controlled�operation�

The�Group�enters�into�agreements�with�universities�and�research�institutes�for�pharmaceutical�research� and�development�projects�which�are�considered�"joint�venture"�arrangements.��A�joint�venture�is�a� contractual�arrangement�whereby�two�or�more�parties�undertake�an�economic�activity�(normally� pharmaceutical�research�and�development�projects)�which�are�considered�"joint�venture"�arrangements� that�is�subject�to�joint�control.��A�jointly�controlled�operation�involves�use�of�assets�and�other�resources�of� the�venturers�rather�than�establishment�of�a�separate�entity.��The�Group�recognises�its�interests�in�jointly� controlled�operations�by�recognising�the�assets�that�it�controls�and�the�liabilities�that�it�incurs.��The�Group� also�recognises�the�expenses�that�it�incurs�and�its�share�of�the�income�that�it�earns�from�the�sale�of�goods� or�services�by�the�jointly�controlled�operation.��

(m)��Plant�and�equipment��refer�note�16�

Plant�and�equipment�is�stated�at�historical�cost�less�accumulated�depreciation�and�any�accumulated� impairment�losses.��Depreciation�is�calculated�on�a�straight�line�basis�over�their�useful�economic�lives�as� follows:

��Equipment�and�furniture��3�to�10�years�
��Leasehold�improvements��8�years�

The�assets'�residual�values,�useful�lives�and�amortisation�methods�are�reviewed,�and�adjusted�if� appropriate,�at�each�financial�year�end.��

Derecognition��

An�item�of�plant�and�equipment�is�derecognised�upon�disposal�or�when�no�further�economic�benefits�are� expected�from�its�use�or�disposal.�

2013 circadian annual report 43

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(n)��Leases��refer�note�8�

The�determination�of�whether�an�arrangement�is�or�contains�a�lease�is�based�on�the�substance�of�the� arrangement�and�requires�an�assessment�of�whether�the�fulfilment�of�the�arrangement�is�dependent�on� the�use�of�a�specific�asset�or�assets�and�the�arrangement�conveys�a�right�to�use�the�asset,�even�if�that�right� is�not�explicitly�specified�in�an�arrangement.�

Operating�lease�payments�are�recognised�as�an�expense�in�profit�or�loss�on�a�straight�line�basis�over�the� lease�term.��Operating�lease�incentives�are�recognised�in�the�statement�of�comprehensive�income�as�an� integral�part�of�the�total�lease�expense.��

The�Group�held�no�finance�leases�during�the�2013�and�2012�financial�years.�

(o)��Impairment�of�non�financial�assets�other�than�goodwill��refer�note�15�

Non�financial�assets�are�tested�for�impairment�whenever�events�or�changes�in�circumstances�indicate�that� the�carrying�amount�may�not�be�recoverable.�For�the�policy�relating�to�impairment�regarding�investments� in�associates,�see�note�2(k)�above.�

Circadian�Technologies�Limited�conducts�an�annual�internal�review�of�asset�values,�which�is�used�as�a� source�of�information�to�assess�for�any�indicators�of�impairment.��External�factors,�such�as�changes�in� technology�and�economic�conditions,�are�also�monitored�to�assess�for�indicators�of�impairment.��If�any� indication�of�impairment�exists,�an�estimate�of�the�asset's�recoverable�amount�is�calculated.�

An�impairment�loss�is�recognised�for�the�amount�by�which�the�asset's�carrying�amount�exceeds�its� recoverable�amount.��Recoverable�amount�is�the�higher�of�an�asset's�fair�value�less�costs�to�sell�and�value�in� use.��For�the�purposes�of�assessing�impairment,�assets�are�grouped�at�the�lowest�levels�for�which�there�are� separately�identifiable�cash�inflows�that�are�largely�independent�of�the�cash�inflow�from�other�assets�or� groups�of�assets�(cash�generating�units).��Non�financial�assets�other�than�goodwill�that�suffered�impairment� are�tested�for�possible�reversal�of�the�impairment�whenever�events�or�changes�in�circumstances�indicate� that�the�impairment�may�have�reversed.�

(p)��Intangible�assets��

Internally�generated�intangible�assets,�excluding�capitalised�development�costs,�are�not�capitalised�and� expenditure�is�charged�against�profits�in�the�year�in�which�the�expenditure�is�incurred.��

(q)��Intellectual�property�costs�

Amounts�incurred�for�rights�to�or�for�acquisition�of�intellectual�property�are�expensed�in�the�year�in�which� they�are�incurred�to�the�extent�that�such��intellectual�property�is�used�for�research�and�development� activities.�

44 2013 circadian annual report

(r)��Research�and�development�costs��refer�note�23�

Research�costs�are�expensed�as�incurred.��An�intangible�asset�arising�from�the�development�expenditure�on� an�internal�project�will�only�be�recognised�when�the�Group�can�demonstrate�the�technical�feasibility�of� completing�the�intangible�asset�so�that�it�will�be�available�for�use�or�sale,�its�intention�to�complete�and�its� ability�to�use�or�sell�the�asset,�how�the�asset�will�generate�future�economic�benefits,�the�availability�of� resources�to�complete�the��development�and�the�ability�to�measure�reliably�the�expenditure�attributable�to� the�intangible�asset�during�its�development.�Following�the�initial�recognition�of�the�development� expenditure,�the�cost�model�is�applied�requiring�the�asset�to�be�carried�at�cost�less�any�accumulated� amortisation�and�accumulated�impairment�losses.��Any�expenditure�so�capitalised�is�amortised�over�the� period�of�expected�benefits�from�the�related�project.�

The�carrying�value�of�an�intangible�asset�arising�from�development�expenditure�is�tested�for�impairment� annually�when�the�asset�is�not�yet�available�for�use�or�more�frequently�when�an�indication�of�impairment� arises�during�the�reporting�period.�

(s)��Payables��refer�note�17��

Payables�are�carried�at�amortised�cost�and�due�to�their�short�term�nature,�they�are�not�discounted.��They� represent�liabilities�for�goods�and�services�provided�to�the�Group�prior�to�the�end�of�the�financial�year�that� are�unpaid�and�arise�when�the�Group�becomes�obliged�to�make�future�payments�in�respect�of�the�purchase� of�these�goods�and�services.��The�amounts�are�unsecured�and�are�usually�paid�within�30�days�of� recognition.�

(t)��Loans�and�borrowings�

All�loans�and�borrowings�are�initially�recognised�at�cost,�being�the�fair�value�of�the�consideration�received� net�of�issue�costs�associated�with�the�borrowing.�

After�initial�recognition,�interest�bearing�loans�and�borrowings�are�subsequently�measured�at�amortised� cost�using�the�effective�interest�method.�Amortised�cost�is�calculated�by�taking�into�account�any�issue�costs,� and�any�discount�or�premium�on�settlement.�

The�parent's�non�current�payables�include�loans�from�subsidiaries�which�are�not�interest�bearing.��The� relevant�subsidiaries�have�agreed�that�the�loans�to�the�parent�will�not�be�recalled�for�a�period�of�12�months� from�the�date�the�directors�adopt�the�annual�financial�statements�of�the�parent.��Loans�payable�to� subsidiaries�in�the�parent's�accounts�are�financial�liabilities�carried�at�amortised�cost.�

Loans�are�classified�as�current�liabilities�unless�the�Group�has�an�unconditional�right�to�defer�settlement�of� the�liability�for�at�least�12�months�after�the�reporting�date.�

Borrowing�costs�

Borrowing�costs�are�recognised�as�an�expense�when�incurred.�

2013 circadian annual report 45

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(u)��Provisions�and�employee�benefits��refer�notes�8,�18�and�19��

(i)��Wages,�salaries,�annual�leave�and�sick�leave�

Liabilities�for�wages�and�salaries,�including�non�monetary�benefits�and�annual�leave�expected�to�be�settled� within�12�months�of�the�reporting�date�are�recognised�in�current�provisions�in�respect�of�employees'� services�up�to�the�reporting�date.��They�are�measured�at�the�amounts�expected�to�be�paid��when�the� liabilities�are�settled.��Expenses�for�non�accumulating�sick�leave�are�recognised�when�the�leave�is�taken�and� are�measured�at�the�rate�paid�or�payable.�

(ii)��Long�service�leave��

The�liability�for�long�service�leave�is�recognised�in�the�provision�for�employee�benefits�and�measured�as�the� present�value�of�expected�future�payments�to�be�made�in�respect�of�services�provided�by�employees�up�to� the�reporting�date.��Consideration�is�given�to�expected�future�wage�and�salary�levels,�experience�of� employee�departures,�and�periods�of�service.��Expected�future�payments�are�discounted�using�market� yields�at�the�reporting�date�on�National�government�bonds�with�terms�to�maturity�that�match,�as�closely�as� possible,�the�estimated�future�cash�outflows.�

(v)��Share�based�payment�transactions��refer�to�note�26��

Equity�settled�transactions:�

The�Group�provides�benefits�to�employees�(including�key�management�personnel)�of�the�Group�in�the�form� of�share�based�payments,�whereby�employees�render�services�in�exchange�for�shares�or�rights�over�shares� (equity�settled�transactions).�

There�are�currently�two�plans�that�provide�these�benefits�to�employees:�the�Employee�Share�Option�Plan� and�a�Conditional�Rights�Scheme.�The�Conditional�Rights�Scheme�was�introduced�on�4�March�2011�and� replaces�the�Employee�Share�Option�Plan.�No�more�share�options�will�be�issued�under�the�Employee�Share� Option�Plan�after�this�date.�

The�cost�of�these�equity�settled�transactions�with�employees�is�measured�by�reference�to�the�fair�value�at� the�date�at�which�they�are�granted.��The�fair�value�is�determined�by�an�external�valuer.��A�binomial�model,� the�Monte�Carlo�simulation�or�Hull�model,�as�appropriate,�are�used�to�value�the�options�issued.��

In�valuing�transactions�settled�by�way�of�issue�of�options,�no�account�is�taken�of�any�performance�(or� vesting)�conditions,�other�than�conditions�linked�to�the�price�of�the�shares�of�Circadian�Technologies� Limited�(market�conditions).�

The�cost�of�the�equity�settled�transactions�is�recognised,�together�with�a�corresponding�increase�in�equity,� over�the�period�in�which�the�performance�conditions�are�fulfilled�(the�vesting�period),�ending�on�the�date� on�which�the�relevant�employees�become�fully�entitled�to�the�award�(the�vesting�date).��

46 2013 circadian annual report

At�each�subsequent�report�date�until�vesting,�the�cumulative�charge�to�profit�or�loss�is�the�product�of:�

(i)��the�grant�date�fair�value�of�the�award�
(ii)��the�current�best�estimate�of�the�number�of�awards�that�will�vest,�taking�into�account�such�factors�as� the�likelihood�of�employee�turnover�during�the�vesting�period;�and�
(iii)��the�expired�portion�of�the�vesting�period.�

The�charge�to�profit�or�loss�for�the�period�is�the�cumulative�amount�as�calculated�above�less�the�amounts� already�charged�in�previous�periods.��There�is�a�corresponding�credit�to�equity.��

Until�an�award�has�vested,�any�amounts�recorded�are�contingent�and�will�be�adjusted�if�more�or�fewer� awards�vest�than�were�originally�anticipated�to�do�so.��Any�award�subject�to�a�market�condition�is� considered�to�vest�irrespective�of�whether�or�not�that�market�condition�is�fulfilled,�provided�that�all�other� conditions�are�met.�

Where�the�terms�of�the�equity�settled�award�are�modified,�as�a�minimum�an�expense�is�recognised�as�if�the� terms�had�not�been�modified.��An�additional�expense�is�recognised�for�any�modification�that�increases�the� total�fair�value�of�the�share�based�payment�arrangement,�or�is�otherwise�beneficial�to�the�employee,�as� measured�at�the�date�of�modification.��

The�dilutive�effect,�if�any,�of�outstanding�options�is�reflected�as�additional�share�dilution�in�the�computation� of�earnings�per�share.��There�is,�however�no�dilutive�effect�when�there�is�a�loss�per�share.�

(w)��Contributed�equity��refer�note�20�

Ordinary�shares�are�classified�as�equity.��Incremental�costs�directly�attributable�to�the�issue�of�new�shares� or�options�are�shown�in�equity�as�a�deduction,�net�of�tax,�from�the�proceeds.�

(x)��Revenue�recognition��refer�note�6�

Revenue�is�recognised�and�measured�at�the�fair�value�of�the�consideration�received�or�receivable�to�the� extent�that�it�is�probable�that�the�economic�benefits�will�flow�to�the�Group�and�the�revenue�can�be�reliably� measured.��The�following�specific�recognition�criteria�must�also�be�met�before�revenue�is�recognised:�

(i)��Interest�revenue�

Almost�all�of�the�Group's�interest�revenue�is�earned�on�short�term�bank�deposits�and�as�such�interest� revenue�is�recognised�when�the�Group's�right�to�receive�the�payment�is�established.�

(ii)��Royalty�fee�and�licence�fee�revenue�

Royalty�fee�and�licence�fee�revenue�is�recognised�when�earned.��

(iii)��Dividends��

Revenue�is�recognised�when�the�Group's�right�to�receive�the�payment�is�established.�

2013 circadian annual report 47

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(y)��Income�tax��refer�note�9��

Current�tax�assets�and�liabilities�for�the�current�and�prior�periods�are�measured�at�the�amount�expected�to� be�recovered�from�or�paid�to�the�taxation�authorities�based�on�the�current�period's�taxable�income.��The� tax�rates�and�tax�laws�used�to�compute�the�amount�are�those�that�are�enacted�or�substantively�enacted�by� the�reporting�date.�

Deferred�income�tax�is�provided�on�all�temporary�differences�at�the�reporting�date�between�the�tax�bases� of�assets�and�liabilities�and�their�carrying��amounts�for�financial�reporting�purposes.�

Deferred�income�tax�liabilities�are�recognised�for�all�taxable�temporary�differences�except:�

when�the�deferred�income�tax�liability�arises�from�the�initial�recognition�of�goodwill�or�of�an�asset�or� liability�in�a�transaction�that�is�not�a�business�combination�and�that,�at�the�time�of�the�transaction,� affects�neither�the�accounting�profit�nor�taxable�profit�or�loss;�or��
when�the�taxable�temporary�difference�is�associated�with�investments�in�subsidiaries,�associate�or� interests�in�joint�ventures,�and�the�timing�of�the�reversal�of�the�temporary�difference�can�be� controlled�and�it�is�probable�that�the�temporary�difference�will�not�reverse�in�the�foreseeable�future.

Deferred�income�tax�assets�are�recognised�for�all�deductible�temporary�differences,�carry�forward�of� unused�tax�assets�(or�credits)�and�unused�tax�losses,�to�the�extent�that�it�is�probable�that�taxable�profit�will� be�available�against�which�the�deductible�temporary�differences,�and�the�carry�forward�of�unused�tax� credits�and�unused�tax�losses�can�be�utilised,�except:�

when�the�deferred�income�tax�asset�relating�to�the�deductible�temporary�differences�arises�from�the� initial�recognition�of�an�asset�or�liability�in�a�transaction�that�is�not�a�business�combination�and,�at� the�time�of�the�transaction,�affects�neither�the�accounting�profit�or�taxable�profit�or�loss;�or�
when�the�deductible�temporary�difference�is�associated�with�investments�in�subsidiaries,�associates� or�interests�in�joint�ventures,�in�which�case�a�deferred�tax�asset�is�only�recognised�to�the�extent�that� it�is�probable�that�the�temporary�difference�will�reverse�in�the�foreseeable�future�and�taxable�profit� will�be�available�against�which�the�temporary�differences�can�be�utilised.��

The�carrying�amount�of�deferred�income�tax�assets�is�reviewed�at�each�reporting�date�and�reduced�to�the� extent�that�it�is�no�longer�probable�that�sufficient�taxable�profit�will�be�available�to�allow�all�or�part�of�the� deferred�income�tax�asset�to�be�utilised.

Unrecognised�deferred�income�tax�assets�are�reassessed�at�each�reporting�date�and�are�recognised�to�the� extent�that�it�has�become�probable�that�future�taxable�profit�will�allow�the�deferred�tax�asset�to�be� recovered.�

Deferred�income�tax�assets�and�liabilities�are�measured�at�the�tax�rates�that�are�expected�to�apply�to�the� year�when�the�asset�is�realised�or�the�liability�is�settled,�based�on�tax�rates�(and�tax�laws)�that�have�been� enacted�or�substantively�enacted�at�balance�date.�

Income�taxes�relating�to�items�recognised�directly�in�equity�are�recognised�directly�in�equity�and�not�in� profit�or�loss.�

48 2013 circadian annual report

Tax�consolidation�legislation�

The�head�entity,�Circadian�Technologies�Limited,�and�the�controlled�entities�in�the�tax�consolidated�group� account�for�their�own�current�and�deferred�tax�amounts.��Members�of�the�tax�consolidated�group�have� adopted�the�"separate�taxpayer�within�group"�method�to�allocate�the�current�and�deferred�tax�amounts�to� each�entity�within�the�Group.��This�method�requires�adjustments�for�transactions�and�events�occurring� within�the�tax�consolidated�group�that�do�not�give�rise�to�a�tax�consequence�for�the�Group�or�that�have�a� different�tax�consequence�at�the�level�of�the�Group.�

In�addition�to�its�own�current�and�deferred�tax�amounts,�Circadian�Technologies�Limited�also�recognises�the� current�tax�liabilities�(or�assets)�and�the�deferred�tax�assets�arising�from�unused�tax�losses�and�unused�tax� credits�assumed�from�controlled�entities�in�the�tax�consolidated�group.��

The�head�entity,�which�is�the�parent�entity,�in�assuming�the�net�unused�tax�losses�and�unused�relevant�tax� credits,�has�recognised�reductions�to�investments�in�subsidiaries�and�where�the�amount�of�tax�losses� assumed�is�in�excess�of�the�carrying�value�of�the�investment,�the�parent�has�recognised�the�difference�as�a� distribution�from�subsidiary�in�profit�or�loss.�

(z)��Other�taxes�

Revenues,�expenses,�assets�and�liabilities�are�recognised�net�of�the�amount�of�GST�except:�

when�the�GST�incurred�on�a�purchase�of�goods�and�services�is�not�recoverable�from�the�taxation� authority,�in�which�case�the�GST�is�recognised�as�part�of�the�cost�of�acquisition�of�the�asset�or�as�part� of�the�expense�item�as�applicable;�and�
receivables�and�payables�are�stated�with�the�amount�of�GST�included.�

The�net�amount�of�GST�recoverable�from,�or�payable�to�the�taxation�authority�is�included�as�part�of� receivables�or�payables�in�the�statement�of�financial�position.�

Cash�flows�are�included�in�the�statement�of�cash�flows�on�a�gross�basis�and�the�GST�component�of�cash� flows�arising�from�investing�and�financing�activities,�which�is�recoverable�from,�or�payable�to,�the�taxation� authority�is�classified�as�part�of�operating�cash�flows.�

Commitments�and�contingencies�are�disclosed�net�of�the�amount�of�GST�recoverable�from,�or�payable�to,� the�taxation�authority.��

(aa)��Government�grants��refer�note�7�

Government�grants�are�recognised�when�there�is�reasonable�assurance�that�the�grant�will�be�received�and� all�attaching�conditions�will�be�complied�with.�

When�the�grant�relates�to�an�expense�item,�it�is�recognised�as�income�over�the�periods�necessary�to�match� the�grant�on�a�systematic�basis�to�the�costs�that�it�is�intended�to�compensate.��They�are�not�credited� directly�to�shareholders�equity.��

2013 circadian annual report 49

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(ab)��Earnings�per�share��refer�note�10�

Diluted�earnings�per�share�is�calculated�as�net�profit/loss�divided�by�the�weighted�average�number�of� ordinary�shares�and�dilutive�potential�ordinary�shares.��The�share�options�are�not�dilutive�as�their�respective� exercise�prices�are�in�excess�of�the�share�price�at�year�end.��Whilst�the�deferred�shares�would�generally�be� included�in�the�calculation�as�their�conditions�of�issuance�are�known�to�be�satisfied,�due�to�there�being�a� loss�for�the�current�year,�these�instruments�would�be�anti�dilutive�(decrease�the�loss�per�share).� Accordingly�they�have�been�excluded�from�the�calculation,�resulting�in�basic�earnings/(loss)�per�share�being� the�same�as�the�diluted�value�per�share.��

(ac)��Comparatives�

Where�necessary,�comparatives�have�been�reclassified�and�repositioned�for�consistency�with�current�year� disclosure.�

3.��FINANCIAL�RISK�MANAGEMENT�OBJECTIVES�AND�POLICIES�

The�Group's�principal�financial�assets�comprise�cash,�receivables,�short�term�deposits�and�financial� investments.��

The�Group�(including�the�Parent)�manages�its�exposure�to�key�financial�risks,�including�interest�rate�and� currency�risk�in�accordance�with�the�Group's�financial�risk�management�practices.��The�objective�is�to� support�the�delivery�of�the�Group's�financial�targets�whilst�protecting�future�financial�security.�

The�Group's�other�various�financial�assets�and�liabilities,�such�as�receivables�and�payables,�arise�directly� from�its�operations.��The�main�risks�arising�from�the�Group's�financial�assets�and�liabilities�are�interest�rate� risk,�foreign�currency�risk,�equity�securities�price�risk�and�liquidity�risk.�

The�Group�uses�different�methods�to�measure�and�manage�different�types�of�risks�to�which�it�is�exposed.�� These�include�monitoring�levels�of�exposure�to�interest�rate�and�foreign�exchange�risk�and�assessments�of� market�forecasts�for�interest�rates�and�foreign�exchange�rates.��Liquidity�risk�is�monitored�through�future� rolling�cash�flow�forecasts.�

The�Board�reviews�and�agrees�policies�for�managing�each�of�these�risks�as�summarised�below.�

Risk�exposures�and�responses�

The�Group�has�investigated�the�main�financial�risk�areas�which�could�impact�on�its�financial�assets�and� determined�the�impact�on�post�tax�(losses)�or�profits�for�a�range�of�sensitivities.��These�can�be�seen�in�the� post�tax�(loss)/profit�impact�for�each�risk�area.�

For�each�risk�area,�the�equity�impact�relates�solely�to�reserve�movements�and�excludes�retained�earnings� movements�as�the�impact�of�these�can�be�seen�within�the�post�tax�(loss)/profit�impact.�

50 2013 circadian annual report

(i)��Interest�rate�risk�

The�Group's�exposure�to�market�interest�rates�relates�primarily�to�the�short�term�deposits.�The�deposits�are� held�with�one�of�Australia's�largest�banks.�

The�objective�of�managing�interest�rate�risk�is�to�minimise�the�Group's�exposure�to�fluctuations�in�interest� rates�that�might�impact�its�interest�revenue�and�cash�flow.��To�manage�interest�rate�risk,�the�Group�invests� the�majority�of�its�cash�in�short�term�deposits�for�varying�periods�of�between�30�days�and�90�days,� depending�on�the�short�and�long�term�cash�requirements�of�the�Group�which�is�determined�based�on�the� Group's�cash�flow�forecast.��This�consideration�also�takes�into�account�the�costs�associated�with�recalling�a� term�deposit�should�early�access�to�cash�and�cash�equivalents�be�required.��Cash�is�not�locked�into�long� term�deposits�at�fixed�rates�so�as�to�mitigate�the�risk�of�earning�interest�below�the�current�floating�rate.�

The�Group�does�not�have�any�borrowings.�

The�following�sensitivity�analysis�(an�annual�effect)�is�based�on�the�interest�rate�risk�exposures�in�existence� at�balance�date.�

As�at�30�June�2013,�given�that�the�interest�risk�associated�with�the�Group�and�parent�relates�solely�to� interest�income�(the�Group�has�no�third�party�borrowings),�if�interest�rates�moved,�with�all�variables�held� constant,�post�tax�(loss)/profit�and�equity�would�have�been�affected�as�illustrated�in�the�following�table:�

	Posttax
	(loss)/profit
Judgementsofreasonablypossiblemovemen	impact			Equityimpact
	2013	2012	2013	2012
	$	$	$	$
Consolidated
+0.50%(50basispoints)(2013:+0.50%)	42,500	72,592		�	�
�0.50%(50basispoints)(2013:�0.50%)	(42,500)	(72,592)		�	�

Given�the�amount�of�unrecognised�tax�losses�in�existence,�the�post�tax�figures�include�an�offset�of�these�tax� losses�(bringing�the�tax�effect�to�nil)�for�the�year�ended�30�June�2013�(2012:�Nil).�

Significant�assumptions�used�in�the�interest�rate�sensitivity�analysis�include:�

The�net�exposure�at�balance�date�is�representative�of�what�the�Group�was�and�is�expecting�to�be� exposed�to�in�the�next�twelve�months�from�balance�date.�

2013 circadian annual report 51

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(ii)��Price�risk�

The�Group's�investment�in�listed�shares�is�exposed�to�equity�securities�price�risk�and�as�such�their�fair� values�are�exposed�to�fluctuations�as�a�result�of�changes�in�market�prices.�

Equity�price�risk�is�the�risk�that�the�fair�value�of�equities�will�decrease�as�a�result�of�share�price�movements.�� The�Group's�equity�investments�are�publicly�traded�on�the�ASX�and�are�designated�and�accounted�for�as� "available�for�sale"�financial�assets�(except�for�those�which�are�recognised�as�associates).�

The�investments�in�listed�shares�are�not�held�for�short�term�trading.��Their�values�are�reviewed�regularly�by� management�and�the�board.�The�strategy�for�realising�any�part�of�these�investments�is�determined�based� on�the�liquidity�of�the�respective�stocks,�potential�off�market�acquirers�and�likely�developments�in�their� values�based�on�publicly�available�information.�

At�30�June�2013,�had�the�share�price�moved�with�all�other�variables�held�constant,�post�tax�(loss)/profit�and� equity�would�have�been�affected�as�illustrated�in�the�table�below:�

		Impacton
Judgementsofreasonablypossible	Impacton	equityafter	Impacton	Impacton
movements:	lossaftertax	tax	lossaftertax	equityaftertax
	2013	2013	2012	2012
	$	$	$	$
Consolidated
Changeinvariables
10%increaseinlistedshareprice	�	159,636	�	255,413
10%decreaseinlistedshareprice	�	(159,636)	�	(255,413)

(iii)��Foreign�currency�risk�

As�a�result�of�services�predominantly�provided�by�non�related�entities�in�the�United�States,�United�Kingdom� and�Europe,�part�of�the�Group's�financial�assets�and�liabilities�are�affected�by�movements�in�the�US$�/�A$� exchange�rate,�the�Euro�/�A$�exchange�rate�and�GBP�/�A$�exchange�rate.�

The�Group�does�not�enter�into�any�hedging�transactions.�

As�at�reporting�date,�the�Group�has�the�following�exposure�to�foreign�currencies:�

52 2013 circadian annual report

3.��FINANCIAL�RISK�MANAGEMENT�OBJECTIVES�AND�POLICIES�(CONTINUED)�

2013 Financialassets Cash Receivables Financialliabilities Payables Netexposure 2012 Financialassets Cash Receivables Financialliabilities Payables Netexposure	Consolidated
	USD EURO GBP
	2013 2013 2013 $ $ $ 1,205,398 � 31,118 122,691 5,104 � (368,658) (11,316) (151,515)
	959,431 (6,212) (120,397)
	Consolidated
	USD EURO GBP
	2012 2012 2012 $ $ $ 2,148,205 � 10,675 35,774 1,857 � (786,468) (202,983) (39,399)
	1,397,511 (201,126) (28,724)

The�following�sensitivity�is�based�on�the�foreign�currency�risk�exposures�in�existence�at�balance�date.�

At�30�June�2013,�had�the�Australian�dollar�moved�with�all�other�variables�held�constant,�post�tax�(loss)� profit�and�equity�would�have�been�affected�as�illustrated�in�the�table�below:�

2013 circadian annual report 53

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

Judgements�of�reasonably�possible�

movements:	Posttax(loss)/profitimpact	Posttax(loss)/profitimpact	Equityimpact	Equityimpact
	2013	2012	2013	2012
	$	$	$	$
Consolidated
AUD/USD+5%	(45,687)	(66,548)	�	�
AUD/USD�10%	106,603	155,279	�	�
AUD/Euro+5%	296	9,577	�	�
AUD/Euro�10%	(690)	(22,347)	�	�
AUD/GBP+5%	5,733	1,368	�	�
AUD/GBP�10%	(13,377)	(3,192)	�	�

The�reasonably�possible�movements�at�30�June�2013�are�less�than�at�30�June�2012�due�to�the�lower�net� exposure�to�the�US�dollar.�There�was�minimum�or�insignificant�exposure�to�the�GBP�during�the�current� financial�year.�

Significant�assumptions�used�in�the�foreign�currency�exposure�sensitivity�analysis�include:�

The�reasonably�possible�movement�of�5%�was�calculated�by�taking�the�USD,�EUR�and�GBP�spot�rates� as�at�balance�date,�moving�these�by�5%�and�10%�and�then�re�converting�the�USD,�EUR�and�GBP�into� AUD�with�the�"new�spot�rate'.��This�methodology�reflects�the�translation�methodology�undertaken� by�the�Group.�
The�net�exposure�at�balance�date�is�representative�of�what�the�Group�was�and�is�expecting�to�be� exposed�to�in�the�next�twelve�months�from�balance�date.�

Management�believes�the�balance�date�risk�exposures�are�representative�of�the�risk�exposure�inherent�in� the�financial�instruments.�

(iv)��Credit�risk�

Credit�risk�is�associated�with�those�financial�assets�of�the�Group�which�comprise�cash�and�cash�equivalents� and�listed�investments.��The�Group's�exposure�to�credit�risk�arises�from�default�of�the�counter�party,�with�a� maximum�exposure�equal�to�the�carrying�amount�of�these�investments.��Credit�risk�is�considered�minimal� as�the�Group�transacts�with�a�reputable�recognised�third�party�(the�Commonwealth�Bank�of�Australia).�

54 2013 circadian annual report

3.��FINANCIAL�RISK�MANAGEMENT�OBJECTIVES�AND�POLICIES�(CONTINUED)�

(v)��Liquidity�risk�

Liquidity�risk�arises�from�the�financial�liabilities�of�the�Group�and�the�Group's�subsequent�ability�to�meet� their�obligations�to�repay�their�financial�liabilities�as�and�when�they�fall�due.��The�Group�has�minimal� liquidity�risk�because�of�the�high�balances�of�cash�and�cash�equivalents;�however�the�Group�manages� liquidity�risk�by�maintaining�adequate�reserves�and�by�continuously�monitoring�forecast�and�actual�cash� flows�and�by�matching�the�maturity�profiles�of�financial�assets�and�liabilities.�

The�Group's�objective�is�to�maintain�an�appropriate�cash�asset�balance�to�fund�its�operations.��

(vi)��Fair�value�

The�Group�has�investments�in�listed�equities�which�are�calculated�using�the�quoted�prices�in�an�active� market.��These�investments�are�classified�as�falling�into�level�1�hierarchy�per� AASB�7�Financial�Instruments:� Disclosure .�The�Group�does�not�have�any�derivative�investments�(level�2�hierarchy)�where�the�fair�value�is� estimated�using�inputs�other�than�quoted�prices�included�in�level�1�that�are�observable�for�the�asset�or� liability,�either�directly�(as�prices)�or�indirectly�(i.e.�derived�from�prices).�The�Group�also�does�not�hold�any� financial�instruments�that�fall�into�level�3.�Level�3�fair�value�measurement�uses�observable�inputs�that� require�significant�adjustments�based�on�observable�inputs�to�estimate�its�value.�

Details�of�the�fair�value�of�the�investments�in�listed�equities�are�disclosed�in�note�13(a)�of�the�financial� statements.�

The�methods�for�estimating�fair�value�are�also�outlined�in�the�relevant�notes�to�the�financial�statements.�

4.��SIGNIFICANT�ACCOUNTING�JUDGEMENTS,�ESTIMATES�AND�ASSUMPTIONS�

In�applying�the�Group's�accounting�policies,�management�continually�evaluates�judgements,�estimates�and� assumptions�based�on�experience�and�other�factors,�including�expectations�of�future�events�that�may�have� an�impact�on�the�Group.��All�judgements,�estimates�and�assumptions�made�are�believed�to�be�reasonable� based�on�the�most�current�set�of�circumstances�available�to�management.�Actual�results�may�differ�from� the�judgements,�estimates�and�assumptions.��Significant�judgements,�estimates�and�assumptions�made�by� management�in�the�preparation�of�these�financial�statements�are�outlined�below:�

(i)��Significant�accounting�judgements�

Capitalised�development�costs�

Development�costs�are�only�capitalised�by�the�Group�when�it�can�be�demonstrated�that�the�technical� feasibility�of�completing�the�intangible�asset�is�valid�so�that�the�asset�will�be�available�for�use�or�sale.�

No�development�costs�were�capitalised�during�the�current�year.�

2013 circadian annual report 55

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

4.��SIGNIFICANT�ACCOUNTING�JUDGEMENTS,�ESTIMATES�AND�ASSUMPTIONS� (CONTINUED)�

Impairment�of�available�for�sale�assets�

The�Group�holds�available�for�sale�financial�assets�and�follows�the�requirements�of� AASB�139�Financial� Instruments:�Recognition�and�Measurement �in�determining�when�an�available�for�sale�asset�is�impaired.�� For�the�year�ended�30�June�2013,�losses�of�$26,218�have�been�booked�for�available�for�sale�financial�assets.�

Taxation�

The�Group's�accounting�policy�for�taxation�requires�management�judgements�as�to�the�types�of� arrangements�considered�to�be�a�tax�on�income�in�contrast�to�an�operating�cost.��Judgement�is�also� required�in�assessing�whether�deferred�tax�assets�and�certain�deferred�tax�liabilities�are�recognised�in�the� statement�of�financial�position.�Deferred�tax�assets,�including�those�arising�from�unrecouped�tax�losses,� capital�losses�and�temporary�differences,�are�recognised�only�where�it�is�considered�more�likely�than�not� that�they�will�be�recovered,�which�is�dependent�on�the�generation�of�sufficient�future�taxation�profits.�

Assumptions�about�the�generation�of�future�taxable�profits�depend�on�management's�estimates�of�future� cash�flows.��These�depend�on�estimates�of�future�operating�costs,�capital�expenditure�and�the�possible� timing�of�realising�capital�gains�taxes/losses.�

Judgements�are�also�required�about�the�application�of�income�tax�legislation.��These�judgements�and� assumptions�are�subject�to�risk�and�uncertainty,�hence�there�is�a�possibility�that�changes�in�circumstances� will�alter�expectations,�which�may�impact�the�amount�of�deferred�tax�assets�and�deferred�tax�liabilities� recognised�in�the�statement�of�financial�position�and�the�amount�of�other�tax�losses��and�temporary� differences�not�yet�recognised.��In�such�circumstances,�some�or�all�of�the�carrying�amounts�of�recognised� deferred�tax�assets�and�liabilities�may�require�adjustment,�resulting�in�a�corresponding�credit�or�charge�to� profit�or�loss.�

Carrying�value�of�investment�in�subsidiary�

The�judgement�with�respect�to�the�carrying�value�of�the�investment�in�Vegenics�Pty�Ltd�has�been�made� through�assessing�the�progress�of�the�research�and�development�activities�against�the�milestones�which� were�established�for�these�activities.�In�undertaking�the�impairment�test�with�respect�to�this�investment,� the�Company�assessed�that�the�development�milestones�are�being�achieved�in�the�timeframes�expected,� therefore�the�Company�does�not�consider�its�investment�is�impaired.�A�detailed�summary�of�progress�of�the� Group's�research�and�development�activities�and�discussion�of�the�Company's�achievements�and�plans�over� the�next�12�months�is�contained�within�the�Operating�and�Financial�Review�contained�in�the�Directors� Report.�

(ii)��Significant�accounting�estimates�and�assumptions�

Valuation�of�investments�

The�Group�has�classified�investments�in�listed�securities�as�'available�for�sale'�investments�and�movements� in�fair�value�are�recognised�directly�in�equity,�unless�considered�impaired.��The�fair�value�of�listed�shares�has� been�determined�by�reference�to�published�price�quotations�in�an�active�market.�

56 2013 circadian annual report

4.��SIGNIFICANT�ACCOUNTING�JUDGEMENTS,�ESTIMATES�AND�ASSUMPTIONS� (CONTINUED)�

Share�based�payment�transactions�

The�Group�measures�the�cost�of�equity�settled�transactions�with�employees�by�reference�to�the�fair�value� of�the�equity�instruments�at�the�date�at�which�they�are�granted.�The�fair�value�is�determined�with�the� assistance�of�an�external�valuer�using�a�binomial�model.��The�related�assumptions�are�detailed�in�note�26.�� The�accounting�estimates�and�assumptions�relating�to�equity�settled�share�based�payments�would�have�no� impact�on�the�carrying�amounts�of�assets�and�liabilities�within�the�next�annual�reporting�period�but�may� impact�expenses�and�equity.�

5.��SEGMENT�INFORMATION�

The�consolidated�entity�operates�predominantly�in�one�industry�and�one�geographical�segment,�those� being�the�medical�technology�and�healthcare�industry�and�Australia�respectively.�

The�Group�is�a�biologics�drug�developer�building�on�its�significant�intellectual�property�portfolio�around� Vascular�Endothelial�Growth�Factor�(VEGF)�C�and�D�(angiogenic�molecules)�and�R3.��The�Group�is�focused� primarily�on�developing�biological�therapeutics�for�cancer�and�other�serious�diseases.�

The�objective�is�to�generate�value�by�undertaking�pre�clinical�and�early�human�clinical�development�and� partnering�with�pharmaceutical�companies�the�further�development�of�major�therapeutic�indications�while� retaining�rights�to�selected�indications.�

The�chief�operating�decision�maker�regularly�reviews�entity�wide�information�that�is�compliant�with� Australian�Accounting�Standards.�There�is�only�one�segment�for�segment�reporting�purposes�and�the� information�reviewed�by�the�chief�operating�decision�maker�is�the�same�as�the�information�presented�in� the�statement�of�financial�position,�statement�of�comprehensive�income�and�statement�of�cash�flows.�

6.��REVENUE�

6.REVENUE
(a)Financerevenue Interestfrom: �Bank �Otherunrelatedpersons (b)Otherrevenue Royaltiesandlicencefees TotalRevenue	2013 2012 $ $ 527,734 973,597 3,252 1,965
	530,986 975,563 622,701 510,270
	1,153,687 1,485,832

2013 circadian annual report 57

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

7.��OTHER�INCOME�

7.OTHERINCOME
NetdiscountonacquisitionduetoSyngeneLimitedbecominga subsidiary(i) Dividendsfromequityinvestments Governmentgrantincome Netgainondisposalofavailable�for�saleinvestments Netforeignexchangegains Other	2013 2012 $ $ � 13,719 � 1,500 13,500 133,674 149,834 � 284,777 57,723 18,880 47,112
	466,991 253,728

(i)��The�net�impact�due�to�the�acquisition�of�Syngene�Limited�and�ceasing�to�be�equity�accounted.�

58 2013 circadian annual report

8.��EXPENSES�

8.EXPENSES
*(a)Impairmentlosses* Listedfinancialinvestments *(b)Occupancyexpenses* �Operatingleaserentals �Outgoings Totaloccupancyexpense *(c)Administrativeexpenses* Includedinadministrativeexpensesare: �Depreciationof: Equipmentandfurniture(note16) Leaseholdimprovements(note16) Totaldepreciationexpense �Lossonsaleofavailable�for�saleinvestments �Employeebenefitsexpense: Salariesandfees Cashbonuses Superannuation Share�basedpaymentsexpense(note26) Otheremployeebenefitsexpense Totalemployeebenefitsexpense �Otheradministrativeexpenses �Travelexpenses �Insurance �Consultancyfees �Legalfees �Payrolltax �Investorrelationandshareregistryrelatedcosts �Auditandaccounting �Otherexpenses Totalotheradministrativeexpenses Totaladministrativeexpenses	2013 2012 $ $ 26,218 �
	26,218 �
	2013 2012
	$ $ 122,836 112,408 38,680 40,096
	161,516 152,504
	27,051 28,289 289 290
	27,340 28,579
	� 9,762 2,084,947 2,078,891 12,829 249,859 197,350 214,529 66,407 45,155 90,021 54,566
	2,451,554 2,643,001
	113,803 125,960 94,615 88,262 206,321 98,100 83,351 37,127 93,643 114,105 248,961 331,924 161,650 125,763 462,050 322,592
	1,464,394 1,243,832
	3,943,288 3,925,175

2013 circadian annual report 59

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

9.��INCOME�TAX�

(a)IncomeTaxBenefit	2013	2012
	$	$
Themajorcomponentsofincometaxbenefitare:
StatementofComprehensiveIncome
Currentincometax
Currentincometaxcredit	(1,960,206)	(1,409,793)
RefundofResearchandDevelopmentTaxCredit(i)	�	(622,800)
Adjustmentsinrespectoftaxlossesofpreviousyears	(10,493)		�
Deferredincometax
Relatingtorevaluationoflistedinvestmentstofairvalue	412,690	(369,477)
Incometaxbenefitreportedinthestatementofcomprehensive
income	(1,558,009)	(2,402,070)
(i) Followingthelodgementofincometaxreturnfor30June2011,theGrouprecognisedan
incometaxbenefitof$622,800whichrelatestotheresearchanddevelopmenttax		offset
allowableonresearchanddevelopmentexpenditureundertakenwithinAustralia.Inthe
currentyearduetotheimplementationoftheR&DtaxincentivetheGroupexpectstorecover
$1,960,206(2012:$1,409,793)forR&Dtaxincentivesoncetheincometaxreturnislodgedfor
30June2013.
(b)Amountschargedorcrediteddirectlytoequity	2013	2012
	$	$
Deferredincometaxrelatedtoitemscharged(credited)directly
toequity
Netunrealisedgain/(loss)onlistedinvestments(i)	(412,690)	369,477
Incometaxbenefitreportedinequity	(412,690)	369,477

(i)��Deferred�tax�movements�were�recognised�with�respect�to�unrealised�gains�and�losses�on�listed� investments�in�Antisense�Therapeutics�Limited,�$244,576�and�Optiscan�Imaging�Limited,�$49,711�plus� movements�in�other�minor�holdings�by�Syngene�Limited�$118,403.�

60 2013 circadian annual report

(c)��Numerical�reconciliation�between�aggregate�tax�expense�recognised�in�the�statement� of�comprehensive�income�and�expense�calculated�per�the�statutory�income�tax�rate�

A�reconciliation�between�tax�expense�and�the�product�of�accounting�loss�before�income�tax� multiplied�by�the�Group's�applicable�income�tax�rate�is�as�follows:�

Accountinglossbeforetax Attheparententity'sstatutoryincometaxrateof30%(2012:30%) Researchanddevelopmenttaxcreditrefundable Writeoffoftemporarydifferencesandtaxlossesnotrecovered Adjustmentsrecognisedincurrentyearinrelationtothecurrent taxofprioryear Unrecognisedunrealisedandrealisedtaxassets RefundofResearchandDevelopmentTaxCredit Increaseindeferredtaxassetsduetotemporarydifferences (Decrease)/increaseindeferredtaxliabilitiesduetotemporary differences Expenditurenotallowableforincometaxpurposes Income(notassessable)/assessableforincometaxpurposes Differencebetweentaxgain/lossandaccountinggain/losson disposalofinvestments�non�assessable Incometaxexpensereportedinthestatementofcomprehensive income	2013 2012 $ $ (6,562,515) (7,308,526)
	(1,968,755) (2,192,558) (1,960,206) (1,392,581) 2,381,445 � (10,493) � � 4,693,030 (622,800) � (3,421,561) � (621,777) � 1,027,655 � 133,141 � (4,619)
	(1,558,009) (2,402,070)

Accountinglossbeforetax
Attheparententity'sstatutoryincometaxrateof30%(2012:30%)
Researchanddevelopmenttaxcreditrefundable
Writeoffoftemporarydifferencesandtaxlossesnotrecovered
Adjustmentsrecognisedincurrentyearinrelationtothecurrent
taxofprioryear
Unrecognisedunrealisedandrealisedtaxassets
RefundofResearchandDevelopmentTaxCredit
Increaseindeferredtaxassetsduetotemporarydifferences
(Decrease)/increaseindeferredtaxliabilitiesduetotemporary
differences
Expenditurenotallowableforincometaxpurposes
Income(notassessable)/assessableforincometaxpurposes
Differencebetweentaxgain/lossandaccountinggain/losson
disposalofinvestments�non�assessable
Incometaxexpensereportedinthestatementofcomprehensive
income

2013
2012
$
$ (6,562,515)
(7,308,526)

(1,968,755)
(2,192,558)
(1,960,206)
(1,392,581)
2,381,445
�
(10,493)
�
�
4,693,030
(622,800)
�
(3,421,561)
�
(621,777)
�
1,027,655
�
133,141
�
(4,619)

(1,558,009)
(2,402,070)

2013 circadian annual report 61

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

	2013	2012
	$	$
(d)Recogniseddeferredtaxassetsandliabilitiesinstatementof
financialposition
Deferredincometaxat30Junerelatestothefollowing:
Deferredtaxliabilities:
Revaluationoflistedinvestmentstofairvalue	(14,225)	(128,645)
Interestandroyaltyincomereceivable(futureassessableincome)	(63,160)	(47,936)
	(77,385)	(176,581)
Deferredtaxassets:
Taxlosses	�	�
Incomereceivedinadvance	�	60,379
Employeeprovisions(i)	77,385	88,258
Futureallowabledeductions/incomenotassessable	�	27,944
	77,385	176,581
(i)Recognisedonlytotheextentthattherearetemporarydifferencestooffset
(e)Recogniseddeferredtaxexpenseinstatementof
comprehensiveincome	2013	2012
Deferredincometaxat30Junerelatestothefollowing:	$	$
TaxLosses	�	�
Revaluationoflistedinvestmentstofairvalue	(412,690)	369,477
Incomereceivedinadvance	�	5,334
Temporarydifferenceforinvestmentinassociate	�	78,802
Interestandroyaltyincomereceivable(futureassessableincome)	(15,224)	(17,411)
Employeeprovisions	(10,873)	13,378
Futureallowabledeductions/incomenotassessable	�	(31,572)
Derecognitionofdeferredtaxassetsduetoprobabilitytest	26,097	(48,531)
Deferredtaxexpenses	(412,690)	369,477

(f)��Unrecognised�temporary�differences�

Temporary�differences�with�respect�to�deferred�tax�assets�associated�with�investments,�intellectual� property�and�other�miscellaneous�items�which�have�a�low�probability�of�realisation�are� unrecognised.�These�amounted�to�$3,238,863�at�year�end�(2012:�$3,365,754).�

(g)��Tax�consolidation�

(i)��Members�of�the�tax�consolidated�group�

Circadian�Technologies�Limited�and�its�100%�owned�subsidiaries�formed�a�tax�consolidated�group� effective�1�July�2003.�Circadian�Technologies�Limited�is�the�head�entity�of�the�tax�consolidated� group.��

62 2013 circadian annual report

(ii)��Tax�effect�accounting�by�members�of�the�tax�consolidated�group�

Members�of�the�tax�consolidated�group�have�adopted�the�"separate�taxpayer�within�group"�method� to�allocate�the�current�and�deferred�tax�amounts�to�each�entity�within�the�Group.�For�details�with� respect�to�this�method,�see�accounting�policy�note�2(y).�

(h)��Carry�forward�unrecognised�tax�losses�

The�Group�had�income�tax�losses�of�$11,826,085�and�capital�losses�of�$877,704�at�year�end�(2012:� income�tax�losses�of�$10,887,936�and�capital�losses�of�$877,704�for�which�no�deferred�tax�asset�is� recognised�on�the�statement�of�financial�position�as�they�are�currently�not�considered�probable�of� realisation.�These�tax�losses�are�available�indefinitely�for�offset�against�future�assessable�income� subject�to�continuing�to�meet�relevant�statutory�tests.�

(i)��Franking�credit�balance�

The�franking�account�balance�at�the�end�of�the�financial�year�at�30%�is�$330,630�(2012:�$330,630),� which�represents�the�amount�of�franking�credits�available�for�the�subsequent�financial�year.�

10.��EARNINGS�PER�SHARE�

(a)Earningsusedincalculatingearningspershare Netlossattributabletoordinaryequityholdersoftheparent (b)Weightedaveragenumberofshares Weightedaveragenumberofordinarysharesonissueforbasicearningspershare Effectofdilution: Conditionalrights Shareoptions Weightedaveragenumberofordinarysharesadjustedfortheeffectofdilution Thefollowingreflectstheincomeusedinthe basicanddilutedearningspershare	2013 2012 $ $ (4,754,793) (4,837,253)
	48,588,214 46,539,326 � � � �
	48,588,214 46,539,326

There�have�been�no�other�transactions�involving�ordinary�shares�or�potential�ordinary�shares�that�would� significantly�change�the�number�of�ordinary�shares�or�potential�ordinary�shares�outstanding�between�the� reporting�date�and�the�date�of�completion�of�this�financial�report.�

Diluted�earnings�per�share�is�calculated�as�net�profit/(loss)�divided�by�the�weighted�average�number�of� ordinary�shares�and�dilutive�potential�ordinary�shares.�The�share�options�in�place�are�not�dilutive�as�their� respective�exercise�prices�are�in�excess�of�the�share�price�at�year�end.�Although�the�conditional�rights�would� generally�be�included�in�the�calculation�due�to�the�conditions�of�the�issuance�being�satisfied,�because�there�is�a� loss�in�the�current�year,�these�instruments�would�be�anti�dilutive�(decrease�the�loss�per�share)�and�therefore� have�been�excluded�from�the�calculation.�Therefore,�the�basic�loss�per�share�is�the�same�as�the�diluted�value� per�share.�

2013 circadian annual report 63

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(c)��Information�on�the�classification�of�securities�

Options�and�conditional�rights�granted�to�employees�(including�key�management�personnel)�as�described�in� note�26�are�considered�to�be�potential�ordinary�shares�and�have�been�included�in�the�determination�of�diluted� earnings�per�share�to�the�extent�they�are�dilutive.�

11.��CURRENT�ASSETS��CASH�AND�CASH�EQUIVALENTS�

Cashatbankandinhand Short�termdeposits	2013 2012 $ $ 2,503,941 3,889,225 8,500,000 12,550,000
	11,003,941 16,439,225

Cash�at�bank�earns�interest�at�floating�rates�based�on�daily�bank�deposit�rates.�The�carrying�amounts�of�cash� and�cash�equivalents�represent�fair�value.�

Short�term�deposits�are�with�a�major�bank�and�are�made�for�varying�periods�of�between�30�days�and�90�days,� depending�on�the�immediate�cash�requirements�of�the�Group,�and�earn�interest�at�a�fixed�rate�for�the� respective�short�term�deposit�periods.�At�year�end,�the�average�rate�was�4.37%�(2012:�5.21%).�

12.��CURRENT�ASSETS��RECEIVABLES

Interestreceivable Royaltyincomereceivable(i) GSTreceivable(i) Other(i) Currenttaxasset(ii) Totalcurrentreceivables	2013 2012 $ $ 27,493 127,496 44,111 37,286 54,400 48,970 237,806 50,019 1,960,206 1,392,581 2,324,016 1,656,352

(i) These�receivables�are�non�interest�bearing,�most�of�which�have�repayment�terms�between�30�and�60� days.�There�are�no�receivables�past�due�or�considered�impaired.�

(ii) Current�tax�assets�relates�to�the�balance�accrued�in�relation�to�the�R&D�tax�incentive�introduced�by�the� Australian�government�effective�1�July�2012.�

64 2013 circadian annual report

(a)��Fair�value�and�credit�risk�

Due�to�the�short�term�nature�of�these�receivables,�their�carrying�value�is�assumed�to�approximate�their�fair� value.��The�maximum�exposure�to�credit�risk�is�the�fair�value�of�receivables.�

(b)��Foreign�exchange�and�interest�rate�risk�

Details�regarding�foreign�exchange�and�interest�rate�risk�exposure�are�disclosed�in�note�3.�

13.��NON�CURRENT�ASSETS��AVAILABLE�FOR�SALE�FINANCIAL�ASSETS

	2013	2012
	$	$
ListedAustralianshares�atfairvalue	2,280,517	3,651,785

(a)��Details�of�listed�Australian�shares

Ownershipinterest	Fairvalue(i) Costofinvestment
2013 2012 Listedinvestments % %	2013 2012 2013 2012 $ $ $ $
Non�currentinvestments: AntisenseTherapeuticsLtd 10.33 11.40 OptiscanImagingLimited 5.16 5.99 OtherlistedinvestmentsheldinSyngeneLtdlessthan1%interest Totallistedinvestments	1,488,158 2,596,485 3,578,074 3,512,998 585,601 776,624 824,847 818,202 206,758 278,676 347,926 356,370
	2,280,517 3,651,785 4,750,847 4,687,570

Non�current�investments�in�listed�shares�(which�are�not�associates)�are�designated�and�accounted�for�as� "available�for�sale"�financial�assets�pursuant�to� AASB�139�Financial�Instruments:�Recognition�and� Measurement.�

These�non�current�investments�in�listed�shares�consist�of�investments�in�ordinary�shares,�and�therefore�have� no�fixed�maturity�date�or�coupon�rate.�

(i)��The�fair�value�represents�the�share�(bid)�price�at�year�end,�and�does�not�include�any�capital�gains�tax�or� selling�costs�that�may�be�applicable�on�the�disposal�of�these�investments.��The�capital�gains�tax�that�may�be� applicable�on�the�disposal�of�these�investments�is�included�in�the�investments�revaluation�reserve.�

(b)��Details�of�investments�in�subsidiaries�

Details�of�the�investments�in�subsidiaries�are�fully�disclosed�in�note�24�(a).�

2013 circadian annual report 65

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

14.��NON�CURRENT�ASSETS��INVESTMENTS�IN�ASSOCIATES�

14.NON�CURRENTASSETS�INVESTMENTSINASSOCIATES
(a) Investmentdetails Ownershipinterest 2013 2012 NameandPrincipalActivities % % Unlisted: SyngeneLimited�TechnologyDevelopments 0 0	Carryingamount
	2013 2012 $ $
	� �

The�Group's�proportion�of�voting�power�held�in�this�associate�was�the�same�as�its�ownership�interest.�The� Group’s�investment�in�the�associate�is�accounted�for�in�accordance�with�the�accounting�policy�described�in� note�2(k).�

Syngene�Limited�is�an�unlisted�public�company�and�is�incorporated�in�Australia.�Due�to�a�rights�issue�in�which� the�Group�took�up�its�rights,�Syngene�has�ceased�to�be�an�associated�entity�of�the�Group�and�has�been� consolidated�since�8�February�2012.�Refer�to�note�33.��

(b)MovementsinthecarryingamountsoftheGroup'sinvestmentsinassociates SyngeneLimited: At1July Shareofprofitafterincometaxto8February2012(i) Shareofnetunrealisedgain/(loss)onlistedinvestmentto8February2012(i) TransferredtoinvestmentinsubsidiaryduetogainingcontrolofSyngeneLimited(i) At30June	2013 2012 $ $ � 493,431 � 37,613 � 128,460 � (659,504)
	� �

(i) The�Group’s�share�of�the�profit�after�income�tax�was�equity�accounted�until�8�February�2012�after� when�Syngene�became�a�subsidiary.�The�Group's�share�of�the�net�unrealised�gain�on�listed�investment� represents�Syngene's�3.35%�(2012:�3.35%)�investment�in�Antisense�Therapeutics�Limited.�The�movement�in� the�fair�value�of�this�investment�during�the�year�is�recognised�in�the�net�unrealised�gains�reserve�account�(see� note�21(b)(iv)).�

66 2013 circadian annual report

15.��PARENT�ENTITY�INFORMATION�

(a)InformationrelatingtoCircadianTechnologiesLimited: Currentassets Noncurrentassets Totalassets Currentliabilities Noncurrentliabilities Totalliabilities Netassets Issuedcapital Retainedearnings Assetrevaluationreserve Optionreserve Employeeequitybenefitsreserve Netunrealisedgainsreserve Totalshareholders'equity Lossoftheparententity Othercomprehensiveincome/(expense) Totalcomprehensivelossoftheparententity	2013 $ 9,433,017 63,242,685 72,675,702 486,335 27,337,710 27,824,045 44,851,657 39,453,733 5,048,432 � � 187,497 161,995 44,851,657 (16,089,171) (115,992) (16,205,163)	2012 $ 13,760,038 48,642,764
		62,402,802
		756,189 714,330
		1,470,519
		60,932,283
		39,395,603 21,137,603 � � 121,090 277,987
		60,932,283
		(424,759) 162,390
		(262,369)

(b)��Parent�entity�contractual�commitments�for�acquisition�of�property,�plant�and�equipment�

The�parent�entity�does�not�have�any�contractual�commitments�for�the�acquisition�of�property,�plant�and� equipment�for�the�year�ended�30�June�2013�(2012:�Nil).�

(c)��Parent�entity�contingent�liabilities�

The�parent�entity�has�no�(2012:�$128,000)�contingent�liabilities�for�the�year�ended�30�June�2013.�

(d)�Parent�entity�guarantees�in�respect�of�debts�of�its�subsidiaries�

The�parent�entity�has�provided�a�written�guarantee�to�all�its�controlled�entities�that�it�will�continue�to�provide� sufficient�funds�to�enable�them�to�meet�their�commitments�and�contingencies�for�the�next�twelve�months.� These�controlled�entities�are�disclosed�in�note�24(a).�

(e)��Impairment�of�investments�in�subsidiaries�

There�was�an�impairment�of�investments�in�the�subsidiaries�of�the�Company�of�$16,238,409�during�the�2013� financial�year�(2012:�$181,986).�See�note�24(a).�

2013 circadian annual report 67

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

16.��NON�CURRENT�ASSETS��PLANT�AND�EQUIPMENT�

16.NON�CURRENTASSETS�PLANTANDEQUIPMENT
Equipmentandfurnitureatcost Openingbalance Additions Disposals Closingbalance Accumulateddepreciation Openingbalance Depreciationfortheyear Disposals Closingbalance Netcarryingamount Leaseholdimprovementsatcost Openingbalance Additions Closingbalance Accumulateddepreciation Openingbalance Depreciationfortheyear Closingbalance Netcarryingamount Totalplantandequipment,net 17.CURRENTLIABILITIES–PAYABLES Creditors(unsecured)(i) Incomereceivedinadvance PAYGtaxliability Withholdingtaxpayable	2013 2012 $ $ 254,405 238,087 2,990 38,497 � (22,179)
	257,395 254,405
	(152,259) (145,622) (27,051) (28,289) � 21,652
	(179,310) (152,259)
	78,085 102,146
	79,478 79,478 � �
	79,478 79,478
	(74,728) (74,438) (289) (290)
	(75,017) (74,728)
	4,461 4,750
	82,546 106,896
	2013 2012 $ $ 1,343,198 1,677,873 198,640 201,262 56,649 57,245 295 984
	1,598,782 1,937,364

(i)��Creditors�are�non�interest�bearing�and�are�normally�settled�on�30�day�terms.

68 2013 circadian annual report

(a)��Fair�value�

Due�to�the�short�term�nature�of�these�payables,�their�carrying�value�is�assumed�to�approximate�their�fair�value.�

(b)��Interest�rate,�foreign�exchange�and�liquidity�risk�

Information�regarding�interest�rate,�foreign�exchange�and�liquidity�risk�exposure�is�set�out�in�note�3.�

18.��CURRENT�LIABILITIES�–�PROVISIONS�

Annualleave Longserviceleave 19.NON�CURRENTLIABILITIES�PROVISIONS Longserviceleave	2013 2012 $ $ 232,266 187,987 79,319 �
	311,585 187,987
	2013 2012 $ $ 65,261 106,207

19.��NON�CURRENT�LIABILITIES��PROVISIONS�

Refer�to�note�2(u)�for�the�relevant�accounting�policy�and�a�discussion�of�the�significant�estimations�and� assumptions�applied�in�the�measurement�of�this�provision.�

20.��CONTRIBUTED�EQUITY�

(a)Ordinaryshares Issuedandfullypaidat30June Movementinordinaryshares: Openingbalance Issueofshares(i) Ordinarysharesonissue: Openingbalance Issueofshares(i)	2013 2012 $ $ 39,453,733 39,395,603
	39,395,603 38,374,094 58,130 1,021,509
	39,453,733 39,395,603
	No: No:
	48,481,642 46,396,928 151,373 2,084,714
	48,633,015 48,481,642

Fully�paid�ordinary�shares�carry�one�vote�per�share�and�carry�the�right�to�dividends.�

2013 circadian annual report 69

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

20.��CONTRIBUTED�EQUITY�(CONTINUED)�

(i) On�24�August�2012�63,152�shares�were�issued�to�various�staff�members’�staff�in�lieu�of�a�cash�bonus�at� a�cost�of�$24,250.�On�21�November�2012�88,221�shares�were�issued�to�Mr�Klupacs�in�lieu�of�a�cash� bonus.�The�share�price�on�24�August�2012�and�21�November�2012�was�$0.38�and�$0.37�respectively.�
(ii) On�12�June�2012,�Circadian�undertook�a�private�placement�totalling�$1,021,509�to�international�and� Australian�based�institutional�and�sophisticated�investors.�The�private�placement�of�2,084,714�fully� paid�ordinary�shares�(being�equal�to�4.5%�of�Circadian’s�issued�capital)�was�made�at�an�issue�price�of� $0.49c.�This�was�a�7%�premium�to�the�volume�weighted�average�share�price�over�the�thirty�days�prior� to�the�placement�date.��

Share�options:�

The�company�has�a�share�based�payment�scheme,�the�Employee�Share�Option�Plan�under�which�options�to� subscribe�for�the�Company's�shares�have�been�granted�to�certain�employees�and�a�Conditional�Rights�Scheme,� which�was�established�to�offer�eligible�employees�conditional�rights�to�a�specified�number�of�Circadian�shares� subject�to�certain�milestones.�The�company�did�not�issue�shares�or�options�under�these�plans�(refer�to�note� 26).�

(b)��Capital�management�

The�Group�is�not�subject�to�any�externally�imposed�capital�requirements.�

When�managing�share�capital,�management's�objective�is�to�ensure�the�entity�continues�as�a�going�concern�as� well�as�to�provide�benefits�to�shareholders�and�for�other�stakeholders.��In�order�to�maintain�or�achieve�an� appropriate�capital�structure,�the�Company�may�issue�new�shares�or�reduce�its�share�capital,�subject�to�the� provisions�of�the�Company's�constitution.�

70 2013 circadian annual report

21.��RETAINED�EARNINGS�AND�RESERVES�

21.RETAINEDEARNINGSANDRESERVES
(a)Movementsinretainedearningswereasfollows: Balanceat1July Transferofbalancesfromhistoricalreservesaccounts Netlossfortheperiod Balanceat30June (b)Reserves Assetrevaluationreserve(i) Optionreserve(ii) Contributedcapitalofassociatereserve(iii) Netunrealisedgainsreserve(iv) Employeeequitybenefitsreserve(v) Equityreserveattributabletoparent(vi) Totalreserves (i)Movementinassetrevaluationreserve: Openingbalance Transfertoretainedearnings Closingbalance (ii)Movementinoptionreserve: Openingbalance Transfertoretainedearnings Closingbalance (iii)Movementincontributedcapitalofassociatereserve: Openingbalance Transfertoretainedearnings Closingbalance (iv)Movementinnetunrealisedgainsreserve: Openingbalance Netgains/(loss)onnon�currentlistedinvestmentsfortheperiod Taxeffectonabovenetgains(note9) NCIshareofrevaluationoflistedinvestmentsnetoftax Shareofassociate'snetunrealisedloss Netgains/(losses)onnon�currentlistedinvestmentsfortheperiod aftertax Closingbalance (v)Movementinemployeeequitybenefitsreserve: Openingbalance Transfertoretainedearningsoffullyamortisedoptions Sharebasedpaymentsexpense(note8(c)) Closingbalance (vi)Movementinequityreserveattributabletoparent: Openingandclosingbalance	2013 2012 $ $ (14,488,786) (13,246,618) � 3,595,085 (4,754,793) (4,837,253)
	(19,243,579) (14,488,786)
	� � � � � � 226,105 1,055,629 187,497 121,090 (7,172,143) (7,172,143)
	(6,758,541) (5,995,424)
	� 734,407 � (734,407)
	� �
	� 19 � (19)
	� �
	� 1,180,872 � (1,180,872)
	� �
	1,055,629 197,820 (1,375,640) 1,231,591 412,690 (369,477) 133,426 6,583 � (10,888)
	(829,524) 857,809
	226,105 1,055,629
	121,090 1,755,722 � (1,679,787) 66,407 45,155
	187,497 121,090

	(7,172,143) (7,172,143)

2013 circadian annual report 71

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(vii)��Nature�and�purpose�of�reserves:�

Asset�revaluation�reserve�

The�asset�revaluation�reserve�is�an�historical�reserve�used�to�record�increments�and�decrements�in�the�value�of� non�current�assets.�The�Board�resolved�to�clear�this�reserve�to�retained�earnings�in�the�prior�year.�

Option�reserve�

This�reserve�is�an�historical�reserve�used�to�record�the�consideration�received�for�options�granted�to�executives� and�employees�as�part�of�their�remuneration.�The�Board�resolved�to�clear�this�reserve�to�retained�earnings�in� the�prior�year.�

Contributed�capital�of�associate�reserve�

This�reserve�is�an�historical�reserve�which�was�used�to�record�the�Group's�equity�accounting�of�share�issues�by� its�associated�entities.�The�Board�resolved�to�clear�this�reserve�to�retained�earnings�in�the�prior�year.�

Net�unrealised�gains�reserve�

This�reserve�records�fair�value�changes�on�listed�investments�(other�than�investments�in�listed�associates)�and� the�Group's�equity�share�of�its�associate's�listed�investments.�

Employee�equity�benefits�reserve�

This�reserve�is�used�to�record�the�value�of�equity�benefits�provided�to�executives�and�employees�as�part�of� their�remuneration.�Refer�to�note�26�for�further�details�on�the�equity�benefit�plans.�The�Board�resolved�to� clear�the�fully�amortised�value�of�options,�from�the�previous�employee�options�plan,�in�this�reserve�to�retained� earnings�in�the�prior�year.�

Equity�reserve�attributable�to�parent�

This�reserve�recognises�the�non�controlling�interests'�share�of�the�change�in�the�net�assets�of�Vegenics�on�new� investments�(capital�injections)�made�by�the�parent�in�Vegenics,�which�are�offset�by�the�relevant�effect�of� additional�investments�made�by�non�controlling�interests.��The�premium�paid�by�Circadian�on�acquisition�of� the�balance�of�Vegenics'�non�controlling�interests�is�also�recognised�in�this�account.�

72 2013 circadian annual report

22.��CASH�FLOW�STATEMENT�RECONCILIATION�

(a)�Reconciliation�to�cash�at�the�end�of�the�year

For�the�purpoase�of�the�statement�of�cash�flows,�cash�and�cash�equivalents�include�cash�on�hand�and�in� banks,�net�of�bank�guarantees.

Cashatbankandinhand(Note11) (b)Reconciliationofnetlossaftertaxtonetcashflows fromoperations Netloss *Adjustmentsfor:* Depreciation Netlossondisposalofnon�currentassets Net(profit)/lossondisposalofinvestments NetdiscountonacquisitionofSyngeneLimited Dividendsfromequityinvestments Employeebenefitsexpense Shareofassociates'net(profits)/losses Impairmentlossesonnon�currentfinancialinvestments Netexchangedifferences *Changesinassetsandliabilities:* (Increase)/decreaseinprepayments Decrease/(increase)ininterestreceivable (Increase)/Decreaseinotherreceivables (Decrease)/increaseinpayables Increase/(decrease)inemployeeprovisions (Increase)/decreaseindeferredtaxassets (Decrease)/increaseindeferredtaxliabilities Netcashusedinoperatingactivities (c)Non�cashfinancingandinvestingactivities Share�basedpaymentsexpense(note26) (d)Disclosureofinvestingactivities Refertonotes13and24.	2013 2012 $ $ 11,003,941 16,439,225
	11,003,941 16,439,225
	2013 2012 $ $ (5,004,506) (4,906,456) 27,340 28,579 � � (149,834) 9,762 � (13,719) � (1,500) 66,407 45,155 � (166,073) 26,218 � 55,244 (84,685) (69,399) 5,973 100,003 (53,959) (767,667) (1,423,638) (338,581) (362,355) 82,653 44,593 99,196 (293,968) 259,931 (1,614)
	(5,612,996) (7,173,904)
	66,407 45,155
	66,407 45,155

2013 circadian annual report 73

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

23.��RESEARCH�AND�DEVELOPMENT�EXPENSES�

ResearchandDevelopmentCosts Researchprojectcosts(i)	2013 2012 $ $
	3,436,660 3,595,677
	3,436,660 3,595,677

(i)��The�research�project�costs�predominantly�relate�to�the�development�programs�in�respect�to�the�Vascular� Endothelial�Growth�Factors�(VEGF)�based�therapeutics.�

There�are�no�expenditure�commitments�relating�to�joint�venture�research�projects�in�the�current�or�prior�year.�

The�consolidated�entity�has�nil�assets�in�the�financial�statements�employed�in�the�joint�ventures.�

There�were�no�impairment�losses�in�the�assets�employed�in�the�joint�venture�operations.�

24.��RELATED�PARTY�DISCLOSURES�

(a)��Subsidiaries�

The�consolidated�financial�statements�include�the�financial�statements�of�Circadian�Technologies�Limited�and� the�subsidiaries�listed�in�the�following�table:�

Book�value�of�parent�entity�investment�and�%�equity�interest

Nameofcompany	2013 $ %	2012 $ %
CircadianOcularOy(i) CircadianShareholdingsPtyLtd(ii) PolychipPharmaceuticalsPtyLtd PrecisionDiagnosticsPtyLtd(iii) SyngeneLimited(iv) VegenicsPtyLtd(v) OptheaPtyLtd(vi) CeresOncologyPtyLtd(vii)	� 100 1 100 1,999,892 100 2,000,000 100 1,381,640 52 13,573,661 100 7,250,000 100 17,400,000 100 43,605,194	� 100 1 100 2,028,734 100 � 100 1,381,640 52 28,732,560 100 � � � � 32,142,935

74 2013 circadian annual report

(i) Circadian�Ocular�Oy�has�been�deregistered�in�2013�and�has�been�dormant�since�its�creation�in�2011.�It� was�set�up�to�potentially�receive�grant�funds�from�Finland�which�were�not�forthcoming.�
(ii) Circadian�Shareholdings�Pty�Ltd�was�incorporated�on�24�February�2011�as�trustee�for�the�employee� Conditional�Rights�Scheme.�Refer�to�note�26.�
(iii) Precision�Diagnostics�Pty�Ltd�was�previously�known�as�Cancer�Therapeutics�Pty�Ltd.�
(iv) Syngene�Limited,�a�development�company�for�unique�peptide�therapeutics�technology,�became�a� subsidiary�on�8�February�2012.�
(v) �Vegenics�Pty�Ltd�was�previously�known�as�Vegenics�Limited.�The�entity�changed�its�status�to�a�Pty�Ltd� company�on�8�October�2010.�
(vi) Opthea�Pty�Ltd�was�previously�known�Insight�Therapeutics�Pty�Ltd.�Insight�Therapeutics�Pty�Ltd�was�first� incorporated�on�4�September�2012.�
(vii) Ceres�Oncology�Pty�Ltd�was�first�incorporated�on�12�September�2012.�

Circadian�Technologies�Limited�is�the�ultimate�parent�entity.�

All�subsidiaries�were�incorporated�in�Australia,�except�for�Circadian�Ocular�Oy�(incorporated�in�Finland�in�the� previous�financial�year)�and�have�the�same�financial�year�as�Circadian�Technologies�Limited.�

As�at�30�June�2013,�the�above�subsidiaries�were�reviewed�to�determine�whether�the�investment�values�held�by� the�Company�were�impaired.�As�a�result�of�this�exercise,�an�impairment�of�$16,238,409�(2012:�$181,986)�was� recognised�in�profit�or�loss�of�the�parent�entity�during�the�current�financial�year.��

In�undertaking�the�impairment�test�with�respect�to�the�investments,�the�Company�assessed�the�progress�of�its� research�and�development�activities�in�respect�of�VGX�100.�VGX�100�has�a�number�of�potential�indications�as�a� treatment�for�solid�tumours�as�well�as�a�potential�treatment�for�breast�cancer�related�lymphedema.�In�light�of� the�strong�focus�on�undertaking�Phase�2�studies�with�VGX�100�in�lymphedema�and�deferring�commencement� of�Phase�2�studies�in�the�solid�tumour�indications�while�the�lymphedema�clinical�data�is�generated,�we�believe� it�is�prudent�to�revise�the�valuation�for�VGX�100�this�year.�

(b)��Transactions�with�related�parties�

(i)�� Balances�and�transactions�between�the�Company�and�its�subsidiaries,�which�are�related�parties�of�the�� Company,�have�been�eliminated�on�consolidation�and�are�not�disclosed�in�this�note.��
(ii) For�details�of�Director�Related�Party�Transactions�refer�to�note�25�(e).�

2013 circadian annual report 75

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

onnel	2013 2012 $ $ 1,573,927 1,954,352 140,822 158,018 64,087 33,252
	1,778,836 2,145,622

==> picture [456 x 91] intentionally omitted <==

==> picture [453 x 215] intentionally omitted <==

----- Start of picture text -----

remuneraton exercised other June Lapsed vested)
M.
Total
----- End of picture text -----

==> picture [489 x 88] intentionally omitted <==

76 2013 circadian annual report

==> picture [266 x 36] intentionally omitted <==

==> picture [409 x 375] intentionally omitted <==

----- Start of picture text -----

remuneraton other June
Directors
1
2013 70,000
Executives
Total
----- End of picture text -----

==> picture [495 x 169] intentionally omitted <==

2013 circadian annual report 77

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(e)��Other�transactions�and�balances�with�key�management�personnel�and�their�related�parties�

Director�related�party�transactions:�

Purchases�

(i)��Laboratory�costs�totalling�$9,356�(2012:�$63,570)�were�incurred�during�the�year�by�Vegenics�Limited�for� facilities�provided�by�LICR.�Dr�Jonathan�Skipper,�a�former�non�executive�director�of�Circadian�until�November� 2011,�is�an�executive�officer�of�LICR.�

(ii)�Legal�fees,�including�miscellaneous�expenses,�totalling�$72,711�(2012:�$43,271)�were�incurred�during�the� year�by�the�Group�for�services�provided�by�the�legal�firm�of�Minter�Ellison�of�which�Don�Clarke,�a�director�of� the�Company,�is�a�partner.��These�legal�fees�were�charged�at�commercial�rates.�

(iii)�Website�fees�totalling�$84,492�(2012:�$31,436)�were�incurred�during�the�year�by�the�Group�for�services� provided�by�Helix�Digital�Pty�Ltd�of�which�Dominique�Fisher,�Chairman�of�the�Company,�is�the�managing� director.�These�fees�were�charged�at�a�discount�to�the�company’s�commercial�rates.�

Amounts�recognised�at�the�reporting�date�in�relation�to�director�related�entity�transactions:�

Assetsandliabilities: Currentassets Non�currentassets Currentliabilities Payables Non�currentliabilities Revenuesandexpenses: Administrativeexpenses Research&developmentexpenses	2013 2012 $ $ � � � �
	� �
	594 10,373 � �
	594 10,373
	157,203 93,874 9,356 54,073
	166,559 147,947

26.��SHARE�BASED�PAYMENT�PLANS�

(a)��Recognised�share�based�payment�expenses�

The�expense�recognised�for�employee�services�received�during�the�year�is�shown�in�the�table�below:�

	2013	2012
	$	$
Expensearisingfromequity�settledshare�basedpayment
transactions(note8(c))	66,407	45,155

78 2013 circadian annual report

Circadian�currently�operates�two�share�based�payment�plans;�the�Option�Plan�and�the�Conditional�Rights� Scheme.�These�are�described�below.�There�have�been�no�cancellations�or�modifications�to�the�existing�Options� Plan.��

A�new�Conditional�Rights�Scheme�was�introduced�on�4�March�2011�which�enables�eligible�employees�to�be� awarded�shares�which�are�equity�settled,�when�certain�milestones�have�been�met�by�the�Group.��This�will� replace�the�Option�Plan�and�no�more�new�options�will�be�granted�under�the�existing�plan.�Refer�to�note� 26(b)(ii).�

(b)��Types�of�share�based�payment�plans�

(i)�Senior�Management�Option�Plan�(Option�Plan)�

Share�options�were�granted�to�executive�directors�and�certain�employees�under�this�plan.�There�will�be�no� more�new�options�issued�to�executives�and�senior�management�under�this�Option�Plan.�

In�valuing�transactions�settled�by�way�of�issue�of�options,�no�account�is�taken�of�any�performance�conditions,� other�than�market�conditions�linked�to�the�price�of�the�shares�of�Circadian�Technologies�Limited.��All�options� issued�have�market�performance�conditions�so�as�to�align�shareholder�return�and�reward�for�the�Company's� key�management�personnel.�

The�Option�Plan�was�implemented�to�offer�options�which�are�subject�to�performance�hurdles�in�January�2007.� The�options�issued�to�employees�(including�senior�executives)�in�2007,�2008,�and�2009�were�divided�equally� into�three�tranches.�

The�number�of�options�in�each�tranche�will�vest�on�the�satisfaction�of�the�following�performance�conditions� during�the�relevant�option�period�(2007�options�within�5�years�of�grant�date;�2008,�2009�and�2010�options� within�approximately�4�years�of�grant�date).�

The�2007�options�issued�have�an�exercise�price�of�$1.50,�the�2008�options�issued�have�an�exercise�price�of� $1.30�and�the�2009�options�have�an�exercise�price�of�$1.00.�

Performance�Hurdles�

Tranche�1��a�market�price�for�a�Circadian�share�(Share�Price)�achieves�not�less�than�125%�of�the�Exercise�Price;� �Tranche�2��the�Share�Price�achieves�not�less�than�150%�of�the�Exercise�Price;�and� �Tranche�3��the�Share�Price�achieves�not�less�than�175%�of�the�Exercise�Price.�

The�Share�Price�is�to�be�calculated�as�the�Volume�Weighted�Average�Price�(VWAP)�of�Circadian�shares�traded� on�the�ASX�over�a�consecutive�15�day�trading�period.�

Vested�options�may�only�be�exercised�at�any�time�in�the�last�12�months�of�the�relevant�option�period.�

The�Exercise�Price�is�subject�to�any�adjustment�which�is�required�under�the�ASX�Listing�Rules�as�a�consequence� of�a�capital�reorganisation�or�a�pro�rata�rights�issue�of�shares�which�occurs�after�the�grant�of�the�options�but� prior�to�the�exercise�of�the�options.�

2013 circadian annual report 79

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

The�Board�has�residual�discretion�to�accelerate�vesting�(i.e.�reduce�or�waive�the�Performance�Hurdles)�and� exercise�options�in�the�event�of�a�takeover�or�merger�or�any�other�circumstance�in�accordance�with�the�terms� of�the�Option�Plan.�

Options�in�relation�to�which�performance�conditions�have�not�been�satisfied�(i.e.�that�do�not�vest)�will�lapse� and�will�not�able�to�be�exercised,�except�in�circumstances�as�described�below.�

Options�which�have�not�vested�will�lapse�where�an�option�holder�ceases�employment�with�Circadian�other� than�on�retirement,�redundancy,�death�or�total�and�permanent�disablement,�or�unless�as�otherwise� determined�by�the�Board�in�its�absolute�discretion.�

Where�an�option�holder�has�ceased�employment�with�Circadian�as�a�result�of�resignation,�retirement,� redundancy,�death�or�total�and�permanent�disablement�prior�to�the�end�of�a�performance�period�but�not� before�the�first�anniversary�or�grant�date,�options�(whether�vested�or�not),�may�be�retained�by�the�option� holder�on�a�pro�rata�basis�(the�pro�rata�being�calculated�over�the�period�from�grant�date).�

(ii)�Conditional�Rights�Scheme�

The�Scheme�was�established�on�4�March�2011�to�offer�eligible�employees�conditional�rights�to�a�specified� number�of�Circadian�shares�subject�to�certain�milestones.�These�shares�are�equity�settled�at�no�cost�to�the� employees�once�the�milestones�are�met.�The�contractual�life�of�the�rights�is�four�years.�Employees�who�have� obtained�three�months�of�satisfactory�service�with�the�Group�as�at�1�October�2010�are�eligible�to�participate�in� the�Scheme.�

Once�the�milestones�have�been�met�and�the�share�rights�exercised,�the�Circadian�shares�will�be�issued�to�the� Scheme�Trustee�to�be�held�on�the�employee's�behalf.�

When�an�employee�ceases�employment�with�the�Group�before�the�share�rights�have�vested,�other�than�death,� total�and�permanent�disablement�and�redundancy,�the�entitlement�to�the�rights�will�lapse�and�the�share�rights� will�cease.�The�employee�will�not�be�entitled�to�any�compensation�in�respect�of�those�rights�which�are� forfeited.�

If�employment�ceases�with�the�Group�after�all�of�the�conditions�attaching�to�the�rights�are�satisfied,�these� rights�can�be�retained,�exercised�and�the�shares�withdrawn�from�the�Scheme.�

The�exercise�of�the�rights�is�conditional�on�the�Group�achieving�the�following�conditions�(milestones):�

Milestone�1�

33%�of�the�rights�will�vest�if�either�of�the�following�occurs�within�18�months:�
if�the�Board�determines�that�a�material�commercial�licensing,�joint�venture,�partnering�or�similar� agreement�is�entered�into�and�completed�and�annualised�royalty�income�exceeds�$2�million.�

80 2013 circadian annual report

Milestone�2�

67%�of�the�rights�will�vest�if�any�three�of�the�following�occurs�within�36�months:�
if�the�Board�determines�that�a�material�commercial�licensing,�joint�venture,�partnering�or�similar� agreement�is�entered�into�and��completed;�
the�share�price�based�on�a�10�day�Volume�Weighted�Average�Price�(VWAP)�at�any�time�exceeds�$1.50� within�90�days�of�the�date�of�the�offer,�which�is�4�March�2011;�
completion�of�necessary�studies�to�have�enabled�the�VGX�200�or�VGX�300�series�of�molecules�to�be� designated�"formal�drug�development�candidates;"�
identification�of�a�putative�biomarker/clinical�profile�to�enable�patient�selection�into�Phase�2�clinical� trials;�or�
annualised�sales�royalty�income�exceeding�$5�million.�

Milestone�3�

100%�of�the�rights�will�vest�if�any�three�of�the�following�occurs�within�48�months:�
if�the�Board�determines�that�a�material�commercial�licensing,�joint�venture,�partnering�or�similar� agreement�is�entered�into�and�completed;�
the�share�price�based�on�a�10�day�Volume�Weighted�Average�Price�(VWAP)�at�any�time�exceeds�$1.75� within�90�days�of�the�date�of�the�offer,�which�is�4�March�2011;�
completion�of�necessary�studies�to�have�enabled�the�VGX�200�or�VGX�300�series�of�molecules�to�be� designated�"formal�drug�development�candidates”;�
identification�of�a�putative�biomarker/clinical�profile�to�enable�patient�selection�into�Phase�2�clinical� trials;�or�
annualised�sales�royalty�income�exceeding�$7.5�million.�
100�%�of�the�rights�will�also�vest�and�are�able�to�be�exercised�if:�
the�10�day�VWAP�of�Circadian�shares�is�not�less�than�$1.75�at�any�time;�
in�the�event�of�a�sale,�merger�or�takeover,�or�other�similar�event�as�determined�by�the�Board,�the� offer�price�per�share�exceeds:�
��(i)��$1.30�per�share,�within�the�12�months�of�the�offer�date�which�is�4�March�2011� ��(ii)��$1.50�per�share,�within�the�24�months�of�the�offer�date�
��(iii)��$1.75�per�share,�within�the�36�months�of�the�offer�date�
��(iv)��$2.00�per�share,�within�the�48�months�of�the�offer�date�
if�all�of�the�events�for�Milestone�3�occur�within�48�months�of�the�offer�date.�

2013 circadian annual report 81

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

(c)��Summary�of�options/rights�granted�

The�following�table�details�the�number�and�movements�in�share�options�and�rights�during�the�current�year:�

2013
Dateofissue	16/05/2012 (ii)	22/03/2011 (ii)	26/06/2009 (i)	15/12/2008 (i)	15/09/2008 (i)
Onissueatthebeginningof theyear Grantedduringtheyear Exercisedduringtheyear Forfeitedduringtheyear Outstandingattheendofthe year 2012	� 150,000 1,560,000 77,144 100,000 780,982 � � � � � � � � � (200,000) (77,144) (100,000) (780,982)
	150,000 1,360,000 � � �

Dateofissue	16/05/2012 (ii)	22/03/2011 (ii)	26/06/2009 (i)	15/12/2008 (i)	15/09/2008 (i)
Onissueatthebeginningof theyear Grantedduringtheyear Exercisedduringtheyear Forfeitedduringtheyear Outstandingattheendofthe year Exercisableatendoftheyear Numberofrecipients Exerciseprice Exerciseperiodfrom To(Expirationday)	� 1,560,000 77,144 100,000 780,982 150,000 � � � � � � � � � � � � �
	150,000 1,560,000 77,144 100,000 780,982
	� � � � � 1 10 2 1 8 $0.00 $0.00 $1.00 $1.00 $1.00 4/09/2012 4/09/2012 26/06/2012 15/12/2011 15/09/2011 31/03/2015 31/03/2015 26/06/2013 15/12/2012 15/09/2012

(i)��Refer�to�note�26(b)(i)�for�a�summary�of�the�options�granted.�

(ii)��Refer�to�note�26(b)(ii)�for�a�summary�of�the�rights�granted.�

82 2013 circadian annual report

(d)��Pricing�models�for�options�and�conditional�rights�granted�

The�following�assumptions�were�used�to�derive�a�value�for�the�options�and�rights�granted�using�the�model�as� specified�below�as�at�the�grant�date,�taking�into�account�the�terms�and�conditions�upon�which�the�options�or� rights�were�granted.�

Issuedateofoptions/rights	16/05/2012	22/03/2011	26/06/2009	15/12/2008	15/09/2008
Dividendyield	0.00%	0.00%	0.00%	0.00%	0.00%
Expectedannualvolatility	50.0%	45.0%	45.0%	45.0%	45.0%
Risk�freeinterestrate(p.a)	2.60%	5.04%	5.08%	3.73%	5.43%
Expectedlifeofoption/right
(years)	2.8	4.0	3.5	3.5	3.5
Fairvalueperoption/right	11.00cents	20.34cents*	20.96cents	11.28cents	27.99cents
		�25.00cents	�21.97cents	�12.06cents	�29.14cents
Exercisepriceperoption/right	$0.00	$0.00	$1.00	$1.00	$1.00
Sharepriceatgrantdate	$0.440	$0.700	$0.745	$0.58	$0.85
Modelused	Binomial**	Binomial**	MonteCarlo	MonteCarlo	MonteCarlo

*�The�fair�value�of�520,000�options�is�20.34�cents�which�are�valued�effective�11�November�2010�which�is�the� date�that�shareholders�approved�the�issue�of�conditional�rights�to�R�Klupacs�at�the�Annual�General�Meeting.� Refer�to�the�Remuneration�Report�section�of�the�Directors'�Report.�

**�The�Binomial�model�is�implemented�by�defining�the�upper�and�lower�values�of�the�stock�over�discrete� periods�of�time.�Under�the�assumption�of�no�dividends,�the�Binomial�model�approximates�to�the�Black�Scholes� model.�

For�the�options�issued,�from�2007�onwards,�the�life�was�based�on�the�assumed�exercise�behaviour�which� calculates�the�effect�of�an�early�exercise�of�the�option�into�the�expected�life.��These�estimates�may�not�be� indicative�of�the�exercise�pattern�which�may�occur.�

For�the�rights�issued�in�2012�and�2011,�the�life�was�based�on�the�expiry�date�quoted�on�the�Performance� Rights�Certificates�of�the�rights�granted.�The�expected�volatility�is�calculated�using�historic�share�returns.�� These�periods�differed�in�each�financial�year.��For�those�rights�granted�in�2012�and�2011,�this�was�a�period�of� two�years.��This�basis�assumes�that�the�historical�volatility�is�indicative�of�future�market�trends�which�may�not� be�the�case.�

2013 circadian annual report 83

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

27.��COMMITMENTS�

(i)��Operating�lease�commitments��Group�as�lessee�

The�Group�has�entered�into�a�commercial�lease�for�the�office�premises.��The�lease�was�signed�in�July�2013�and� is�for�a�period�of�6�years�from�the�15[th] �July,�2013.�The�previous�lease�has�been�transferred�effective�15�July,� 2013.��

2013.
Withinoneyear Afteroneyearbutnotmorethanfiveyears	2013 2012 $ $ 89,523 132,419 428,360 376,044
	517,883 508,463

(ii)��Research�projects�and�license�commitments�

The�Group�has�entered�into�research�and�development�and�intellectual�property�license�agreements�with� various�parties�(refer�to�note�23�for�details�of�some�of�the�projects).��Expenditure�commitments�relating�to� these�are�payable�as�follows:�

Withinoneyear Afteroneyearbutnotmorethanfiveyears Aftermorethanfiveyears	2013 2012 $ $ 1,793,006 2,367,143 703,065 958,405 373,344 400,960
	2,869,415 3,726,508

28.��CONTINGENCIES�

(i)��Circadian�and�its�subsidiaries�are�party�to�various�research�agreements�with�respect�to�which�a� commitment�to�pay�is�contingent�on�the�achievement�of�research�milestones.��Assuming�all�milestones�are� achieved�within�the�timeframes�stipulated�in�the�contracts,�those�which�could�become�payable�in�less�than� one�year�total�$20,000�(2012:�$130,000)�and�those�which�could�become�payable�in�more�than�one�year�total� $12,751,034�(2012:�$11,612,747).�These�expenditure�commitments�would�have�an�offsetting�revenue�stream� from�royalties�and�other�income.��

Further,�under�license/collaboration�agreements�with�three�third�parties,�payments�are�to�be�made�only�if� certain�research�and�clinical�development�milestones�are�achieved�and�royalties�may�become�payable�on�any� eventual�sales�of�products�developed�under�these�agreements.�

(ii)��Remuneration�contingent�liability��refer�to�"Employment�contracts"�in�the�Remuneration�Report�of�the� Director's�Report�with�respect�to�payments�in�lieu�of�notice�where�either�the�Managing�Director�resigns�or�the� Company�terminates�his�employment.�

84 2013 circadian annual report

29.��EVENTS�AFTER�THE�BALANCE�SHEET�DATE�

No�matters�or�circumstances�have�arisen�since�the�end�of�the�reporting�period,�not�otherwise�disclosed�in�this� report,�which�significantly�affected,�or�may�significantly�affect,�the�operations�of�the�Group,�the�results�of� those�operations,�or�the�state�of�affairs�of�the�Group�in�future�financial�years.��

The�company�moved�to�its�new�office�located�at�Level�4/650�Chapel�Street�South�Yarra,�Victoria�on�the�15[th] July,�2013.��

30.��AUDITORS'�REMUNERATION�

TheauditorofCircadianTechnologiesLimitedisDeloitteToucheTohmatsu AmountsreceivedordueandreceivablebyDeloitte (Australia)for: �anauditorreviewofthefinancialreportoftheentityandany otherentityintheconsolidatedgroup �otherservicesinrelationtotheentityandanyotherentityin theconsolidatedgroup	2013 2012 $ $ 87,210 85,500 10,500 �
	97,710 85,500

31.��NON�CONTROLLING�INTEREST�

Balanceatbeginningofyear Non�controllinginterestsarisingon thechangeincontrolofSyngene Additionalnon�controllinginterestsarisingduetoshareissue Shareoflossfortheperiodto Shareofothercomprehensiveincomefortheperiod Balanceatendofyear	2013 2012 $ $ (1,285,462) � � (862,932) (5,010) (498,316) 249,713 69,203 133,426 6,583
	(907,333) (1,285,462)

2013 circadian annual report 85

Notes to the CoNsoLIDAteD FINANCIAL stAteMeNts (CoNtINueD) For tHe Year ended 30 June 2013

32.��OTHER�INTANGIBLE�ASSETS�

Carryingamountsof: Intellectualproperty Cost: Balanceatbeginningofyear AcquisitionofDiMitechplatformtechnology Balanceatendofyear	2013 2012 $ $
	500,000 500,000
	500,000 � � 500,000
	500,000 500,000

During�the�2012�financial�year,�Syngene�Limited�acquired�DiMitech�platform�technology�intellectual� property�from�Monash�University�to�further�develop�unique�therapeutic�peptides.�As�Syngene�is� undertaking�further�experiments�to�improve�upon�the�technology�it�is�considered�to�have�an� indefinite�useful�life�and�has�therefore�not�been�amortised.�Each�year�the�Company�will�assess�the� development�of�the�asset�and�consider�any�indications�of�impairment.�

33.��BUSINESS�COMBINATIONS�

(i)��Subsidiaries�acquired

*(i)Subsidiariesacquired*
2012 SyngeneLimited	Principalactivity Dateof acquisition Proportionof sharesacquired (%) Consideration transferred($)
	Research 8/02/2012 51.67 293,880

Syngene�Limited�was�acquired�on�8�February�2012�as�a�result�of�a�rights�issue�by�Syngene�and� effectively�the�Company�gained�control�of�this�investment.�Prior�to�this�the�Group�owned�42.66%�of� Syngene�which�had�been�equity�accounted�until�the�date�of�the�change�in�control.�During�the�year� 100,000�shares�were�issued�to�new�shareholders.�The�Group�owns�51.54%�(2012:�51.67%)�of�Syngene� Limited.�

86 2013 circadian annual report

(ii)��Assets�acquired�and�liabilities�assumed�at�the�date�of�acquisition

Currentassets Cashandcashequivalents Receivables Non�currentassets Availableforsaleinvestments Deferredtaxassets Currentliabilities Payables Non�currentliabilities Deferredtaxliabilities	SyngeneLimited
	2013 2012 $ $ � 994,965 � 1,624 � 881,477 � 132,801 � (60,603) � (132,801)
	� 1,817,463

(iii)��Non�controlling�interests�

The�non�controlling�interest�(47.48%�ownership�interest�in�Syngene�Limited)�recognised�at�the� acquisition�date�was�measured�by�reference�to�the�fair�value�of�the�non�controlling�interest�and� amounted�to�$862,932.�This�fair�value�was�estimated�by�applying�the�percentage�ownership�to�the� net�assets�of�Syngene�Limited�which�had�been�fair�valued�at�the�date�of�acquisition.�Refer�note�31.�

(iv)��Net�cash�inflow�on�acquisition�of�subsidiaries

Considerationpaidincash Less:cashandcashequivalentbalancesacquired	2013 2012 $ $ � (293,880) � 994,965
	� 701,085

(v)��Impact�of�acquisitions�on�the�results�of�the�Group�

Included�in�the�loss�for�the�2012�year�is�$59,683,�which�reflects�the�full�loss�attributable�to�the� addition�of�Syngene�Limited�to�the�Group.�Income�for�the�year�includes�$48,746�of�which�the�majority� is�interest�generated�from�Syngene’s�term�deposits.�As�Syngene�had�been�equity�accounted�up�until�8� February�2012,�the�profit�generated�by�Syngene�for�the�period�1�July�2011�to�8�February�2012�of� $84,398�has�not�been�recognised�in�the�consolidated�accounts�so�that�only�the�post�acquisition� profits�of�Syngene�are�consolidated.�The�equity�accounted�share�of�profit�to�8�February�2012�has� been�recognised�at�note�14(b).��

2013 circadian annual report 87

dIreCtors’ deCLArAtIon FOR tHE YEAR ENDED 30 JUNE 2013

In accordance with a resolution of the directors of Circadian Technologies Limited, we state that:

In the opinion of the directors:
(a) the financial report and the notes there to are 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 2013 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards, Corporations Regulations 2001, and International Financial Reporting Standards (IFRS) as disclosed in note 2(a) of the financial statements; and
(b) 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 has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2013.

Signed in accordance with a resolution of the directors made pursuant to S.295(5) of the Corporations Act 2001 .

On behalf of the Directors

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Robert Klupacs Director

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Dominique Fisher Director Melbourne 26 August 2013

88 2013 circadian annual report

Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

Tel: +61 3 9671 7000 Fax: +61 3 9671 7001 www.deloitte.com.au

Independent Auditor’s Report to the Members of Circadian Technologies Limited

Report on the Financial Report

We have audited the accompanying financial report of Circadian Technologies Limited, which comprises the statement of financial position as at 30 June 2013, the statement of profit or loss and other comprehensive income, the statement of cash flows and the statement of changes in equity for the year ended on that date, 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 as set out on pages 30 to 88.

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 gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2 (a), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the consolidated 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. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance 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 company’s preparation of the financial report that gives a true and fair view, 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 company’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 scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

2013 circadian annual report 89

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

Auditor’s Independence Declaration

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 Circadian Technologies 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 Circadian Technologies 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 2013 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 consolidated financial statements also comply with International Financial Reporting Standards as disclosed in Note 2 (a).

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 13 to 19 of the directors’ report for the year ended 30 June 2013. 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 Circadian Technologies Limited for the year ended 30 June 2013, complies with section 300A of the Corporations Act 2001 .

DELOITTE TOUCHE TOHMATSU

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G J McLean Partner Chartered Accountants Melbourne, 26 August 2013

90 2013 circadian annual report

AsX AddItIonAL InforMAtIon

1. dIstrIbutIon of equIty seCurItIes

The number of shareholders, by size of holding, of quoted fully paid ordinary shares as at 20 September 2013 is as follows:

	Fully Paid Ordinary Shares	Fully Paid Ordinary Shares
Category	No. of Holders	No. of Shares
1–1,000	562	475,359
1,001–5,000	1,210	3,267,656
5,001–10,000	341	2,690,125
10,001–100,000	312	8,606,839
100,001 and over	37	33,593,036
	2,462	48,633,015
The number of shareholders holding less than a marketable parcel of shares are:	845	871,279

The number of shareholders holding less than a marketable parcel of shares are:

2. twenty LArgest shArehoLders

2. twenty LArgest shArehoLders	2. twenty LArgest shArehoLders	2. twenty LArgest shArehoLders
The names of the twenty largest holders of quoted fully paid ordinary shares and their respective holdings as at 20 September			2013 are:
Rank	Name	No. of Shares	% Interest
1.	BNP PARIBAS NOMS PTY LTD	9,669,302	19.88
2.	CITICORP NOMINEES PTY LIMITED	4,279,115	8.80
3.	LUDWIG INSTITUTE FOR CANCER RESEARCH LTD	3,122,090	6.42
4.	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA	2,587,387	5.32
5.	NATIONAL NOMINEES LIMITED	2,343,073	4.82
6.	CAPITAL MACQUARIE PTY LIMITED	1,377,360	2.83
7.	4 EYES LIMITED	1,278,500	2.63
8.	CHEMICAL TRUSTEE LIMITED	1,158,108	2.38
9.	JFF STEVEN PTY LTD	714,867	1.47
10.	PRIMDONN NOMINEES PTY LTD	650,000	1.34
11.	TRADERS MACQUARIE PTY LIMITED	647,972	1.33
12.	MR ROBERT JOHN KLUPACS	480,453	0.99
13.	DR CHOON-JOO KHO	392,424	0.81
14.	MR ERIC LUCAS	354,036	0.73
15.	MR DAVID JOHN MASSEY	352,730	0.73
16.	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	352,190	0.72
17.	BOND STREET CUSTODIANS LIMITED	282,334	0.58
18.	PHILADELPHIA INVESTMENTS PTY LTD	281,050	0.58
19.	MR ROGER WILLIAM SAWKINS + MR GARY ROBERT YONG GEE	249,800	0.51
20.	MR MICHAEL RICHARD TARANT	240,000	0.49
totals		30,812,791	63.36

3. substAntIAL shArehoLders

The following information is current at 20 September 2013 based on information extracted from substantial shareholding notices given to the Company by shareholders who hold relevant interests in more than 5 per cent of the Company’s voting shares:

	No. of Shares
Packer & Co Limited	7,868,430
University of Helsinki Holding Oy – formerly Licentia Limited	3,150,340
Ludwig Institute for Cancer Research Ltd	3,122,090

4. votIng rIghts

Clauses 44 to 53 of the Company’s Constitution stipulate the voting rights of members. In summary, but without prejudice to the provisions of the Constitution, every member present in person or by representative, proxy or attorney shall have one vote on a show of hands and on a poll have one vote for each ordinary share held by the member.

The Company’s shares are quoted on the Australian Securities Exchange Limited (ASX code: CIR) and the OTC Markets Group Inc (OTCQX code: CKDXY).

2013 circadian annual report 91

CorporAte InforMAtIon

Company Directors

Circadian Technologies Limited ABN 32 006 340 567 Dominique Fisher, BA(Hons), MAICD (Chairman) Robert Klupacs, BSc(Hons), Grad Dip IP Law, MAIPA (Managing Director and Chief Executive Officer) Don Clarke, LLB(Hons)

Tina McMeckan, BLibArts&Sc, MBA, FAICD

Company Secretary Registered Office

Principal Administrative Office

Bankers Auditors Solicitors Share Register

Stock Exchange Listing

Mark Pryn (appointed 9 September 2013), ACA, ACSA, ACIS Level 4, 650 Chapel Street, South Yarra, Victoria 3141 Level 4,650 Chapel Street, South Yarra, Victoria 3141 Telephone: +61 (3) 9826 0399 Facsimile: +61 (3) 9824 0083 Commonwealth Bank of Australia, Melbourne, Victoria Deloitte Touche Tohmatsu, 550 Bourke Street, Melbourne, Victoria 3000 Minter Ellison, Rialto Towers, Level 23, 525 Collins Street, Melbourne, Victoria 3000 Computershare Investor Services Pty Ltd Yarra Falls, 452 Johnston Street, Abbotsford, Victoria 3067 Telephone: +61 (3) 9415 4000 or 1300 850 505 (within Australia)

Circadian Technologies Limited’s shares are quoted on the Australian Securities Exchange Limited ASX (code: CIR)

Circadian also operates an American Depositary Receipt (ADR) program where One ADR is the equivalent of five shares. ADRs are publicly traded on the OTC QX In the United States of America (code: CKDXY).

92 2013 circadian annual report

Level 4 650 Chapel Street South Yarra Victoria 3141 Australia T +61 (3) 9826 0399 F +61 (3) 9824 0083 www.circadian.com.au ABN 32 006 340 567

AI assistant

Opthea Ltd — AGM Information 2013

32698_rns_2013-10-27_a89988eb-ce80-4ee9-994a-bb42bf9b89e0.pdf

Notice of Annual General Meeting and Explanatory Memorandum

Circadian Technologies Limited ACN 006 340 567

Notice of Annual General Meetin g

Ordinary Business

1. Financial statements and reports

2. Remuneration Report (Resolution 1)

3. Re-election of Mr Don Clarke as a director (Resolution 2)

4. Other business

Notes

Proxies

Notes

Body Corporate Representatives

Appointing the chair as your proxy

Resolution 1

Definitions

Voting entitlements

Notes

Voting Exclusion and Restriction Statements

Resolution 1:

Notes

Questions and comments by Shareholders at the meeting

Ex lanator Memorandum p y

1. Purpose of information

2. Financial statements and reports

3. Remuneration Report (Resolution 1)

Ex lanator Memorandum p y

4. Re-election of Mr Don Clarke as director (Resolution 2)

Introduction

Ex lanator Memorandum p y

Biography of Mr Don Clarke

5.

How to Vote

6.

Glossary

Ex lanator Memorandum p y

Circadian Technologies Ltd

Lodge your vote:



By Mail:

For all enquiries call:

Proxy Form

 For your vote to be effective it must be received by 11.00am (AEDT) Wednesday, 27 November 2013

How to Vote on Items of Business

Appointment of Proxy

Signing Instructions

Attending the Meeting

Turn over to complete the form 

www.investorcentre.com



I 9999999999 I ND

Proxy Form

XX

SIGN

Signature of Securityholder(s) This section must be completed.

2013 AnnuAl RepoRt

InsIde thIs report

MILESTONES

PLANNING

TECHNOLOGY

LEADERSHIP

Directors’ Report

DIRECTORS

DIRECTORS wERE IN OffICE fOR THIS ENTIRE PERIOD uNLESS OTHERwISE STATED.

Dominique FisheR, BA(hons), mAiCD NoN-ExEcutivE chAirMAN

RoBeRt KlupACs,

Bsc(hons), Grad Dip ip law, mAipA

MANAgiNg DirEctor AND chiEf ExEcutivE officEr

Don ClARKe, llB(hons) NoN-ExEcutivE DirEctor

tinA mCmeCKAn, BlibArts&sc, mBA, FAiCD NoN-ExEcutivE DirEctor

COMPANY SECRETARY

DIRECTORSHIPS Of OTHER LISTED COMPANIES

DIRECTORS’ INTERESTS

SHARE OPTIONS AND PERfORMANCE RIGHTS

unissued shares

Unissued ordinary shares:

Conditional rights:

DIVIDENDS

Opthea Ltd AGM Information 2013