Opthea Ltd — Annual Report 2014

Aug 28, 2014

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29 August 2014

Dear Sir/Madam

PRELIMINARY FINAL REPORT (APPENDIX 4E) FINANCIAL YEAR ENDED 30 JUNE 2014

No. of Pages: 24

In accordance with Listing Rule 4.3A, we enclose the Preliminary Final Report (Appendix 4E) on the consolidated results of Circadian Technologies Limited (‘Circadian’ or ‘Group’) for the year ended 30 June 2014.

This letter and the attached Appendix 4E Preliminary Final Report form part of this announcement to the Australian Securities Exchange Limited.

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Mike Tonroe CFO & Company Secretary

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Circadian Technologies Limited and Controlled Entities

Appendix 4E

Preliminary Final Report

Name of entity: CIRCADIAN TECHNOLOGIES LIMITED ABN: 32 006 340 567 Reporting period: FINANCIAL YEAR ENDED 30 JUNE 2014 Previous corresponding period: FINANCIAL YEAR ENDED 30 JUNE 2013

INDEX

INDEX	INDEX
Results for announcement to the market............................................................................................... 4
Consolidated statement of profit or loss and other comprehensive income for the year ended 30
June 2014 ................................................................................................................................................ 5
Consolidated statement of financial position at 30 June 2014 .............................................................. 6
Consolidated statement of changes in equity for the year ended 30 June 2014 ................................... 7
Consolidated statement of cash flows for the year ended 30 June 2014 .............................................. 8
Notes to the	preliminary final report for the year ended 30 June ......................................................... 9
1.	BASIS OF PREPARATION .................................................................................................. 9
2.	REVENUE ........................................................................................................................ 10
3.	OTHER INCOME ............................................................................................................. 10
4.	EXPENSES ....................................................................................................................... 11
5.	INCOME TAX .................................................................................................................. 12
6.	EARNINGS PER SHARE ................................................................................................... 13
7.	CURRENT ASSETS - CASH AND CASH EQUIVALENTS ...................................................... 14
8.	CURRENT ASSETS - RECEIVABLES................................................................................... 14
9.	NON-CURRENT ASSETS - AVAILABLE-FOR-SALE FINANCIAL ASSETS.............................. 15
10.	NON-CURRENT ASSETS - PLANT AND EQUIPMENT ....................................................... 16
11.	CURRENT LIABILITIES – PAYABLES ................................................................................. 16
12.	CURRENT LIABILITIES – PROVISIONS ............................................................................. 17
13.	NON-CURRENT LIABILITIES - PROVISIONS ..................................................................... 17

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Circadian Technologies Limited and Controlled Entities

14.	CONTRIBUTED EQUITY .................................................................................................. 17
15.	RETAINED EARNINGS AND RESERVES ............................................................................ 18
16.	CASH FLOW STATEMENT RECONCILIATION .................................................................. 20
17.	RESEARCH AND DEVELOPMENT EXPENSES ................................................................... 21
18.	RELATED PARTY DISCLOSURES ...................................................................................... 21
19.	COMMITMENTS ............................................................................................................. 22
20.	CONTINGENCIES ............................................................................................................ 22
21.	NON-CONTROLLING INTEREST ...................................................................................... 23
22.	INTANGIBLE ASSETS ....................................................................................................... 23
23.	NET TANGIBLE ASSET BACKING ..................................................................................... 23
24.	RATIOS ........................................................................................................................... 24
25.	INFORMATION ON AUDIT OR REVIEW .......................................................................... 24

This Preliminary Final Report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.3A.

The financial figures provided are in actual Australian dollars, unless specified otherwise.

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Circadian Technologies Limited and Controlled Entities

Results for announcement to the market

The consolidated results of Circadian Technologies Limited for the year ended 30 June 2014 are as follows:

e as follows:
		Change
Revenues and results from ordinary activities:		compared to 2013		2014
		%		$
Revenues from ordinary activities
	Down	23.9	to	878,083
Loss from ordinary activities after tax attributable	Loss has
to members	decreased	16.0	to	(3,996,142)
Loss for the year attributable to members	Loss has decreased	16.0	to	(3,996,142)

Commentary on results

Results for the year predominantly reflect the Group’s investment in executing the strategy to develop the extensive intellectual property platform it owns in respect of VEGF-C, VEGF-D and VEGFR-3 into therapeutics for eye diseases and cancer, as well as diagnostic products.

The consolidated net loss of the Group for the year was $3,989,618 after an income tax benefit of $2,859,403 (2013: loss of $5,004,506 after an income tax benefit of $1,558,009).

Pursuant to the Group’s strategy, its major expenditure was research and development (R&D) activities associated with OPT-302 for the treatment of wet AMD. Also included in this expenditure is clinical evaluation of VGX-100 in oncology. Direct R&D expenditure (excluding personnel costs) for the year was $3,613,066 (2013: $3,436,660).

Non-R&D expenditure excluding impairment losses for the Group was $4,004,380, a 15.2% reduction over the same expenditure last year (2013: $4,720,315).

The income tax benefit for the year of $2,859,403 includes a $507,923 favourable adjustment to the 2013 R&D claim following AusIndustry’s positive findings in relation to the eligibility of Circadian’s overseas R&D spend on certain projects. This provides greater certainty for future R&D claims and accordingly a further income tax benefit of $2,292,038 was recognised based on the R&D spend for this year (2013: $1,960,206).

The Group’s consolidated cash balances at 30 June 2014 were $7,162,020 (30 June 2013: $11,003,941); its net current asset surplus was $8,216,001 (30 June 2013: $11,561,144).

The group retains an interest in various listed invesments, the total market value of these at 30 June 2014 was $2,275,421 (30 June 2013: $2,280,517).

Shareholder Distributions

No dividends have been paid or declared by the entity since the beginning of the current reporting period.

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Circadian Technologies Limited and Controlled Entities

Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2014

he year ended 30 June 2014
Note Finance revenue Other revenue Revenue 2 Other income 3 Research and development expenses 17 Patent expenses Intellectual property costs Administrative expenses 4(c) Occupancy expenses 4(b) Impairment losses 4(a) Loss before income tax Income tax benefit 5 Loss for the year Other comprehensive income Items that may be reclassified subsequently to profit or loss: Net unrealised gains/(losses) on non-current listed investments for the period Income tax on items of other comprehensive income 5 Other comprehensive income for the period, net of tax Total comprehensive income for the period Profit/loss for the period is attributable to: Non-controlling interests 21 Owners of the parent 15 Total comprehensive income for the period is attributable to: Non-controlling interests Owners of the parent Earnings per share for loss attributable to the ordinary equity holders of the parent: - Basic and diluted loss per share (cents) 6	2014 2013 $ $ 274,931 530,986 603,152 622,701
	878,083 1,153,687 397,514 466,991 (3,613,066) (3,436,660) (336,154) (459,999) (229,840) (155,512) (3,323,659) (3,943,288) (114,727) (161,516) (507,172) (26,218)
	(6,849,021) (6,562,515) 2,859,403 1,558,009
	(3,989,618) (5,004,506)
	215,970 (1,375,640) (64,791) 412,690
	151,179 (962,950)
	(3,838,439) (5,967,456)
	6,524 (249,713) (3,996,142) (4,754,793)
	(3,989,618) (5,004,506)
	36,754 (383,139) (3,875,193) (5,584,317)
	(3,838,439) (5,967,456)
	(8.22) (9.79)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

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Circadian Technologies Limited and Controlled Entities

Consolidated statement of financial position at 30 June 2014

Note ASSETS Current Assets Cash and cash equivalents 7 Current tax assets 5 Receivables 8 Prepayments Total Current Assets Non-Current Assets Available-for-sale financial assets 9 Deferred tax assets Plant and equipment 10 Intangible assets 22 Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Payables 11 Provisions 12 Total Current Liabilities Non-Current Liabilities Deferred tax liability Provisions 13 Other liabilities Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 14 Accumulated Losses 15 Reserves 15 Equity attributable to owners of the Company Non-controlling interests 21 TOTAL EQUITY	2014 2013 $ $ 7,162,020 11,003,941 2,292,038 1,960,206 413,820 363,810 113,121 143,554
	9,980,999 13,471,511
	2,275,421 2,280,517 56,135 77,385 148,778 82,546 - 500,000
	2,480,334 2,940,448
	12,461,333 16,411,959
	1,604,668 1,598,782 160,330 311,585
	1,764,998 1,910,367
	56,135 77,385 86,165 65,261 74,779 -
	217,079 142,646
	1,982,077 2,053,013
	10,479,256 14,358,946
	39,453,733 39,453,733 (23,239,721) (19,243,579) (6,678,843) (6,758,541)
	9,535,169 13,451,613
	944,087 907,333
	10,479,256 14,358,946

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

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Circadian Technologies Limited and Controlled Entities

Consolidated statement of changes in equity for the year ended 30 June 2014

Note As at 1 July 2012 Net unrealised gains on non-current listed investments for the period 15(b) Loss for the year Total comprehensive income and expense for the year Changes in controlling interest due to share issue Issue of ordinary shares under private placement 14 Recognition of share-based payment 15(b) Balance at 30 June 2013 As at 1 July 2013 Net unrealised gains on non-current listed investments for the period 15(b) Loss for the year Total comprehensive income and expense for the period Recognition of share-based payment 15(b) Balance at 30 June 2014	Contributed equity Employee Equity benefits reserve Equity reserve- parent Unrealised gains reserve Accumulated Losses Attributable to owners of theparent Non- controlling interests Total equity
	$ $ $ $ $ $ $ $ 39,395,603 121,090 (7,172,143) 1,055,629 (14,488,786) 18,911,393 1,285,462 20,196,855 - - - (829,524) - (829,524) (133,426) (962,950) - - - - (4,754,793) (4,754,793) (249,713) (5,004,506)
	- - (829,524) (4,754,793) (5,584,317) (383,139) (5,967,456) - - - - - - 5,010 5,010 58,130 - - - - 58,130 - 58,130 - 66,407 - - - 66,407 - 66,407
	39,453,733 187,497 (7,172,143) 226,105 (19,243,579) 13,451,613 907,333 14,358,946
	39,453,733 187,497 (7,172,143) 226,105 (19,243,579) 13,451,613 907,333 14,358,946 - - - 120,949 - 120,949 30,230 151,179 - - - - (3,996,142) (3,996,142) 6,524 (3,989,618)
	- - - 120,949 (3,996,142) (3,875,193) 36,754 (3,838,439) - (41,251) - - - (41,251) - (41,251)
	39,453,733 146,246 (7,172,143) 347,054 (23,239,721) 9,535,169 944,087 10,479,256

• Amounts are after tax

The above statement of changes in equity should be read in conjunction with the accompanying notes.

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Circadian Technologies Limited and Controlled Entities

Consolidated statement of cash flows for the year ended 30 June 2014

Note Cash flows from operating activities Interest received Royalty and licence income received Grant income Sales of Reagents Payments to suppliers, employees and for research & development and intellectual property costs (inclusive of GST) Income tax refund Net cash flows used in operating activities 16(b) Cash flows from investing activities Acquisition of financial investments Proceeds from sale of investments Purchase of plant and equipment Net cash flows provided by investing activities Net decrease in cash and cash equivalents Effects of exchange rate changes on the balance of cash held in foreign currencies Cash and cash equivalents at beginning of year Cash and cash equivalents at the end of the year 7	2014 2013 $ $ 300,146 630,989 490,750 615,876 - 13,500 6,513 5,481 (7,439,845) (8,202,698) 2,468,129 1,323,856
	(4,174,307) (5,612,996)
	(45,328) (370,199) 505,483 606,144 (118,028) (2,989)
	342,127 232,957
	(3,832,180) (5,380,040) (9,741) (55,244) 11,003,941 16,439,225
	7,162,020 11,003,941

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

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Circadian Technologies Limited and Controlled Entities

Notes to the preliminary final report for the year ended 30 June

1. BASIS OF PREPARATION

This preliminary final report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E.

The accounting policies and methods of computation adopted in the preparation of the preliminary final report are consistent with those adopted in the Company’s annual financial report for the year ended 30 June 2013. These accounting policies are consistent with Accounting Standards and with International Financial Reporting Standards.

Going concern basis

The Company is an emerging drug development business and as such expects to be cash absorbing until its technologies are commercialised. For the financial year ended 30 June 2014, the Group incurred a net loss of $3,989,618 and experienced negative cash flows from operations of $4,174,307. The Company expects to receive a research and development tax credit relating to expenditure in the 2014 financial year of approximately $2.2 million in December 2014.

These financial statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

The directors believe the going concern basis of preparation to be appropriate given its existing resources are expected to provide sufficient funding to allow the Company to pay its debts as and when they become due and payable.

Having carefully assessed the Company’s ability to effectively manage its expenditures and cash flows from operations, the directors believe that the Company will continue to operate as a going concern for the foreseeable future and therefore it is appropriate to prepare the financial statements on a going concern basis.

If for any reason the Company is unable to continue as a going concern, then this could have an impact on the Company’s ability to realise assets at their recognised values and to extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial statements.

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Circadian Technologies Limited and Controlled Entities

2. REVENUE

3. OTHER INCOME (a) Finance revenue Interest from: - Bank - Other unrelated persons (b) Other revenue Royalties and licence fees Total Revenue Government grant income (i) Net gain on disposal of available-for-sale investments Net foreign exchange (loss)/gains Other	2014 2013 $ $ 271,251 527,734 3,680 3,252
	274,931 530,986 603,152 622,701
	878,083 1,153,687
	187,900 13,500 251,616 149,834 (48,515) 284,777 6,513 18,880
	397,514 466,991

3. OTHER INCOME

(i) Government grants during the financial year were paid directly to suppliers by the awarding agency as a contribution towards the Group’s research and development costs.

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Circadian Technologies Limited and Controlled Entities

4. EXPENSES

4. EXPENSES
(a) Impairment losses Listed financial investments Intangible asset impairment (b) Occupancy expenses - Operating lease rentals - Outgoings Total occupancy expense (c) Administrative expenses Included in administrative expenses are: - Depreciation of: Equipment and furniture (note 10) Leasehold improvements (note 10) Total depreciation expense - Loss on sale of non-current assets - Employee benefits expense: Salaries and fees Cash bonuses Superannuation Share-based payments (write back)/expense Total employee benefits expense - Other administrative expenses - Travel expenses - Insurance - Consultancy fees - Legal fees - Payroll tax - Investor relation and share registry related costs - Audit and accounting - Other expenses Total other administrative expenses Total administrative expenses	2014 2013 $ $ 7,172 26,218 500,000 -
	507,172 26,218
	80,185 122,836 34,542 38,680
	114,727 161,516
	25,540 27,051 12,681 289
	38,221 27,340
	13,575 - 1,843,888 2,174,968 2,500 12,829 173,883 197,350 (41,251) 66,407
	1,979,020 2,451,554
	116,459 113,803 81,757 94,615 99,394 206,321 118,538 83,351 76,924 93,643 259,236 248,961 169,000 161,650 371,535 462,050
	1,292,843 1,464,394
	3,323,659 3,943,288

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Circadian Technologies Limited and Controlled Entities

5. INCOME TAX

(a) Income Tax Benefit The major components of income tax benefit are: Statement of Comprehensive Income Current income tax Current income tax credit Under recognition of prior year benefit Adjustments in respect of tax losses of previous years Deferred income tax Relating to revaluation of listed investments to fair value In respect of the current year Income tax benefit reported in the statement of comprehensive income (b) Amounts charged or credited directly to equity Deferred income tax related to items credited/(charged) directly to equity Net unrealised gain/(loss) on listed investments Income tax benefit/(expense) reported in equity (c) Current tax assets Research and Development Tax incentive credit receivable	2014 2013 $ $ 2,292,038 1,960,206 507,923 - - 10,493 64,791 (412,690) (5,349) -
	2,859,403 1,558,009
	64,791 (412,690)
	64,791 (412,690)
	2,292,038 1,960,206

(d) 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.

(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.

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Circadian Technologies Limited and Controlled Entities

6. EARNINGS PER SHARE

The following reflects the income used in the basic and diluted earnings per share computations: (a) Earnings used in calculating earnings per share Net loss attributable to ordinary equity holders of the parent (b) Weighted average number of shares Weighted average number of ordinary shares on issue for basic earnings per share Effect of dilution: Conditional rights Share options Weighted average number of ordinary shares adjusted for the effect of dilution	2014 2013 $ $ (3,996,142) (4,754,793)
	48,633,015 48,588,214 - - - -
	48,633,015 48,588,214

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.

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Circadian Technologies Limited and Controlled Entities

7. CURRENT ASSETS - CASH AND CASH EQUIVALENTS

Cash at bank and in hand Short-term deposits	2014 2013 $ $ 2,412,020 2,503,941 4,750,000 8,500,000
	7,162,020 11,003,941

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 3.47% (2013: 4.37%).

8. CURRENT ASSETS - RECEIVABLES

Interest receivable Royalty income receivable (i) GST receivable (i) Other (i) Total current receivables	2014 2013 $ $ 2,278 27,493 - 44,111 122,727 54,400 288,815 237,806
	413,820 363,810

(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.

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Circadian Technologies Limited and Controlled Entities

9. NON-CURRENT ASSETS - AVAILABLE-FOR-SALE FINANCIAL ASSETS

	2014	2013
	$	$
Listed Australian shares - at fair value	2,275,421	2,280,517

Details of listed Australian shares Ownershipinterest	Fair value(i) Cost of investment
2014 2013 Listed investments % %	2014 2013 2014 2013 $ $ $ $
Non-current investments: Antisense Therapeutics Ltd 9.97 10.33 Optiscan Imaging Limited 4.95 5.16 Other listed investments held in Syngene Ltd less than 1% interest Total listed investments	2,010,622 1,488,158 3,548,269 3,578,074 248,555 585,601 786,131 824,847 16,244 206,758 20,888 347,926
	2,275,421 2,280,517 4,355,288 4,750,847

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.

Details of the investments in subsidiaries are shown in note 18.

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Circadian Technologies Limited and Controlled Entities

10. NON-CURRENT ASSETS - PLANT AND EQUIPMENT

Equipment and furniture at cost Opening balance Additions Disposals Closing balance Accumulated depreciation Opening balance Depreciation for the year Disposals Closing balance Net carrying amount Leasehold improvements at cost Opening balance Additions Disposals Closing balance Accumulated depreciation Opening balance Depreciation for the year Disposals Closing balance Net carrying amount Total plant and equipment, net	2014 2013 $ $ 257,395 254,405 38,863 2,990 (120,393) -
	175,865 257,395
	(179,310) (152,259) (25,540) (27,051) 111,279 -
	(93,571) (179,310)
	82,294 78,085
	79,478 79,478 79,165 - (79,478) -
	79,165 79,478
	(75,017) (74,728) (12,681) (289) 75,017 -
	(12,681) (75,017)
	66,484 4,461
	148,778 82,546

11. CURRENT LIABILITIES – PAYABLES

Creditors (unsecured) (i) Income received in advance PAYG tax liability Withholding tax payable	2014 2013 $ $ 1,326,516 1,343,198 197,336 198,640 78,316 56,649 2,500 295
	1,604,668 1,598,782

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

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Circadian Technologies Limited and Controlled Entities

12. CURRENT LIABILITIES – PROVISIONS

13. NON-CURRENT LIABILITIES - PROVISIONS Annual leave Long service leave Long service leave	2014 2013 $ $ 136,570 232,266 23,760 79,319
	160,330 311,585
	86,165 65,261

13. NON-CURRENT LIABILITIES - PROVISIONS

14. CONTRIBUTED EQUITY

(a) Ordinary shares Issued and fully paid at 30 June Movement in ordinary shares: Opening balance Issue of shares (i) Ordinary shares on issue: Opening balance Issue of shares (i)	2014 2013 $ $ 39,453,733 39,453,733
	39,453,733 39,395,603 - 58,130
	39,453,733 39,453,733
	No: No:
	48,633,015 48,481,642 - 151,373
	48,633,015 48,633,015

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

• (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 (former Managing Director) in lieu of a cash bonus. The share price on 24 August 2012 and 21 November 2012 was $0.38 and $0.37 respectively.

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. During the financial year the company did not issue shares or options under these plans.

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Circadian Technologies Limited and Controlled Entities

(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.

15. RETAINED EARNINGS AND RESERVES

(a) Movements in retained earnings were as follows: Balance at 1 July Net loss for the period Balance at 30 June (b) Reserves Net unrealised gains reserve (i) Employee equity benefits reserve (ii) Equity reserve attributable to parent (iii) Total reserves (i) Movement in net unrealised gains reserve: Opening balance Net gains /(loss) on non-current listed investments for the period Tax effect on above net gains (note 5) NCI share of revaluation of listed investments net of tax Net gains/(losses) on non-current listed investments for the period after tax Closing balance (ii) Movement in employee equity benefits reserve: Opening balance Share based payments (written back)/expense Closing balance (iii) Movement in equity reserve attributable to parent: Opening and closing balance	2014 2013 $ $ (19,243,579) (14,488,786) (3,996,142) (4,754,793)
	(23,239,721) (19,243,579)
	347,054 226,105 146,246 187,497 (7,172,143) (7,172,143)
	(6,678,843) (6,758,541)
	226,105 1,055,629 215,970 (1,375,640) (64,791) 412,690 (30,230) 133,426
	120,949 (829,524)
	347,054 226,105
	187,497 121,090 (41,251) 66,407
	146,246 187,497
	(7,172,143) (7,172,143)

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Circadian Technologies Limited and Controlled Entities

• (c) Nature and purpose of reserves

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.

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.

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Circadian Technologies Limited and Controlled Entities

16. CASH FLOW STATEMENT RECONCILIATION

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

(a) Reconciliation to cash at the end of the year
Cash at bank and in hand (Note 7) (b) Reconciliation of net loss after tax to net cash flows from operations Net loss for the year Adjustments for: Income tax benefit recognised in profit or loss Depreciation of non-current assets Net loss on disposal of non-current assets Net profit on disposal of investments Employee benefits expense Impairment losses on non-current financial investments Impairment loss recognised on intangible asset Impairment loss recognised on trade receivables Net exchange differences Movements in working capital: Decrease/(increase) in prepayments Decrease in interest receivable Increase in other receivables Increase/(decrease) in payables (Decrease)/increase in employee provisions Net cash used in operating activities Income tax refund Net cash generated by operating activities	2014 2013 $ $ 7,162,020 11,003,941
	7,162,020 11,003,941
	(3,989,618) (5,004,506) (2,859,403) (1,558,009) 38,221 27,340 13,575 - (251,616) (149,834) (41,251) 66,407 7,172 26,218 500,000 - 104,202 - 9,741 55,244
	(2,479,359) (1,532,634) 30,433 (69,399) 25,215 100,003 (179,426) (174,388) 80,671 (338,581) (130,352) 82,653
	(6,642,436) (6,936,852) 2,468,129 1,323,856
	(4,174,307) (5,612,996)

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17. RESEARCH AND DEVELOPMENT EXPENSES

Research project costs (i)	2014 2013 $ $ 3,613,066 3,436,660
	3,613,066 3,436,660

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

18. 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:

	Parent entity% equity	interest
	2014	2013
Name of company	%	%
Circadian Shareholdings Pty Ltd (i)	100	100
Polychip Pharmaceuticals Pty Ltd	100	100
Precision Diagnostics Pty Ltd	100	100
Syngene Limited	52	52
Vegenics Pty Ltd	100	100
Opthea Pty Ltd (ii)	100	100
Ceres Oncology Pty Ltd (iii)	100	100

• (i) Circadian Shareholdings Pty Ltd acts as trustee for the employee Conditional Rights Scheme.

• (ii) Opthea Pty Ltd was previously known as Insight Therapeutics Pty Ltd. Insight Therapeutics Pty Ltd was first incorporated on 4 September 2012.

• (iii) 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 and have the same financial year as Circadian Technologies Limited.

(b) Transactions with related parties

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.

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Circadian Technologies Limited and Controlled Entities

19. 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.

effective 15 July, 2013.
Within one year After one year but not more than five years	2014 2013 $ $ 90,939 89,523 390,800 428,360
	481,739 517,883

(ii) Research projects and license commitments

The Group has entered into research and development and intellectual property license agreements with various parties. Expenditure commitments relating to these are payable as follows:

Within one year After one year but not more than five years After more than five years	2014 2013 $ $ 3,216,270 1,793,006 320,272 703,065 227,778 373,344
	3,764,320 2,869,415

20. CONTINGENCIES

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 $NIL (2013: $20,000) and those which could become payable in more than one year total $2,309,722 (2013: $12,751,034). 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.

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Circadian Technologies Limited and Controlled Entities

21. NON-CONTROLLING INTEREST

Balance at beginning of year Additional non-controlling interests arising due to share issue Share of profit/loss for the period Share of other comprehensive income for the period Balance at end of year	2014 2013 $ $ (907,333) (1,285,462) - (5,010) (6,524) 249,713 (30,230) 133,426
	(944,087) (907,333)

22. INTANGIBLE ASSETS

Carrying amounts of: Intellectual property - at cost Less: impairments Cost: Balance at beginning and end of year	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. Each year the Company assesses the development of the asset and considers any indications of impairment. The Company has determined that the cost of the investment is similar in nature to its other research and development costs. The company has been consistent with its treatment of research and development costs and has recorded an impairment of the whole of the carrying value of the intangible asset in the 2014 financial year.

23. NET TANGIBLE ASSET BACKING

23. NET TANGIBLE ASSET BACKING
	2014	2013
	$	$
Net tangible asset backing per ordinary security	0.26	0.33

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Circadian Technologies Limited and Controlled Entities

24. RATIOS

24. RATIOS
	2014	2013
Consolidated net loss from ordinary activities after tax attributable to members as a percentage of equity	-41.91%	-35.35%
attributable to members at the end of the year

25. INFORMATION ON AUDIT OR REVIEW

This preliminary final report is based on accounts to which one of the following applies:

The accounts have been audited.

The accounts have been subject to review.

 The accounts are in the process of being audited or subject to review.

The accounts have not yet been audited or reviewed.

Description of likely dispute or qualification if the accounts have not yet been audited or subject to review or are in the process of being audited or subjected to review:

• Not applicable.

Description of dispute or qualification if the accounts have been audited or subjected to review: - Not applicable.

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