IDT AUSTRALIA LTD ANNUAL REPORT 2017 Directors Graeme Kaufman BSc, MBA

(Executive Chair)

Hugh Burrill

BSc, MScSt, MBA, GAICD

Alan Fisher

BCom, FCA, MAICD

Reo Shigeno

BA, Dip Financial Services

Mary Sontrop

BAppSci, Grad Dip Quality Management, Grad Dip Management (Health), MBA, GAICD

Secretaries

Joanna Johnson

BEc, Grad Dip Management, ICAA

Dr David Sparling

BVSc (Hons), LLB (Hons), GDi pAppCor Gov

Share Register

Link Market Services Limited Tower 4, 727 Collins Street

MELBOURNE, VICTORIA, 3008

Bankers

National Australia Bank Limited NAB Health

Level 2, 151 Rathdowne Street

CARLTON, VICTORIA, 3053

Auditors

Deloitte Touche Tohmatsu 550 Bourke Street

MELBOURNE, VICTORIA, 3000

Stock Exchange

Australian Stock Exchange Limited 530 Collins Street

MELBOURNE, VICTORIA, 3000 (ASX Code : IDT)

Report of the Executive Chair 2

Report of the Directors 3-11

Auditors Independence Declaration 12

Statement of Profit or Loss and

Other Comprehensive Income 13

Statement of Financial Position 14

Statement of Changes in Equity 15

Statement of Cash Flows 16

Notes To and Forming Part of

the Financial Statements 17-32

Directors' Declaration 33

Independent Audit Report to

the Members 34-38

Shareholder Information 39

Registered Office and Principal Place of Business

45 Wadhurst Drive

BORONIA, VICTORIA, 3155

Telephone +61 3 9801 8888

Facsimile +61 3 9837 6445

Website Address

www.idtaus.com.au

1

This year has been an eventful one for IDT on many fronts. We have celebrated some successes and suffered some setbacks, but we continue to move forward on our pathway to transforming the IDT business.

Our drive to build a generics manufacturing business saw the first sales of our proprietary products, Temozolomide and Pindolol. These products are being distributed in the US by our distributors, Mayne Pharma and ANI respectively. We are actively looking at other markets, particularly Japan, for these products to extend the revenue base.

Notwithstanding our success in bringing these products to market, the Board remains concerned that the progress in commercializing the drugs in the parcel purchased from Sandoz is slower than management had forecast, and we are taking steps to improve execution of the generics rollout. This has involved myself and director Mary Sontrop taking on executive roles pending the selection of a new CEO - with our immediate focus being speeding up execution and achieving cost efficiencies. We are being supported by our fellow directors taking on additional direct involvement in the operations of the Company, and we are very appreciative of their expertise and their time.

With the resignation of our Managing Director, Dr Paul MacLeman, we have taken the opportunity to seek a new leader with proven skills in delivery and commercialisation of generics including the management of manufacturing operations and we expect to shortly announce the successful candidate. In the interim, we have restructured the operations and infrastructure areas at IDT to facilitate planning and co-ordination while achieving improved execution at reduced cost.

These changes flow out of a detailed review by the Board of our operations across the organization following Dr MacLeman's resignation. In the course of this review, we have carefully assessed the carrying value of the assets on our balance sheet. While the bulk of the value of individual assets is supported by future cash flows, we deemed it prudent to impair some of the assets - particularly having regard to the implementation delays I referred to earlier, significant downward pressure on generics pricing in the US and increased competitor activity in some markets.

During the year, we completed the sale of our CMAX clinical trials unit in Adelaide for a total sale price of $16.2m, with final settlement expected in late August. This marks the tightening of focus in the business to our core strengths in manufacturing on the Boronia site, while at the same time bringing in funds to support the expansion of the business into specialty generics.

At the Board level, we welcomed Mary Sontrop as a Director. Mary is a seasoned pharmaceutical executive with extensive international experience in the life sciences industry at CSL Limited. Her appointment is part of the ongoing Board restructure to meet our challenges and opportunities as we move forward with the generics business model.

The Board also farewelled two long serving Directors, Dr Graeme Blackman and Geoff Lord. Dr Blackman was IDT's founder and its former CEO and Chair and has taken on increasing responsibilities in the not-for-profit sector as well as other philanthropic board and trustee roles. As Managing Director and Chair, Graeme built IDT from a small unit of the Victorian College of Pharmacy into today's specialised high technology manufacturing operation with global

markets. More broadly, his contribution to the development of the pharmaceutical industry in Australia is unparalleled.

Geoff Lord joined the IDT Board in 1998, and has been a valuable contributor to the company both as a director and as a significant shareholder. With his indepth experience across a very broad business spectrum, Geoff was a great advocate of IDT and a consistent contributor to Board deliberations.

Looking forward to 2018, we are continuing to aggressively seek out opportunities in our traditional contract manufacturing and development businesses to build our revenue base. Our core focus, however, is to improve on our execution of the proprietary products we acquired from Sandoz - to speed up the rollout and to capture the value in the portfolio. We are also committed to reviewing our existing portfolio of manufactured products to identify candidates such as Thiotepa which would fit our generics strategy.

There is no doubt that the next 12 months will be challenging, but we have the capacity and determination to exploit the opportunities open to us and to take IDT to the next level.

Graeme Kaufman Executive Chair 23 August 2017

2

The Directors present their report on the financial report of the company for the year ended 30 June 2017.

The following persons were Directors of IDT Australia Limited during or since the end of the financial year: G Kaufman (Executive Chair) G F Lord (until 18 October 2016)

G L Blackman (until 13 June 2017) H N Burrill

A D Fisher P D R MacLeman (until 14 July 2017)

R Shigeno M E Sontrop (from 1 March 2017)

Principal Activities

The principal activities of the Company in the course of the year were the supply of products and provision of research and development and other technical services for the pharmaceutical and allied industries.

Review of Operations

The Company continues to provide consulting research and development services as well as manufacture active pharmaceutical ingredients for clients in the pharmaceutical and allied industries.

In October 2016 the Company launched the first of its generic finished dose form products by making its first shipment of generic Temozolomide to its US partner. This was followed by the launch of Pindolol in April 2017 being the first of the 23 acquired abbreviated new drug applications ("ANDAs") to be launched. Commercialisation work on key products from this portfolio is ongoing with launches planned for the next financial year and beyond.

In December 2016 the Company announced divestment of the first 61% of the CMAX business unit for initial consideration of $10.0 million. The remaining 39% is on track to be transacted in 2017 and based on sales revenues achieved to 30 June 2017 is expected to realise a further $6.1 million. This divestment simplifies IDT's core business and enables resources to be focused on commercialisation of the Company's proprietary generic portfolio and supporting infrastructure projects at Boronia. CMAX has been reported as a discontinued operation in these financial statements.

A detailed review of operations is given in the Executive Chair's report on page 2 of this annual report.

Summary of FY17 financial performance

30 June 2017

$000

30 June 2016

$000

Movement

Revenue (*)

9,543

7,611

1,932

Net profit/ (loss) before tax - continuing operations

(14,846)

(5,779)

(9067

Net profit / (loss before tax - discontinued operations

13,730

75

13,655

Net profit/ (loss) after tax

(773)

(4,006)

4,779

Basic earnings per share

(0.3¢)

(1.9¢)

(1.6¢)

Diluted earnings per share

(0.3¢)

(1.9¢)

(1.6¢)

(*) excluding CMAX discontinued operations

Revenue from ongoing operations increased by 25% year-on-year whilst the Net loss after tax was reduced to $0.773 million after Net Profit - Discontinued Operation (CMAX) of $13.730 million and impairment of intangible assets of

$7.622 million.

Financial position

The Company has strong cash reserves of $8.4 million at balance date. This is will be supplemented by an additional

$6.1 million to be received later in 2017 for the divestment of the remaining 39% of CMAX as well as significant R&D Tax Incentive balances receivable for financial years ended June 2016 and 2017. The balance receivable of $1.8 million for the year ended June 2016 was received in July 2017.

The cash reserves are further supported by $2.5 million available through approved commercial borrowing and overdraft facilities with the National Australia Bank Ltd, renewed through to 30 November 2018.

These cash reserves will enable the Company to continue to develop and launch new products in its generic drug portfolio.

Results

The net result of operations after applicable income tax was a loss of $0.773 million (2016: $4.006 million).

Dividends

No dividends were paid during the course of the financial year. There are no dividends or distributions recommended or declared for payment to members, but not yet paid, during the year.

3

IDT Australia Limited published this content on 23 August 2017 and is solely responsible for the information contained herein.
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