Avexa Annual Report 2013

Avexa Limited ABN 53 108 150 750

Suite 8, Level 1, 61-63 Camberwell Road

Hawthorn East, Victoria 3123 Australia
T +61 3 8888 1040 F +61 3 8888 1049
Annual Report
2013

www.avexa.com.au
DEVELOPING
OUR
PORTFOLIO
OF DRUG
ASSETS
Contents
Chairmans Report 1
Directors Report 2
Remuneration Report 9
Lead Auditors Independence Declaration 16
Statement of Comprehensive Income 17
Statement of Changes in Equity 18
Statement of Financial Position 19
Statement of Cash Flows 20
Notes to the Financial Statements 21
Directors Declaration 43
Independent Auditors Report 44
Corporate Governance Statement 46
Shareholder Information 58
Avexa is a Melbourne based biotechnology company with a focus on discovery, development

and commercialisation of small molecules for the treatment of infectious diseases. Avexas key
projects include apricitabine (ATC) for the treatment of drug resistant HIV, an HIV Integrase
program and an antibiotic program for antibiotic resistant bacterial infections.

Designed and produced by MDM Design
Chairmans Report
Dear Shareholder
Last year we reported that we were focussed on two objectives
(i) securing a co-marketing partner for apricitabine (ATC), the
Companys drug for the treatment of drug-resistant HIV; and
(ii) finding innovative ways to fund ATCs remaining clinical
trial development.
Your Board is very pleased to report that we have achieved
both these objectives.
In June this year we announced that Avexa had signed a
major collaboration with Link Healthcare (Link), a privately
owned specialist Pharmaceutical and Medical Technology
business. The collaboration covers the development,
registration, sale and marketing of ATC worldwide, with
the exception of a couple of small territories.
Many shareholders may not have heard of Link and may
be wondering how Avexa and Link will be able to effectively
market and distribute ATC or even begin to compete against
the well-established HIV drug companies. In fact, Link is the
second biggest company for HIV drugs in South Africa, one
of the biggest volume markets in the world, and therefore
widely experienced in the franchise with an extensive
international network.
Our view, shared by Link, is that in the specialty area of HIV
drugs, you dont necessarily need big pharmas large infield
sales force, with the associated large overheads, detailing
HIV drugs to every doctor in the territory. Often the opposite
approach is better, as most HIV drugs are prescribed through
specialty clinics, not GPs.
We also know that there is demand for an HIV drug with ATCs
unique properties once it can be made available. Work has
already begun on this. Importantly, Link is a successful, fast
growing business run by a very competent, highly motivated team,
many members of which have worked in big pharma. In short,
we like what we see in Link and have high regard and respect
for what they have already achieved in a number of countries
with HIV drugs, in particular in Southern Africa. Your Directors
are confident this will be a successful venture. More details
are contained in the Directors Report that follows.
The second objective, of finding ways of funding ATC trials,

is being achieved through the bold and innovative decision to
invest in the North Pratt coal project in Alabama, USA. We are
very grateful to have received majority shareholder support at last
years AGM for this investment although we are very aware that
some observers have questioned our strategy. The budgeted
production for the North Pratt mine is 660,000 tonnes of coking
(or metallurgical) coal per annum which, at the current assumed
sales price, equates to US$66 million in annual revenues for
approximately 15 years. Whilst there have been some delays,
primarily due to new, much stricter environmental regulations in
the USA, we are pleased that the permits have now been issued
and the project is underway. Arising from the delay, we negotiated
a higher equity stake of 30.0 per cent (formerly 25.5 per cent)
and importantly, that all upfront fees totalling some US$3.5 million,
would be paid for out of revenues from coal sales, not our equity
investment. This means precious cash is conserved for capital
expenditure and getting the mine into production, not intangibles.
Pleasingly, at the time of this report, the USD:AUD exchange rate
remains close to the rate assumed in the business case put to
shareholders in December 2012.
Your Board continues to look for efficiencies and cost savings.
The biggest annual cash burn for your Company was rent on
the old laboratories and offices. We moved offices during the
year, so this is now behind us and we can turn our attention to
other, overdue corporate tasks. The first of these is to address
the very large number of holders of unmarketable parcels
of shares on the Companys register. Your Directors are also
very aware of the Companys low share price and have a work
programme in place over the next year to address this. We are
of the firm view, supported by third parties, that the Company
is undervalued, so we intend to change this especially now the
North Pratt investment is underway and the future for ATC (and
the Companys two early stage drug candidates) is much brighter.
In closing, the Board acknowledges and thanks the small team
at Avexa very much for their hard work and I personally remain
grateful to my fellow Directors for their continued professional
guidance and counsel.
Iain Kirkwood
Chairman
Avexa Limited Annual Report 2013
Directors Report
The Directors present their report together with the financial statements of the Group comprising of Avexa Limited (the Company),
and its subsidiaries for the financial year ended 30 June 2013 and the auditors report thereon.
Principal Activities
There have been two principal activities for the Group during the course of the financial year. Firstly, the research and development,
for commercialisation, of anti-infective pharmaceutical programs and projects and secondly, a due diligence process relating to
investment in the North Pratt coal mine and subsequent permit issuance. The Company is a public company listed on the ASX,
incorporated and domiciled in Australia, and with a registered office and principal place of business located at Suite 8, Level 1, 61-63
Camberwell Road, Hawthorn East, VIC 3123. Except as disclosed elsewhere in this Report, there have been no significant changes in
the nature of these activities during the year.
Operating and Financial Review

During the year, Avexas operations have focused on progressing our late stage project apricitabine (ATC), the early stage HIV
integrase and antibiotic projects, and extensive due diligence on the investment in the North Pratt coal mine.
The statement of comprehensive income shows a loss of $3.0 million (2012: $3.5 million) for the year. The Group has no bank debt.
As at 30 June 2013 the Group had a cash position of $11.9 million (2012: $12.6 million). Operating activities incurred a cash outflow
for the year of $0.7 million (2012: $3.8 million).
Partnership with Link for ATC

An important milestone was achieved for ATC in June 2013 with the signing of a major collaboration with Link Healthcare (Link). The
collaboration covers the development, registration, sale and marketing of ATC in all major territories worldwide, with the exception
of a handful of specialist market regions such as Taiwan, for which local specialist partners were announced in December 2012. The
signing of the agreement with Link concluded an exhaustive examination of possible marketing partners from a detailed international
search effort. Several advantages offered by Link influenced our final choice. Firstly, through their subsidiary Equity Pharma/Novagen,
Link have a strong presence in Southern Africa, an important growing market for HIV drugs. Links subsidiary Novagen Pharma is the
second largest supplier of anti-retroviral drugs in the region, so the addition of ATC to their portfolio makes good commercial sense.
Secondly, Link have a demonstrated expertise in growing sales of products for niche disease areas in developed countries.
The unique properties of ATC in targeting drug-resistant patients who have failed other treatments and have few other options for
therapy means that such a niche sales approach targeting specialist centres is a particularly cost-effective approach. As more and
more people are treated, the numbers of patients who subsequently fail first line drugs will increase. Indeed, recent data from the
7th IAS Conference in Kuala Lumpur shows that even with the most potent treatment regimens, nearly 20 per cent of patients do not
achieve undetectable levels of HIV in the blood, putting them at risk of the development of resistance. Yet many options for second
and third line treatment are poorly tolerated, difficult to administer, or poorly effective. At the same time, the prospects for a vaccine
against HIV are dismal; in April the US National Institute of Allergy and Infectious Diseases (NIAID) discontinued the only remaining
HIV vaccine efficacy study as the vaccine did not prevent infection nor even reduce the viral load of those infected.
ATCs properties make it ideally suited to meeting the needs of these patients. Our continued interactions with patient advocates,
community groups, scientists and medical practitioners indicate a clear medical need for ATC. In certain cases, where there is a
demonstrable medical need for a promising new drug for serious, life-threatening conditions, special procedures may allow the
provision of that drug prior to final approval. Such early access schemes (called the Special Access Scheme, or SAS in Australia)
can enable many more patients to access a drug than a clinical trial alone can. In certain countries, mechanisms for cost recovery
of this process exist. We view this as an important part of our overall development plan for ATC. During the year, we have taken
steps towards ensuring we have stocks of ATC ready for clinical trial use and for early access. Our current stocks of ATC are amply
sufficient for the production of all of the required clinical trial material.
Our efforts to push forward ATCs development have resulted in a number of articles and letters of support. A consensus letter calling
for US Federal facilitation of ATCs development has been signed by institutions such as the World AIDS Institute, the Timothy Ray
Brown Foundation, and the Cornell AIDS Clinical Trials Unit Community Advisory Board of the US National Institute of Health and
others. A petition calling upon the US Government to expedite ATCs final approval has been sent to US Congressman Alcee Hastings
and Congresswoman Maxine Waters from the President of World Health Clinicians, and continues to gather signatories. This petition
is timely as a resolution to make federal funding available for small biotech with promising new drugs is being put before the US
Congress. We continue to look for alternative ways to support the development of ATC.
New Opportunities for Early Stage Projects

HIV Integrase Program
We have made good progress in our early stage projects this year. Our HIV integrase project has made substantial steps forward. HIV
integrase is the target for the newest class of anti-retroviral drugs, which are already playing a major role in the construction of patient
treatment regimens. HIV integrase catalyses the insertion of the HIV genome into the DNA of the cells, creating reservoirs of infected
cells which may at any time start actively producing new viral particles. Inhibiting HIV integrase is not only highly effective in reducing
the amount of virus in infected persons, but could also play a role in possible future strategies to attempt to clear the reservoir of virus,
by preventing the formation of new reservoirs.
Current HIV integrase inhibitors have been commercially very successful despite limitations of twice daily administration or
requirement for an additional pharmacological booster. Resistance to HIV integrase inhibitors is known to occur, and the mutations
associated with this are known. Our HIV integrase project has targeted these two key areas (once daily administration without a
pharmacological booster; active against resistant mutants) to build a commercial advantage. This last year has seen considerable
success in both these key targets. Not only have we identified a series of compounds with excellent activity against both wild type and
resistant mutant virus, two of these compounds have shown excellent pharmacokinetic profiles in both rats and non-human primates
which clearly indicate the potential for once daily dosing. Having secured a grant from the Victorian State Government, we have
initiated further manufacture of the current lead in order to continue to build on these results.
Whilst concentrating on pushing forward with the current lead compound, we are also encouraged that other compounds in the
series remain to be further explored and could provide further leads. We have therefore initiated a number of patent applications
to ensure that this potential rich vein is appropriately protected by a strong intellectual property position.
Owing to the difficulties in raising funds for drug development in China, the first generation HIV integrase compounds out-licensed
to SIOC have progressed slowly. These compounds, whilst presenting a possible opportunity in China owing to ease and cost of
synthesis, have been superseded by our second generation in-house leads. Avexa does not expect that any significant progress
in this area is likely to occur.
Antibiotic Programme
Together with our partner, Valevia, we have seen new possibilities open up for our antibiotic project. The demonstration of activity
against the Clostridium bacterium has revealed an important new indication which is attracting interest. Infection with Clostridium
is becoming more common with the prevalent use of antibiotics to treat other infections. Treatment with antibiotics often causes the
additional unintended effect of killing the normal gut flora besides treating the intended infection. The absence of the usual flora in the
gut paves the way for colonisation by harmful bacteria such as Clostridium. Often, the secondary Clostridium infection becomes a
much greater problem than the first infection for which the antibiotics were prescribed, necessitating lengthy and costly hospital stays.
The rise of antibiotic resistance is only adding to this problem. The Office of the Chief Scientist in Australia released a paper in July 2013,
which describes the rapidly rising threat of antibiotic resistance and calls for a global revival in antibiotic research and development.
It states that there is now a genuine threat of humanity returning to an era where mortality due to common infections is rife.
The ideal treatment for Clostridium would be effective locally at the site of the infection in the gastrointestinal mucosa, but not
systemically (throughout the whole body) where treatment is not required. However, many current antibiotics must either be delivered
intravenously (and therefore systemically) or are absorbed systemically after oral absorption. We believe that our lead compound
AVX13616 may be particularly suited to the local treatment of the gut whilst avoiding systemic exposure. Importantly, we were able
to show good activity against clinical isolates of bacteria from current hospital cases of disease.
Armed with these results and with support from Avexa, Valevia have succeeded in obtaining a grant from the UK Technology Strategy
Board to undertake further pre-clinical studies in preparation for clinical studies. These studies are aimed at understanding the
behaviour of the lead compound in its interaction with the whole body compartment, rather than its topical behaviour. The studies
will also be used to try to identify potential species of compound related to the lead in vivo, and show the relevance or otherwise
to the compounds mode of action. It is understood that such funding could open the way to further grants and increase the
attractiveness of the lead compound to potential investors and/or development partners.
Directors Report continued
North Pratt Investment

During the past year, an opportunity arose to invest in a coal mine in North Pratt, Alabama. Projections indicated that, for an
investment of US$4 million and a further loan of US$6 million, Avexa could achieve an income stream that could underpin financing
the development of ATC. Avexas existing cash resources (refer to the Statement of Financial Position on page 19) are insufficient to
fund the development of ATC through late stage Phase III trials to marketing approval, which the Directors conservatively estimate to
be in the range of $30 million to $40 million. Given the current market capitalisation of Avexa and the current risk-averse equity capital
markets, the Directors have concluded that a sufficiently large capital raise to fund these trials is unlikely to be achieved at least in
the short term. Further, and as explained in some detail in Avexas 2012 Directors Report, it has become very clear that the number
of large pharmaceutical companies active in the area of HIV drug discovery and development has shrunk considerably. Despite
extensive efforts, it has not proved possible to secure an out licensing deal of sufficient magnitude to fund these Phase III trials.
Avexa has undertaken comprehensive due diligence, including from external experts, over the proposed investment. The Alabama
Coal Projects general location is near the township of Graysville in Jefferson County, some 15 miles north west of Birmingham in
the State of Alabama in the United States of America. The North Pratt Coal Mine is an existing mine with an estimated 20 million
tons of remaining in-situ coal reserves. A National Instrument 43-101 (a geological/ technical report) shows a measured resource
of approximately 10.55 million clean recoverable tons of metallurgical coal. The life of the mine is about 15 years depending on
production levels per annum. The mine, once operational, will employ up to 100 workers working two shifts a day. The first coal is
expected to be produced within nine to 12 months from commencement and Avexa expects to receive its first cash flow from its
investment in approximately 18 months from commencement. The mine is budgeted to produce 660,000 tons of coal a year at full
production, generating US$85 million in sales a year based on the economic assumptions used in the business plan provided by
Coal Holdings. The Directors are of the view that, barring any unforeseen contingency, the proposed investment in the Alabama Coal
Project currently gives Avexa the best chance of locking in an annuity revenue stream to assist it in developing its portfolio of drug
assets, as far as possible, in-house.
We have been advised as of the date of publication that the principle set of permits required to commence mining operations have
been issued by the Alabama authorities. After considerable deliberation and further due diligence, the Board is of the view that the
potential revenues are still commercially attractive despite this delay. The delay is a result of administrative/bureaucratic factors
outside of the projects control. Upon Avexa formally entering into the proposed investment, mining and preparatory activities
are expected to commence with first coal expected to be produced within nine to 12 months from commencement.
Preservation of Cash New Premises

As part of our ongoing prudent management of existing cash reserves, we have completed a major relocation to much smaller
premises. Our previous premises had been inherited as a result of a historical legacy from our previous parent company and
were large and costly. Whilst we were offsetting these high costs as far as possible by sub-leasing unneeded space, we were
determined to move to more appropriate premises as soon as possible. This reorganisation has now been completed. The transition
has required considerable logistical effort, dealing with more than 15 years occupancy of the previous site by ourselves and our
various predecessors. With our constant focus on containing spending, a great number of diverse tasks were undertaken by our
small number of staff, in addition to all their usual workload. Their extraordinary efforts with this transition whilst continuing to carry
on the Company business are appreciated. The net effect of our removal to new premises has been a 90 per cent reduction in
rental expenses. Our overheads have also seen a similar significant reduction (refer Statement of Financial Position Note 20).
We will continue to ensure our operations remain nimble and prudent.
Portfolio Investments
To seek returns to offset some of its fixed operating expenses Avexa has, in addition to placing funds in fixed deposits where deposit
rates have been on a downward trend, made several liquid alternative investments through its wholly owned subsidiary AVI Capital
Pty Ltd, to diversify its investment portfolio. During the year AVI Capital Pty Ltd, sold its substantial holding in Allied Healthcare Group
(AHZ). The sale of AHZ shares for $2.4 million realised a net gain of $0.8 million on the initial investment. AVI Capital Pty Ltd continues
to hold smaller holdings in two other listed entities. Realised gains in AVI Capital Pty Ltd for the period ending 30 June 2013 were
$0.8 million along with unrealised (paper) losses of $0.9 million. These investments are not held on a long term basis.
About ATC
Apricitabine (ATC) is Avexas nucleoside reverse transcriptase inhibitor (NRTI) for the treatment of human immunodeficiency virus
(HIV) infection. HIV is the virus which causes Acquired Immunodeficiency Syndrome (AIDS). In the 30 years since the first cases
of AIDS were described, more than 30 million persons have been infected with the virus worldwide, and many millions have died.
HIV primarily targets cells of the immune system, leaving infected individuals progressively defenceless against common diseases.
Treatment with a combination of antiviral drugs which inhibit the replication of the virus can dramatically slow down the course of the
disease, but drug resistance often develops. In many cases, resistance to one drug causes cross-resistance to other, as yet unused,
drugs. As a result, patients may have very few active drugs available to them in practice. A further problem is the unwanted side
effects of many of the currently used anti-retroviral drugs, which can be intolerable or even life-threatening. This can further restrict
the drugs an individual patient can take. Lastly, many current drugs have significant interactions if they are given at the same time
as other drugs the patient may need, such as drugs for diabetes, heart disease, hypertension, or bacterial infections. Taken together,
this means that an individual patient may, in practice, have very few appropriate drugs available.
ATC has significant potential to be a valuable new treatment for HIV as it addresses these pivotal issues: drug resistance, safety/
tolerability, and drug interactions. As well as showing antiviral activity against natural (wild-type) HIV, ATC is active against virus with
various mutations that cause resistance to other NRTIs. These include the M184V mutation (associated with resistance to the currently
used NRTIs lamivudine and emtricitabine) and thymidine analogue mutations (TAMs, associated with resistance to zidovudine and
stavudine). These mutations are commonly found in patients, as the use of these existing NRTIs is widespread. ATC therefore has
the potential to be a valuable treatment option for patients whose current treatments are no longer effective due to the development
of drug resistance. In addition, resistance to ATC itself has not been observed even in patients who have been treated with ATC for three
years. Clinical trials of ATC have shown it to be safe and very well tolerated. ATC is easy to dose and may be taken with or without
food. ATC does not produce deleterious interactions when dosed with a variety of different drugs known to produce interactions with
current HIV medications. These key properties of ATC, lack of resistance, safety, and ease of dosing, are exactly those which are
required in patients who have developed resistance to the currently used drugs.
Capital and Corporate Structure

During the financial year ended 30 June 2013 there were no issues of shares.
Full details of movements in share capital for the year are detailed in Note 18 to the financial statements. There were no changes
to the corporate structure of Avexa Limited during the financial year ended 30 June 2013.
Unissued Shares Under Option

During the year nil (2012: nil) options to acquire ordinary shares were issued to staff, nil (2012: nil) to Executive officers, nil (2012: nil)
to the Interim CEO/Chief Scientific Officer and nil (2012: 5,000,000) to Directors. Nil (2012: nil) options were exercised during
the financial year for total proceeds of $nil (2012: $nil). 3,080,000 (2012: 5,990,000) options lapsed during the financial year
and nil (2012: 1,360,000) options were forfeited upon the departure of Directors or employees during the financial year.
At 30 June 2013 there were 4,190,000 options (30 June 2012: 7,270,000) on issue to Directors, Executives and employees. There
have been 3,080,000 (2012: 7,350,000) options lapsed or forfeited, nil (2012: nil) approved to be issued and nil (2012: nil) exercised
after the reporting date and up to the date of this report, such that at the date of this report unissued ordinary shares of the Group
under option are as shown in the following table.
Number of Options on Issue
at the Date of this Report
Employee options:
190,000
190,000
Non-employee options:
4,000,000
4,190,000
Exercise Price
when Granted
Adjusted
Exercise Price
Expiry
Date
$0.13
$0.13
18 June 2014
$0.06
n/a
31 Dec 2013
Directors
The Directors of the Company at any time during the year or since the end of the financial year are as follows. Directors were in office
for the entire period unless stated otherwise:
Name, Qualification and Independence Status (Age)
Experience, Special Responsibilities and Other Directorships
Mr Iain Kirkwood
Independent Non-Executive Chairman (61)
Qualifications: MA (Hons) Oxon, FCPA, CA, MAICD
Mr Kirkwood was appointed as Non-Executive Chairman on

18 April 2011 and is Chairman of the Avexa Audit Committee and
a member of the Avexa Remuneration and Nomination Committee.
He has extensive operational, financial, general management and
boardroom experience, particularly in the life sciences industry.
He is currently serving as Chairman of Bluechiip Limited (ASX.BCT),
Chairman of MHM Metals Ltd (ASX.MHM) and as a Non-Executive
Director of Vision Eye Institute Ltd. (ASX.VEI).
During his career Mr Kirkwood has worked with a number of ASX
listed companies in senior management roles, including Woodside
Petroleum Ltd. and Santos Ltd, and was previously the CFO of
FH Faulding & Co. Ltd. and CEO of EpiTan Ltd. (now Clinuvel
Pharmaceuticals Ltd).
Mr Bruce Hewett
Independent Non-Executive Director (59)
Qualifications: BAppSc. (Pharmacy), GAICD
Mr Hewett joined the Board on 6 July 2010 as a Non-Executive

Director of the Company and is a member of the Avexa Audit
Committee and Chairman of the Avexa Remuneration and
Nomination Committee. He brings more than 25 years experience
in the pharmaceutical and healthcare industries. He is a
Non-Executive Director of the private pharmaceutical company
Vector Pharma Holdings Ltd and is currently Managing Director
of RxConnect International Pty Ltd, a pharmaceutical industry
consulting firm. Mr Hewett has held senior roles with Janssen-Cilag,
Faulding Pharmaceutical and founded specialist pharmaceutical
company Max Pharma.
Mr Allan Tan
Independent Non-Executive Director (48)
Qualifications: LLB (Hons) University of Buckingham (UK)
Barrister-at-Law (Grays Inn)
MA London-Guildhall University (UK)
Mr Tan joined the Board on 1 December 2010. He is a NonExecutive Director of the Company and is a member of both
the Avexa Audit Committee and the Avexa Remuneration and
Nomination Committee. He is also an Independent Director of
Singapore listed companies, Adventus Holdings Limited and
CNMC Goldmine Holdings Limited. Mr Tan is a partner in a
Singapore law firm.
Company Secretary
Mr Lee Mitchell BA LLM
Mr Mitchell was appointed as Company Secretary of Avexa Limited on 1 December 2010. He is a qualified lawyer and has practiced
in corporate and commercial law for over 15 years.
Directors Interests
The relevant interest of each Director in the share capital of the Company, as notified by the Company to the ASX in accordance
with S205G (1) of the Corporations Act 2001, as at the date of this report is as shown following.
Director
Mr I Kirkwood
Mr B Hewett
Mr A Tan
Number of Ordinary Shares

9,150,000
2,000,000
-
Number of Options to Acquire Ordinary Shares

2,000,000
1,000,000
1,000,000
Directors Meetings and Committee Membership

Due to the small number of Non-Executive Directors on the Board, all Non-Executive Directors are members of the Audit Committee
and the Avexa Remuneration and Nomination Committee. The role of the Audit Committee ordinarily is to give the Board of Directors
assurance regarding the quality and reliability of financial information prepared for use by the Board in determining policies or
for inclusion in the financial report. The role of the Remuneration and Nomination Committee is to assume responsibility for the
composition of the Board and nomination of new Directors and reviewing and monitoring the performance of the Performance
Management and Development System for Director, Executive and staff remuneration.
The number of Directors meetings (including meetings of committees of Directors) held and number of meetings attended by
each of the Directors of the Company during the financial year are:
Director
Mr I Kirkwood
Mr B Hewett
Mr A Tan
Board Meetings
Attended
Held(i)
10
10
10
10
10
10
Audit Committee Meetings

Attended
Held(i)
3
3
3
3
3
3
Remuneration and Nomination

Committee Meetings
Attended
Held(i)
1
1
1
1
1
1
(i) Represents the number of meetings held during the time that the Director held office.
Dividends
The Directors do not recommend a dividend be paid or declared by the Company for the year. No dividend has been paid by the
Company since its incorporation on 7 April 2004.
Significant Changes in the State of Affairs

Other than as detailed elsewhere in this financial report, there has been no significant change in the state of affairs of the Company.
Environmental Regulation
The Groups operations are not subject to any significant environmental regulations under either Commonwealth or State legislation.
The Directors believe that the Group has adequate systems in place for the management of its environmental requirements and are
not aware of any breach of those environmental requirements as they apply to the Group.
Events Subsequent to Reporting Date

In the interval between the end of the financial year and the date of this report no item, transaction or event of a material and unusual
nature has arisen that is likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the
results of those operations, or the state of affairs of the Group in future financial years except:
The Alabama Department of Environmental Management has confirmed that a permit to mine has been issued and the requisite
bond monies deposited. Avexa is now in a position to activate its investment subject to the Board being satisfied with final, closing
due diligence. Further, Avexa will finance its participation in the joint venture in order to preserve cash and allow a contemporaneous
investment in the ATC project (refer above). The closing due diligence and financing arrangements are expected to be completed
in or about October 2013, which will allow Avexa to proceed as planned with the investment in the North Pratt coal mine through its
subsidiary CHUSA (Coal Holdings USA). It is proposed that revenues from this mine will be used to fund the AVX-305 Phase III clinical
trial of apricitabine (ATC).
Indemnification and Insurance of Officers

Indemnification
The Company has agreed to indemnify the Directors of the Company against liability arising as a result of a Director acting as a
Director or other officer of the Company. The indemnity includes a right to require the Company to maintain Directors and Officers
Liability insurance that extends to former Directors. The indemnity provided by the Company is an unlimited and continuing indemnity
irrespective of whether a Director ceases to hold any position in the Company.
Insurance Premiums
Since the end of the financial year, the Company has paid a premium of $36,300 for Directors and Officers Liability insurance for
current and former Directors and officers, including Executive officers of the Company. The Directors have not contributed to the
payment of the policy premium.
The Directors and Officers Liability insurance policy covers the Directors and officers of the Company against loss arising from
any claims made against them during the period of insurance (including company reimbursement) by reason of any wrongful act
committed or alleged to have been committed by them in their capacity as Directors or officers of the Company and reported to the
insurers during the policy period or if exercised, the extended reporting period.
Risk Management
The Group takes a proactive approach to risk management. The Board is responsible for ensuring that risks, and also opportunities,
are identified on a timely basis and that the Companys objectives and activities are aligned with the risks and opportunities identified
by the Board. The Company believes that it is crucial for all Board members to be a part of this process, and as such the Board has not
established a separate risk management committee. Instead sub-committees are convened as appropriate in response to issues and
risks identified by the Board as a whole, and each respective sub-committee further examines the issue and reports back to the Board.
The Board has a number of mechanisms in place to ensure that managements objectives and activities are aligned with the risks
identified by the Board. These include the following:
Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets,
including the establishment and monitoring of KPIs of both a financial and non-financial nature.
The establishment of committees to report on specific business risks, including for example such matters as strategic investments.
The Audit Committee assists in discharging the Boards responsibility to manage the organisations financial risks. The Committee
advises the Board on such matters as the Groups liquidity, currency, credit and interest rate exposures and monitors managements
actions to ensure they are in line with Group policy.
Rounding Off
The Group is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts
in the financial report and Directors Report have been rounded off to the nearest thousand dollars, unless otherwise stated.
Lead Auditors Independence Declaration under Section 307C of the Corporations Act 2001
The lead auditors independence declaration forms part of the Directors Report for the year ended 30 June 2013 and is set out on
page 16.
Non-audit Services
The following non-audit services were provided by the Groups auditor KPMG during the financial year. The Directors are satisfied that
the provision of non-audit services is compatible with the general standard for independence imposed by the Corporations Act 2001
and with the Companys own Auditor Independence Policy. The nature and scope of each of the non-audit services provided means
that auditor independence was not compromised. KPMG received or is due to receive the following amounts for the provision of the
following services:
Non-audit Services
Tax compliance and other advisory services $31,365
Other assurance services
$8,400
Total non-audit services
$39,765
Remuneration Report
This report outlines the compensation arrangements in place for Directors and Senior Executives of the Company being the key
management personnel (KMP) of the Company being those persons having authority and responsibility for planning, directing
and controlling the major activities of the Company, directly or indirectly, including any Director and includes all the Executives in
the Company. For the purposes of this report, the term Executive includes the interim CEO/CSO and Senior Executives but does
not include the Non-Executive Directors or the secretary of the Company. All sections contained herein have been subject to audit
as required by section 308(3C) of the Corporations Act. Remuneration is referred to as compensation in this report.
Details of KMP including the top remunerated Executives of the Company are set out in the tables on page 12. There have been
no changes to KMP after the reporting date and before the date of this report.
Company Performance
Net profit/(loss) attributable to equity holders of the parent
Closing share price ($)
2013
2012
2011
2010
2009
(2,977,497) (3,513,138) (4,402,000) (41,488,378) (36,218,828)
.014
.022
.042
.033
.115
Principles of Compensation
The Remuneration Committee is responsible for making recommendations to the Board on the remuneration arrangements for
Non-Executive Directors (NEDs) and Executives. The Remuneration Committee assesses the appropriateness of the nature and
amount of remuneration of NEDs and Executives on a periodic basis by reference to relevant employment market conditions,
with the overall objective of ensuring maximum stakeholder benefit from the retention of a high performing Director and Executive
team. The Remuneration Committee comprises all of the NEDs.
Avexa Limiteds remuneration strategy is designed to attract, motivate and retain employees and NEDs by identifying and rewarding
high performers and recognising the contribution of each employee to the continued growth and success of the Group. To this end,
key objectives of the Companys reward framework are to ensure that remuneration practices are aligned to the Groups business
strategy, offer competitive remuneration benchmarked against the external market, provide strong linkage between individual and
Group performance and rewards and align the interests of Executives with shareholders.
In accordance with best practice corporate governance, the structure of NED and Executive remuneration is separate and distinct.
The Board assumes full responsibility for compensation policies and packages applicable to Directors and Senior Executives of the
Company. The broad compensation policy is to ensure the compensation package appropriately reflects the persons duties and
responsibilities, and that compensation levels are competitive in attracting, retaining and motivating people who possess the requisite
level of skill and experience. Employees may receive at-risk incentive payments remunerated as cash or share options based on
the achievement of specific goals related to the performance of the individual and the Company (as determined by the Directors).
Incentives are provided to Senior Executives and employees for the achievement of individual and strategic objectives with the
broader view of creating value for shareholders.
Fixed Compensation
Fixed compensation consists of a base compensation package, which includes Fringe Benefits Tax calculated on any salary
packaging arrangements and employer contributions to superannuation funds. Fixed compensation levels for Key Management
Personnel (KMP) and senior members of staff are reviewed at least annually by the Remuneration Committee through a process that
considers: the employees personal development; achievement of key performance objectives for the year; industry benchmarks
wherever possible; and CPI data. Compensation recommendations for other staff are conducted by the interim CEO who then
makes recommendations to the Remuneration Committee for final approval.
Key Performance Indicators (KPIs) are individually tailored by the Board, based on recommendations and input by the interim CEO
in advance for each employee each year, and reflect an assessment of how that employee can fulfil his or her particular responsibilities
in a way that best contributes to Company performance and shareholder wealth in that year. KPIs and compensation levels are set for
the interim CEO by the Remuneration Committee and Board adopting the same process as that adopted for staff, with close alignment
to the role and responsibility within the organisation and in conjunction with the strategic objectives of the Company.
Performance-linked Compensation and Short Term Performance Incentives

All employees may receive at-risk incentive payments and/or securities (shares or options) based on the achievement of specific
goals related to (i) performance against individual key performance indicators and/or (ii) the performance of the Company as a
whole as determined by the Directors based on a range of factors. These factors include traditional financial considerations such as
operating performance, cash consumption and deals concluded and also industry-specific factors relating to the advancement of a
project portfolio, introduction of new projects to the portfolio, collaborations and relationships with scientific institutions, third parties
and internal employees.
Remuneration Report continued
Employment contracts for staff other than the interim CEO provide for at-risk incentive compensation of up to 10 per cent of their total
fixed compensation package (although higher incentive compensation payments may be made at the Boards discretion). Typically
incentive compensation is split 50 per cent on personal performance and 50 per cent on Company performance.
The Board at its sole discretion determines the total amount of performance-linked compensation payable as a percentage of the total
annualised salaries for all employees employed as at the end of the financial year (with pro rata reductions to the annualised salary
made for any employee not employed for the entire financial year).
The interim CEO makes a recommendation annually to the Board in respect of incentive compensation for employees and Executives
with the decision to award a performance incentive resting with the Board for decision. The Board similarly reviews the performance
of the CEO and resolves accordingly on the appropriate level of performance incentive to be paid.
An amount of $63,500 (2012: $15,000) has been accrued at the end of the 2013 financial year by way of an employee benefit
provision in respect of performance incentives for the 2013 financial year. $63,500 (2012: $15,000) was paid in the August 2013
payroll in respect of staff performance for the 2013 financial year.
An amount of $37,000 (2012: nil) has been recognised in the 2013 financial year by way of share-based payment expense in respect
of performance incentives achieved in respect of key performance indicators set for the 2013 financial year. $37,000 (2012: nil) worth
of shares in the Company will be issued after the release of the Groups Financial Statements in respect of staff performance for the
2013 financial year. A five day VWOP will be applicable to the issue of the shares.
The Interim CEO has the discretion to recommend the offer of options to acquire ordinary shares or the direct issue of shares to any
member of staff in recognition of exemplary performance. Such securities may be fully vested upon issue given that they are issued
as a reward for past performance rather than as a long term incentive. Any issue of options proposed as incentive compensation
requires approval by the Board and is subject to any limitations imposed by the Corporations Act and the ASX Listing Rules. The
Board considers that the performance-linked compensation structure is operating effectively.
At, or as soon as practicable after, the beginning of the financial year, individual and team performance for the previous year is
assessed for every employee by their manager and new objectives set for the forthcoming year. These objectives include department
and project specific objectives together with individual stretch objectives, challenging, realistic and personal development objectives
tailored to the employees role within the organisation. Measurement, management support, target dates and training course
requirements are all set. Progress against the objectives is reviewed during the year and percentage achievement concluded at the
end of the year, whereupon the cycle recommences. The outputs of this process form the basis of the assessment of the individuals
personal incentive compensation.
Service Contracts
All Avexa Executives other than the Company Secretary are employed under contracts with the following common terms and conditions:
Treatment
of Short Term
Incentives
Treatment
of Long Term
Incentives
Notice Period
Payment in Lieu
of Notice
Termination
by Company
3 months (6 months
for interim CEO/CSO)
3 months (6 months
Board discretion
Board discretion
depending on
circumstances
Termination
for Cause
None
None
Unvested awards
are forfeited
Unvested awards
are forfeited
Termination
by Employee
6 weeks (3 months
None
Unvested awards
are forfeited
Unvested awards
are forfeited
In the event of a change in control and an Executives position becomes surplus to requirements, that Executives options,
if any, will vest and be exercisable within a 30 day period, at the conclusion of which the options will expire. The Executive
will receive, in addition to the notice period, six months payment in the event of a redundancy following a change in control.
On termination for cause, the Executive will only be entitled to any outstanding payments in respect of the base remuneration
package which are payable to the Executive for the Executives period of service up to the date of termination.
The Company Secretary is engaged by the Company under a consultancy agreement. The agreement provides a fixed monthly
fee for in scope services with additional work charged at hourly rates. The consultancy agreement is a rolling contract and can
be terminated by either party by giving one months notice in writing to the other party.
10
Long Term Incentive

From time to time Board approval may be sought for the issue of options to acquire ordinary shares to staff and Executives as a
means of providing a medium to long term incentive for performance and loyalty. Any such options are issued under the Employee
Share Option Plan (ESOP).
2013
No issues of options occurred in 2013.
2012
No issues of options occurred in 2012.
Other Benefits
In addition to the fixed and at-risk compensation, the Company provides salary continuance cover for its permanent employees
engaged in more than 20 hours work per week and pays the administration fees for employees participating in the Aon Master
Trust superannuation fund.
The value for non-cash benefits in the compensation tables represents the value of motor vehicle costs salary packaged by an Executive.
Director Compensation
The Constitution and the ASX Listing Rules specify that the aggregate compensation of Non-Executive Directors shall be determined
from time to time by a general meeting. An amount not exceeding the amount approved by shareholders is then divided between the
Directors as agreed by the Board. An amount of $350,000 was approved at the Companys inaugural Annual General Meeting held on
4 October 2005.
Non-Executive Directors do not receive performance related compensation and the structure of Non-Executive Director and senior
management compensation is separate and distinct. Non-Executive Directors do not have contracts of employment but are required
to evidence their understanding and compliance with the Board policies of Avexa Limited. These Board policies do not prescribe how
compensation levels for Non-Executive Directors are modified from year to year.
Compensation levels are to be reviewed by the Board each year taking into account cost of living changes, changes to the scope
of the roles of the Directors, and any changes required to meet the principles of the overall Board policies.
Directors base fees of $50,000 and $100,000 for the Non-Executive Directors and the Chairman respectively have applied from
7 July 2010. The Chairman of the Audit and Risk Committee and the Remuneration and Nomination Committee have each received
an additional $5,000 per annum, inclusive of superannuation, in recognition of these additional duties.
Directors and Executive Officers Compensation Tables

Details of the nature and amount of each major element of the compensation of each Director of the Company and each of the three
named officers of the Company receiving the highest compensation for the period that the Director or officer held that position during
the current and prior financial years are disclosed in accordance with Accounting Standard AASB 124 Related Party Disclosures and
with the Corporations Act 2001 in the following tables.
No options held by persons in the following compensation tables were exercised during the 2013 and 2012 financial years.
Details of the Companys policy in relation to the proportion of compensation that is performance related are provided earlier in this
report. For the individuals named in the Directors and Executive Officers compensation tables, details of their service contracts are
provided under the heading of Service contracts earlier in this report. Figures in brackets represent the value of bonuses/incentives
and options respectively as a percentage of total compensation.
In the following tables, the fair value of the options granted to Executive officers has been calculated based on the value at the date of
grant using a valuation model that takes into account the performance hurdles and vesting period related to those options. The value
as disclosed is the portion of the fair value of the options allocated to this reporting period. Refer to the next sections of this report for
full details of the option valuations.
CEO and CSO Performance Incentive Compensation Tables

The bonus/incentive compensation value in 2013 for Dr Coates was based on a total potential bonus of up to $55,000. Similarly, a total
potential bonus of up to $25,000 was set aside for Dr Cox in respect of the 2013 financial year.
11
In both cases the bonus was to be determined and paid by the Board in its discretion. The KPIs for each of Drs Coates and Cox were
broadly the same and were not connected with the Companys profit or share price performance but rather was aligned by reference
to the achievement of personal KPIs relating to the Companys pharmaceutical programs and projects both in respect of research and
development and commercialisation. The three main personal KPIs, the organisation and completion and outcome of the European
Medicines Agency Review of the ATC clinical trial, the identification of a new group of compounds with anti-HIV activity against integrase
inhibitor resistant strains, and progress in the securing of marketing partners for ATC. The potential bonuses for Drs Coates and Cox
were allocated as to 80 per cent for product related performance (50 per cent ATC, 20 per cent HIV integrase project, 5 per cent Valevia
and the balance relating to IP) with the remaining 20 per cent of the potential bonus relating to administration related matters.
The Board also determined that in the event that it awarded bonuses to Drs Coates and Cox that the amount of the bonus would be
provided as to 50 per cent cash with the remaining 50 per cent of any bonus to be satisfied by way of an entitlement to be issued fully
paid ordinary shares in the Company with the number of shares to be issued to be an amount equal in value to the amount of the
bonus based on the five day VWAP at the time the bonus is provided.
The Board established these KPIs for the reason that they were directly linked to the Companys strategic objectives and were
considered to be more meaningful than other objectives such as those relating to share price performance or profitability given
the Companys current circumstances.
In assessing whether the KPIs were satisfied the Chairman of the Remuneration Committee (Mr Hewett) met with Dr Coates to
discuss performance against the KPIs formalised in February 2013. Following that meeting Mr Hewett advised the Remuneration
Committee that in his view all of the KPIs had been satisfied and the bonuses should be provided in full. This recommendation
was approved and accordingly the cash proportion of the bonus was paid in August 2013 with the shares to be issued following
the release to market of the Companys full year audited financial statements.
In addition to the bonus arrangements discussed above, Drs Coates and Cox were each awarded ex-gratia payments of $20,000
and $10,000 respectively in recognition of their significant efforts during FY 2012 in advancing the licensing of ATC and achieving
significant successes in relation to the HIV Integrase Program.
2013
Short Term
Base
NonCompensation
cash
(Salary
and Fees) Benefits
$
$
Directors
Non-Executive
Mr I Kirkwood(i)
Mr B Hewett(ii)
Mr A Tan (iii)
Total compensation
101,501
55,000
50,000
206,501
Executives
Key Management Personnel
Dr J Coates (iv)
194,295
Ms M Klapakis (v)
130,968
Dr S Cox (vi)
152,840
Total compensation
478,103
Post
Employment:
Bonuses/ Superannuation
Contributions
Incentives
$
$
- 45,000 (15.7%)
- 13,500 (8.5%)
- 20,000 (9.6%)
78,500
3,500
3,500
Share-based
Payments:
Shares and
Options
Issued
$
8,280 (7.3%)
4,140 (7%)
4,140 (7.6%)
16,560
23,262 24,500 (8.5%)*

14,347
23,796
12,500 (6%)*
61,405
37,000
Termination
Total
Benefits Compensation
$
$
113,281
59,140
54,140
226,561
287,057
158,815
209,136
655,008
* Fully paid ordinary shares to this value will be issued after the release of the Groups Financial Statements. A five day VWOP will be applicable to the
issue of the shares.
(i) Appointed on 9 August 2010. Appointed Chairman on 18 April 2011.
(ii) Appointed on 6 July 2010.
(iii) Appointed on 1 December 2010.
(iv) Ceased employment on 7 May 2010. Re-appointed on 12 July 2010.
(v) Appointed on 1 December 2010.
(vi) Appointed 7 February 2013.
12
2012
Short Term
Base
NonCompensation
cash
(Salary
and Fees) Benefits
$
$
Directors
Non-Executive
Mr I Kirkwood(i)
Mr B Hewett(ii)
Mr H Soedirdja(vi)
Mr A Tan(iii)
Total compensation
84,006
55,000
29,167
50,000
218,173
Executives
Key Management Personnel
Dr J Coates(iv)
172,924
(v)
Ms M Klapakis
128,175
Total compensation
301,099
Post
Employment:
Bonuses/ Superannuation
Contributions
Incentives
$
$
8,000 (5.4%)
8,000
Share-based
Payments:
Shares and
Options
Issued
$
Termination
Total
Benefits Compensation
$
$
21,000
21,000
5,520 (5%)
2,760 (4.8%)
2,760 (5.2%)
11,040
110,526
57,760
29,167
52,760
250,213
44,514
12,628
57,142
15,083 (6.5%)
293 (.2%)
15,376
232,521
149,096
381,617
(i) Appointed on 9 August 2010. Appointed Chairman on 18 April 2011.

(ii) Appointed on 6 July 2010.
(iii) Appointed on 1 December 2010.
(iv) Ceased employment on 7 May 2010. Re-appointed on 12 July 2010.
(v) Appointed on 1 December 2010.
(vi) Appointed on 12 July 2010. Resigned on 31 January 2012.
Grants, Modifications and Exercise of Options and Rights Over Equity Instruments
Granted as Compensation
There were no options granted as compensation during the financial year. There were no options exercised during the financial
year by any of these persons nor were there any alterations or modifications to existing terms and conditions.
13
2013
No options were granted during the 2013 financial year.
2012
Directors, Executives and Title

Directors
Options Granted
Number Date
Mr I Kirkwood
Mr B Hewett
Mr A Tan
2,000,000 19 December 2011

1,000,000 19 December 2011
1,000,000 19 December 2011
4,000,000
Number and
Percentage
Vested in Year
Financial Years in
which Grant Vests
Value Yet
to Vest in $
100%
100%
100%
2012
2012
2012
nil
nil
nil
Shareholder approval was given on 24 November 2011 to the issue on 19 December 2011 of the following options during the year
end 30 June 2012.
(i) A total of 5,000,000 options with an exercise price of $0.06 each expiring on 31 December 2013 and exercisable only when
the performance condition is met (see table below).
(ii) Options are only exercisable if the arithmetic average of the daily VWAP (rounded to the nearest cent) in any five consecutive
trading days in which trading in Avexa shares occurs following the date of grant of the Options, equal or exceeds $0.125
(12 and one half cents).
Fair Value of Options

The fair values of the options granted to Executive Directors and Officers in the above tables have been calculated at grant date using a
binomial valuation model that takes into account the performance hurdles and vesting period related to those options, The value as
disclosed is the portion of the fair value of the options allocated to this reporting period. The factors and assumptions used in determining
the fair value on grant date are detailed in the table below. Comparative information for the 2013 financial year has not been restated
as market conditions were already included in the prior valuation. A zero divided assumption has been adopted in every valuation.
2013
There were nil options issued during the 2013 financial year.
2012
There were 5,000,000 issued during the 2012 financial year.
Number and
Recipients of Options
2,000,000
Mr I Kirkwood
1,000,000
Mr B Hewett
1,000,000
Mr A Tan
1,000,000
Mr H Soedirdja
Grant
Date
19/12/11
19/12/11
19/12/11
19/12/11
Expiry
Date
31/12/13
31/12/13
Lapsed
31/12/13
Fair Value
Per Option
$0.0069
$0.0069
$0.0069
$0.0069
Exercise Price of Shares

Risk Free
Price on Value Date Interest Rate
$0.06
$0.033
3.01%
$0.06
$0.033
3.01%
$0.06
$0.033
3.01%
$0.06
$0.033
3.01%
Estimated
Volatility
75%
75%
75%
75%
Shares Issued on Exercise of Options

During the financial year the Company issued nil (2012: nil) ordinary shares upon the exercise of options for total proceeds of
$nil (2012: $nil). Since the end of the financial year up to the date of this report the Company has issued nil (2012: nil) shares
upon exercise of options for total proceeds of $nil (2012: $nil).
14
Alteration to Option Terms

Other than in accordance with ASX Listing Rule adjustments to option exercise prices following pro rata issues of securities, there
has been no alteration to option terms and conditions during or since the end of the financial year up to the date of this report.
Consequences of Performance on Shareholder Wealth

In considering the Groups performance and how best to generate shareholder value, the Board has regard to a broad range of
factors, some of which are financial and others of which relate to the scientific progress on the Companys projects when applicable,
relationship building with research institutions, projects introduced, staff development etc. The Board has some but not absolute
regard to the Groups result and cash consumption for the year. It does not utilise earnings per share as a performance measure and
does not contemplate consideration of any dividends in the short to medium term given that all efforts are currently being devoted to
obtaining value for the Groups assets and where possible building the business and partnerships to establish self-sustaining revenue
streams. The Company is of the view that any adverse movement in the Companys share price should not be taken into account in
assessing the performance of employees other than the Interim CEO.
Dated at Melbourne this 29th day of August, 2013.
This report is made with a resolution of the Directors.
Mr I Kirkwood
Chairman
15
Lead Auditors Independence Declaration

Under Section 307C of the Corporations Act 2001
To the Directors of Avexa Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2013, there have been:
(i) No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) No contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Paul J McDonald
Partner
Melbourne
29 August 2013
16
Statement of Comprehensive Income

For the Year Ended 30 June 2013
Revenue from operating activities

Other revenue
Contract research and development expenses
Employee expenses
Share-based payment expense
Depreciation expense
Loss on disposal of plant and equipment
Consulting expenses
Occupancy expenses
Professional services expenses
Travel and accommodation expenses
Raw materials and consumables expenses
Asset management expenses
Insurance expenses
Corporate administration expenses
Intellectual property expenses
Other expenses
Note
4
4
5(a)
19
5(b)
5(b)
5(c)
Results from operating activities
Net finance income/(costs)

Income tax expense
Loss from operations for the period
Loss attributable to owners of the Company
Other comprehensive income
Items that may be reclassified subsequently to the income statement
Net change in fair value of available for sale financial assets
Total comprehensive income/(loss) for the period
Earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
33
Consolidated
2013
2012
$000
$000
617
564
452
523
(286)
(1,206)
(53)
(164)
(88)
(133)
(1,323)
(445)
(37)
(3)
(38)
(98)
(139)
(555)
(64)
(557)
(1,184)
(27)
(144)
(97)
(1,463)
(206)
(48)
(12)
(46)
(103)
(117)
(315)
(143)
(3,563)
(3,375)
591
(138)
(5)
19
(2,977)
(2,977)
(3,513)
(3,513)
(566)
(3,543)
(5,840)
(9,353)
(0.35)
(0.35)
(0.41)
(0.41)
33
The statement of comprehensive income is to be read in conjunction with the notes to the financial statements set out on pages 21 to 42.
17
Statement of Changes in Equity

Note
Opening balance as at 1 July 2012
Comprehensive income/(loss) for the period
Loss
Total other comprehensive income
Total comprehensive income for the period
Transactions with owners, recorded directly in equity

Contributions by owners
Issue of ordinary shares pursuant to placement
Issue of ordinary shares pursuant to share purchase plan
Equity settled share-based payment transactions
Total contributions by owners
Total transactions with owners
Issued
Capital
$000
182,523
19
19
Closing balance as at 30 June 2013
182,523
Transactions with owners, recorded directly in equity

Contributions by owners
Issue of ordinary shares pursuant to placement
Issue of ordinary shares pursuant to share purchase plan
Equity settled share-based payment transactions
Total contributions by owners
Total transactions with owners
Closing balance as at 30 June 2012
(2,977)
(2,977)
53
53
53
(168,853)
19
(3,513)
(3,513)
19
182,523
(131)
Consolidated
Fair Value
Accumulated
Reserve
Losses
$000
$000
(162,443)
6,275
Note
(566)
(566)
Issued
Capital
$000
182,523
Opening balance as at 1 July 2011

Comprehensive income/(loss) for the period
Loss
Total other comprehensive income
Consolidated
Fair Value
Accumulated
Reserve
Losses
$000
$000
(165,929)
435
27
27
27
(165,929)
(5,840)
(5,840)
Total
Equity
$000
17,029
(2,977)
(566)
(3,543)
53
53
53
13,539
Total
Equity
$000
26,355
(3,513)
(5,840)
(9,353)
27
27
27
435
17,029
Amounts disclosed in the statement of changes in equity are stated net of tax.
The statement of changes in equity is to be read in conjunction with the notes to the financial statements set out on pages 21 to 42.
18
Statement of Financial Position

As at 30 June 2013
Note
Current assets
Cash and cash equivalents
Receivables
Investments
Other assets
Total current assets
Non-current assets
Intangible assets
Plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefit provisions
Other liabilities
Total current liabilities
Non-current liabilities
Employee benefit provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Fair value reserve
Accumulated losses
Total equity
Consolidated
2013
2012
$000
$000
9
10
11
12
11,869
1,418
659
47
13,993
12,570
822
3,679
224
17,295
13
14
20
20
14,013
325
325
17,620
15
16
17
279
183
462
284
79
201
564
16
12
12
474
13,539
27
27
591
17,029
18
19
182,523
(131)
(168,853)
13,539
182,523
435
(165,929)
17,029
The statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 21 to 42.
19
Statement of Cash Flows

Note
Cash flows from operating activities
Cash receipts in the course of operations
Cash payments in the course of operations
Research and development incentive
Interest received
Net cash used in operating activities
Consolidated
2013
2012
$000
$000
384
(4,262)
558
639
(2,681)
649
(4,422)
657
817
(2,299)
Cash flows from investing activities

Payments for property, plant and equipment
Payments for equity investments
Proceeds from disposal of listed equity instruments
(10)
2,422
(10)
(5,086)
3,578
Working capital loan to Coal Holdings USA, LLC

Proceeds from disposal of assets
Net cash used in investing activities
(494)
62
1,980
(1,518)
Net (decrease)/increase in cash held

Cash at the beginning of the financial year
Effect of exchange rate fluctuations on cash held
Cash at the end of the financial year
(701)
12,570
11,869
(3,817)
16,387
12,570
21
The statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 21 to 42.
20
Notes to the Financial Statements

As at 30 June 2013
1. Reporting Entity
Avexa Limited (the Company) is a company domiciled in Australia. The address of the Companys registered office is Suite 8, Level 1,
61-63 Camberwell Road, Hawthorn East, VIC 3123. The consolidated financial statements of the Company as at 30 June 2013 comprise
the Company and its subsidiary entities (together referred to as the Group and individually as Group entities). The Group primarily is
involved in research and development, for commercialisation of anti-infective pharmaceutical programs and projects.
2. Basis of Preparation
(a) Statement of Compliance
The consolidated financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards
Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with the International Financial Reporting
Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board.
The consolidated financial statements were approved by the Board of Directors on 29 August 2013. The Group is of a kind referred
to in ASIC Class Order 98/100 dated 10 July 1998 (updated by CO 05/641 effective 28 July 2005 and CO 06/51 effective 31 January
2006) and in accordance with that Class Order, all financial information presented in Australian dollars has been rounded off to the
nearest thousand dollars, unless otherwise stated.
(b) Basis of Measurement and Presentation Currency

The consolidated financial statements are presented in Australian dollars and have been prepared on the historical cost basis.
Going Concern Basis of Accounting

In preparing the financial statements, the Directors have made an assessment of the ability of the consolidated entity to continue as a
going concern, which contemplates the continuity of normal operations, realisation of assets and settlement of liabilities in the ordinary
course of business and at the amounts stated in the financial report. The Companys strategy in this regard is to maintain sufficient
working capital to continue with its operations in the 2014 financial year and beyond, until such time as self-sustaining revenue
streams are realised.
As detailed in Note 28, on 29 August 2013 the Directors are of the view that it is likely that the Group will proceed with the investment
in Coal Holdings USA Inc (CHUSA), comprising an equity investment of US$4 million and a secured loan of US$6 million. If this
investment proceeds the consolidated entity will have remaining cash reserves of approximately $1.6 million. The ability of the
consolidated entity to meet operating cash requirements for the next 12 months and beyond is dependent in part on proceeds from
the sale of equity investments, and cash flows from the successful execution of the business plans of CHUSA, which is dependent
on a number of factors that may or may not occur as expected, including assumptions relating to start-up costs, sales volumes, coal
prices, working capital requirements and regulatory compliance. In addition, in order to meet the forecast operating cash requirements,
the Company will need to raise funds from other sources, which may include raising capital, securing debt facilities or monetising the
Groups existing portfolio of intangible assets.
As a result of these factors, there exists a material uncertainty regarding the ability of the consolidated entity to continue as a going
concern. After making enquiries, and considering the uncertainties described above, the Directors have a reasonable expectation
that the Consolidated Entity will have adequate resources to continue to meet its obligations as and when they fall due. For these
reasons, they continue to adopt the going concern basis in preparing the Consolidated Financial report.
Should the Directors be of the view that the development of ATC should continue, further additional funding will be required to conduct
further Phase III trials and secure the requisite marketing and regulatory approvals.
(c) Use of Estimates and Judgements

The preparation of consolidated financial statements conforms with Australian Accounting Standards which requires management to
make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities,
income and expenses. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision only affects that period, or in the period of the revision and future periods
if the revision affects both current and future periods.
There have been no judgements made during the current financial year in the application of Australian Accounting Standards that
have had or are expected to have a significant effect on the consolidated financial statements. Based on the information available
at the time of signing the financial report, the Company is still of the view that a full provision for impairment is still required, as the
recoverable amount of the intangible asset, following decisions taken by the Board leading up to 30 June 2010, cannot reasonably
be estimated. Should future decisions and actions in regard to ATC result in the Directors of the Company having the opinion that
some value has been restored to this intangible asset, the existing provision for impairment may be reversed to the extent that the
Directors believe to be prudent and that value will be reflected in the Companys balance sheet. Refer to Note 13 for further detail.
21
Notes to the Financial Statements continued

As at 30 June 2013
3. Significant Accounting Policies

The accounting policies as set out below have been applied consistently to all periods presented in these consolidated financial
statements and have been applied consistently by Group entities. The Group has not elected to early adopt any accounting standards
(refer Note 3(s)).
(a) Revenue Recognition

Services
Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction as at
reporting date.
Rental Income
Rental income from sub-leasing arrangements is recognised in profit or loss on a straight line basis over the term of the lease.
Government Grants
Conditional government grants are recognised initially as deferred income when there is a reasonable assurance that they will be
received and that the Company will comply with the conditions associated with the grant. Grants that compensate the Company for
expenses incurred are recognised in profit or loss on a systematic basis in the same periods in which the expenses are recognised.
An unconditional grant is recognised in profit or loss as other income when the grant becomes receivable.
(b) Financial Instruments

Non-derivative financial instruments comprise receivables, cash and cash equivalents, trade and other payables and financial assets
at fair value through profit and loss and available for sale assets. Non-derivative financial instruments are recognised initially at fair
value and, subsequent to initial recognition, are measured as described below.
A financial instrument is recognised if the Group becomes a contractual party to the contractual provisions of the instrument. Financial
instruments are derecognised if the Groups contractual rights to the cash flows from the financial assets expire or are transferred to
another party without retaining control or substantially all the risks and rewards of the asset. Regular purchases and sales of financial
assets are accounted for at a trade date, i.e. the date the Group commits itself to purchase or sell the asset. Financial liabilities are
derecognised if the Groups obligations specified in the contract expire or are discharged or cancelled.
The Group has the following non-derivative financial assets: financial assets at fair value through profit and loss and available-for-sale assets.
Financial Assets at Fair Value through Profit and Loss

A financial asset is classified as at fair value through profit and loss if it is classified as held for trading or is designated as such
upon initial recognition. Financial assets are designated at fair value through profit and loss if the Group manages such investments
and make purchases and sale decisions based on their fair value in accordance with the Groups documented risk management
or investment strategy. Attributable transaction costs are recognised in profit and loss when incurred. Financial assets at fair value
through profit and loss are measured at fair value, and changes therein are recognised in profit and loss.
Financial assets designated at fair value through profit and loss comprise equity securities that otherwise would have been classified
as available for sale.
Available-For-Sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not
classified in any of the previous categories of financial assets. Subsequent to initial recognition, they are measured at fair value
and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments are
recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised,
the cumulative gain or loss in equity is transferred to profit and loss.
Available-for-sale financial assets comprise equity securities.
Cash and cash equivalents comprise cash balances and call or term deposits. Accounting for finance income and costs are
discussed in Note 3(c).
22
(c) Finance Income and Costs

Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains
on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss,
gains on hedging instruments that are recognised in profit or loss and reclassifications of amounts previously recognised in other
comprehensive income. Interest income is recognised as it accrues in profit or loss, using the effective interest method.
Finance costs comprise interest expense on borrowings, changes in the fair value of financial assets at fair value through profit or
loss, impairment losses recognised on financial assets, and losses on hedging instruments that are recognised in profit or loss and
reclassifications of amounts previously recognised in other comprehensive income.
(d) Goods and Services Tax

Revenue, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except where the amount
of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost
of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to,
the Australian Taxation Office (ATO) is included as a current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing
and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
(e) Foreign Currency

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the reporting date are translated to Australian dollars at the foreign exchange rate
at that date. Foreign exchange differences arising on translation are recognised in the income statement.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are retranslated to Australian
dollars using the foreign exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated to Australian dollars at the exchange rate at the date that the fair value
was determined.
(f) Income Tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent
that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet liability method, providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the
tax rates that are expected to be applied to the temporary differences when they reverse based on the laws that have been enacted
or substantively enacted by the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
(g) Property, Plant and Equipment

(i) Owned Assets
The Group holds no property. Items of plant and equipment are measured at cost less accumulated depreciation and impairment
losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The costs of day-to-day servicing
of plant and equipment are recognised in profit or loss as incurred. The cost of replacing part of an item of plant and equipment
is recognised in the carrying amount of the asset if it is probable that the future economic benefits embodied within the part will flow
to the Company and its costs can be measured reliably.
(ii) Leased Assets

Leases on terms by which the Group assumes substantially all of the risks and rewards of ownership are classified as finance leases.
The Group has no finance leases. Leases other than finance leases are classified as operating leases.
23

As at 30 June 2013
3. Significant Accounting Policies continued

(iii) Depreciation
Depreciation is recognised in profit or loss on a straight line basis over the estimated useful lives of each part of an item of plant
and equipment. The estimated useful lives in the current and comparative periods are as follows:
plant and equipment 2.5 10 years
Depreciation methods, useful lives and residual values are reassessed annually at the reporting date.
(h) Intangible Assets

Intangible assets acquired by the Group which satisfy the asset recognition criteria set out in AASB 138 Intangible Assets, are
measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets which are considered
to have a finite life are amortised over their estimated useful life. In respect of acquired licences/marketing rights, amortisation
commences upon the asset becoming available for use, based on commercialisation of the licensed or marketed product.
(i) Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and short term deposits with an original maturity of three months or less.
(j) Impairment
A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect
on the estimated future cash flows of that asset.
The carrying amounts of the Groups assets are reviewed at each balance date to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount of the asset is estimated.
An impairment loss in respect of an asset measured at amortised cost is calculated as the difference between its carrying amount
and the present value of the estimated future cash flows discounted at the effective original interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively
to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal
is recognised in profit or loss.
The carrying amounts for non-financial assets are reviewed each reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the assets recoverable amount is estimated and an impairment loss recognised in
profit or loss if the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of an asset is determined
as the greater of its value in use and its fair value less costs to sell. Value in use is assessed using discounted cash flow analysis.
(k) Employee Benefits

(i) Long Term Service Benefits
The Companys net obligation in respect of long term employee benefits is the amount of future benefit that employees have earned in
return for their service in the current and prior periods, plus related on-costs. That benefit is discounted to determine its present value.
The discount rate is the yield at the reporting date on AA credit-rated (Commonwealth Government) bonds that have maturity dates
approximating the terms of the Companys obligations. The calculation is performed using the projected unit credit method.
Periods of service with each employees immediate former employer have been recognised by the Company as at the date of
commencement of employment for those employees starting with the Company on 1 July 2004.
(ii) Share-Based Payment Transactions

The Avexa Employee Share Option Plan allows eligible employees to acquire shares in the Company. The grant date fair value of
options granted to employees is recognised as an employee expense with a corresponding increase in equity, over the period in
which the employees become unconditionally entitled to the options. The amount recognised is adjusted to reflect the actual number
of share options that vest, except for those that fail to vest due to market conditions not being met. The fair value of the options
granted is calculated using a binomial model taking into account the terms and conditions upon which the options were granted.
24
(iii) Wages, Salaries, Annual Leave and At-Risk Performance Incentives

Liabilities for employee benefits for wages, salaries, annual leave and performance incentives represent present obligations resulting
from employees services provided up to reporting date and are calculated at undiscounted amounts based on compensation wage
and salary rates that the Company expects to pay as at reporting date including related on-costs, such as workers compensation
insurance and payroll tax.
(iv) Superannuation
Obligations for contributions to defined contribution superannuation funds are recognised as an expense in profit or loss when they
are due. The Company has no defined benefit pension fund obligations.
(l) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be measured
reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money, and
when appropriate, the risks specific to the liability.
(m) Lease Payments

Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease.
(n) Research and Development

Research expenditure undertaken with the prospect of gaining new scientific or technical knowledge or understanding is expensed
in profit or loss as incurred. Development expenditure is capitalised only if development costs can be measured reliably, the product
is technically and commercially feasible, future economic benefits are probable, and completion of development is intended.
(o) Segment Reporting

A segment is a distinguishable component of a company engaged in providing products or services within a particular business sector
or geographical environment. The Group operates within two business segments comprising anti-infective research and development
and listed investments. Although the Groups clinical trials are conducted in a number of countries there is no meaningful way of
presenting geographically segmented results, particularly given these operations do not currently generate revenue.
(p) Earnings Per Share

The Group presents basic and diluted earnings per share for its ordinary shares. Basic earnings per share (EPS) is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares
outstanding for the period. Diluted EPS is calculated by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, including share
options granted to employees and to third parties.
(q) Share Capital

Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity,
net of any associated tax benefit.
(r) Fair Value Reserve

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments
are derecognised or impaired.
(s) New Standards and Interpretations Not Yet Adopted

A number of new standards, amendments to standards and interpretations, which are effective for annual periods beginning on or
after 1 July 2013, have not been applied in preparing these consolidated financial statements. None of these is expected to have
a significant effect on the consolidated financial statements of the Group, except for AASB9 Financial Instruments, which becomes
mandatory for the Groups 2016 consolidated financial statements and could change the classification and measurement of financial
assets. The Group does not plan to adopt this standard early and the extent of the impact has not been determined.
25

As at 30 June 2013
4. Revenue
Grant income
Research and development incentive
Total revenue from operating activities
Lease income
Other income
Total other revenue
Consolidated
2013
2012
$000
$000
6
617
558
617
564
452
452
522
1
523
286
1,382
1,668
557
905
1,462
164
88
89
85
144
40
123
64
29
(67)
38
64
35
31
63
14
143
5. Profit Before Related Income Tax Expense

(a) Individually Material Items Included in Profit Before Related Income Tax Expense:
Contract research and development expenditure
Direct research and development expenditure
Research and development
(b) Profit Before Related Income Tax Expense Has Been Arrived at After Charging the
Following Items:
Depreciation of plant and equipment
Loss on disposal of plant and equipment
Amounts recognised in provisions for employee entitlements (Note 27)
Superannuation payments to defined contribution plans
(c) Other Expenses

Advertising and promotion
Workplace administration
Foreign exchange (gains)/losses
Other expenses
Total other expenses
6. Auditors Remuneration
Audit services:
Auditors of the Company KPMG
Total audit services
Other services:
Accounting advice
Tax compliance and advisory services KPMG
Other assurance services overseas KPMG firm1
Total other services
2013
$
2012
$
71,450
71,450
63,000
63,000
31,365
8,400
39,765
37,275
14,100
51,375
1. Other assurance services include fixed asset verification procedures provided.
26
7. Income Tax
Current tax expense (benefit) current year

Deferred tax expense continuing operations
Total income tax expense (benefit) in income statement attributable to continuing operations
Numerical reconciliation between tax expense and pre-tax net loss:
Loss before tax continuing operations
Income tax using the domestic corporation tax rate of 30% (2012: 30%)
Change in unrecognised temporary differences
Increase in income tax expense due to:
Non-deductible expenses
Deferred tax assets not brought to account
Research and development allowance
Sundry
Decrease in income tax expense due to:
Items deductible for tax purposes
Research and development allowance
Income tax expense on pre-tax net loss
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 30%
Consolidated
2013
2012
$000
$000
5
5
(2,972)
(892)
(5)
(3,513)
(1,054)
12
289
585
226
(4)
545
461
204
-
(194)
5
(168)
-
142,499
42,749
140,548
42,164
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been
recognised in respect of these items because it is not probable that future taxable profit will be available from which the Company
can utilise the benefits. There was no deferred tax recognised directly in equity.
8. Dividend Franking Account

The Company has no franking credits at reporting date.
9. Cash and Cash Equivalents

Cash at bank and on hand
Bank short term deposits
Total cash assets
2013
$000
132
11,737
11,869
2012
$000
256
12,314
12,570
Financing Arrangements
At 30 June 2013 the Company had a credit card facility of $150,000 of which nil was used as at 30 June 2013 (2012: $nil).
A security bond of $30,822 was provided on a Bank Guarantee on the Companys new premises. Interest on cash at bank is
credited at prevailing market rates. The weighted average interest rate at reporting date was 4.4 per cent (2012: 5.6 per cent).
27

As at 30 June 2013
10. Receivables
Current
Trade and other receivables

Research and development incentives and other tax receivables
Working capital loan Coal Holdings USA, LLC 1
Total receivables
Consolidated
2013
2012
$000
$000
240
246
617
576
561
1,418
822
1. The working capital loan to Coal holdings USA, LLC (CHUSA) is secured by a fixed and floating charge over the assets of CHUSA and its subsidiary
company, North Pratt Coal Holdings LLC.
11. Investments
Current
Financial assets classified as held for trading

Financial assets classified as available for sale
2013
$000
40
619
659
2012
$000
900
2,779
3,679
2013
$000
47
2012
$000
224
12. Other Assets

Current
Prepayments
13. Intangible Assets

North American marketing licence for apricitabine (ATC) at cost
Less: Provision for impairment
Total marketing licence and intangibles
Intellectual property (at cost)
Less: Accumulated amortisation
Total intangible assets
2013
$000
25,762
(25,762)
12,000
(12,000)
-
2012
$000
25,762
(25,762)
12,000
(12,000)
-
Following a General Meeting of shareholders in July 2010, the new Directors of the Company initiated an independent review of the
Companys assets including apricitabine (ATC), to which the impaired intangible asset relates. Should future decisions and actions in
regard to ATC result in the Directors of the Company having the opinion that some value has been restored to this intangible asset,
the existing provision for impairment may be reversed to the extent that the Directors believe to be prudent and that value will be
reflected in the Companys balance sheet.
For the financial year 2013, the Directors still consider the intangible assets nil valuation is appropriate.
28
14. Plant and Equipment
Plant and equipment (at cost)

Less: Accumulated depreciation
Total plant and equipment
Consolidated
2013
2012
$000
$000
438
1,378
(418)
(1,053)
20
325
Reconciliation Plant and Equipment

Carrying amount at the beginning of the financial year
Additions
Disposals
Depreciation
Carrying amount at the end of the financial year
325
10
(151)
(164)
20
459
10
(144)
325
15. Trade and Other Payables

Trade creditors and accruals
2013
$000
279
2012
$000
284
The Groups exposure to currency and liquidity risk related to trade creditors and accruals is disclosed in Note 23.
16. Employee Benefits Provisions

2013
$000
2012
$000
Current
Employee benefits (Note 27)
183
79
Non-current
Employee benefits (Note 27)
12
27
2013
$000
2012
$000
78
123
201
17. Other Liabilities

Current
Unearned income
Onerous contract provision
Total other liabilities
The Company was a party to a non-cancellable lease for office and laboratory space. The Company ceased to use part of these
premises by 30 June 2010. The unused facilities had been sublet or were available for sublease for the remaining lease term, but
changes in market conditions had meant that the rental income was lower than the rental expense. The obligation for future rental
payments, net of expected rental income, had been provided for. The lease expired 26 June 2013.
29

As at 30 June 2013
18. Issued Capital

Terms and Conditions of Ordinary Shares
Holders of ordinary shares are entitled to one vote per share at shareholders meetings and to receive any dividends as may be
declared. In the event of winding up of the Company, ordinary shareholders rank after all creditors and are fully entitled to any
proceeds of liquidation. Ordinary shares have no par value.
Options to Acquire Ordinary Shares

During the financial year nil (2012: nil) options were issued to employees under the Avexa Employee Share Option Plan,
nil (2012: 5,000,000) options were issued to Directors. 3,080,000 (2012: 3,350,000) options held by employees or Directors
lapsed or were forfeited and nil (2012: nil) were exercised. Nil (2012: 4,000,000) held by Shire Canada Inc lapsed. Movements
in options for the current and prior year are provided in the following tables.
2013 Options
Total employee options (Note 27)
Total Directors options
Shire options
Total options
Number of Options
at Beginning of Year
3,270,000
4,000,000
7,270,000
Options
Granted
-
Options
Options
Lapsed/Forfeited Exercised
(3,080,000)
(3,080,000)
-
Number of Options
at End of Year
190,000
4,000,000
4,190,000
2012 Options
Total employee options (Note 27)
Total Directors options
Shire options
Total options
Number of Options
5,620,000
4,000,000
9,620,000
Options
Granted
5,000,000
5,000,000
Options
Options
Lapsed/Forfeited Exercised
(2,350,000)
(1,000,000)
(4,000,000)
(7,350,000)
-
Number of Options
at End of Year
3,270,000
4,000,000
7,270,000
2013
Issued and Paid Up Capital
847,688,779 (2012: 847,688,779) ordinary shares, fully paid
$000
182,523
2012
Number
847,688,779
$000
182,523
Number
847,688,779
182,523 847,688,779
182,523 847,688,779
182,523
182,523
847,688,779
847,688,779
Movements in issued capital during the year were as follows:

Balance at the beginning of the financial year
Issue of shares pursuant to Share Purchase Plan
Issue of shares pursuant to placement
Transaction costs relating to Rights Issue and placements
Issued capital at the end of the financial year
30
19. Accumulated Losses
Accumulated losses at the beginning of the financial year

Net loss attributable to owners of the Company
Accumulated losses at the end of the financial year
Consolidated
2013
2012
$000
$000
(165,929)
(162,443)
53
27
(2,977)
(3,513)
(168,853)
(165,929)
20. Commitments
(a) Non-cancellable Operating Lease Expense Commitments
Future operating lease commitments not provided for in the financial statements and payable:
Within one year

One year or later and no later than five years
Greater than five years
2013
$000
63
204
267
2012
$000
948
948
For the 2012 financial year the commitments shown are net of the onerous contract provision as disclosed in Note 17.
The principal operating lease commitment other than immaterial office equipment leases was the Companys premises lease
agreement which expired on 26 June 2013 and for the 2013 financial year the new lease on the new premises represents a
commitment of $50,288.
(b) Cancellable Research and Development Commitments

Future research and development commitments not provided for in the financial statements, excluded from (a) above and payable:
2013
2012
$000
$000
Within one year
20
82
One year or later and no later than five years
20
82
Amounts reflected in the above table represent contracted commitments to undertake various scientific studies as part of the
development of the Companys project portfolio. Each commitment is cancellable without penalty subject to notice periods of
up to three months.
31

As at 30 June 2013
21. Notes to the Statement of Cash Flows

Cash as at the end of the financial year in the statement of cash flows is reconciled to the related items in the balance sheet as follows:
Cash at bank and on hand

Bank short term deposits
Cash assets (Note 9)
Consolidated
2013
2012
$000
$000
132
256
11,737
12,314
11,869
12,570
Reconciliation of Loss After Related Income Tax to Net Cash Used in

Operating Activities
Loss after income tax
Add non-cash and non-operating items:
Depreciation and loss on disposal of plant and equipment
Foreign exchange gains
Investment loss on revaluation
Change in working capital and provisions
(Increase)/decrease in receivables
(Increase)/decrease in other assets
Increase/(decrease) in employee benefits
Increase/(decrease) in deferred income
Increase/(decrease) in payables
Increase/(decrease) in other liabilities
Net cash used in operating activities
(2,977)
252
53
(67)
32
(34)
177
89
(78)
(5)
(123)
(2,681)
(3,513)
144
27
975
114
(164)
(40)
78
27
53
(2,299)
Non-cash Financing and Investing Activities

There have been no non-cash financing and investing transactions during the 2013 financial year (2012: nil) which have had a material
effect on assets and liabilities of the Group.
32
22. Earnings Per Share
Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)
Consolidated
2013
2012
$000
$000
(0.35)
(0.41)
(0.35)
(0.41)
(a) Earnings Reconciliation

Net loss:
Basic earnings
Diluted earnings
(2,977)
(2,977)
(3,513)
(3,513)
(b) Weighted Average Number of Shares

Number for basic earnings per share:
Ordinary shares
Number for diluted earnings per share:
Ordinary shares
Effect of share options on issue
Weighted average number of ordinary shares (diluted)
Number
Number
847,688,779
847,688,779
847,688,779
847,688,779
847,688,779
847,688,779
23. Financial Instruments Disclosure and Financial Risk Management

The Group has exposure to market, credit and liquidity risks from the use of financial instruments. This note presents information
about the Groups exposure to each of these risks, its objectives, policies and processes for measuring and managing risk. The
Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. The Group has adopted a Strategic Risk Management Framework through
which it manages risks and aims to develop a disciplined and constructive control environment and action plans for risks that cannot
be effectively managed through the use of controls. The Audit Committee oversees how management monitors compliance with the
Companys Strategic Risk Management Framework in relation to the changing risks faced by the Group.
(a) Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the
Groups income or value of its holdings in financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the financial return. No more than $2.7 million of the Groups
cash resources is permitted to be invested in securities or investments other than bank and term deposits without approval by the
shareholders at an AGM. In respect of listed company investments, the holding is reviewed by the Audit Committee if the market
price falls by more than 10 per cent below the initial acquisition cost.
(i) Foreign Currency Risk

The Company has contracts denominated in foreign currencies, predominantly in US dollars and Great Britain Pounds Sterling, and
may enter into forward exchange contracts where appropriate in light of anticipated future purchases and sales, conditions in foreign
markets, commitments from customers and past experience and in accordance with Board-approved limits. Note 3(e) sets out the
accounting treatments for such contracts. There were no hedged amounts payable or receivable in foreign currencies at reporting
date (2012: nil).
33

As at 30 June 2013
23. Financial Instruments Disclosure and Financial Risk Management continued

(i) Foreign Currency Risk continued
In relation to the proposed investment in Coal Holdings USA (CHUSA), the Company plans to invest and loan CHUSA US$4 million
and US$6 million respectively. These amounts are unhedged.
At reporting date the Company had the following exposures to foreign currency, converted to thousands of Australian dollars:
Bank accounts
Receivables
Payables
Gross balance sheet exposure
GBP
$000
21
21
2013
USD
$000
37
561
598
Euros
$000
-
GBP
$000
24
24
2012
USD
$000
45
45
Euros
$000
-
Foreign Currency Sensitivity Analysis

A 10 per cent strengthening or weakening of the Australian dollar applied against the gross balance sheet exposure in the above table
in respect of the above currencies at 30 June 2013 would have increased/(decreased) profit or loss by the amounts shown below. This
analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for
2012. There is no impact on equity.
2013 Profit and Loss
Strengthening
Weakening
$000
$000
(54)
66
Exposure
Gross balance sheet exposure

Strengthening
Weakening
$000
$000
(6)
7
The following significant exchange rates applied during the financial year:
Currency
GBP
USD
Euro
2013
0.65
1.03
0.79
Average Rate
2012
0.65
1.03
0.77
Reporting Date Spot Rate

2013
2012
0.61
0.65
0.93
1.02
0.71
0.81
(ii) Interest Rate Risk

The effective weighted average interest rate used to discount the Long Service Leave provision is 4.1 per cent (2012: 6.0 per cent).
Interest earned on cash at bank is determined in accordance with published bank interest rates. The Companys exposure to interest
rate risk is confined to cash assets, the effective weighted average interest rate for which is set out below.
Floating
Effective
Interest Rate Interest Rate
$000
Percentage
Note
3 Months Non-interest
Bearing
or Less
$000
$000
Total
$000
Financial assets:
Cash assets at 30 June 2013
4.4
253
11,557
59
11,869
Cash assets at 30 June 2012
5.6
301
12,200
69
12,570
An increase or decrease of 0.50 per cent in interest rates applied for 12 months to the cash balances at reporting date would have
increased or decreased profit or loss by $59,344 (2012: $62,851), assuming that all other variables, including foreign currency rates,
remain constant. The analysis is performed on the same basis for 2012.
Strengthening
Weakening
$000
$000
Cash at bank variable interest rate:
AUD
34
59
(59)

Strengthening
Weakening
$000
$000
63
(63)
(b) Credit Risk

Credit risk represents the loss that would be recognised if counterparties fail to perform as contracted. For financial assets, the credit
risk exposure of the Group is the carrying amount of the asset net of any provision for doubtful debts. For the Group, credit risk arises
from receivables due from tenants, the working capital loan to Coal Holdings USA, LLC (CHUSA), which is secured by the assets of
CHUSA, and from interest and capital on investments with financial institutions.
(i) Investments (Including Cash)

The Groups Cash Management and Treasury Policy limits the maximum proportion of Avexas aggregate gross cash resources that
can be placed with or invested in any one counterparty, having regard to the credit risk assigned to that counterparty unless the Board
determines otherwise. No more than $2.7 million of the Groups cash resources is permitted to be invested in securities or investments
other than bank and term deposits without approval by the shareholders at an AGM. In respect of listed company investments the
holding is reviewed by the Audit Committee if the market price falls by more than 10 per cent below the initial acquisition cost.
(ii) Receivables
The Group undertakes due diligence prior to entering into any collaboration, codevelopment or licensing agreement with a
counterparty that exposes the Group to credit risk. Generally the nature of the core business is such that the Group tends to deal
with a small number of counterparties of a multinational, high profile and high credit rating status. Wherever possible, the Group
will seek appropriate security for any long term credit risk. The Groups exposure to credit risk from receivables is shown below.
No amounts are past due and/or impaired at balance date.
Note
3 Months
or Less
$000
Greater Than
3 Months
$000
Total
$000
Financial assets:
Receivables at 30 June 2013
10
240
1,178
1,418
Receivables at 30 June 2012
10
812
10
822
(c) Liquidity Risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The Groups approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both
normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companys reputation.
The liquidity risk profile will be impacted by the Companys decision to make a strategic investment in Coal Holdings USA LLC.
Refer to Note 2(b) going concern basis of accounting.
The Company has no lines of credit other than a credit card facility for $150,000 and a Bank Guarantee of $30,822. The Company
manages its liquidity risk using existing cash reserves managed in accordance with a Cash Management and Treasury Policy. Under this
policy, sufficient liquidity to meet day-to-day operating requirements is maintained in interest-bearing operating, at-call and term bank
accounts. Cash balances are prepared daily and cash requirements monitored on weekly, month end reporting and annual budget/
forecast cycles.
At reporting date, the Group had the following financial liability exposures.
Note
3 Months
or Less
$000
Greater Than
3 Months
$000
Total
$000
Financial liabilities:
Creditors and other accruals at 30 June 2013
15
279
279
Creditors and other accruals at 30 June 2012
15
284
284
35

As at 30 June 2013
23. Financial Instruments Disclosure and Financial Risk Management continued

(d) Net Fair Values of Financial Assets and Liabilities
Net fair values of financial assets and liabilities are determined by the Group on the following bases:
(i) for monetary financial assets and financial liabilities not readily traded in an organised financial market, values are determined
by valuing them at the value of contractual cash flow amounts due from customers and payable to suppliers discounted as
appropriate for settlements beyond 12 months; and
(ii) the carrying amounts of bank balances and deposits, trade debtors and accounts payable expected to be payable within
12 months of reporting date approximate the net fair value.
At reporting date there were no material differences between carrying values and fair values.
(e) Capital Management

The Boards policy is to maintain a sufficient capital base so as to sustain investor, creditor and market confidence and to facilitate
the future development of the business. As noted in Note 2(b), in order to meet forecast operating cash requirements, the Company
may need to raise funds from other sources which may include raising capital or securing debt facilities.
24. Related Parties

Disclosures of compensation policies, service contracts and details of compensation are included in the Remuneration Report on
pages 9 to 15. The following were Key Management Personnel of the Company at any time during the reporting period and unless
otherwise indicated, were Directors or Executives for the entire period.
Non-Executive Directors
Mr I Kirkwood (Appointed Chairman 18 April 2011)
Mr B Hewett (Appointed 6 July 2010)
Mr A Tan (Appointed 1 December 2010)
Executives
Dr J Coates (Interim CEO & Chief Scientific Officer) (Ceased
employment as Chief Scientific Officer 7 May 2010. Appointed
Interim CEO and re-appointed Chief Scientific Officer 12 July 2010)
Dr S Cox (Head of Drug Development) (Appointed 7 February 2013)
Ms M Klapakis (Financial Controller) (Appointed 1 December 2010)
Directors and Key Management Personnel Compensation

The Directors and Key Management Personnel compensation included in employee expenses are as follows:
Nature of Compensation
Short term employee benefits
Performance benefits
Other short term benefits
Post-employment benefits
Termination benefits
Share-based payments
Total compensation
2013
$000
685
79
65
53
882
2012
$000
519
8
78
26
631
Options and Rights Over Equity Instruments Granted as Compensation

All options refer to options over ordinary shares of Avexa Limited, which are exercisable on a one-for-one basis under the Avexa
Employee Share Option Plan (ESOP). The fair value of the options is calculated at the date of grant using a binomial model and
allocated to each reporting period in accordance with the vesting profile of the options. The value disclosed is the portion of the
fair value of the options allocated to this reporting period. The factors and assumptions used in determining the fair value on grant
date of options issued during the financial year and previous financial year are detailed in the following tables.
36
2013
No options were granted during the 2013 financial year.
2012
Number and
Recipients
of Options
5,000,000
to Directors
Grant Date
Expiry Date
Fair Value Exercise

Per Option
Price
19 December 2011 31 December 2013
$0.0069
$0.06
Price of
Shares on
Value Date
Risk Free
Interest
rate
Estimated
volatility
Number
Vested
During
year
$0.033
3.01%
75%
All
Exercise of Options Granted as Compensation

There were no shares issued during the reporting period on the exercise of options previously granted as compensation.
Key Management Personnel (KMP)

The numbers of options issued, vested and exercisable, and forfeited or lapsed during the financial year and prior financial year for
KMP are shown in the following tables. No options were exercised by KMP during the year.
2013
Directors
Mr I Kirkwood
Mr B Hewett
Mr A Tan
Executives
Dr J Coates
Ms M Klapakis
Dr S Cox
Total Executives
Number
Number
Number of Options
Number
of Options
Vested
of Options of Options
Lapsed
During
Vested
Held at
During
the Year
Year 30 June 2013 1 July 2012
Number
Number
of Options
of Options
Vested at
Lapsed
During Year 30 June 2013
Number
of Options
Held at
1 July 2012
Number
of Options
Issued
During Year
2,000,000
1,000,000
1,000,000
3,150,000
25,000
7,175,000
Number
of Options
Held at
1 July 2011
Number
of Options
Issued
During Year
2,000,000
1,000,000
1,000,000
1,000,000
(1,000,000)
2,000,000
1,000,000
1,000,000
-
2,000,000
1,000,000
1,000,000
1,000,000
(1,000,000)
2,000,000
1,000,000
1,000,000
-
4,150,000
225,000
900,000
5,275,000
5,000,000
(1,000,000)
(200,000)
(900,000)
(3,100,000)
3,150,000
25,000
7,175,000
3,490,000
215,000
540,000
4,245,000
660,000
10,000
5,670,000
(1,000,000)
(200,000)
(540,000)
(2,740,000)
3,150,000
25,000
7,175,000
(3,000,000)
(10,000)
(3,010,000)
2,000,000
1,000,000
1,000,000
2,000,000
1,000,000
1,000,000
150,000
15,000
4,165,000
3,150,000
25,000
7,175,000
(3,000,000)
(10,000)
(3,010,000)
2,000,000
1,000,000
1,000,000
150,000
15,000
4,165,000
2012
Directors
Mr I Kirkwood
Mr B Hewett
Mr A Tan
Mr H Soedirdja
Executives
Dr J Coates
Ms M Klapakis
Mr S Kerr (i)
Total Executives
Number
Number
Number of Options
Number
of Options
Vested
of Options of Options
Lapsed
During
Vested
Held at
During
the Year
Year 30 June 2012 1 July 2011
Number
Number
of Options
of Options
Vested at
Lapsed
During Year 30 June 2012
(i) Mr Kerr (former CFO) left the Company on 30 November 2010. The terms of Mr Kerrs vested but unexercised options that would otherwise have
lapsed during the previous financial year were varied and extended by 12 months. There was no difference between the total fair value of the
options immediately before the variation and immediately afterwards and the financial effect is not quantifiable.
37

As at 30 June 2013
24. Related Parties continued

Directors and Key Management Personnel Compensation continued
Equity Holdings and Transactions
The movements during the reporting period and prior reporting period in the number of ordinary shares in Avexa Limited held, directly
or indirectly or beneficially, by each specified Director and specified Executive, including their personally-related entities are shown
in the following tables. For persons who commenced or ceased as a Director during a period, figures reported are for the period of
appointment only.
2013 Directors
Directors
Mr I Kirkwood
Mr B Hewett
Mr A Tan
Total Directors
Holding of Ordinary
Shares at 1 July 2012
(or Date of Appointment)
Number
650,000
100,000
750,000
Shares Sold on
Market During the
Financial Year
Number
-
Shares Acquired on
Market During the
Financial Year
Number
8,500,000
1,900,000
10,400,000
Holding of Ordinary
Shares at 30 June 2013
(or Date of Resignation)
Number
9,150,000
2,000,000
11,150,000
Holding of Ordinary
(or Date of Appointment)
Number
650,000
100,000
1,325,715
2,075,715
Shares Sold on
Market During the
Financial Year
Number
-
Shares Acquired on
Market During the
Financial Year
Number
-
Holding of Ordinary
(or Date of Resignation)
Number
650,000
100,000
1,325,715
2,075,715
Shares Sold on
Market During the
Financial Year
Number
-
Shares Acquired on
Market During the
Financial Year
Number
500,000
500,000
70,000
1,070,000
Holding of Ordinary
Number
1,532,519
1,129,951
139,029
2,801,499
2012 Directors
Directors
Mr I Kirkwood
Mr B Hewett
Mr J Soedirdja(i)
Mr A Tan
Total Directors
(i) Resigned on 31 January 2012.
2013 Executives
Executives
Dr J Coates
Dr S Cox (i)
Ms M Klapakis
Total Executives
Holding of Ordinary
Number
1,032,519
629,951
69,029
1,731,499
(i) Dr S Cox was re-employed on a permanent full time basis on 7 February 2013.
2012 Executives
Executives
Dr J Coates
Ms M Klapakis
Total Executives
Holding of Ordinary
Number
1,032,519
69,029
1,101,548
Shares Sold on
Market During the
Financial Year
Number
-
Shares Acquired on
Market During the
Financial Year
Number
-
Holding of Ordinary
Number
1,032,519
69,029
1,101,548
Loans and other transactions with Key Management Personnel

There were no loans made to Directors or Executives or other loan movements during the 2013 financial year.
38
Other Key Management Personnel Transactions with the Group

No Key Management Personnel member has entered into a material contract with the Group during either the 2013 or 2012 financial
years and there were no material contracts with, amounts receivable from or payable to interests involving Directors or Executives at
period end.
25. Non-Key Management Personnel Related Parties

There were no material transactions with non-Director related parties during either the 2013 or 2012 financial years.
26. Contingent Liabilities

The Group is not aware of any contingent liabilities or contingent assets capable of having a material impact on the Group,
other than service contracts with Key Management Personnel.
27. Employee Benefits

Aggregate liability for employee benefits, including on-costs:
Consolidated
2013
2012
$000
$000
Current employee benefits provision:

Annual leave and long service leave entitlements
Performance incentive entitlements
119
64
64
15
12
195
27
106
Non-current employee benefits provision:

Long service leave entitlement
Total employee benefits
At-Risk Incentive Performance Payments

Compensation for all employees other than Non-Executive Directors includes an at-risk performance component. Provision has been
made at reporting date for the amount payable in respect of performance for the financial year as measured against agreed criteria
set on an employee by employee basis.
A reconciliation of movement for the year for all employee provisions is provided in the following table.
Balance at the beginning of the year

Provision utilised
Charges raised
Balance at the end of the year
Annual Leave
$000
64
(26)
55
93
Long Service Leave

$000
27
11
38
Performance Incentive
$000
15
(30)
79
64
Total
$000
106
(56)
145
195
The present values of employee entitlements not expected to be settled within 12 months of reporting date have been calculated
using the following weighted averages:
2013
2012
Assumed rate of annual increase in salary and wages
5.0%
5.0%
Average discount rate
4.1%
6.0%
Settlement term (years)
7
7
Number of employees at year end (excluding Non-Executive Directors)
6
6
39

As at 30 June 2013
27. Employee Benefits continued

Equity Based Plan: Avexa Employee Share Option Plan
The Company has a share option plan for employees (ESOP), and during the financial year ended 30 June 2013 issued nil (2012:
nil) options over unissued shares under the rules of the ESOP. 3,080,000 (2012: 2,350,000) of these options were forfeited or lapsed
during the financial year and nil (2012: nil) options issued in a prior year were exercised during the financial year for total proceeds of
$nil (2012: $nil), at a weighted average exercise price of $nil (2012: $nil). The ESOP rules include the following terms and conditions:
the Board has absolute discretion in terms of eligibility subject to the 5 per cent limit of the Companys share capital that can be
issued to employees for the ESOP;
the options to acquire ordinary shares will be issued for no consideration;
the options have a maximum five year life subject to death, permanent disablement or termination of employment in circumstances
the Board deem to involve serious misconduct;
each option is convertible into one ordinary share; and
there are no voting rights attached to the options or the unissued ordinary shares.
Movements during the financial year are detailed in the following table.
2013
Exercise Price
Grant Date
Expiry Date
Original/Current#
10 Sept 2008
30 June 2013
$0.31/$0.30
10 Sept 2008
30 June 2013
$0.54/$0.53
10 Sept 2008
30 June 2013
$0.62/$0.61
18 June 2009
18 June 2014
$0.13/$0.13
3 May 2011
31 Dec 2012
$0.06/$0.06
Total employee options on issue
#
Number of Options
1,180,000
200,000
200,000
190,000
1,500,000
3,270,000
Options
Granted
-
Options Number of Options

Forfeited/Lapsed
at End of Year
1,180,000
200,000
200,000
190,000
1,500,000
3,080,000
190,000
he exercise price of employee options is reduced whenever there is a pro rata issue (except a bonus issue) to the holders of the Companys shares
T
in accordance with the formula outlined in ASX Listing Rule 6.21.
Movements in employee options during the previous financial year are detailed in the following table.
2012
Exercise Price
Grant Date
Expiry Date
Original/Current#
25 May 2007
30 April 2012
$0.63/$0.62
10 Sept 2008
30 June 2013
$0.31/$0.30
10 Sept 2008
30 June 2013
$0.54/$0.53
10 Sept 2008
30 June 2013
$0.62/$0.61
18 June 2009
18 June 2014
$0.13/$0.13
3 May 2011
31 Dec 2012
$0.06/$0.06
Total employee options on issue
Number of Options
1,450,000
1,180,000
200,000
200,000
1,090,000
1,500,000
5,620,000
Options
Granted
-
Options Number of Options

Forfeited/Lapsed
at End of Year
(1,450 000)
1,180,000
200,000
200,000
(900,000)
190,000
1,500,000
(2,350,000)
3,270,000
28. Events Subsequent to Balance Date

In the interval between the end of the financial year and the date of this report no item, no transaction or event of a material and
unusual nature has arisen that is likely, in the opinion of the Directors of the Company, to affect significantly the operations of the
Group, the results of those operations, or the state of affairs of the Group in future financial years except:
The Alabama Department of Environmental Management has confirmed that a permit to mine has been issued and the requisite
bond monies deposited. Avexa is now in a position to activate its investment subject to the Board being satisfied with final, closing
due diligence. Further, Avexa will finance its participation in the joint venture in order to preserve cash and allow a contemporaneous
investment in the ATC project (refer above). The closing due diligence and financing arrangements are expected to be completed in or
about October 2013 which will allow Avexa to proceed as planned with the investment in the North Pratt coal mine through its subsidiary
CHUSA (Coal Holdings USA). Revenues from this mine will be used to fund the AVX-305 Phase III clinical trial of apricitabine (ATC).
40
29. Dividends
No dividends were paid or proposed in the current or prior financial years.
30. Segment Reporting

Information about Reportable Segments
External revenues
Inter-segment revenue
Interest revenue
Finance expense
Depreciation and loss on disposal
Reportable segment profit/(loss) before tax
Reportable segment total assets
Reportable segment total liabilities
Research and Development

2013
2012
$000
$000
1,069
1,087
596
825
252
144
(2,787)
(2,498)
12,763
13,923
472
591
Listed Investments
2013
2012
$000
$000
27
10
(32)
(975)
(185)
(1,015)
1,250
3,697
2
-
Total
2013
$000
1,069
623
(32)
252
(2,972)
14,013
474
2012
$000
1,087
835
(975)
144
(3,513)
17,620
591
The Group comprises of the following main business segments:

1. Research and development the operation of conducting anti-infective research and development.
2. Listed investments investing in the share market.
Reconciliation of Reportable Segment Profit or Loss

2013
$000
(2,972)
Total profit or loss for reportable segments before tax
Elimination of inter-segment profits

Elimination of discontinued operations
Unallocated amounts:
Other corporate expenses
Share of profit of equity accounted investees
Profit/(loss) before tax
(2,972)
2012
$000
(3,513)
(3,513)
31. Group Entities

Significant Subsidiaries
For the year ending 30 June 2013
AVI Capital Pty Ltd
Avexa Inc
Avexa Ltd
AVI Capital Inc
Country of Incorporation
Australia
USA
UK
USA
Ownership Interest %
2013
2012
100
100
100
100
100
100
100
-
41

As at 30 June 2013
32. Parent Entity Disclosures

As at, and throughout, the financial year ended 30 June 2013 the parent entity of the Group was Avexa Limited.
2013
$000
2012
$000
Results of parent entity

Profit/(loss) for the period
Other comprehensive income
(5,397)
-
(2,486)
-
(5,397)
(2,486)
13,949
13,969
19,106
19,432
459
472
564
591
Financial position of parent entity at year end

Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity:
Share capital
Revaluation reserve
Retained earnings
Total equity
182,523
(169,025)
13,498
182,523
(163,682)
18,841
33. Finance Income and Finance Costs

Consolidated
2013
2012
$000
$000
Recognised in profit or loss
Interest income on cash and cash equivalents
Net gain on disposal of available-for-sale financial assets transferred from equity
Finance income
Net change in fair value of financial assets at fair value through profit or loss:
Held for trading
Finance costs
Net finance income/(costs) recognised in profit or loss
Recognised in other comprehensive income
Net change in fair value of available-for-sale financial assets
Net change in fair value of available-for-sale financial assets reclassified to profit or loss
Finance income recognised in other comprehensive income
42
623
828
1,451
837
93
930
(860)
(860)
591
(1,068)
(1,068)
(138)
356
210
566
5,925
(85)
5,840
Directors Declaration
In the opinion of the Directors of Avexa Limited (the Company):

(a) the consolidated financial statements and notes and the remuneration disclosures that are contained in the Remuneration Report
in the Directors Report, set out on pages 2 to 8, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Groups financial position as at 30 June 2013 and of its performance for the financial year
ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001;
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2(a); and
(c) there are reasonable grounds to believe that the Company and the group entities will be able to pay its debts as and when they
become due and payable.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Interim Chief Executive
Officer and Financial Controller for the financial year ended 30 June 2013.
Dated at Melbourne this 29th day of August, 2013.
This report is made with a resolution of the Directors.
Mr I Kirkwood
Chairman
43
Independent Auditors Report

Independent Auditors Report to the Members of Avexa Limited

Report on the Financial Report
We have audited the accompanying financial report of Avexa Limited (the Company), which comprises the statement of financial
position as at 30 June 2013, and the statement of comprehensive income, statement of changes in equity and statement of cash
flows for the year ended on that date, notes 1 to 33 comprising a summary of significant accounting policies and other explanatory
information and the Directors declaration.
Directors Responsibility for the Financial Report

The Directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance
with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This
responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;
and making accounting estimates that are reasonable in the circumstances. In Note 2(a), the Directors also state, in accordance with
Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report, comprising the financial
statements and notes, complies with International Financial Reporting Standards.
Auditors Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance 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 auditors 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 entitys preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys 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.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with
the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding
of the Companys and the Groups financial position and of their performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditors Opinion
In our opinion:
(a) The financial report of Avexa Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Companys 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 (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001.
(b) The financial report also complies with International Financial Reporting Standards as disclosed in Note 2(a).
44
Report on the Remuneration Report

We have audited the Remuneration Report included in pages 9 to 15 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 auditing standards.
Auditors Opinion
In our opinion, the remuneration report of Avexa Limited for the year ended 30 June 2013, complies with Section 300A of the
Corporations Act 2001.
KPMG
Paul J McDonald
Partner
Melbourne
29 August 2013
45
Corporate Governance Statement
Introduction
The Board of Directors (Board) of Avexa Limited (the Company or Avexa) recognises the important role that effective corporate
governance practices can play in the management of the business of a company and the creation of value for a companys
shareholders. As a result, the Company and its Board are committed to achieving and maintaining a high standard of corporate
governance that is tailored to suit, amongst other matters, the size of the Company and its business and the characteristics
of the industry of which it is a part.
A description of the Companys main corporate governance practices and policies is set out in this statement. In certain instances,
the Companys approach has been to address the objectives underlying the ASX Corporate Governance Councils (CGC) Corporate
Governance Principles and Recommendations (the ASX Recommendations) without strictly complying with the letter of the
Recommendations. Accordingly, while the Company has adopted a number of the ASX Recommendations, it has not followed others.
The instances in which the Companys practices depart from the ASX Recommendations are described and explained in this statement.
The Board will continue to review and assess the Companys corporate governance practices and policies as the Companys
business evolves and grows over time.
The Companys Corporate Governance Practices were in place throughout the year ending 30 June 2013. Various corporate
governance practices are discussed within this statement.
For further information on corporate governance policies adopted by Avexa, refer to our website: www.avexa.com.au
46
Recommendation
Comply Reference/
Yes/No Explanation
ASX Listing Rule/CGC

Recommendations
Principle 1 Lay Solid Foundations for Management and Oversight

1.1
Companies should establish the functions reserved to the Board and

those delegated to Senior Executives and disclose those functions.
Yes
Page 49
ASX CGC 1.1
1.2
Companies should disclose the process for evaluating the

performance of Senior Executives.
Yes
Page 51
Remuneration
Report
ASX CGC 1.2
1.3
Companies should provide the information indicated in the guide

to reporting on Principle 1.
Yes
Page 52,
website
ASX CGC 1.3
Principle 2 Structure the Board to Add Value

2.1
A majority of the Board should be independent Directors.
Yes
Page 50
ASX CGC 2.1
2.2
The Chair should be an independent Director.
Yes
Page 50
ASX CGC 2.2
2.3
The roles of Chair and Chief Executive Officer (CEO) should not be
exercised by the same individual.
Yes
Page 50
ASX CGC 2.3
2.4
The Board should establish a Nomination Committee.
Yes
Page 50
ASX CGC 2.4
2.5
Companies should disclose the process for evaluating the

performance of the Board, its committees and individual Directors.
Yes
Page 51
ASX CGC 2.5
2.6

Yes
Pages 6, 7, 49,
50, 51 and 56
ASX CGC 2.6
No
Page 53
ASX CGC 3.1
Principle 3 Promote Ethical and Responsible Decision-making

3.1
Companies should establish a code of conduct and disclose

the code or a summary of the code as to:
The practices necessary to maintain confidence in the
Companys integrity.
The practices necessary to take into account their legal
obligations and the reasonable expectations of their stakeholders.
The responsibility and accountability of individuals for
reporting and investigating reports of unethical practices.
3.2
Companies should establish a policy concerning diversity and disclose

the policy or a summary of that policy. The policy should include
requirements for the Board to establish measurable objectives for
achieving gender diversity for the Board to assess annually both
the objectives and progress in achieving them.
Yes
Website,
page 56
ASX CGC 3.2
3.3
Companies should disclose in each Annual Report the measurable

objectives for achieving gender diversity set by the Board in accordance
with the diversity policy and progress towards achieving them.
No
Page 57
ASX CGC 3.3
3.4
Companies should disclose in each Annual Report the proportion

of women employees in the whole organisation, women in Senior
Executives positions and women on the Board.
Yes
Page 57
ASX CGC 3.4
3.5

Yes
Pages 53, 54,

55, website
ASX CGC 3.5
47
Corporate Governance Statement continued
Recommendation
Comply Reference/
Yes/No Explanation

Recommendations
Principle 4 Safeguard Integrity in Financial Reporting

4.1
The Board should establish an Audit Committee.
Yes
Page 52
ASX CGC 4.1
4.2
The Audit Committee should be structured so that it:
No
Pages 52
and 53
ASX CGC 4.2

ASX LR 12.7
Consists only of Non-Executive Directors.

Consists of a majority of independent Directors.
Is chaired by an independent Chair, who is not Chair of the Board.
Has at least three members.
4.3
The Audit Committee should have a formal charter.
Yes
Website
ASX CGC 4.3
4.4

Yes
Website,
pages 52
and 53
ASX CGC 4.4
Principle 5 Make Timely and Balanced Disclosure

5.1
Companies should establish written policies designed to ensure

compliance with ASX Listing Rule disclosure requirements and to
ensure accountability at a Senior Executive level for that compliance
and disclose those policies or a summary of those policies.
Yes
Website,
pages 2,
3 and 4
ASX CGC 5.1
5.2

Yes
Website
ASX CGC 5.2
Principle 6 Respect the Rights of Shareholders

6.1
Companies should design a communications policy for promoting

effective communication with shareholders and encouraging their
participation at general meetings and disclose their policy or a
summary of that policy.
Yes
Page 55
ASX CGC 6.1
6.2

Yes
Page 55
ASX CGC 6.2
Principle 7 Recognise and Manage Risk

7.1
Companies should establish policies for the oversight and

management of material business risks and disclose a summary
of those policies.
Yes
Website,
pages 36
and 54
ASX CGC 7.1
7.2
The Board should require management to design and implement

the risk management and internal control system to manage the
Companys material business risks and report to it on whether those
risks are being managed effectively. The Board should disclose
that management has reported to it as to the effectiveness of the
Companys management of its material business risks.
Yes
Pages 53
and 54
ASX CGC 7.2
7.3
The Board should disclose whether it has received assurance from

the CEO [or equivalent] and the Chief Financial Officer (CFO) [or
equivalent] that the declaration provided in accordance with section
295A of the Corporations Act is founded on a sound system of risk
management and internal control and that the system is operating
effectively in all material respects in relation to financial reporting risks.
Yes
Page 53
ASX CGC 7.3
7.4

Yes
Page 53
ASX CGC 7.4
48
Recommendation
Comply Reference/
Yes/No Explanation

Recommendations
ASX CGC 8.1
Principle 8 Remunerate Fairly and Responsibly

8.1
The Board should establish a Remuneration Committee.
Yes
Page 52
8.2
The Remuneration Committee should be structured so that it:
Yes
ASX CGC 8.2

Pages 52 and
53. Also refer to
Remuneration
Report
Consists of a majority of independent Directors.

Is chaired by an independent Chair.
Has at least three members.
8.3
Companies should clearly distinguish the structure of Non-Executive

Directors remuneration from that of Executive Directors and Senior
Executives.
Yes
Refer to
Remuneration
Report
ASX CGC 8.2
8.4
Companies should provide the information indicated in the guide to

reporting on Principle 8.
Yes
Page 7,
website
ASX CGC 8.3
The Board of Directors

The Avexa Board is responsible for, and has the authority to determine, all matters relating to the strategic direction, policies and
practices of Avexa with the objective of protection and enhancement of long term shareholder value. Part of the Boards role in this
regard is to establish goals for Senior Executives and for the operation of the Company.
In defining its roles and responsibilities, the Board has not adopted a formal charter, but instead has had regard to the Constitution
of Avexa and to the categories of matters that are commonly understood to be within the province of a company Board. The Boards
specific responsibilities and functions include:
oversight of the Company, including its control and accountability systems;
appointing, removing and approving remuneration for the interim Chief Executive Officer (CEO);
appointing, removing and approving remuneration for each of the Financial Controller and Company Secretary;
input into and final approval of the corporate strategy, business plans, budgets and performance objectives developed by senior
management;
monitoring senior managements performance and implementation of strategy, and ensuring appropriate resources are available;
approving and monitoring the progress of major capital expenditure, capital management, budgeting, operations and acquisitions
and divestitures;
approving communications with shareholders and announcements to the ASX;
reviewing and ratifying systems of risk management, internal compliance and control and legal compliance; and
approving and monitoring financial and other statutory reporting and compliance matters.
The Board has approved a formal delegation to the CEO and other senior management of day-to-day authority over the operations
of Avexas business.
The Board monitors the business affairs of the Company on behalf of holders of the Companys securities and have formally adopted
corporate governance policies which are designed to encourage Directors to focus their attention on accountability, risk management
and ethical conduct.
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.
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.
49
Whilst at all times the Board retains full responsibility for guiding and monitoring the Group, in discharging its stewardship it makes
use of sub-committees. Specialist sub-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 Committee; and
Remuneration and Nominations Committee.
The roles and responsibilities of these committees are discussed throughout this corporate governance statement.
The Board is responsible for ensuring that managements 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:
setting overall financial goals for the Company;
approval of strategies, objectives and plans for the Company to achieve these goals;
monitoring Executive management and business performance in the implementation and achievement of strategic
and business objectives a strategic plan designed to meet stakeholders needs and manage business risk;
ongoing development of the strategic plans and approving initiatives and strategies designed to ensure the
continued growth and success of the entity; and
implementation of financial plans and budgets by management and monitoring progress against budget on an
ongoing basis via the establishment and reporting of both financial and non-financial key performance indicators
Board Composition
The Board currently consists of three independent Non-Executive Directors. The Company also has an Interim CEO,
Dr Jonathan Coates, who is not a Director of the Company. The Non-Executive Directors are as follows:
Mr Iain Kirkwood (Chairman);
Mr Bruce Hewett; and
Mr Allan Tan.
Details of each Directors relevant skills, experience and expertise and his term of office, attendance at Board and committee
meetings in each case as at the date of this Annual Report, are set out in the Directors Report.
Directors of Avexa Limited are considered to be independent when they are independent of management and free from any
business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere
with the exercise of their unfettered and independent judgement.
In the context of Director independence, materiality is considered from both the Group and individual Directors perspective.
The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to
be quantitatively immaterial if it is equal to or less than 5 per cent of the appropriate base amount. It is presumed to be material
(unless there is qualitative evidence to the contrary) if it is equal to or greater than 10 per cent of the appropriate base amount.
Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature
of the relationship and the contractual or other arrangements governing it and other factors that point to the actual ability of the
Director in question to shape the direction of the Groups loyalty.
The Board has considered the independence of each of the Avexa Directors within the framework of the ASX Recommendations,
and in accordance with the definition of independence above, and the materiality thresholds set, each of the Directors of Avexa
(including the chair) are considered to be independent.
50
The Board continually assesses the composition of the Board and endeavours to ensure that it reflects an appropriate mix of
expertise, knowledge of Avexas operations and independence. The size of the Board is currently considered optimal, as a small
Board facilitates efficient decision-making and is appropriate for a company of Avexas size.
Board Processes
The Board generally holds 11 scheduled meetings per annum plus any other meetings as necessary to deal with specific matters.
Agendas for Board meetings are prepared in conjunction with the Chairman, interim CEO and Company Secretary, with standing
items comprising minutes, matters arising from previous meetings, Occupational Health and Safety Report, CEO and Finance
Reports. Executives are invited to present the CEO and Finance Reports and papers are circulated in advance in all but exceptional
circumstances.
Each Director of Avexa has the right to seek independent professional advice at the Companys expense with the approval of the
Chairman not to be withheld except in case of an unreasonable request, and to seek independent legal and other professional
advice at the Companys expense concerning any aspect of the Companys operations or undertakings in order to fulfil his or her
duties and responsibilities as a Director.
Each Director is also indemnified under the Companys Constitution and under separate deeds of indemnity and has the right of
access to all relevant Company information and Executives, and to continuing education opportunities to update and enhance their
skills and knowledge.
Board Remuneration and Performance Evaluations

The Company Constitution and the ASX Listing Rules require the total amount of remuneration payable to Non-Executive Directors to
be approved by shareholders by ordinary resolution at a general meeting. At the Companys 2005 inaugural Annual General Meeting,
the Companys shareholders approved $350,000 as the maximum aggregate amount of remuneration payable to Directors. This
amount has not changed.
Non-Executive Directors are paid their fees out of the maximum aggregate amount approved by shareholders for the remuneration
of Non-Executive Directors. Non-Executive Directors do not receive performance based bonuses and do not generally participate in
equity-based incentive plans of the Company although it is noted that options were issued to members of the Board following the last
AGM (details of which are disclosed in the Remuneration Report). Non-Executive Directors are entitled to statutory superannuation.
The details of remuneration received by each of the Companys Directors are contained in the Remuneration Report.
The Board carefully considers its composition and the mix of skills, experience and perspectives of its members on an ongoing basis.
The Nominations and Remuneration Committee is committed to conducting annual reviews of the role of the Board, assessing the
performance of the Board over the previous 12 months and examining ways of assisting the Board in performing its duties more
effectively. It is expected that the next annual review will include:
examination of the Boards interaction with management;
the nature of information provided to the Board by management; and
managements performance in assisting the Board to meet its objectives.
A similar review will be conducted for each committee by the Board with the aim of assessing the performance of each committee
and identifying areas where improvements can be made.
A formal performance evaluation for the Board, its committees and the Directors has not taken place during the reporting period
however the Chairman has, together with the other Directors, informally surveyed the role of the Board and has assessed the
performance of the Directors. The Directors consider that the Board is functioning well and, at the present time, consider that a
more structured review/evaluation process is unlikely to add any material value and that the Boards existing time and resources
are better utilised in assisting with the execution of the Companys strategies.
51
The Board, with the assistance of the Nominations and Remuneration Committee, oversees the performance evaluation of the
interim CEO, Dr Jonathan Coates and other Senior Executives. The evaluation is based on specific criteria, including the business
performance of the Company, whether strategic objectives are being achieved and the development of management and personnel.
This evaluation generally occurs on an annual basis or more often, where required. A performance evaluation for the interim CEO and
other Senior Executives occurred in August 2013 basis on performance against KPIs previously set for the 12 month period ending
30 June 2013. The Board also notes that the size of the Company and the Executive team is such that performance is able to be
monitored on an ongoing basis. The Board notes that it is currently in the process of setting KPIs for each of the Senior Executives
for the period ending 30 June 2014 a process which began in August 2013.
Board Committees
At the commencement of operations in 2004 the Board established an Audit Committee and in 2008 established a Remuneration
and Nominations Committee.
For details on the number of meetings of the committee meetings held during the year and the attendees at those meetings,
refer to the Directors Report.
The Audit Committee in general is responsible for any matters relating to the assets and financial affairs of Avexa, internal controls,
ethical standards and to the Companys external or internal audit functions. The Audit Committees specific responsibilities (which
have been delegated to it by the Board) include:
monitoring and reviewing the integrity of financial statements and the effectiveness of internal financial controls;
making recommendations to the Board in relation to the appointment of external auditors and approving the
remuneration and terms of their engagement;
reviewing risk management and internal compliance, business processes and control systems; and
monitoring and reviewing the independence, objectivity and competency of internal and external auditors.
The Remuneration and Nomination Committee in general is responsible for the selection and appointment of new Directors, Board
and Committee composition and succession planning and performance evaluation of Directors and Senior Executives. A key role
of the Remuneration and Nomination Committee is ensuring that the Board is appropriately structured and comprised of individuals
who are best able to discharge the responsibilities of Directors. In doing so, the Remuneration and Nomination Committee has
regard to, amongst other things, the size, composition, diversity and skills required by the Board to enable it to fulfil its responsibilities
to shareholders having regard to its current activities and the extent to which the required knowledge, experience and skills are
represented on the Board.
In respect of human resources policies and initiatives, it is responsible for the structure of a Performance Management and
Development System (PMDS).
The PMDS structure is designed to provide employee remuneration which is competitive, equitable, sufficiently attractive to attract
and retain high quality employees and provide adequate incentive for all staff to actively pursue the achievement of the Companys
long term strategic objectives.
Each committees charter is posted on the corporate governance section of Avexas website. Each committee comprises the following
Non-Executive, independent Directors:
Mr Iain Kirkwood (Chairman of the Audit and Risk Committee);
Mr Bruce Hewett (Chairman of the Remuneration and Nomination Committee); and
Mr Allan Tan.
52
All of the members of both the Remuneration and Nomination Committee and the Audit Committee are independent Directors.
Details of Directors qualifications and attendance at committee meetings are set out in the Directors Report.
The Board recognises the Corporate Governance Councils recommendation that the Audit Committee should be chaired by an
independent Chair who is not also the Chair of the Board. The Board also recognises that, since April 2011, when Mr Kirkwood
was appointed as Chair of the Board, he is responsible for chairing both the Board and the Audit Committee.
While the Board will continue to keep this issue under review, at this time the Directors believe that, given his skills and expertise in
relation to finance matters, Mr Kirkwood remains the most appropriate person to Chair the Audit Committee. The Board believes that
having Mr Kirkwood as the Chair of the Audit Committee better safeguards the integrity of the Companys financial reporting structure
and outweighs the benefits of having an independent Chair who is also not Chair of the Board. Further, given the Companys size and
available cash resources, the appointment of additional independent Directors is not considered to be appropriate at this time. The
Board also considers that Mr Kirkwood brings quality and independent judgement to his role as Chair of the Audit Committee.
The Board requires the interim CEO of Avexa and the Financial Controller to provide written assurances to the Board in respect of
the accuracy and compliance of Company financial reports and of the integrity of the risk management and internal compliance and
control systems as part of the management sign-off process for Avexas half year and full year financial statements. The interim CEO
of Avexa and the Financial Controller have reported to the Board as the effectiveness of the implementation of the Companys risk
management and internal control systems.
Other Corporate Governance Practices and Policies

Avexa has written policies and procedures in respect of the environment, trading in the Companys securities and compliance
with the Companys continuous disclosure obligations. These policies and procedures are posted on the corporate governance
section of Avexas website.
Under the Companys securities trading policy, an Executive or Director 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.
Before commencing to trade, an Executive must first obtain the approval of the Company Secretary to do so and a Director must
first obtain approval of the Chairman.
Only in exceptional circumstances will approval be forthcoming inside of the following periods which is four weeks after:
1 July until the business day after the release of the full year results;
1 January until the business day after the release of the half-yearly results; and
any additional periods imposed by the Board from time to time.
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 Company does not have a formal code of conduct governing unethical practices or compliance matters. Instead, the Company
has individual policies covering matters such as confidentiality, conflicts of interest, fraud and employee discrimination and harassment.
Avexa employees, contractors and consultants are made aware of these policies through induction processes and the employees
policies and procedures manual.
Furthermore, Directors, management and staff are expected to perform their duties in a professional manner and act with the utmost
integrity, objectivity and ethics in all dealings with each other, the Company, customers, suppliers and the community, striving at all times
to enhance the reputation and performance of the Company with full regard to and compliance with all legal obligations of the Company.
All Directors and employees are required to abide by laws and regulations in order to respect confidentiality and ensure the proper handling
of information.
53
Risk
The Board has continued its proactive approach to risk management. The identification and effective management of risk, including
calculated risk-taking is viewed as an essential part of the Companys approach to creating long term shareholder value.
Implementation of the risk management system and day-to-day management of risk is the responsibility of the interim CEO, with the
assistance of senior management. The interim CEO is responsible for regularly reporting directly to the Board on all matters associated
with risk management, including whether the Companys material business risks are being managed effectively. In fulfilling his duties,
the interim CEO has unrestricted access to company employees, contractors and records and may obtain independent expert advice
on any matter he believes appropriate, with the approval of the Board.
The Board is responsible for overseeing the establishment and implementation of effective risk management and internal control
systems to manage the Companys material business risks and for reviewing and monitoring the Companys application of these
systems. In doing so the Board has taken the view that it is crucial for all Board members to be a part of this process and as such,
has not established a separate risk management committee.
In addition, the Company maintains a number of policies and practices designed to manage specific business risks. These include:
Audit Committee and Audit Committee Charter;
insurance programs;
regular budgeting and financial reporting;
clear limits and authorities for expenditure levels;
procedures/controls to manage environmental and occupational health and safety matters;
procedures for compliance with continuous disclosure obligations under the ASX Listing Rules; and
procedures to assist with establishing and administering corporate governance systems and disclosure requirements.
The Companys risk management system is an ongoing process. It is recognised that the level and extent of the risk management
system will evolve commensurate with the evolution and growth of the Companys activities. Further information on financial risk
management is outlined in Note 23 to the financial statements.
For the purposes of assisting investors to understand better the nature of the risks faced by Avexa Limited, the Board has prepared
the following list of operational risks as part of the Principle 7 disclosures. However the Board notes that this does not necessarily
represent an exhaustive list and that it may be subject to change based on underlying market events:
inherent uncertainties that exist in any development/commercialisation programme for new drugs;
ability to raise sufficient funds (via the debt or equity capital markets) to fund the Companys initiatives and programmes;
the intellectual property of the Company may become subject to adverse claims; and
the market performance of the Companys liquid strategic investments.
As part of its duties, the Companys internal audit function conducts a series of risk-based and routine reviews based on a plan
agreed with management and the Audit Committee with the objective of providing assurance on the adequacy of the Companys
risk framework and the completeness and accuracy of risk reporting by management.
54
In accordance with section 295A of the Corporations Act, the interim CEO and Financial Controller have provided a written statement
to the Board that:
Their view provided on the Companys financial report is founded on a sound system of risk management and internal compliance
and control which implements the financial policies adopted by the Board.
The Companys risk management and internal compliance and control system is operating effectively in all material respects.
The Board agrees with the views of the ASX on this matter and notes that due to its nature, internal control assurance from the interim
CEO and Financial Controller can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the
use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence available is persuasive
rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in control procedures.
External Auditors
KPMG has been Avexas external auditor since the Companys incorporation in April 2004, and meets with the Audit and Risk Committee
at least three times each year. KPMG will be requested to attend the annual general meeting and to be available to answer shareholder
questions about its audit of the Companys financial statements.
The Company has an Auditor Independence Policy.
Shareholder Communications
Pursuant to Principle 6, Avexa acknowledges the need to promote effective communications with shareholders and to encourage
effective participation at general meetings and has adopted the following strategy:
shareholder meetings are structured to provide effective communication to shareholders and allow reasonable opportunity
for informed shareholder participation;
the external auditor attends the annual general meeting (AGM) and is available to respond to shareholder questions;
the Companys Annual Report is available (at the shareholders option);
in addition to the Annual Report, the Company issues a report with the release of the half-year and full-year financial results;
the Company posts on its website all relevant announcements made to the market (including information used for analyst
briefings and press releases) after they have been released to the ASX; and
shareholder questions may be posed to the Company via email communication (please refer to the Companys website)
or by written correspondence or telephone to the Company Secretary.
The Companys website www.avexa.com.au has a dedicated investor relations section for the purpose of publishing all important
company information and relevant announcements made to the market.
The external auditors are required to attend the annual general meeting and are available to answer any shareholder questions
about the conduct of the audit and preparation of the audit report.
55
Executive Remuneration
It is the Companys 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 employment market conditions. To
assist in achieving this objective, the Remuneration Committee links the nature and amount of Executive officers remuneration to the
Companys financial and operational performance. The expected outcomes of the remuneration structure are:
retention and motivation of key Executives;
attraction of high quality management to the Company; and
performance incentives that allow Executives to share in the success of Avexa Limited.
For a full discussion of the Companys remuneration philosophy and framework and the remuneration received by Directors and
Executives in the 12 month period ending 30 June 2013 (including all monetary and non-monetary components) please refer to
the Remuneration Report, which is contained within the Directors Report.
There is no scheme to provide retirement benefits to Non-Executive Directors.
The Board has adopted a policy of prohibiting the entry by the Directors or any Senior Executive into transactions in associated
products which limit the economic risk of participating in unvested entitlements under any equity based remuneration scheme.
The Board is responsible for determining and reviewing compensation arrangements for the Directors themselves, the interim
CEO and Executive team, which it does primarily through the Remuneration and Nomination Committee.
Diversity
Avexa is committed to workplace diversity and has had in place a formal diversity policy since June 2011.
The Board recognises the benefits of diversity where people from different backgrounds can bring fresh ideas and perceptions
which make the way work is done more efficient; and products and services more valued.
Diversity includes, but is not limited to, gender, age, ethnicity, religion and cultural background. Diversity also encompasses the
many ways people differ in terms of their education, life experience, job function, work experience, personality, location, marital
status and carer responsibilities.
Diversity at Avexa is about the commitment to equality and the treating of all individuals with respect.
Avexa understands that the wide array of perspectives resulting from such diversity promotes innovation and business success
which creates value for our customers and shareholders.
56
To the extent practicable, having regard to Avexas size and stage of development, Avexa supports and will address
the recommendations and guidance provided in the ASX Corporate Governance Principles and Recommendations.
Measures designed to promote diversity at Avexa include:
Career Development and Promotion: Avexa facilitates equal employment opportunities based on relative ability, performance
or potential. This is exemplified by the gender diversity in management. All employees are treated fairly and evaluated objectively.
Safe Work Environment: Avexa helps to build a safe work environment by taking action against inappropriate workplace and
business behaviour that does not value diversity including discrimination, harassment, bullying, victimisation and vilification.
Flexibility in the Workplace: Avexa has a culture which takes account of domestic responsibilities of its employees.
The Diversity Policy provides for the Board to develop an appointment process for future Directors that takes diversity of background
into account to fit and enhance the Boards skills matrix.
In order to promote the specific objective of gender diversity, the Diversity Policy requires that the selection process for Board
appointments must involve the following steps:
a short-list identifying potential candidates for the appointment must be compiled and must include at least one female candidate; and
if, at the end of the selection process, a female candidate is not selected, the Board must be satisfied that there are objective
reasons to support its determination.
The Avexa Board is committed to workplace diversity, with a particular focus on supporting the representation of women at the
senior level of Avexas management. While there is currently no gender diversity on the Board, the Board is made up of individuals
from various professions, cultures, and backgrounds. The Board has not determined to adopt a particular mix of skills and diversity
for which the Board is looking to achieve by way of Board composition preferring to have regard to:
the need for independence;
the strategic direction and progress of the Company; and
the geographic spread and diversity of the Companys business.
The Company aims to achieve an appropriate mix of diversity on its Board, in senior management and throughout the organisation.
The Board has determined that no specific measurable objectives will be established until the number of employees and level of
activities of the Company increases to a level sufficient to enable meaningful and achievable objectives to be developed.
The proportion of women in the organisation, Senior Executive positions and the Board during the reporting period is as follows:
Number
Proportion (%)
Women in Organisation
3
43
Women as Senior Executives

2
66
Women on the Board

0
0
57
Shareholder Information
Share Capital
As at 8 October 2013 the share capital of the Company was:
Issued and paid up capital: 847,688,779 ordinary shares.
Number
847,688,779
Number of shares quoted on the Australian Securities Exchange Limited
Avexa Limited ordinary shares have been traded on ASX Limited since 23 September 2004 and trade under the ASX code AVX.
Melbourne is the Home Exchange. The Companys securities are not quoted on any other stock exchange.
Twenty Largest Shareholders as at 8 October 2013

Name
Mr Jonathan Keng Hock Lim
National Nominees Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
UOB Kay Hian Private Limited <Clients A/C>
Mr Paul Andrew George Dickson <Johannes Y Lin A/C>
HSBC Custody Nominees (Australia) Limited A/C 2
JP Morgan Nominees Australia Limited <Cash Income A/C>
Mrs Lauraine Elizabeth Worthington
Link Healthcare Pty Ltd
Mr Jack Budiman
PT Dragon Capital Management
Paul Hammans Pty Ltd <Hammans Family S/F A/C>
Reefgrove Pty Ltd <IJ Miller A/C>
Mr John Mitchell + Ms Pauline Mitchell <Mitchell Super Fund A/C>
Inside Investments Pty Ltd <DAllura Share Holding A/C>
Mr Murray Shaw + Mr Benjamin Shaw +Ms Lee Anne Shaw <Uri Park Pastoral A/C>
Mrs Oanh Thi Phuong Tran
Mr Jerzy Plaga
Mr David Kevin Cooper + Mrs Natalie Cooper <D&N Cooper Family A/C>
Ordinary
Shares Held
144,500,564
40,122,662
33,735,733
31,187,991
29,035,000
13,303,782
12,644,936
11,094,056
10,876,285
10,000,000
8,000,000
7,795,000
7,200,000
7,047,215
6,740,000
6,635,715
6,142,246
5,280,000
5,135,923
5,122,398
401,599,506
Percentage of
Total Shareholding
17.05
4.73
3.98
3.68
3.43
1.57
1.49
1.31
1.28
1.18
0.94
0.92
0.85
0.83
0.80
0.78
0.72
0.62
0.61
0.60
47.38
Substantial Shareholders
The following information is extracted from substantial shareholding notices given to the Company up to 8 October 2013 by
shareholders who hold relevant interests in more than 5 per cent of the Companys voting shares.
Name
Mr Jonathan Keng Hock Lim
58
Ordinary
Shares Held
144,500,564
Percentage of
Total Shareholding
17.05
Distribution of Shareholders as at 8 October 2013

Range
1 1,000
1,001 5,000
5,001 10,000
10,001 100,000
100,001 and over
Total shareholders
Holders
1,234
2,107
1,081
3,050
904
8,376
Ordinary Shares Held

669,021
5,726,388
8,471,338
114,467,664
718,354,368
847,688,779
Percentage of Total Shareholding

0.08
0.68
1.00
13.50
84.75
100.00
The number of shareholders as at 8 October 2013 with less than a marketable parcel of $500 worth of shares, based on the market
price as at the above date, was 6,142.
Shares and Voting Rights

As at 8 October 2013, there were 8,376 holders of ordinary shares of the Company.
The voting rights attached to ordinary shares are set out in Rules 5(f) and 40 of the Companys Constitution. In broad summary, but
without prejudice to the provisions of those Rules, each shareholder present at a general meeting in person or by a duly appointed
representative, proxy or attorney:
(a) on a show of hands, has one vote except if a shareholder has appointed more than one person as a representative, proxy
or attorney, in which case none of those persons is entitled to vote or if a person is entitled to vote in more than one capacity,
that person is entitled to only one vote; and
(b) on a poll, has one vote for each fully paid share held and for each other share held, has a vote in respect of the share equivalent
to the proportion which the amount paid on that share is of the total amounts paid and payable on that share at the time a poll is
taken but no amount paid on a share in advance of calls shall be treated as paid on that share.
As at 8 October 2013, there were options over 190,000 unissued ordinary shares granted to employees under the Employee Share
Option Plan plus a further 4,000,000 issued to Directors. There are no voting rights attached to either the options or the underlying
unissued ordinary shares.
Officers
Interim Chief Executive Officer:
Company Secretary:
Dr Jonathan Coates
Mr Lee Mitchell
Registered Office
Avexa Limited
Suite 8, Level 1
61-63 Camberwell Road
Telephone +61 3 8888 1040
Facsimile +61 3 8888 1049
Share Registry
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford, Victoria 3067 Australia
Telephone 1300 850 505 or +61 3 9415 4000
Facsimile +61 3 9473 2500
Website www.computershare.com
Email [email protected]
Facsimile for receipt of 28 November 2013 Annual General Meeting correspondence only: +61 3 9473 2555.
59
Shareholder Information continued
Securityholder Information
You can gain access to your Securityholding information in a number of ways. The details are managed via the Companys registrar,
Computershare Investor Services and can be accessed as outlined below. Please note your Securityholder Reference Number (SRN)
or Holder Identification Number (HIN) is required for access.
Investor Phone Access

Provides telephone access 24 hours a day seven days a week.
Step 1: Call 1300 850 505
Step 2: Please say Company name i.e. Avexa.
Step 3: Follow the prompts to gain secure, immediate access to your holding details, registration details or payment information.
Internet Account Access

Securityholders can access their details via the internet. Computershare provides two levels of access: Single Holding Access
or Portfolio Access, both with updating capability.
View Securityholding (single holding access)

Step 1: Go to www.computershare.com.au/investors
Step 2: Select Holding Enquiry, Address Change or Statement Viewing and enter AVX or Avexa Limited.
Step 3: Enter Securityholder Reference Number (SRN) or Holder Identification Number (HIN), postcode and security code.
Step 4: Confirm and/or amend details as required.
Investor Centre (online portfolio updating capability)

Step 1: Go to www.computershare.com.au/investors
Step 2: Enter User ID and PIN or access the Register Here button.
Step 3: Follow the prompts to register. For security purposes, Computershare will generate a PIN and mail it to your registered address.
Step 4: View, evaluate and manage your portfolio.
Changing Shareholder Details

Changes to your name or address must be advised in writing to Computershare Investor Services Pty Limited. If you are sponsored
by a broker, your notice in writing must be sent to your sponsoring broker.
Avexa Publications Mailing List

The Annual Report is a major source of information about the Company. Shareholders who do not wish to receive this publication can
assist the Company to reduce costs by advising Computershare Investor Services Pty Limited in writing. Shareholders will continue to
receive all other shareholder information, including the Notice of Annual General Meeting and Proxy Form. The Annual Report, other
releases and general Company information are also available on the Companys website at www.avexa.com.au
Annual General Meeting

10am on Thursday 28 November 2013
KPMG House
Theatrette Ground Floor
147 Collins Street
Melbourne Victoria 3000 Australia
Investor Relations
If you have any questions or issues regarding your shareholding or require hard copies of any information posted on Avexas website,
please contact the Company Secretary, Mr Lee Mitchell on +61 3 8888 1040.
60
Contents
Chairmans Report 1
Directors Report 2
Remuneration Report 9
Lead Auditors Independence Declaration 16
Statement of Comprehensive Income 17
Statement of Changes in Equity 18
Statement of Financial Position 19
Statement of Cash Flows 20
Notes to the Financial Statements 21
Directors Declaration 43
Independent Auditors Report 44
Corporate Governance Statement 46
Shareholder Information 58
Avexa is a Melbourne based biotechnology company with a focus on discovery, development

and commercialisation of small molecules for the treatment of infectious diseases. Avexas key
projects include apricitabine (ATC) for the treatment of drug resistant HIV, an HIV Integrase
program and an antibiotic program for antibiotic resistant bacterial infections.

Designed and produced by MDM Design

Suite 8, Level 1, 61-63 Camberwell Road
T +61 3 8888 1040 F +61 3 8888 1049
Annual Report
2013
www.avexa.com.au
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Avexa Limited ABN 53 108 150 750

Suite 8, Level 1, 61-63 Camberwell Road

Avexa is a Melbourne based biotechnology company with a focus on discovery, development

Avexa Limited ABN 53 108 150 750

The second objective, of finding ways of funding ATC trials,

Avexa Limited Annual Report 2013

Operating and Financial Review

Partnership with Link for ATC

Avexa Limited Annual Report 2013

New Opportunities for Early Stage Projects

Avexa Limited Annual Report 2013

Directors Report continued

North Pratt Investment

Preservation of Cash New Premises

Avexa Limited Annual Report 2013

Capital and Corporate Structure

Unissued Shares Under Option

Avexa Limited Annual Report 2013

Directors Report continued

Experience, Special Responsibilities and Other Directorships

Mr Kirkwood was appointed as Non-Executive Chairman on

Mr Hewett joined the Board on 6 July 2010 as a Non-Executive

Avexa Limited Annual Report 2013

Number of Ordinary Shares

Number of Options to Acquire Ordinary Shares

Directors Meetings and Committee Membership

Audit Committee Meetings

Remuneration and Nomination

Significant Changes in the State of Affairs

Events Subsequent to Reporting Date

Avexa Limited Annual Report 2013

Directors Report continued

Indemnification and Insurance of Officers

Avexa Limited Annual Report 2013

Performance-linked Compensation and Short Term Performance Incentives

Avexa Limited Annual Report 2013

Remuneration Report continued

Avexa Limited Annual Report 2013

Long Term Incentive

Directors and Executive Officers Compensation Tables

CEO and CSO Performance Incentive Compensation Tables

Avexa Limited Annual Report 2013

Remuneration Report continued

23,262 24,500 (8.5%)*

Avexa Limited Annual Report 2013

(i) Appointed on 9 August 2010. Appointed Chairman on 18 April 2011.

Avexa Limited Annual Report 2013

Remuneration Report continued

Directors, Executives and Title

2,000,000 19 December 2011

Fair Value of Options

Exercise Price of Shares

Shares Issued on Exercise of Options

Avexa Limited Annual Report 2013

Alteration to Option Terms

Consequences of Performance on Shareholder Wealth

Avexa Limited Annual Report 2013

Lead Auditors Independence Declaration

To the Directors of Avexa Limited