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ANNUAL REPORT 2014

People do not decide to

become extraordinary.

They decide to accomplish

extraordinary things.

Sir Edmund Hillary

“”

PacificEdgeAnnualReport2014 1

Annual Report for the Year Ended 31 March 2014

Contents

Key Dates

OurBusiness 2

2014HighlightsandKeyEvents 6

Chairman’sReport 8

CEO’sReport 12

BoardofDirectors 21

SeniorExecutiveTeam 22

FinancialStatements 23

NotestotheFinancialStatements 30

AdditionalStockExchangeInformation 58

IndependentAuditors’Report 61

RiskAnalysis 63

ScientificAdvisoryBoard 64

ClinicalAdvisoryBoard 65

AnnualReportofDirectors 66

Directors’ResponsibilityStatement 70

Glossary 74

CompanyDirectory 77

EndofFinancialYear 31March

PreliminaryResultsAnnouncement By31May

IssueofAnnualReport By30June

2014AnnualMeeting 21August2014atDunedinArtGallery

EndofHalfYear 30September

InterimResultsAnnouncement By30November

InterimReport By31December

TheBoardofDirectorsofPacificEdgeLimitedispleasedtopresenttheAnnualReportfortheYearEnded

31March2014.ThisAnnualReportprovidesareviewofouractivitiesduringthe2014financialyearand

managementandBoardcommentaryonourfocusfor2015andbeyond.

Wearepleasedtohavethisopportunitytoshareourprogressandfutureplanswithyou.

TheAnnualReportcanalsobeviewedonourwebsitewww.pacificedgedx.com

2 PacificEdgeAnnualReport2014

Our Business

PacificEdgeisacancerdiagnosticscompany.Wedevelopandcommercialisetestsfortheearlydetection

andmanagementofcancer.

Ourproducts,builtfromourproprietarygeneticdatabases,areusedtoidentifydiagnosticbiomarkersfor

cancer.Wespecialiseindiscovering,buildingandcommercialisingnovelcancertests.

Ourfirstproduct,Cxbladder,isanovelbladdercancerdetectiontestwhichhasrecentlybeensuccessfully

launchedintargetmarkets.Ourfocusisfirmlyfixedongrowingourrevenuebase,particularlyintheworld’s

largestbiomedicalmarket,theUS.TheCompany’sshorttomediumtermfocuswillremainonbladdercan-

cerandwillseetheCompanylaunchafurtherproducttohelpcliniciansandpatientsalike,inthedetection

andmanagementofbladdercancer.

THE BUILDING BLOCKS OF OUR BUSINESS

Our innovative capability is underwritten by our scientific and clinical expertise, both of which help us

developandlaunchinnovativeproductstoimprovepatientcare.Ourcommercialcapabilitieshavedriven

ourCompany’sevolutionfromaresearchanddevelopmentbusinesstoanorganisationthatisnowmak-

ingcommercialinroadsinkeymarketsaroundtheworld.WenowhaveasolidfootprintintheUSmarket,

withacertifiedlaboratory,aUSsalesandmarketingteamandagrowingreputationandawarenessofour

Cxbladderproduct.

Globally,wehavecommercialoperationsinNewZealand,AustraliaandtheUnitedStates.

CXBLADDER

Cxbladderofferspatientsanon-invasive,accuratetestforthedetectionofbladdercancer.

Cxbladdermeasures the expression of five genes that create a uniquemolecular signature for bladder

cancer,alertingphysiciansandclinicianstopossibletumours.Moreaccuratethanmanyotherurine-based

cancerdetectiontests,Cxbladdercangivepatientsanddoctorsaddedconfidenceintheirdiagnoses.

Cxbladderisbeingutilisedbyclinicianstoprovideanumberofclinicalandpatientadvantages.Thetestcan

beusedonpatientspresentingwithbloodinurinetoruleinorruleoutthepresenceofbladdercancer;

savingmanypatientstheinconvenience,invasivenessandcostofafullurologicalworkup.

Thetestrequiresasmallsampleofthepatient’surinetobesenttooneofPacificEdge’sownorfranchised

partner laboratories.The laboratoryanalyses theurine,measures thepresenceoffivegenesanddeter-

mines,withahighdegreeofaccuracy,whetherthepatientdoesordoesnothavebladdercancer.

Innovative Thinking

Proprietary Genetic

Databases

Scientific And Clinical

Expertise

Commercial Capabilities

Global Market Focus


TheperformanceoftheCxbladdertestwasevaluatedinaformalclinicalstudy1thatwaspublishedinthe

JournalofUrologyin2012.ThestudyshowedthatCxbladderoutperformedalloftheotherclinicaltechnolo-

giesthatwereevaluatedalongsideit.Inthisstudy,Cxbladdercorrectlyidentified100%oflatestagetumours

and97%ofhigh-gradetumours.Thesefindingswerevalidatedbyafurthertwo-centrestudyin2013.

ThistestiscommerciallyavailablefromPacificEdgeanditscommercialpartnersinseveralcountriesaround

theworld,includingAustralia,NewZealandandtheUSA.

BLADDER CANCER

Bladdercancerhastheninthhighestincidenceintheworld.Ithasaveryhighrecurrencerateandoften

progressesquickly.Consequently,bladdercancerpatientsliveinaworldofongoingmonitoringandclinical

intervention,muchofwhichisinvasiveandexpensive.

However,bladdercancersarehighlytreatable,especiallyifdetectedintheearlystages.Thismakestimely

andregularsurveillanceofthiscancerakeyelementoftheclinicalprocessandoftheindividual’sannual

healthcareplan.

Oneof theearly symptomsofbladder cancer is thepresenceofblood in theurine, calledhaematuria.

PeoplewithhaematuriausuallypresenttotheGPbeforebeingreferredontoaurologist.

UNITED STATES SPAIN AUSTRALIA & NEW ZEALAND

1 MILLION

2 MILLION

200,000

300,000

50,00085,000

Number of people presenting with haematuria (blood in the urine) every year

Number of potential tests every year2

1O’Sullivanetal:Amultigeneurinetestforthedetectionandstratificationofbladdercancerinpatientspresentingwithhematuria, J Urol2012;188:741–747.2Undercurrentclinicalguidelines,patientsdiagnosedwithbladdercancerwillrequirerepeattestingoveraperiodofyears.


Our Business (continued)

OUR COMMERCIAL OPERATIONS FOR CXBLADDER

BUILDING THE GLOBAL CXBLADDER BUSINESS

IdentifyandprotectIntellectual

Property

IPdefiningtherelationshipbetweenthegenesandthedisease,thatis,the

genesignature.

Protectthegeneticsignature

containedinthepatient’surine

sample

Innovativeurinesamplingsystem(USS)thatenablesapatienttoeasily

provideaurinesampleandtoprotectthatsamplefromthepatient

collectiontothelaboratorythatmeetsstringentregulatoryrequirementsin

servedmarkets.

Meetregulatory

requirementsinglobalmarkets

Refinethetechnologytoproduceahighlyrepeatableandreproducible

clinicalproduct.

Provideaconsistentclinician

experienceeverytime

Developthefranchisemodelwhereeachlaboratoryusesthesame

processes,equipmentandconsumablestogivetheclinicianahighquality

productandservice.

Establishin-marketcapability

Understandtheregulatoryandreimbursementneeds.

Ensurelogisticsareinplaceforsamplesystemstotraveltoandfromthe

clinician.

Ensuretheprocessinglaboratoryisinplaceandhasregulatoryapproval.

Planandbuildthesalesandmarketingteam.

United States

• Population:327million

• Patientswithhaematuria:

approx.1millionperyear

• Approx.Urologists:10,500

• PotentialCxbladdertestmarket:

2milliontestsperyear

• Commerciallyavailable

sinceJuly2013

Spain



approx.200,000peryear

• Approx.Urologists:1,350


300,000testsperyear

• Commercialprocessin

development

NZ and Australia



approx.50,000peryear

• Approx.Urologists:300


85,000testsperyear

• Commerciallyavailable

since2012


Our VisionTo benefit global communities through delivery of innovative solutions for the early detection and better management of cancer.

OUR MISSION

To improve patient outcomes, provide superior

returns toour shareholdersandbenefits toother

stakeholders by developing and commercialising

innovative solutions for the early detection and

managementofcancer.

OUR FOCUS

Developmentandcommercialisationofstateofthe

artcancerdiagnosticsandprognosticsfortheearly

detectionandbettermanagementofcancer.

OUR PEOPLE

Ourstrengthisourpeople.Webelievepassionate,

focused,dedicatedandincentivisedpeoplemakea

significantdifference.

OUR MOTIVATION

To meet and exceed medical, clinical and

stakeholderexpectations.

OUR PRODUCTS

Todeliverproductsandservicewithperformance

that make a clinically meaningful difference for

cancermanagementandprovidebetteroutcomes

forpatients.

MILESTONES ON OUR JOURNEY TO SUCCESS

2001

Companyformedtobuildandcommercialisenovel

cancerdiagnostics

2002

CompanylistedonNZX

2005

Completedthegeneexpressiondatabaseinfive

cancers

2008

Publishedtheinitialbladdercancerdetectionresearch

2009

Producedapre-commercialprototypeofCxbladder

2011

CompletedtheclinicalevaluationofCxbladder

CompletedthecommerciallaboratoryinDunedinand

openedbytheNZMinisterofHealth

2012

PublishedCxbladderclinicalpaperinJournalof

Urology

CompletedthebuildandfitoutoftheUSlaboratory

inHershey,Pennsylvania

2013

ReceivedCLIAregulatoryapprovalforUSlaboratory

ReceivedCLIAregulatoryapprovalforDunedin

laboratory

FirstdedicatedsalesexecutivestartedintheUS

FirstsignificantsalesrevenuegeneratedintheUS


Commercial launch of Cxbladder in the United States

Recruitmentand trainingof salesandmarketing team fromJuly2013with thefirst commercialproduct

processedinOctober2013.

Continuation of successful User Programmes with selected urologists in New Zealand, Australia and the United States

TheUserProgrammesprovidetargetedcliniciansandurologyspecialistsinLargeUrologyGroups(LUGs)

andinIntegratedHealthCareorganisations(IHCs)withtheopportunitytoevaluateCxbladderintheirown

clinicalsettingandexperiencethesignificantbenefitsthatCxbladderofferstoclinicians,patientsandtheir

insurers.NewZealand successfully completed two largeUserProgrammes thatprovided clinicalperfor-

mancevalidationforCxbladder.IntheUS,anumberofnewUserProgrammeswereinitiatedwithprospec-

tivelargecustomers.

Signing of agreements with three National Provider Networks in the USA – FedMed, ACPN and Stratos. Since year-end, a fourth agreement has been signed with MultiPlan

TheseNationalProviderNetworks(NPNs)provideacontractedpricenetworkthatlinkspayerstothehealth-

careproviders.TheNPNsfacilitatethecommercialreimbursementinteractionsbetweenhealthcarepayers

andhealthcareproviders.

Significant gains made in the adoption of Cxbladder by publicly and privately funded health organisations and agencies in New Zealand

Agreement signedwith theGovernment’sHealth InnovationHub (HIH) tomakeCxbladderavailable to

patients in Waitemata, Auckland, Counties Manukau and Canterbury DHBs. Cxbladder in commercial

evaluation atMidCentralHealthDHBand commercially adoptedbyUrotec.Urotecprovides urological

servicestoBayofPlentyandLakesDHBs.

Pacific Edge’s Hershey and Dunedin laboratories receive CLIA certification

Pacific Edge has achieved essential US laboratory regulatory approval from CLIA (Clinical Laboratory

Improvement Amendments) in two laboratories, Hershey, Pennsylvania in the US and Dunedin, New

Zealand,oneofthefewCLIAregulatedlaboratoriesoutsidetheUnitedStates.

Hershey Laboratory gains CAP accreditation

ThePacificEdge(PED)laboratory intheUShasattainedthepinnacleof laboratorycertificationwiththe

recentapprovalgrantedbyCAP(CollegeofAmericanPathologists)—theleadingorganisationofboard-

certifiedpathologiststhatservespatients,pathologistsandthepublicbyfosteringandadvocatingexcellence

inthepracticeofpathologyandlaboratorymedicineworldwide.

Recipient of several Awards and Grants

NewZealandInnovationCouncilSupremeAwardwinner;NZBIOTopBiotechCompanyAward;Callaghan

InnovationGrowthGrant.

FY14 Highlights and Key Events


Completion and publication of international clinical study

AtwocentreuserstudyinNewZealandprovideda

formalvalidationoftheperformanceachievedby

Cxbladder in the 2011 international multi-centre

clinicalstudythatwaspublishedintheprestigious

international Journal of Urology in September

2012. These studies showed that Cxbladder has

excellent accuracy in detecting urothelial carci-

nomas,ofwhichbladdercancer isone,andper-

formed significantly better than any of the other

currentlyusedbladdercancerdetectiontechnolo-

gies that were benchmarked in these studies. At

anoverall82%sensitivityforaspecificityof85%,

Cxbladder saw100%ofTis,T1,T2andT3 stage

tumoursand97%ofallhighgradetumours.3

Validation studies reiterate Cxbladder technology performance

Two User Programmes at large District Health

Board (DHB) clinics in New Zealand completed

their evaluation and provided results that con-

firmed Cxbladder’s performance in an operating

clinical setting. These two sites provided blinded

samplestoPacificEdge’slaboratorywhichshowed

anoverallsensitivityof90%ataspecificityof75%

compared to the clinical study3of 82%and85%

respectively. At this performance Cxbladder saw

100% of T1, T2 and Tis stage tumours. These

recent results effectively replicate the accuracy

obtained in the clinical study published in the

Journal of Urology in September 20123. The

Companyislookingtopublishtheseresultsin2014

inanappropriateclinicalorscientificjournalafter

inclusionofotherUserProgrammes.

TRADING REVENUE

$523,000, up 187%

TOTAL REVENUE

$838,000, up 62.7%

TOTAL COMPREHENSIVE LOSS

$9.3 million, an increase of 35%

GLOBAL EMPLOYEES

33 employees, an increase of 50%

US SALES TEAM

Initial recruitment of four specialist sales people in four high volume sales regions

PIPELINE

Three new products in research and development

3O’Sullivanetal:Amultigeneurinetestforthedetectionandstratificationofbladdercancerinpatientspresentingwith hematuria,J Urol2012;188:741–747.


Chairman’s Report2014 was a milestone year for our Company

as we celebrated the commercial launch of our

first product, Cxbladder, and the start of revenue

generationintheworld’sbiggestbiomedicalmar-

ket,theUnitedStates.

For the past thirteen years, we have beenwork-

ingtowardsthismilestone.Wehaveinvestedtime,

moneyandresourcesintodevelopingourgenetic

databases, creating and testing prototypes, pro-

ducinga commercially viableproduct andestab-

lishingafootprintinourtargetedglobalmarkets.

Allthishardworkandeffortculminatedinadefin-

ingmomentinOctober2013whenweprocessed

our first commercial test sample through our US

laboratory.Whilenumbersofcommercialtestsare

stillsmall,theyaregrowingandweseethisasthe

startofaneweraforourCompany.

Atalltimesoverthelast13years,wehavefocused

ondeliveringonourpromises toour sharehold-

ers,andIampleasedthat2014wasnodifferent.

Further details on our operational achievements

forFY14canbefoundinthereportfromourCEO,

DavidDarling,onpages12to20.

Akeybuildingblockofourbusiness isourscien-

tificandclinicalknow-how.PacificEdgehasboth

aScientificAdvisoryBoardandaClinicalAdvisory

Board.MembersofbothBoardsareinternational

experts in their field and provide advice toman-

agement and the Pacific Edge Board.My thanks

gototheseindividualsforsharingtheirknowledge

andexpertisewithusagaininFY14aswecontinue

toinnovateanddevelopnewproducts.

The investment into the growth of the business,

particularly thecommercialrollout intheUS,was

theprimarydriverbehind theFY14reported loss

of$9.38million(FY13:$6.95million),whichwas

in linewithbudgetedexpectations.TheCompany

reported its first substantial trading revenue in


FY14andwhilststillonlyasmallnumber,thisisa

strongliftdespitetheshortperiodofsellinginthe

Americanmarket.

Themajorityofthenetlossisthesignificantinvest-

ment the Company has made in the growth of

the business; set up and rollout of our presence

in the US; investment in clinical trials and User

Programmes with new customers; further prod-

uctdevelopmentandmanagementof intellectual

property.

FUNDING FOR FUTURE GROWTH

InOctober2013,wesuccessfullycompleteda$20

millioncapitalraising.Mythanksgotothoseshare-

holderswhoparticipatedandwhocontinuetosup-

portus.

Thecapitalraised ishelpingtodriveanaccelera-

tion of the Pacific Edge salesforce rollout in the

US in 2014 and beyond, and will aid continued

research and development of new products for

urologistcustomers.

Over the years, we have received a number of

technologydevelopmentgrantstohelpusdevelop

our products. These have been a very important

funding line for us. In February 2014, we were

delightedtoreceiveaCallaghanInnovationGrowth

Grant thatwillprovideup to$4.5million, spread

overthreeyears,withanadditionaltwoyearsavail-

ableonreview.Thisfundingwillprovideadditional

resources to accelerate the development of our

non-invasive,cancerdetectiontests.

Asat31March2014,PacificEdgeheldcashand

equivalents of $20.4million, up from $10.7mil-

lion the year earlier. The Company is debt free.

The Board is comfortable that sufficient funds

are inplace to support thenext twoyearsof the

Company’splannedgrowthstrategy.

GOVERNANCE

PacificEdgeislistedontheNZXMainBoard.The

Board is responsible for the corporate govern-

anceoftheCompany.TheCompany’sgovernance

policies are consistent with the NZX Corporate

GovernanceBestPracticeCodeandmeetthenine

PrinciplesforCorporateGovernanceissuedbythe

Securities Commission.More detail on corporate

governancecanbereadonpages70to73.

Of our shareholders, 20 hold 52%of the shares

intheCompany,withthebalanceoftheCompany

heldby5,348shareholders.

Our capital raising in 2013 introduced a number

ofnewshareholderstoourshareregistryandwe

nowhaveover5,300shareholders.DuringFY14,

theCompanysawconsiderablegrowthintheshare

price, culminating in the Company entering the

NZX50.Thiswasagreatachievement.Wealsosaw

asignificantshiftasglobalmarketsrevaluedtech-

nologysharesorshareswithprojectedfutureearn-

ings,suchasPacificEdge.

We are aware of the need to inform sharehold-

ers about our business, and during the year, we

focusedonprovidingasmuchinformationaspos-

sibleontheregulatory,reimbursementandadop-

tiondriversfornovel,medicaldevicesinbothNew

ZealandandtheUS.Thiswillbeasignificantand

on-goingfocusfortheCompany.Weexpecttosee

a number of research papers produced by local

andinternationalanalyststofillsomeofthisknowl-

edgegapduringthecomingyear.

Weendeavourtokeepourshareholdersupdated

on our progress, key events and our business

activities throughannouncements to theNZXand

our annual and interim reports. All announce-

mentsandreportscanalsobefoundonourweb-

site. Shareholders are also welcome to attend

the Annual Meeting of Shareholders. The 2014


Chairman’s Report (continued)

AnnualMeetingwillbeheldon21August2014in

Dunedin.

LOOKING FORWARD

Ourfocusforthepastsixyearshasbeenondevel-

oping, testingand launchingourfirstcommercial

Cxbladderproducttothemarket.Wehaveestab-

lishedourbrandandhavegrowingawarenessof

ourproductamongstourtargeturologistcustom-

ers,withwhomwehavebeenworkingsodiligently

overthelastfewyears.

We have identified a number of other potential

uses of the Cxbladder technology, at different

stages of the detection and treatment cycle for

bladdercancer.Theseprovideuswithnewproduct

opportunities.Webelieve that focusingondevel-

opingthesenewproductsforbladdercanceristhe

fastestandsurestwayforourCompanytogrowits

productbaseandtotalrevenue.

Therefore,whilewewillcontinuetomaintainour

portfolio of intellectual property in the areas of

gastric, colorectal and endometrial cancers and

melanoma, our focus will be on bladder cancer

productsfortheshorttomediumterm.Ourwider

portfoliowillprovideuswithfurtheroptionsinthe

future.

Whilst the New Zealand and Australian markets

are important tous fromaproductdevelopment

andcommercialisationprocessperspective,itisthe

scaleandaccessibilityoftheAmericanmarketthat

isparamounttothesuccessoftheCompany.

Evaluating haematuria (blood in the urine) in

American patients for bladder cancer is a sig-

nificantmarketofscaleandcouldbeworthupto

$100millioningrossrevenueforourCompanyin

fiveyears’time.

Our investment intoourbusinesswillcontinue to

grow over the 2015 financial year, focusing on

customercapture,adoptionofCxbladder,building

relationshipsandnegotiatingagreementswithkey

organisations that facilitate reimbursement, and

theset-upandroll-outof the franchisedbusiness

model in the targeted markets of New Zealand,

Australia,USandSpain. Inaddition,wewill con-

tinuetofurtherthedevelopmentoftheCompany’s

bladdercancerproductportfolio.

Ourgoalofattainingabusinesswithagrossrev-

enueof $100million after five full yearsof trad-

ingremainsourtargetandcontinuestobereadily

attainable.

Chris Swann

Chairman


CEO’s ReportThe2014financialyearwasanexcitingoneforour

Companyandmarkedanewstageofourjourney.

Itwas the yearwemade the change frombeing

simply a research and development organisation

and became a significant commercial enterprise.

The launchofCxbladder into theUSmarket and

the initialrevenuegeneratedhasbeenafantastic

achievementforallinvolved.

We are only at the beginning of this new com-

mercial phase and still have a lot ofwork ahead

ofus.Muchofthisisacontinuationoftheground-

workwe started inFY14, fromsalesandmarket-

ing efforts in theUS, New Zealand andAustralia

to building commercial scale at our laboratories

andcontinuedresearchanddevelopmentofnew

products.

Wearepleased tohaveonceagainachieved the

goals we set for ourselves last year. These were

important initiatives thathavebuiltastrongstart-

ingplatformforourcommercialjourney.Manyof

theseinitiativesareongoingandwillagainbeour

focusinFY15.

Thistimelastyear,wehadjustreceivedregulatory

approval for our newpurpose-built laboratory in

Hershey,Pennsylvania, a very significant achieve-

ment in its own right and one which required a

dedicatedeffortfromboththeNewZealand-based

teamandthenewteamintheUnitedStates.This

openedthewayforustostartplanningforacom-

mercial rollout in theUS.Ensuring thiswasdone

effectivelyandefficientlywastheprimaryfocusfor

managementinFY14.

WenowhaveanexcellentbaseintheUSmarket,

through our 100% owned US subsidiary PEDUSA.

Our US operations are based out of our pur-

pose built laboratory in Pennsylvania, where all

CxbladdertestsintheUSareprocessed.

Weareproceedingwellwith therecruitmentand

training of a specialist sales andmarketing team


in the US and we are receiving strong product

endorsementandseeingencouragingresultsfrom

our User Programmes, where targeted clinicians

areprovidedwiththeopportunitytotrialanduse

ourtestsintheirpractices.

We have also made excellent progress in nego-

tiating commercial relationships with National

ProviderNetworks (NPN) in theUS. TheseNPNs

provide patients with access to healthcare ser-

vices and technology by contracting with pro-

viders and payers on a national basis. The

agreements we have signed give millions of

Americans access to Cxbladder and its positive

benefits as a quick, cost effective, non-invasive

andhighlyaccuratecancerdetectiontest.Welook

forwardtoseeingthebenefitsofthisworkreflected

inoursalesinthiscomingyear.

Overthe2014financialyear,wehaveseenasteady

increaseinthegrowthoftheadoptionofCxbladder,

notjustintheUS,butalsoinourmarketsinNew

Zealand and Australia. The focus in all of these

markets is on providing a consistent and highly

repeatableclinicalexperienceforboththepatient

andtheclinicianswhenusingCxbladder,delivered

fromoneofPacificEdge’sspecialistlaboratoriesin

NewZealand,AustraliaandnowtheUnitedStates.

Wehaveidentifiedhighvolumesegmentsinthese

markets and have signed a number of valuable

contractsandagreementsoverthepastyear.These

provideuswithaccesstotheverylargenumberof

patientswithhaematuria in theUS,NewZealand

andAustralia.

ThefastestwayforourCompanytogrowrevenue

is to deliver another test to existing urology cus-

tomersdownthesamechanneltomarket.During

theyear,wehavemadegoodprogressonbringing

ournextnewproducttothemarket.Thecollection

oftheclinicalperformancedatahasbegun,anda

NewZealandlaunchisexpectedlateinthesecond

halfof2014.

TIMELINE OF ACTIVITY FOR DEVELOPMENT OF US SALESNationalProviderNetworksprovidemillionsofpatientswithaccesstoCxbladder.However,itcantakeanumberofmonthsfromthesigningofagreementsforcommercialteststoflowthroughandforreimbursementtobereceived.

AGREEMENTS SIGNED

TEST ANALYSIS

REVENUE

FedMed

Oct 13 Dec 13 Jan 14 Apr 14

ACPN

National Provider NetworksStratos Multiplan

Apr 14

May 14

First FedMed

network sale

Reimbursement from private insurance

from FedMed network sale

Elapsed Time: 7 Months


BUILDING OUR PRESENCE IN THE US MARKET

The US is the world’s largest biomedical market

andweoperateinthismarketthroughourwholly

owned subsidiary, Pacific Edge Diagnostics USA

(PEDUSA).

In March 2013, we received regulatory approval

and CLIA (Clinical Laboratory Improvement

Amendments) certification for our purpose built

laboratory in Pennsylvania. This is the regulatory

agencythatadministersthestandardswhichapply

to all clinical laboratory testing that provides or

usesaLaboratoryDevelopedTest(LDT)toprovide

aservicetocliniciansmanagingortreatinghumans

intheUnitedStates.

This regulatory achievement allowed us to pro-

gresswiththecommercialrolloutofCxbladder in

theUSmarketandenabledustostartourprocess

ofrecruitingthefirstofourdedicatedsalesexecu-

tives. We launched in July 2013, recruiting and

training sales and marketing personnel over the

followingsixmonths.

InOctober2013,weprocessedthefirstcommercial

test through the laboratory.This facilityhasbeen

builtbasedonourestimatesofthefuturescaleof

theUSmarketandhastheplannedcapacitytopro-

cessupto260,000testsperannum.

Ittakessignificanttimetobuildawarenessandthen

developcompetency in thisextensivemarketand

tobegintherelationshipswithourcustomersata

commercial level.We are confident themomen-

tumoftheextensivecommercialisationprogramto

familiarise theurology clinicians in theUShealth

system with the significant benefits of Cxbladder

willacceleratesalesinFY15.

As demand for our tests grows, we will look to

expand our testing capacity in the US to meet

demand.

WearestillintheveryembryonicstagesofourUS

rolloutandwelookforwardtoexpandingourpres-

enceanddrivingrevenue.

NationalProviderNetworks(NPNs)areakeycom-

ponentofthecommercialhealthcaremarketinthe

UnitedStates.Wehavesignedanumberofimpor-

tantcommercialagreementswith theseorganisa-

tionssinceOctober2013.

ThehealthsystemintheUnitedStatesissubstan-

tiallydifferent toNewZealand,withpaymentpri-

marilythroughinsurance,eitherprivateorpublic.

National(andregional)providernetworksarekey

components of theUShealth system. They com-

prisenetworksofclinicians,hospitals,laboratories

andotherspecialistswhocontractwiththeprovider

toofferservicestothepatientsoftheirclients,who

are private insurers, large employers and third

partyadministrators(TPAs).

Companies suchasPacificEdgenegotiateagree-

ments with these large organisations to provide

their products and services at agreed prices to

patientswhoareinsuredbyclientsoftheNPN.The

approvedcoverageofCxbladderprovidedbythe

agreementsencouragesitsusebycliniciansasan

accepteddiagnostictestfordeterminingthepres-

ence,ornot,ofbladdercancers.

Since October 2013, we have signed four

agreements–FedMed,America’sChoiceProvider

Network (ACPN), Stratos and MultiPlan. These

agreements givemillions of Americans access to

Cxbladder.

We are also advancing relationships with large

commercial payers and funding agencies includ-

ing the Government funded Centre forMedicare

and Medicaid Services (CMS) and Veterans

Administration(VA).

CEO’s Report(continued)


Awareness of Clinical Efficacy

• Publicationofpeerreviewed

sciencepapers

• Peertopeerinteraction

• KeyOpinionLeader(KOL)topeer

recommendation

• Businesstobusinessvalidation

• PresentationatUrologyconventions

Early Stage Trialling

• UserProgrammeforcustomfitintheir

clinicalsetting

• Evaluationondifferentpatient

populations

Initial Commercial Adoption

• Urologistdefinedpatientpopulation

Expansion of Adoption

• UrologistusesCxbladderbroadlyin

multiplepatientapplications

THE CLINICIAN’S ADOPTION PROCESS

OurUserProgrammesareprovinghighlyeffective

withcliniciansinencouragingevaluationandearly

useofourproduct.Ourgoal is toprogress these

participantsintocommercialcustomersoncetheir

UserProgrammesconclude.

AkeypartofouractivitypriortoandsincetheUS

launchhasbeentobuildawarenessofCxbladder

andencourageurologiststoevaluateanduseitfor

theirpatients,throughourUserProgrammes.

We have found that once urologists have the

opportunity to trial Cxbladderwith their patients,

they can see its positive benefits as a quick, cost

effective,non-invasiveandhighlyaccuratecancer

detectiontest.Giventheopportunityforthistestto

enhanceclinicalutilityandpossiblychangeclinical

practice,itcantakesometimeforclinicianstofind

thebestfitforthetestintheirclinicalpractice.

There are approximately 10,500 urologists in the

United States. We target our User Programmes

towards high volume clinicians or clinical groups

and tailor the Programme according to the size

and potential value proposition that each user

groupidentifiesasbeingimportanttothemintheir

practice.Insomecases,theseclinicalgroupscanbe

verylarge,withupto100urologistsseeingthou-

sandsofpatients every year. It is notuncommon

for our US customers to have clinical businesses

withinexcessof40practicingurologists.Whenput

inperspective,thiswouldbeasinglepracticewith

moreurologists that theentirenumberpracticing

inNewZealand.

WehavealsobeenrunningtheseUserProgrammes

inNewZealandandAustralia,wheretheyarecru-

cial for early feedback and generating the new

practices and data that underlie the validation of

theCompany’snewproducts.

OurfocusforFY15istocontinuetotranslatethese

formal evaluation programmes into paying com-

mercialrelationships.


Patients

Patientwithhaematuriaseeks

healthcaretreatmentand

services.

Patient Care Reimbursement process

National Provider Networks

Mostcliniciansandhealthcare

providersbelongtoone

ormoreNationalProvider

Networks(NPN).

TheNPNsnegotiateagreed

pricesforservicesandprod-

uctsforusebytheclients.

NPNsenablepaymentforan

approvedproductorservice

atanagreedpriceandina

timelymanner.

Payers

Largeprivateinsurance

companies.

IHC–Integratedhealthcare

providers.

IHS–IntegratedHealthcare

System.

CentreforMedicareand

MedicaidServices(CMS).

VeteransAdministration(VA).

Pacific Edge

Sendsinvoicetopatient’s

insurancecompany/payerfor

Cxbladderservices.

Payers

Checkspatient’spolicycover-

age,checksthatprovisionof

servicesiscoveredbyNPN.If

yes,thaninsurancecompany

expeditespaymentatagreed

NPNcontractprice.

Reimbursement and Billing

Agency

Processesclaimsand

facilitatespaymentbetween

payersandPEDUSA.

General Physicians

Primarycarephysiciansassess

patientandrecommendfor

fullevaluationby

urologistspecialtyservices.

Urologists

Urologistsinprivatepractice,

hospitalorspecialistcancer

clinicundertakefullevalua-

tionofpatientandrecom-

menddiagnosticstests.

Pacific Edge Laboratories

Cxbladdertestingand

analysis.Currentcapacityof

260,000testsperyearinthe

USand35,000peryearin

NewZealand.Testresultssent

tothephysicianforpatient

diagnosisandtreatment.

US HEALTHCARE SYSTEM


INTERNATIONAL ROLLOUT OF CXBLADDER

Develop the product and test the commercial model

Test and implement the franchise business model

Rollout to potential new markets

AUSTRALIA SPAIN

USA

JAPAN

SOUTH EAST ASIA

NEW ZEALAND

OUR CANCER DIAGNOSTIC BUSINESS

We operate through a franchise business model

whichincludesourwhollyownedsubsidiariesand

anyotherlicensedpartner.

Our laboratoriesarebuilt fromworld classoper-

ating platforms and equipment that can be pur-

chasedoff theshelfandsetuptoanalysepatient

urineusingourproprietaryRNAtranscripts.These

are brought together in line with our standard

operating systems to enable a high degree of

reproducibilityandrepeatabilityinourlabsensur-

ingthedeliveryofaconsistentuserexperienceto

cliniciansandpatientsglobally.

We currently have franchise partnerships in New

Zealand,Australia,SpainandtheUSA.

In New Zealand, all tests are analysed in Pacific

Edge’slaboratoryinDunedin.However,Labtestsin

Aucklandistheexclusivesalesandmarketingpart-

nerfortheAucklandandNorthlandregions.These

regionsaccountforapproximately40%ofalltests

inNewZealand.

InAustralia,wehavepartneredwithanAustralian

laboratoryprovider,Healthscope,abusinesspart-

nernecessarytohelpusaccesspublicfundingfor

our products. Our Cxbladder technology is fully

integrated into their Melbourne-based business

andisthecommercialhubforallAustraliantests.

Wearehopingtoseeanincreasingnumberoftests

beingdrivenoutofAustraliainthenextyear.

InSpain,wehaveanagreementwithOryzon.The

CxbladdervaluepropositionchosenbyOryzonto

launchCxbladderinSpainisfocusedonCxbladder

forsecondarydetectionofbladdercancer.Weare

workingwiththemtobuildthisspecificdatasetand

arehopingtoseeOryzonunderwaywithinthenext

12months.



THE GENERIC CLINICAL PATHWAY FOR THE DETECTION OF BLADDER CANCER

Pri

mary

Healt

hcare

(Gen

era

l P

racti

tio

ner)

Seco

nd

ary

Healt

hcare

(S

pecia

list

healt

hcare

pro

vid

er/

Uro

log

ist/

specia

list

can

cer

clin

ic)

Referraltoaspecialist

Nofurther

healthcare

intervention

required

FullEvaluation:Testing

Diagnosedwith

bladdercancer

Cancer Management

Duetohighrecurrenceof

bladdercancer,patients

undergoregulartesting.

Yearone–uptosixtimes

Yearstwotofive–upto

fourtimesperyear

New Opportunity: Cxbladder Triage

Preliminary evaluation:Newandaccurateopportunity totriageoutpatientswhodonotrequireareferral

forafullurologicalworkup.

Estimatedthatpatientsrequiringafullevaluationfor

bladdercancercoulddropfrom80%to20%

Benefits:• Fewerpeoplerequiringfullurologicalworkup

• Reducedpressureonhealthcaresystem

• Highlyaccurate,simple,non-invasivetest

CurrentlybeingdevelopedandtestedbyPacificEdge

inconjunctionwithselectedurologists

1 million patients with haematuria

presentingtoGPsannually.

Current Pathway approx. 80%

Cxbladder

Simple, singular urine test to identify the presence of bladder cancer.

Used for initial detection and ongoing disease management

Total market opportunity estimated at 2 million tests per year

Cxbladderworksasanadjuncttocystoscopy*andother

diagnostictools.Itprovidesquantitativegenomicinformation

tocomplementthevisualdiagnosisofferedbycystoscopy.

Cxbladderreplacescytology–athreesampleurinetest

whichisthecurrentalternativetoCxbladder.Cxbladderout-

performscytologyinthedetectionoftumoursinallcases.

Potentialopportunitytocreatemoretailoredproductsfor

useinthemanagementofbladdercancer

20% 80%

*Cystoscopy:Invasiveinternalexaminationwithascope,oftendoneundergeneralanaesthetic.Normallycarriedoutoncepatienthasbeendeterminedtohavebladdercancer.

PercentagesareestimatesmadebyPEBbasedonavailableclinicalandindustrydata.



THE OPPORTUNITY IS HUGE

InAmericaalone,thereisestimatedtobeapproxi-

mately1millionpeoplepresentingtotheirhealth-

careprovidereveryyearwithhaematuria(bloodin

theirurine).Mostofthesepeoplearereferredby

theirGPtoaspecialistclinicianforafullevaluation

and it isestimated thatoverUS$1billion is spent

investigatinghaematuriaeveryyear.

Duetoitshighrecurrencerateandneedforongo-

ing management, treatment of bladder cancer

incursthehighesttotalmedicalcostsofanycancer.

In theUS, this figure is approachingUS$200,000

perpatient,fromdetectionuntildeath.

PacificEdge’sCxbladderproductisspecificallytar-

getedtotestpeoplepresentingwithhaematuriato

determineiftheyhavebladdercancer.Itisseenas

amoreeffectivereplacementforothertestswhich

are currently in use and it is expectedCxbladder

willbeusedalongsideotherdiagnostictoolssuch

asultrasoundandcystoscopy.

In addition, during our engagement with clini-

ciansoverthepastthreeyears,wehaveidentified

anumberofotheropportunitiesfornewCxbladder

productswhichcanbeusedatdifferentstagesof

thedetectionandmanagementofhaematuriaand

bladdercancer.

We are currently developing our next product,

whichcanbeusedbyprimaryphysicianstotriage

outpatientswhodonot require a full referral for

a full urologicalwork-up. This coulddramatically

reducethenumberofpatientsrequiringafulluro-

logicalwork-up,reducingthecostandpressureon

thehealthcaresystemandofferingpeaceofmind

andbettercareforpatients.

FY15 OPERATING OBJECTIVES

Expand our sales presence in the United States and drive revenue

Continue to rollout our User Programmes to targeted clinical groups and urologists, particularly in the US

Continue to negotiate agreements with National and Regional Provider Networks in the US

Focus on developing new bladder cancer products where we have an identified opportunity

Ongoing focus on rollout and set up of franchise partnerships in other targeted markets


OUR FOCUS FOR THE 2015 FINANCIAL YEAR

OurachievementsinFY14havebroughtusanother

stepclosertoattainingourvisionofbeingaworld

leadingcancermoleculardiagnosticscompany.

OurprimaryfocusinFY15willbetostrengthenour

footprintintheUSmarket.

We have the opportunity to provide millions of

patients with access to our non-invasive, simple

andeffectiveCxbladdertechnologyandourfocus

will be on this particular cancer offering for the

shorttomediumterm.

This includes developing new products to meet

specificneedswithin thedetectionand treatment

pathwayforbladdercancer.

Significantinvestmentofhumanandfinancialcapi-

tal intoourCompanywill continue inFY15aswe

establishandexpandourfootprintintheUSmarket.

Ongoing investment is required to establish and

growthecommercialsideofourbusiness.InFY15,

wewillcontinuetoinvestinfourkeyareas:

1.People–expansionofourUSsalesandmarket-

ingteam.Their focuswillbeoncustomercap-

turethroughourUserProgrammes,particularly

of high volume user groups, and progressing

negotiations with National Provider Networks

andfundingagencies.

2.Intellectual Property – registration of patents

andtrademarksintargetedcommercialmarkets.

SomecomponentsofourIParetradesecrets.

3.Franchisemodel–rolloutandsetupofthefran-

chisedbusinessmodelinNewZealand,Australia,

USandSpainandinvestigationofnewmarkets.

4.Research andDevelopment – further develop-

mentofnewproductstomeettheneedsofclini-

ciansandpatients.

PacificEdgeisauniqueNewZealandbusiness.Our

peoplearemotivatedbytheopportunitytomake

adifferenceinhealthcareglobally.At itssimplest,

ourproductscansavelivesthroughearlierdetec-

tionofcancer.

My thanks go to all our hardworking and dedi-

catedpeoplewhobelieveinourCompanyandare

anessentialbuildingblockinoursuccess.

IhavebeenproudtobeCEOofPacificEdgeforthe

last13yearsaswehavebuiltupourCompany.Iam

lookingforwardtothenextstageofourjourneyas

webuildourcommercialcapabilitiesandgrowour

revenue.

David Darling

Chief Executive Officer



Board Of Directors

PACIFIC EDGE LTD

David Band, Independent Director (Appointed 2007)

DavidBandisanexperiencedinternationalbusinessman.HiscareerencompassesaperiodasDirectorofthe

AdvancedBusinessProgrammeattheUniversityofOtagoandsignificantexperienceincorporateconsulting

andmanagement.

Colin Dawson, Independent Director (Appointed 2002)

ColinhasabroadbackgroundwithintheLifeSciencessectorincluding10yearsinveterinaryclinicalprac-

tice.Hehasheldanumberofseniorexecutivepositionsinthepublicandprivatehealthcaresectors.He

servesonanumberofadvisoryboardsandisadirectorofanumberofNZtechnologyandbiotechnology

companiesincludingImmuneSolutionsLtd,BLISTechnologiesandMenixisLtd.

Anatole Masfen, Non-independent Director (Appointed 2008)

AnatoleMasfen is theco-founderofArtemisCapitalaprivateequity investmentfirmbased inAuckland.

AnatolebringstotheBoardsignificantexperienceasaninvestmentmanager,aswellasexperienceinsys-

temsandprocessimplementation.

Chris Swann, Independent Chairman (Appointed 2005)

ChrisSwannwastheprincipalofTDScott&Co.Limited,aDunedin-basedaccountancyandconsultingfirm

for10years.Chrisisanexperiencedbusinessadvisorinanumberofindustriesincludingthemanufacturing,

publishing,health,andbiotechnologysectors.ChrisismanageroftheNewZealandSeedFundwithfour

investmentsinbiotechnologycompaniesincludingPacificEdge.Healsoholdsotherdirectorshipsandisa

MemberoftheNZInstituteofDirectors.

Bryan Williams, Independent Director (Appointed 2013)

BryanWilliams has significant business andUS governance experience. Bryan is also an internationally

recognisedcancerresearcherandresearchadministratorwithsignificantbusinessexperience.Bryanwas

chairmanofMEIPharma,aNASDAQlistedcompanyforsevenyears,ispresentlychairmanoftheBoardof

BiogradAustralia,andisadirectorofCancerTrialsAustraliaandtheMIMR-PHIInstituteofMedicalResearch.

PACIFIC EDGE DIAGNOSTICS USA (PEDUSA

)

PEDUSA isa100%ownedsubsidiaryofPacificEdge. It isgovernedbyaboardofdirectorswhich include

PacificEdgedirectors,ChrisSwannandDavidBand;PacificEdgeCEO,DavidDarling;PEDUSACEO,Jackie

Walker;andBruceNogales.

Bruce Nogales, Independent Director, Pacific Edge Diagnostics USA (Appointed 2013)

Brucehasover30years’businessexperiencepredominantlyinlifesciences.HejoinedtheboardofPEDUSA

inMarch2013.BruceiscurrentlytheChiefCorporateDevelopmentOfficeratGlaukosCorporation,aprivate

medicaldevicecompanyintheUS,focusedonophthalmology.Brucehasalsoheldseniorexecutiveposi-

tionswithTalecrisBiotherapeutics,AventisBehringandGenzyme.


Senior Executive Team

DAVE DARLING

Chief Executive Officer, Pacific Edge and Group

Davehasover30years’businessexperienceinlifesciencesandbiotechnology.HehasledPacificEdgefrom

itsearlyinceptionandhassignificantexecutiveandleadershipexperienceinthedevelopmentandinterna-

tionalcommercializationofbiomedicalandbiotechnologybusinessesandproducts.Duringhiscareer,Dave

hasheldanumberofpositionsingovernance,executiveandseniormanagement.DavejoinedPacificEdge

fromFletcherChallenge.

JIMMY SUTTIE

Chief Operating Officer, Pacific Edge

Jimmy has vast experience, as an executive, with the management of science and technology in New

Zealand’s primary industry sector, particularly thedevelopmentof science for commercialisation. Jimmy

joinedPacificEdgetoheadupoperationsforthefranchiseandnewproductdevelopment.

PARRY GUILFORD

Chief Scientific Officer, Pacific Edge

Parryhasledthescience,researchanddevelopmentatPacificEdgefromitsearlydays.Asoneofthefound-

ingscientistsandamemberoftheScientificAdvisoryBoardoftheCompany,Parryisthearchitectofmany

oftheCompany’sproductprototypes.Parry’sfocustodayandgoingforwardistobringhisworldclassskills

andexperienceonthestepchangeinbiotechnologyfortheCompany’snextgenerationofproducts.

BRENT POWNALL

Commercial Director, Pacific Edge Diagnostics New Zealand

PacificEdgeDiagnosticsNewZealandistheCompany’scommercialarminNewZealandandAustralia.Brent

bringssignificantcommercialexperiencefromthesaleandmarketingofbiologicsandbiomedicalproducts

inNewZealandandAustralia.

JACKIE WALKER

Chief Executive Officer, Pacific Edge Diagnostics USA

Jackiebringstothecompanyover25yearsofextensiveleadershipexperienceincommercializingmedi-

caltechnologies intheUSandastronggeneralmanagementbackground.Priorto joiningPacificEdge

Diagnostics USA, Jackie held senior executive positions at OSspray Ltd, Ondine Biomedica, Dentsply

International,aNASDAQ-100company,andOhmedaMedical.


Financial Statements For the Year Ended 31 March 2014

Statements of Comprehensive Income


Note: These Statements are to be read in conjunction with the Notes to the Financial Statements.

Notes Group2014($) Group2013($) Parent2014($) Parent2013($)

OPERATING REVENUE

CxbladderSales 145,195 15,022 – –

CxbladderResearchRebate 4 87,001 – – –

GrantReceived 5 291,187 158,377 291,186 158,377

LicenceFees – 4,530 – 115,992

InterestEarned 315,275 333,190 315,257 333,184

OtherIncome 8 – 4,419 549,767 210,728

Total Operating Revenue 838,658 515,538 1,156,210 818,281

LESS EXPENSES

Auditors’Remuneration AuditFees 30,600 20,700 30,600 20,700

30,600 20,700 30,600 20,700

Directors'Fees 163,226 88,417 110,337 71,417

Depreciation 6 268,057 195,213 72,272 66,133

Amortisation 7 116,274 – 110,050 –

CurrencyExchangeLoss 571,264 91,571 569,747 92,355

Conference&Travel 735,855 502,967 422,103 215,627

StockExchange&RegistryFees 77,014 147,187 77,014 147,187

Leases RentofPremises 8 653,579 365,037 132,087 134,502

Copier 11,842 11,553 11,842 11,553

665,421 376,590 143,929 146,055




Research EmployeeBenefits 722,190 2,172,193 722,190 1,099,018

Consultants 102,336 420,609 102,336 71,946

ClinicalTrials 1,512,086 995,670 1,360,958 28,823

Consumables 82,110 141,913 81,982 85,491

ContractServices 540,483 143,647 445,447 70,512

Patents/Trademarks 406,591 414,052 406,591 412,782

CxbladderDevelopment – 733,193 – 100,201

3,365,796 5,021,277 3,119,504 1,868,773

Writedownofinvestmentandadvanceto

subsidiaries17 – – 4,624,375 4,805,160

OtherExpenses 2,286,211 984,980 741,895 330,273

EmployeeBenefits 2,509,985 – 567,435 –

InterestExpense 9 3,351 9 3,351

Total Expenses 10,789,712 7,432,253 10,589,270 7,767,031

NET (LOSS) BEFORE TAX (9,951,054) (6,916,715) (9,433,060) (6,948,750)

IncomeTaxExpense 9 – – – –

(LOSS) FOR THE YEAR AFTER TAX (9,951,054) (6,916,715) (9,433,060) (6,948,750)

TranslationofOtherForeignOperations 23 571,540 (33,163) – –

TOTAL COMPREHENSIVE INCOME/(LOSS) (9,379,514) (6,949,878) (9,433,060) (6,948,750)

EarningspershareforlossattributabletotheEquityHoldersoftheCompanyandGroupduringtheyear

BasicEarningspershare 3 (0.032) (0.025) (0.032) (0.025)

DilutedEarningspershare 3 (0.032) (0.025) (0.032) (0.025)



Statements of Changes in Equity


EQUITY AT START OF YEAR 11,145,203 17,649,718 11,356,795 17,860,182

(LOSS) FOR YEAR (9,951,054) (6,916,715) (9,433,060) (6,948,750)

TranslationofOtherForeignOperations 571,540 (33,163) – –

Total Comprehensive Loss (9,379,514) (6,949,878) (9,433,060) (6,948,750)

TRANSACTION WITH OWNERS IN THEIR CAPACITY AS OWNERS

OwnersContribution 21 21,243,951 445,363 21,243,951 445,363

ShareIssueExpenses 21 (1,231,632) – (1,231,632) –

Total 20,012,319 445,363 20,012,319 445,363

EQUITY AT END OF YEAR 21,778,008 11,145,203 21,936,054 11,356,795

Equity Comprises:


Share Capital

OpeningBalance 46,599,293 46,153,930 46,599,293 46,153,930

SharesIssued 20,012,319 445,363 20,012,319 445,363

Closing Balance 21 66,611,612 46,599,293 66,611,612 46,599,293

Accumulated Losses

OpeningBalance (35,424,399) (28,507,684) (35,245,970) (28,297,220)

Net(Loss)fortheyear (9,951,054) (6,916,715) (9,433,060) (6,948,750)

Closing Balance 22 (45,375,453) (35,424,399) (44,679,030) (35,245,970)

Reserves

CurrencyTranslationReserve 23 541,849 (29,691) 3,472 3,472

EQUITY AT END OF YEAR 21,778,008 11,145,203 21,936,054 11,356,795



Balance Sheets


CURRENT ASSETS

Cash,CashEquivalentsandShortTermDeposits 10 20,443,700 10,676,307 20,134,605 10,498,206

Receivables 11 574,241 132,206 543,720 198,373

Inventory 12 241,845 – 98,332 –

OtherAssets 13 166,538 204,282 11,250 27,094

Total Current Assets 21,426,324 11,012,795 20,787,907 10,723,673

NON–CURRENT ASSETS

Property,Plant&Equipment 15 1,111,969 1,081,381 370,962 178,478

IntangibleAssets 16 192,890 – 171,311 –

InvestmentinandAdvancetoSubsidiaries 17 – – 1,328,979 1,154,895

WorkinProgress 14 – 128,611 – 128,611

Total Non–Current Assets 1,304,859 1,209,992 1,871,252 1,461,984

TOTAL ASSETS 22,731,183 12,222,787 22,659,159 12,185,657

CURRENT LIABILITIES

PayablesandAccruals 18 953,175 922,084 723,105 673,362

RedeemableShares(PartPaid) 19 – 3,000 – 3,000

SeriesAConvertiblePreferenceShares 20 – 152,500 – 152,500

Total Current Liabilities 953,175 1,077,584 723,105 828,862

TOTAL LIABILITIES 953,175 1,077,584 723,105 828,862

NET ASSETS 21,778,008 11,145,203 21,936,054 11,356,795

RepresentedBy:

EQUITY

ShareCapital 21 66,611,612 46,599,293 66,611,612 46,599,293

AccumulatedLosses 22 (45,375,453) (35,424,399) (44,679,030) (35,245,970)

Reserves 23 541,849 (29,691) 3,472 3,472

TOTAL EQUITY 21,778,008 11,145,203 21,936,054 11,356,795



Statements of Cash Flows


CASH FLOWS TO OPERATING ACTIVITIES

CashwasProvidedfrom:

ReceiptsfromCustomers&Grants 211,954 291,676 74,423 278,225

InterestReceived 220,879 316,119 220,861 526,844

432,833 607,795 295,284 805,069

CashwasDisbursedto:

PaymentstoSuppliers&Employees 9,923,423 7,313,100 5,144,382 2,975,939

InterestPaid 9 3,351 9 3,351

NetGSTPaid 33,013 1,780 48,476 13,607

9,956,445 7,318,231 5,192,867 2,992,897

Net Cash Flows to Operating Activities 25 (9,523,612) (6,710,436) (4,897,583) (2,187,828)

CASH FLOWS TO INVESTING ACTIVITIES

CashwasDisbursedto

CapitalExpenditureonPlantandEquipment 15 316,870 1,008,851 264,756 152,465

PurchaseofShortTermDeposits 10 11,304,780 4,195,220 11,304,780 4,195,220

CapitalExpenditureonIntangibleAssets 17 180,553 – 152,750 –

AdvancestoSubsidiaries 17 – – 4,248,691 5,533,247

11,802,203 5,204,071 15,970,976 9,880,932

Net Cash Flows to Investing Activities (11,802,203) (5,204,071) (15,970,976) (9,880,932)




CASH FLOWS FROM FINANCING ACTIVITIES:

CashwasReceivedfrom:

OrdinarySharesIssued 21 21,001,560 445,363 21,001,560 445,363

21,001,560 445,363 21,001,560 445,363

CashwasDisbursedto:

ShareIssueExpenses 21 1,231,632 – 1,231,632 –

SharefundsinadvancefromShareholders – 9,238 – 9,238

1,231,632 9,238 1,231,632 9,238

Net Cash Flows From Financing Activities 19,769,928 436,125 19,769,928 436,125

Net (Decrease) / Increase in Cash Held (1,555,887) (11,478,382) (1,098,631) (11,632,635)

AddOpeningCashBroughtForward 6,481,087 17,959,469 6,302,986 17,935,620

EffectofExchangeRatechangesonNetCash 18,500 – (569,749) –

Ending Cash Carried Forward 4,943,700 6,481,087 4,634,606 6,302,986

Comprisedof:

BankofNewZealandChequeAccount 182,293 93,626 152,234 79,088

BankofNewZealandCallAccounts 1,151,535 2,212,092 1,151,536 2,212,092

BankofNewZealandUSD 3,298,257 3,963,723 3,298,257 3,963,723

BankofNewZealandAUD 4,668 20,946 4,668 20,946

BankofNewZealandEUR 27,910 27,137 27,910 27,137

CommonwealthBankAUDChequeAccount 7,131 16,216 – –

WellsFargoUSDAccount 271,906 147,347 – –

Ending Cash Carried Forward 4,943,700 6,481,087 4,634,606 6,302,986

BankofNewZealandTermDeposit 3,500,000 4,195,220 3,500,000 4,195,220

ANZTermDeposit 12,000,000 – 12,000,00 –

Total Short Term Deposits 15,500,000 4,195,220 15,500,000 4,195,220

Total Cash, Cash Equivalents and Short Term Deposits

20,443,700 10,676,307 20,134,606 10,498,206

Notes to the Financial Statements


1. GENERAL INFORMATION

The Financial Statements presented for the “Parent” are for the entity Pacific Edge Limited

(“theCompany”),acompanyregisteredunder theCompaniesAct1993.TheCompany isregistered

anddomiciledinNewZealandforthepurposeofdevelopingandcommercialisingnewdiagnosticand

prognostic tools for the early detection andmanagementof cancers. Pacific EdgeDiagnosticsNew

ZealandLtdandPacificEdgeDiagnosticsUSALimitedmanageandoperatethelaboratoriesusedfor

thedetectionofbladdercancer.

TheconsolidatedFinancialStatementsincorporatetheassetsandliabilitiesofallsubsidiariesofPacific

EdgeLimitedasat31March2014andtheresultsofallsubsidiariesfortheyearthenended.Pacific

EdgeLimitedanditssubsidiariestogetherarereferredtointheseFinancialStatementsastheGroup.

TheseconsolidatedFinancialStatementshavebeenapprovedforissuebytheBoardofDirectorson

30June2014.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

TheCompanyisareportingentityundertheFinancialReportingAct1993.TheCompanyisanissuerfor

thepurposesof theFinancialReportingAct1993.TheseFinancialStatementshavebeenprepared in

accordancewithGenerallyAcceptedAccountingPracticeinNewZealand(“NZGAAP”);andtheFinancial

ReportingAct 2013. They complywith International Financial Reporting Standards, theNew Zealand

Equivalents to International Financial Reporting Standards (“NZ IFRS”) andother applicable Financial

ReportingStandardsasappropriateforprofit-orientedentities.

TheCompanyandGrouparedesignatedasprofit-orientedentitiesforfinancialreportingpurposes.

Theaccountingpoliciessetoutbelowhavebeenappliedconsistentlytoallperiodspresentedinthese

FinancialStatements.

TheconsolidatedFinancialStatementsarepresented inNewZealanddollars,which is theCompany’s

functionalcurrencyandGroup’spresentationcurrency.Allfiguresareroundedtothenearestdollar.

Theaccountingprinciplesrecognisedasappropriateforthemeasurementandreportingofearnings,cash

flowsandfinancialpositiononanhistoricalcostbasishavebeenused.

(a) Basis of Consolidation

Thefollowingentitiesandthebasisof their inclusionforconsolidationintheseFinancialStatements

areasfollows:

OwnershipInterests&VotingRights

NameofSubsidiaryPlaceofIncorporation

(orregistration)&Operation PrincipalActivity 2014(%) 2013(%)

PacificEdgeDiagnostics

NewZealandLimitedNewZealand

CommercialLaboratory

Operation100 100

PacificEdgePtyLimited AustraliaBiotechnologyResearch&

Development100 100

PacificEdgeDiagnostics

USALimitedUSA

CommercialLaboratory

Operation100 100

PacificEdgeAnalytical

ServicesLimitedNewZealand DormantCompany 100 100


PacificEdgeLimitedisincorporatedinNewZealandandistheparententityoftheGroup.

Pacific Edge Diagnostics New Zealand Limited, Pacific Edge Diagnostics USA Limited, Pacific Edge

AnalyticalServicesLimitedandPacificEdgePtyLimitedallhaveabalancedateof31March.

TheconsolidatedFinancialStatementsincorporatetheassetsandliabilitiesofallsubsidiariesofPacific

EdgeLimitedasat31March2014andtheresultsofallsubsidiariesfortheyearthenended.Pacific

EdgeLimitedanditssubsidiariestogetherarereferredtointheseFinancialStatementsastheGroup.

PacificEdgeLimitedconsolidatesassubsidiaries intheGroupFinancialStatementsallentitieswhere

PacificEdgeLimitedhastherightstovariablereturnsfromitsinvolvementwiththeentityandhasthe

abilitytoaffectthosereturnsthroughitspowerovertheentity.

SubsidiarieswhichformpartoftheGroupareconsolidatedfromthedateonwhichcontrolistransferred

totheCompany.Theyarede-consolidatedfromthedatethatcontrolceases.

TheacquisitionmethodofaccountingisusedtoaccountforbusinesscombinationsbytheGroup.The

considerationtransferredfortheacquisitionofasubsidiaryisthefairvalueoftheassetstransferred,the

liabilitiesincurredandtheequityinterestissuedbytheGroup.

Theconsiderationtransferred includes thefairvalueofanyassetor liabilityresultingfromacontin-

gentconsiderationarrangement.Acquisition-relatedcostsareexpensedasincurred.Identifiableassets

acquiredandliabilitiesandcontingentliabilitiesassumedinabusinesscombinationaremeasuredini-

tiallyattheirfairvaluesattheacquisitiondate.Onanacquisition-by-acquisitionbasis,theGrouprecog-

nisesanynon-controllinginterestintheacquireeeitheratfairvalueoratthenon-controllinginterest’s

proportionateshareoftheacquiree’snetassets.

Inter-companytransactions,balancesandunrealisedgainsontransactionsbetweenGroupcompanies

areeliminated.Unrealised lossesarealsoeliminated.Accountingpoliciesof subsidiarieshavebeen

changedwherenecessarytoensureconsistencywiththepoliciesadoptedbytheGroup.

InvestmentsinsubsidiariesareaccountedforatcostlessimpairmentintheParentFinancialStatements.

Costisadjustedtoreflectchangesinconsiderationarisingfromcontingentconsiderationamendments.

Costincludesdirectattributablecostsofinvestment.

(b) Property, Plant and Equipment

Property,PlantandEquipmentarethoseassetsheldbytheGroupforthepurposeofcarryingonits

businessactivitiesonanongoingbasis.AllProperty,PlantandEquipment isstatedatcost lesssub-

sequent accumulated depreciation and any accumulated impairment losses. The cost of purchased

assetsincludestheoriginalpurchaseconsiderationgiventoacquiretheassets,andthevalueofother

directlyattributablecoststhathavebeenincurredinbringingtheassetstothelocationandcondition

necessaryfortheirintendedservice.Thisincludesthelaboratoryequipmentfortheestablishmentof

thelaboratories.


Notes to the Financial Statements (continued)

(c) Depreciation

Depreciationofplantandequipmentisbasedonwritingofftheassetsovertheirusefullives,usingthe

diminishingvaluebasis.

Mainratesusedare:

• LaboratoryEquipment 5%to26.4%

• Office&ComputerEquipment 5%to60%

• LeaseholdImprovements 10%

• Plant&Equipment 5%to40%

• Furniture&Fittings 7%to25%

(d) Research and Development Costs

Research is theoriginalandplanned investigationundertakenwith theprospectofgainingnewsci-

entificknowledgeandunderstanding.Thisincludes:directandoverheadexpensesfordiagnosticand

prognosticbiomarkerdiscoveryandresearch;pre-clinicaltrials;andcostsassociatedwithclinicaltrial

activities.Allresearchcostsareexpensedwhenincurred.

Developmentistheapplicationofresearchfindingstoaplanordesignfortheproductionofnewor

substantiallyimprovedprocessesorproductspriortothecommencementofcommercialproduction.

Whenaprojectreachesthestagewhereitisreasonablycertainthatfutureexpenditurecanberecov-

eredthroughtheprocessorproductsproduced,expenditurethat isdirectlyattributedorreasonably

allocatedtothatprojectisrecognisedasadevelopmentasset.Theassetwillbeamortisedfromthedate

ofcommencementofcommercialproductionoftheproducttowhichitrelatesonastraight-linebasis

overtheperiodofexpectedbenefit.Developmentassetsarereviewedannuallyforanyimpairmentin

theircarryingvalue.

(e) Intangible Assets

Intellectual Property

ThecostsofacquiredIntellectualPropertyarerecognisedatcostandamortisedonastraight-linebasis

overitsanticipatedusefullife,whichiscurrentlyassessedattwotofiveyears.AllIntellectualProperty

hasafinitelife.ThecarryingvalueofIntellectualPropertyisreviewedforimpairment.

ThefollowingcostsassociatedwithIntellectualPropertyareexpensedasincurredduringtheresearch

phasesofaproject, andareonly capitalisedwhen incurredaspartof thedevelopmentphaseofa

processorproductwithindevelopmentassets—InternalIntellectualPropertycostsincludingthecosts

ofpatentsandpatentapplication.

Software Development Costs

Costsassociatedwithdevelopmentofsoftwareareheldatcostandamortisedovertheirusefullivesof

betweentwoandfiveyears.


(f) Goods & Services Tax

TheStatementsofComprehensiveIncomeandStatementsofCashFlowshavebeenpreparedsothatall

componentsarestatedexclusiveofGST.AllitemsintheBalanceSheetsarestatednetofGST,withthe

exceptionofreceivablesandpayables.

(g) Share Capital

Ordinary shares are described as equity. Redeemable Shares (part paid) and Series A Convertible

PreferenceSharesareclassifiedasliabilities.

Issueexpenses,includingcommissionpaid,relatingtotheissueofordinaryShareCapitalhavebeen

writtenoffagainsttheissuedsharepricereceivedandrecordedintheStatementsofChangesinEquity.

(h) Financial Instruments

FinancialinstrumentscarriedforwardintheBalanceSheetsincludecashandbankbalances,receiva-

bles,tradecreditors,RedeemableShares,convertiblepreferencesharesandadvancestosubsidiaries.

Theparticularrecognitionmethodsadoptedaredisclosedintheindividualpolicystatementsassociated

witheachitem.

(i) Receivables

Receivablesareinitiallymeasuredatfairvalueandsubsequentlymeasuredatamortisedcostusingthe

effectiveinterestmethod,lessanyprovisionforimpairment.Aprovisionforimpairmentofreceivables

isestablishedwhenthereisobjectiveevidencethattheGroupwillnotbeabletocollectallamountsdue

accordingtotheoriginaltermsofreceivables.Significantfinancialdifficultiesofthedebtor,probability

that thedebtorwillenterbankruptcyorfinancialreorganisation,anddefaultordelinquency inpay-

ments(morethan30daysoverdue)areconsideredindicatorsthatthetradereceivableisimpaired.The

amountoftheprovisionisthedifferencebetweentheasset’scarryingamountandthepresentvalueof

estimatedfuturecashflows,discountedusingtheoriginaleffectiveinterestrate.

(j) Foreign Currency Translation

Foreign Currency Transactions

TheindividualFinancialStatementsofeachgroupentityarepresentedinthecurrencyoftheprimary

economicenvironment inwhichtheentityoperates(its functionalcurrency).For thepurposeof the

GroupFinancialStatements,theresultsandfinancialpositionofeachgroupentityareexpressedinNew

Zealanddollars(‘NZD’),whichisthefunctionalcurrencyoftheCompanyandthepresentationcurrency

fortheGroupFinancialStatements.

InpreparingtheFinancialStatementsoftheindividualentities,transactionsincurrenciesotherthanthe

entity’s functionalcurrency(foreigncurrencies)arerecordedat theexchangeratesprevailingat the

datesofthetransactions.Attheendofeachreportingperiod,monetaryitemsdenominatedinforeign

currenciesareretranslatedattheratesprevailingattheendofthereportingperiod.

Non-monetaryitemscarriedatfairvaluethataredenominatedinforeigncurrenciesareretranslated

attheratesprevailingatthedatewhenthefairvaluewasdetermined.Non-monetaryitemsthatare

measuredintermsofhistoricalcostinaforeigncurrencyarenotretranslated.



ExchangedifferencesarerecognisedinthestatementofComprehensiveIncomeintheperiodinwhich

theyariseexceptfor:

• Exchangedifferencesonmonetary items receivable fromorpayable toa foreignoperation for

whichsettlementisneitherplannednorlikelytooccur,whichformpartofthenetinvestmentina

foreignoperation,andwhicharerecognisedinotherComprehensiveIncomeandaccumulatedas

aseparatecomponentofequityintheGroup’sforeigncurrencytranslationreserveandreclassified

fromequitytoprofitorloss(asareclassificationadjustment)ondisposalofthenetinvestment.

Foreign Operations

ForthepurposeofpresentingtheGroupFinancialStatements,theassetsandliabilitiesoftheGroup’s

foreignoperationsareexpressedinNewZealanddollarsusingexchangeratesprevailingattheendof

thereportingperiod.Incomeandexpenseitemsaretranslatedattheaverageexchangeratesforthe

period,unlessexchangeratesfluctuatedsignificantlyduringthatperiod, inwhichcasetheexchange

ratesatthedatesofthetransactionsareused.Exchangedifferencesarising,ifany,arerecognisedin

otherComprehensiveIncomeandaccumulatedasaseparatecomponentofequityintheGroup’sfor-

eigncurrencytranslationreserve.Suchexchangedifferencesarereclassifiedfromequitytoprofitorloss

(asareclassificationadjustment)intheperiodinwhichtheforeignoperationisdisposedof.

(k) Cash and Cash Equivalents

Cashandcashequivalents includescash inhand,depositsheldat callwithbanks,other short-term

highlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorless,andbankoverdrafts.

Bankoverdraftsareshownwithinborrowingsincurrentliabilitiesinthebalancesheet.

(l) Revenue Recognition

Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivable.Amountsdisclosedas

revenuearenetofreturns,tradeallowances,rebatesandamountscollectedonbehalfofthirdparties.

TheGrouprecognisesrevenuewhentheamountofrevenuecanbereliablymeasured,itisprobablethat

futureeconomicbenefitswillflowtotheentityandspecificcriteriahavebeenmetforeachoftheGroup’s

activitiesasdescribedbelow.

Operatingrevenuesrepresenttherevenuefromthesaleofgoodsthatisrecognisedwhenagroupentity

sellsaproducttothecustomer.

Consultancyfeesarerecognisedintheaccountingperiodinwhichtheservicesarerendered.Forfixed-

pricecontracts,revenueisrecognisedunderthepercentageofcompletionmethod,basedontheactual

serviceprovidedasaproportionofthetotalservicestobeprovided.

Grantsfromthegovernmentarerecognisedattheirfairvaluewherethereisareasonableassurancethat

thegrantwillbereceivedandtheGroupwillcomplywithallattachedconditions.Governmentgrants

relatingtocostsaredeferredandrecognisedintheprofitorlossovertheperiodnecessarytomatch

themwiththecoststhattheyareintendedtocompensate.Grantsareforreimbursementoflaboratory

costs.


Cxbladder research rebate is recognised at its fair valuewhere there is a reasonable assurance that

the rebatewill be received and theGroupwill complywith all attached conditions.Due to the time

takenbetweensubmissionoftherebateclaimandthereceiptoffunds,thisrevenueisrecognisedona

cashbasisinaccordancewithNZIAS18.TheCxbladderresearchrebateisfortheresearchprogramme

administeredbyPacificEdgePTYLimited.

Interest income is recognisedusing theeffective interestmethod.Whenareceivable is impaired, the

Groupreducesthecarryingamounttoitsrecoverableamount,beingtheestimatedfuturecashflowdis-

countedattheoriginaleffectiveinterestrateoftheinstrument,andcontinuesunwindingthediscountas

interestincome.Interestincomeonimpairedloansisrecognisedusingtheoriginaleffectiveinterestrate.

(m) Borrowing Costs

Borrowingcostsarerecognisedasanexpenseintheperiodinwhichtheyareincurred.

(n) Operating Leases

Operating leasesonequipmentarecharged tootherexpenses in thestatementsofComprehensive

Incomeonastraight-linebasisoverthetermofthelease.

(o) Employee Entitlements

Employeebenefitsaremeasuredatnominalvaluesbasedonaccruedentitlementsatcurrentratesof

pay.Theseincludesalariesandwagesaccrueduptobalancedate,annualleaveearnedto,butnotyet

takenatbalancedate.

(p) Critical Accounting Estimates and Assumptions

Inpreparing theseFinancialStatements theGroupmadeestimatesandassumptionsconcerning the

future.Theseestimatesandassumptionsmaydifferfromthesubsequentactualresults.Estimatesand

assumptionsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactorsinclud-

ing expectations or future events that are believed to be reasonable under the circumstances. The

mainestimatesandassumptionsusedaredepreciationofproperty,plantandequipment(note14)and

impairmentofsubsidiaries(note16).Itisnotexpectedthattheseestimatesandassumptionswillhave

asignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithin

thenextFinancialYear.

(q) Statements of Cash Flows

Cashmeanscashbalancesonhand,depositsheldat callwithbanks,other short-termhighly liquid

investmentswithoriginalmaturitiesofthreemonthsorless,andbankoverdrafts.

Operatingactivitiesincludethecashreceivedandcashpaidfortheprincipalrevenue-producingactivi-

tiesoftheCompanyandGroupandotheractivitiesthatarenotinvestingorfinancingactivities.

Investingactivitiesarethoseactivitiesrelatingtotheacquisitionanddisposalofnon-currentassets.

FinancingactivitiescomprisethechangeinequityanddebtcapitalstructureoftheCompanyandGroup.



(r) Income Tax

Thetaxexpensefortheperiodcomprisescurrentanddeferredtax.Taxisrecognisedinprofitorloss,

excepttotheextent that itrelatesto itemsrecognisedinotherComprehensiveIncomeordirectly in

equity. In this case, the tax is also recognised inotherComprehensive Incomeordirectly in equity,

respectively.

Thecurrentincometaxchargeiscalculatedonthebasisofthetaxlawsenactedorsubstantivelyenacted

attheBalanceSheetdateinthecountrieswherethecompanyanditssubsidiariesoperateandgener-

atetaxableincome.Managementperiodicallyevaluatespositionstakenintaxreturnswithrespectto

situationsinwhichapplicabletaxregulationissubjecttointerpretation.Itestablishesprovisionswhere

appropriateonthebasisofamountsexpectedtobepaidtothetaxauthorities.

Deferred income tax isprovided in full,using the liabilitymethod,on temporarydifferencesarising

betweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsintheFinancialStatements

inaccordancewithNZIAS12.Deferredincometaxassetsarerecognisedtotheextentthatitisprob-

ablethatfuturetaxableprofitwillbeavailableagainstwhichthetemporarydifferencescanbeutilised.

Deferredincometaxisdeterminedusingtaxrates(andlaws)thathavebeenenactedorsubstantially

enactedbythebalancesheetdateandareexpectedtoapplywhentherelateddeferredincometaxasset

isrealisedorthedeferredincometaxliabilityissettled.

(s) Inventory

Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Costisdeterminedusingweighted

average.

(t) Impairment of Non-Financial Assets

Non-financialassets thathavean indefiniteuseful lifearenotsubject toamortisationandaretested

annually for impairment.Assets thathaveafiniteuseful lifeare reviewed for impairmentwhenever

events or changes in circumstances indicate that the carrying amountmay not be recoverable. An

impairmentlossisrecognisedfortheamountbywhichtheasset’scarryingamountexceedsitsrecover-

ableamount.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalue

inuse.

Thevalueinuseforcash-generatingassetsisthepresentvalueofexpectedfuturecashflows.

ThetotalimpairmentlossisrecognisedintheStatementsofComprehensiveIncome.

(u) Segment Reporting

Operatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothe

chief operatingdecision-maker. The chief operatingdecision-maker,who is responsible for allocat-

ingresourcesandassessingperformanceoftheoperatingsegments,hasbeenidentifiedastheChief

ExecutiveOfficerwhomakesstrategicdecisions.


(v) Standards or Interpretations Not Yet Effective

Anumberofnewstandardsandamendments to standardsand interpretationsarenotyeteffective

andhavenotbeenappliedinpreparingtheseconsolidatedFinancialStatements.Noneof theseare

expectedtohaveasignificanteffectontheconsolidatedFinancialStatementsoftheGroup,exceptthe

followingsetoutbelow:

NZIFRS9,‘FinancialInstruments’,addressestheclassification,measurementandrecognitionoffinan-

cialAssetsandFinancialLiabilities

NZ IFRS9was issued inNovember2009andOctober2010. It replaces thepartsofNZ IAS39 that

relatetotheclassificationandmeasurementofFinancialInstrumentsandiseffectivefortheFinancial

Statementsissuedforthefiscalyearsbeginningonorafter1January2017.NZIFRS9requiresFinancial

Assets tobeclassified into twomeasurementcategories: thosemeasuredasat fair valueand those

measuredatamortisedcost.Thedeterminationismadeatinitialrecognition.Theclassificationdepends

ontheentity’sbusinessmodelformanagingitsFinancialInstrumentsandthecontractualcashflowchar-

acteristicsoftheinstrument.ForFinancialLiabilities,thestandardretainsmostoftheNZIAS39require-

ments.Themainchangeisthat,incaseswherethefairvalueoptionistakenforFinancialLiabilities,the

partofafairvaluechangeduetoanentity’sowncreditriskisrecordedinotherComprehensiveIncome

ratherthantheincomestatement,unlessthiscreatesanaccountingmismatch.Thegroupisyettoassess

NZIFRS9’sfullimpact.TheGroupwillalsoconsidertheimpactoftheremainingphasesofNZIFRS9

whencompletedbytheBoard.

(w) New and amended standards adopted by the Company and

Group

Thefollowingstandardshavebeenadoptedbythegroupforthefirsttimeforthefinancialyearbegin-

ningonorafter1April2013andarerelevanttothegroup:

• NZIFRS10,‘Consolidatedfinancialstatements’buildsonexistingprinciplesbyidentifyingthecon-

ceptofcontrolasthedeterminingfactorinwhetheranentityshouldbeincludedwithintheconsoli-

datedfinancialstatementsoftheparentcompany.

• NZIFRS12,‘Disclosuresofinterestsinotherentities’includesthedisclosurerequirementsforall

formsofinterestsinotherentities,includingjointarrangements,associates,structuredentitiesand

otheroffbalancesheetvehicles.

• NZ IFRS 13, ‘Fair valuemeasurement’, aims to improve consistency and reduce complexity by

providingaprecisedefinitionoffairvalueandasinglesourceoffairvaluemeasurementanddis-

closurerequirementsforuseacrossNZIFRSs.Therequirements,whicharelargelyalignedbetween

NZIFRSandUSGAAP,donotextendtheuseoffairvalueaccountingbutprovideguidanceonhow

itshouldbeappliedwhereitsuseisalreadyrequiredorpermittedbyotherstandardswithinNZ

IFRS.



3. EARNINGS PER SHARE

(a) Basic

BasicearningspershareiscalculatedbydividingtheprofitattributabletoequityholdersoftheCompany

bytheweightedaveragenumberofOrdinarySharesonissueduringtheyear.

Group2014($) Group2013($) Parent2014($) Parent2013($)

LossattributabletoequityholdersoftheCompany (9,379,514) (6,916,715) (9,433,060) (6,948,750)

WeightedaveragenumberofOrdinaryShareson

issue291,269,094 275,351,207 291,269,094 275,351,207

Earningspershare (0.032) (0.025) (0.032) (0.025)

(b) Diluted

DilutedearningspershareiscalculatedbyadjustingtheweightedaveragenumberofOrdinaryShares

outstandingtoassumeconversionofalldilutivepotentialOrdinaryShares.

DuringtheyeartheCompanyhadtwocategoriesofdilutivepotentialOrdinaryShares:Redeemable

sharesandSeriesAConvertiblePreferenceshares.BothcategorieswerefullyconvertedintoOrdinary

Sharesduringtheyear.


LossattributabletoequityholdersoftheCompany (9,379,514) (6,916,715) (9,433,060) (6,948,750)

WeightedaveragenumberofOrdinarySharesin

issue291,269,094 275,351,207 291,269,094 275,351,207

Adjustmentsfor:

RedemptionofRedeemableShares – 201,000 – 201,000

ConversionofSeriesAConvertiblePreference

Shares– 1,067,500 – 1,067,500

WeightedaveragenumberofOrdinarySharesfor

dilutedearningspershare291,269,094 276,619,707 291,269,094 276,619,707

DilutedEarningspershare (0.032) (0.025) (0.032) (0.025)


4. CXBLADDER RESEARCH REBATE

During thefinancial year theGroupreceived revenue from theAustralianTaxOffice foraResearch

andDevelopmenttaxincentiverebateclaimfortheyearended31March2012.Duetothetimetaken

betweensubmissionoftherebateclaimandthereceiptoffunds,thisrevenueisrecognisedonacash

basisinaccordancewithNZIAS18.Afurtherclaimhasbeensubmittedforthe2013financialyear.

5. GRANTS RECEIVED

Duringthe2014financialyeartheCompanysubmittedaclaimforpartialreimbursementofcostswith

NewZealandTrade&Enterpriseinlinewiththeirfundingagreement(2013:GrantreceivedfromNew

ZealandTrade&Enterprise).AfurtherclaimhasbeensubmittedtoCallaghanInnovation(formerlythe

MinistryofBusiness,InnovationandEmployment)whichrelatestoapostgraduateinternandsummer

student.TheCompanywasalsoawardedaCallaghanInnovationGrowthGrantcommencing1January

2014.AclaimforJanuarytoMarch2014hasbeensubmittedtoCallaghanInnovationinlinewiththis

agreement.

Allconditionsofthegrantshavebeencompliedwith.

6. DEPRECIATION


LaboratoryEquipment 151,400 94,720 44,581 42,810

Computer/OfficeEquipment 74,141 69,897 27,691 23,323

LeaseholdPropertyImprovements 8,854 6,330 – –

Furniture&Fittings 20,736 10,041 – –

Plant&Equipment 12,926 14,225 – –

Total Depreciation 268,057 195,213 72,272 66,133

7. AMORTISATION


SoftwareDevelopmentCosts 89,844 – 83,620 –

Patents 16,901 – 16,901 –

CxbladderDevelopmentCosts 9,529 – 9,529 –

Total Amortisation 116,274 – 110,050 –



8. RELATED PARTIES

TheCompanypaidconsultancyfeesforaccountingservicestoCJSBusinessAdvisorsLimited.CJSwann

isaDirectorandShareholderof thisCompany.Thefeeschargedwereonnormal termsandcondi-

tionsandtotalled$28,658(2013:$40,467).Atbalancedatenofeeswereoutstandingrelativetothese

transactions(2013:$Nil).

Asignificantshareholder,theUniversityofOtago,providedrentalspaceandcarparkingtotheGroupto

thevalueof$228,321(2013:$186,118)andtheCompanytothevalueof$197,367(2013:$160,775).

Asat31March2014theGroupcommitment is$150,600(2013:$147,360)andtheCompanycom-

mitmentis$125,760(2013:$125,760).MrCEDawson,adirectoroftheCompanywasalsotheChief

ExecutiveOfficerofOtagoInnovationLimited,awhollyownedsubsidiaryoftheUniversityofOtago,

duringthe2014FinancialYear.

Refer note 32 for an Incentive Plan that will also impact keymanagement remuneration in future

periods.

Director’sfeesandpaymentsduringthe2014FinancialYearwere$163,226(2013:$88,417).

Keymanagementpersonnelcompensationshorttermemployeebenefitsforthe2014FinancialYear

were$878,300(2013:$700,000).

AllmembersoftheGroupareconsideredtoberelatedpartiesofPacificEdgeLimited(ultimateParent).

ThisincludesthesubsidiariesidentifiedinNote2(a).

During the2014Financial Year theCompanyadvanced$914,296 (2013: $913,808) toPacificEdge

DiagnosticsNewZealandLimitedtofundlaboratorywork.$3,282,763(2013:$3,946,867)wasadvanced

bytheCompanytoPacificEdgeDiagnosticsUSALimitedforplantandequipmentandthesetupofthe

LaboratoryinHershey.$51,633(2013:$691,013)wasadvancedbytheCompanytoPacificEdgePty

Limitedtofundcontinuedresearch.NofundswereadvancedtoPacificEdgeAnalyticalServicesLimited.

Thesebalancesarerecordedasanadvancetotheseparateentitiesandareimpairedpernote17asthey

arenotexpectedtobecalledforrepaymentwithinayear,untilthesubsidiarieshavesufficientfunds.

Interesttotalling$549,767(2013:$210,728)hasbeenchargedatmarketrateonthefundsadvancedto

subsidiariesfromPacificEdgeLimited.Noothertermsareheldontheloans.

9. INCOME TAX

TheCompanyandGrouphaveincurredanoperatinglossforthe2014FinancialYearandnoincome

taxispayable.TheCompanyhadacertificateofexemptionforResidentWithholdingTaxandassuchno

ResidentWithholdingTaxwasdeductedfrominterestearned.


Net(Loss)beforetax (9,951,054) (6,916,715) (9,433,061) (6,948,750)

Add:Non-deductibleitems 13,998 700,468 4,637,663 4,811,429

Add:TimingDifferences 28,204 5,849 28,204 5,849

Net Profit (Loss) before tax (9,908,852) (6,210,399) (4,767,194) (2,131,742)

Taxat28% (2,774,479) (1,945,966) (1,334,814) (1,945,649)

Less:notrecognisedasadeferredtaxasset 2,774,479 1,945,966 1,334,814 1,945,649

Income Tax Expense – – – –


INCOME TAX (CONTINUED)

Tax Losses:

Tax losses are available to be carried forward and offset against future taxable income. Tax losses

canbeutilisedifvariousconditionsrequiredbyincometaxlegislationarecompliedwith.Theparent

has$5,404,883(2013:$3,466,008)lossestocarryforward.TheGrouphaslossestocarryforwardof

approximately$15,642,688whichisdependentonmeetingrequirementsofNewZealandandforeign

taxlegislation.

Deferred Research and Development Expenditure:

TheCompanyhasdeferredresearchanddevelopmentexpendituretotallingapproximately$20,291,449

(2013:$17,463,130)tocarryforwardandclaimforpurposesinNewZealandinthefuture.Thisequates

toapotentialbenefitof$5,681,606.

10. CASH, CASH EQUIVALENTS AND SHORT TERM DEPOSITS


BankofNewZealandChequeAccount 182,293 93,626 152,235 79,088

BankofNewZealandCallAccounts 1,151,535 2,212,092 1,151,535 2,212,092

BankofNewZealandUSD 3,298,257 3,963,723 3,298,257 3,963,723

BankofNewZealandAUD 4,668 20,946 4,668 20,946

BankofNewZealandEUR 27,910 27,137 27,910 27,137

CommonwealthBankAUDChequeAccount 7,131 16,216 – –

WellsFargoUSDAccount 271,906 147,347 – –

Total Cash & Cash Equivalents 4,943,700 6,481,087 4,634,605 6,302,986

BankofNewZealandTermDeposit 3,500,000 4,195,220 3,500,000 4,195,220

ANZTermDeposit 12,000,000 – 12,000,000 –

Total Short Term Deposits 15,500,000 4,195,220 15,500,000 4,195,220

Total Cash, Cash Equivalents and Short Term Deposits

20,443,700 10,676,307 20,134,605 10,498,206

Interestonthebankbalancesrangefrom0%to4.79%(2013:0%to4.20%)perannum.Fundsheldon

shorttermdepositwithANZandBNZcanbeaccessedatanytimeattherequestoftheauthorisedbank

signatoriesofPacificEdgeLimited.



11. RECEIVABLES


TradeReceivables 352,892 38,266 335,000 118,236

AccruedInterest 133,150 38,754 133,150 38,754

AustralianGSTRefundDue 4,908 893 – –

NewZealandGSTRefundDue 83,291 54,293 75,570 41,383

Total Receivables 574,241 132,206 543,720 198,373

Alltradereceivablesarewithinpaymentterms.Noitemsareheldthatarepastdue.

12. INVENTORY


LaboratorySupplies 241,845 – 98,332 –

Total Inventory 241,845 – 98,332 –

13. OTHER ASSETS


Prepayments 75,867 110,417 11,250 27,094

Other–LeaseSecurityDeposit 77,975 80,724 – –

CreditCardCollateral 12,696 13,141 – –

Total Other Assets 166,538 204,282 11,250 27,094

14. WORK IN PROGRESS

Duringthe2014yearworkonimplementingtheNAVfinancialadministrationsystemwascompleted.

The$128,611ofWork inProgress fromtheprioryear(2013)hasnowbeencapitalisedtosoftware

developmentcosts.


15. PROPERTY, PLANT & EQUIPMENT

GroupLaboratory

Equipment($)

Office&Computer

Equipment($)

LeaseholdImprovements

($)

Plant&Equipment($)

Furniture&Fittings($)

Total($)

COST

Balanceat1April2012 1,335,023 554,644 21,825 88,697 18,350 2,018,539

Additions 520,898 135,948 104,657 1,507 116,128 879,138

Disposals – (95,257) – – – (95,257)

Balance at 31 March 2013 1,855,921 595,335 126,482 90,204 134,478 2,802,420

Balanceat1April2013 1,855,921 595,335 126,482 90,204 134,478 2,802,420

Additions 163,434 151,085 – 10,246 7,095 331,860

Disposals – (14,990) – – – (14,990)

ForeignCurrencyTranslationDifference (17,735) (3,752) (3,563) (32) (3,954) (29,036)

Balance at 31 March 2014 2,001,620 727,678 122,919 100,418 137,619 3,090,254

ACCUMULATED DEPRECIATION

Balanceat1April2012 1,164,053 430,386 2,500 21,305 3,941 1,622,185

DepreciationExpense 94,720 69,897 6,330 14,225 10,041 195,213

Disposal – (94,360) – – – (94,360)

ForeignCurrencyTranslationDifference (1,420) (256) (120) (201) (2) (1,999)

Balance at 31 March 2013 1,257,353 405,667 8,710 35,329 13,980 1,721,039

Balanceat1April2013 1,257,353 405,667 8,710 35,329 13,980 1,721,039

DepreciationExpense 151,400 74,141 8,854 12,926 20,736 268,057

ForeignCurrencyTranslationDifference (7,353) (1,754) (521) (13) (1,170) (10,811)

Balance at 31 March 2014 1,401,400 478,054 17,043 48,242 33,546 1,978,285

NET BOOK VALUE

At1April2012 170,970 124,258 19,325 67,392 14,409 396,354

At31March2013 598,568 188,668 117,772 54,875 120,498 1,080,381

At31March2014 600,220 249,624 105,876 52,176 104,073 1,111,969



PROPERTY, PLANT & EQUIPMENT (CONTINUED)

Parent

LaboratoryEquipment($)

Office&Computer

Equipment($)

LeaseholdImprovements

($)

Plant&Equipment($)

Furniture&Fittings($)

Total($)

COST

Balanceat1April2012 1,335,023 396,786 – – – 1,731,809

Additions – 24,781 – – – 24,781

Disposals – (95,257) – – – (95,257)

Balance at 31 March 2013 1,335,023 326,310 – – – 1,661,333

Balanceat1April2013 1,335,023 326,310 – – – 1,661,333

Additions 159,037 105,719 264,756

Disposals – – – – – –

Balance at 31 March 2014 1,494,060 432,029 – – – 1,926,089

ACCUMULATED DEPRECIATION

Balanceat1April2012 1,164,053 347,029 – – – 1,511,082

DepreciationExpense 42,557 23,576 – – – 66,133

Disposals – (94,360) – – – (94,360)

Balance at 31 March 2013 1,206,610 276,245 – – – 1,482,855

Balanceat1April2013 1,206,610 276,245 – – – 1,482,855

DepreciationExpense 44,581 27,691 – – – 72,272

Disposals – – – – – –

Balance at 31 March 2014 1,251,191 303,936 – – – 1,555,127

NET BOOK VALUE

At1April2012 170,970 49,757 – – – 220,727

At31March2013 128,413 50,065 – – – 178,478

At31March2014 242,869 128,093 – – – 370,962


16. INTANGIBLE ASSETS

Group

SoftwareDevelopmentCosts($)

Patents($)Cxbladder

DevelopmentCosts($)Total($)

COST

Balanceat1April2012 – – – –

Additions – – – –

Disposals – – – –

Balance at 31 March 2013 – – – –


Additions 242,188 33,802 32,846 308,836


ForeignCurrencyTranslationDifference – – – –

Balance at 31 March 2014 242,188 33,802 32,846 308,836

ACCUMULATED AMORTISATION


AmortisationExpense – – – –

Disposal – – – –

ForeignCurrencyTranslationDifference – – – –



AmortisationExpense 89,844 16,901 9,529 116,274

ForeignCurrencyTranslationDifference (328) -– – (328)

Balance at 31 March 2014 89,516 16,901 9,529 115,946

NET BOOK VALUE

At1April2012 – – – –

At31March2013 – – – –

At31March2014 152,671 16,901 23,317 192,890



INTANGIBLE ASSETS (CONTINUED)

Parent

Internally GeneratedSoftware

DevelopmentCosts($)Patents($)

CxbladderDevelopmentCosts($)

Total($)

COST


Additions – – – –




Additions 214,713 33,802 32,846 281,361


Balance at 31 March 2014 214,713 33,802 32,846 281,361

ACCUMULATED AMORTISATION


AmortisationExpense – – – –

Disposal – – – –



AmortisationExpense 83,620 16,901 9,529 110,050

Balance at 31 March 2014 83,620 16,901 9,529 110,050

NET BOOK VALUE

At1April2012 – – – –

At31March2013 – – – –

At31March2014 131,093 16,901 23,317 171,311


17. INVESTMENT IN AND ADVANCE TO SUBSIDIARIES

Parent2014($) Parent2013($)

Advancestosubsidiaries 5,952,354 5,959,055

Sharesinsubsidiary 1,000 1,000

5,593,354 5,960,055

LessImpairmentLossfortheYear (4,624,375) (4,805,160)

1,328,979 1,154,895

The cumulative advances to subsidiaries total $21,217,885 (2013: $15,265,531) and are impaired.

PacificEdgeAnalyticalServicesLimitedisdormantsonofundshavebeenadvancedtoit.Theimpair-

mentlossin2014isaresultoftheeffectoftheinvestmentandadvancesnotbeingrecoverableinfull

basedonthetotaldeficitinequityofthesubsidiariesat31March2014.Accordingly,theimpairment

lossreducesthevalueintheParent’sbookstoitsfairvaluebasedontherecoverableamountatbal-

ancedate.

18. PAYABLES AND ACCRUALS


TradeCreditors 619,773 535,263 435,092 296,541

AccruedExpenses 88,688 84,549 43,301 74,549

EmployeeEntitlements(referbelow) 244,712 215,381 244,712 215,381

MoniesReceivedinAdvancefromShareholders – 86,891 – 86,891

Total Payables and Accruals 953,175 922,084 723,105 673,362

Payablesandaccrualsarenon-interestbearingandarenormallysettledon30dayterms, therefore

theircarryingvalueapproximatestheirfairvalue.

EmployeeEntitlements Group2014($) Group2013($) Parent2014($) Parent2013($)

PAYETax 44,834 39,906 44,834 39,906

HolidayPay 138,253 111,319 138,253 111,319

AccruedWages 61,625 64,156 61,625 64,156

Total Employee Entitlements 244,712 215,381 244,712 215,381



19. REDEEMABLE SHARES

PartPaid Group2014($) Group2013($) Parent2014($) Parent2013($)

RedeemableShares(PartPaid) – 3,000 – 3,000

Total Redeemable Shares – 3,000 – 3,000

ThesesharesrelatedtoanEmployeeShareOwnershipPlan(ESOP).Thishasnowterminatedandthe

twosubscribersoftheremaining300,000RedeemableShares($3,000at1centpershare)havecon-

vertedtheirRedeemableSharestoOrdinarySharesorbeenrepaidincash.

TheRedeemableshareswereoriginallyissuedintheESOPon26August2004.Followingasubsequent

reductioninthesharepriceforOrdinaryShares,theDirectorsdecidedtocanceltheschemeandoffer

allredeemableshareholdersrepaymentincashortheequivalentvalueinOrdinaryShares.TheScheme

wascancelledon31July2006.Consequently,theremainingvalueoftheoptionstoconverttoOrdinary

SharesintheESOP,thathadnotbeenpreviouslyexpensed,wasexpensedimmediately.

20. SERIES A CONVERTIBLE PREFERENCE SHARES


OpeningBalance 152,500 190,625 152,500 190,625

Non-cashConversiontoOrdinaryShares (152,500) (38,125) (152,500) (38,125)

Closing Balance – 152,500 – 152,500

AllSeriesAConvertiblePreferenceShareshavenowbeenconvertedresultingintheissueof1,067,000

OrdinaryShares.ThereareNil(2013:$152,500)SeriesAConvertiblePreferenceSharesonissue.

TheoriginalagreementwasforeachSeriesAConvertiblePreferenceshareholderhavingtherightto

convert,uponelection,tofiveOrdinarySharesandthenentitledtofivevotes.Thiswassubsequently

variedtosevenOrdinarySharesandsevenvotesrespectively.


21. SHARE CAPITAL


OrdinaryShares 66,611,612 46,599,293 66,611,612 46,599,293

Total Share Capital 66,611,612 46,599,293 66,611,612 46,599,293

Thereare318,615,921(2013:278,755,147)OrdinarySharesonissue.

AllfullypaidsharesintheCompanyhaveequalvotingrightsandequalrightstodividends.AllOrdinary

Sharesarefullypaidandhavenoparvalue.

ShareCapitalGroup&Parent 2014Shares 2014($) 2013($)

OpeningBalance 278,755,147 46,599,293 46,153,930

Newissues:ConversionofRedeemablePartPaidShares 207,299 51,000 –

Newissues:DirectOffers 38,919,311 21,040,451 –

Newissues:ConversionofSeriesAPreferenceShares 1,067,500 152,500 38,125

NewIssues:ConversionofOptions – – 407,238

318,949,257 67,843,244 46,599,293

LessIssueExpenses – (1,231,632) –

SubscriberWithdrawal (333,336) – –

Closing Balance 318,615,921 66,611,612 46,599,293

On 5 July, 2013, 200,000 Redeemable Preference Shares were converted to 200,000

OrdinarySharesat25centspershareand100,000RedeemablePreferenceShareswere

converted to 7,299 Ordinary Shares at 13.7 cents per ordinary share. On 4 December,

2013,37,358,637OrdinaryShareswereissuedunderarenounceablerightsofferof2new

sharesforevery15existingsharesheld,atapriceof$0.55.1,560,674OrdinaryShareswere

issuedduringtheyearunderseparateagreementsforservicesprovided.152,500SeriesA

Convertiblepreferenceshareswereconvertedto1,067,500OrdinarySharesduringtheyear

at14.3centsperOrdinaryShare.



22. ACCUMULATED LOSSES


OpeningBalance (35,424,399) (28,507,684) (35,245,970) (28,297,220)

Net(Loss)AfterTax (9,951,054) (6,916,715) (9,433,060) (6,948,750)

Closing Balance (45,375,453) (35,424,399) (44,679,030) (35,245,970)

23. FOREIGN CURRENCY TRANSLATION RESERVE

ExchangedifferencesrelatingtothetranslationfromthefunctionalcurrenciesoftheGroup’sforeign

subsidiaries intoNewZealanddollarsarebroughttoaccountbyentriesmadedirectlytotheforeign

currencytranslationreserve.

24. SEGMENT INFORMATION

TheChiefExecutiveOfficerhasdeterminedtheoperatingsegmentsbasedonreportsreviewedbyhim

thatareusedtomonitorperformanceandallocateresources.

TheChiefExecutiveOfficer considers thebusiness tobe threeoperating segments atbalancedate.

Thesesegmentsaretheresearchanddevelopmentofdiagnosticandprognosticproductsforhuman

cancerinNewZealandandAustraliaandtheoperatorsofthelaboratoriesusedforthedetectionof

bladdercancer;currentlyoperatingintheUnitedStatesofAmericaandNewZealand.

TotalresearchsegmentrevenueiscomprisedofGrantsReceivedandCxbladderResearchRebate. It

doesnotincludeinterest.

ThesegmentinformationprovidedtotheChiefExecutiveOfficerforthereportablesegmentdescribed

above,isshownbelow.

2014 NZLaboratory($) USLaboratory($) Research($) Total($)

TotalSegmentRevenue 50,372 94,823 378,188 523,383

Revenue from within the segment – – – –

Revenue from External Customers 50,372 94,823 378,188 523,383

AdjustedEBITDA (758,207) (3,915,378) (5,208,404) (9,881,989)

InterestRevenue 18 – 315,257 315,275

InterestExpense – – (9) (9)

Depreciation&Amortisation (36,641) (165,368) (182,322) (384,331)

Total Loss Before Tax (794,830) (4,080,746) (5,075,478) (9,951,054)

Total Assets 237,532 1,243,079 21,250,572 22,731,183

Total Liabilities 63,575 138,559 751,041 953,175


SEGMENT INFORMATION (CONTINUED)

2013 NZLaboratory($) USLaboratory($) Research($) Total($)

TotalSegmentRevenue 82,465 – 485,096 567,561

Revenue from within the segment 63,019 – 322,189 385,209

Revenue from External Customers 19,440 – 162,907 182,347

AdjustedEBITDA (912,535) (2,938,413) (3,200,393) (7,051,342)

InterestRevenue 5 – 333,185 333,190

InterestExpense – – (3,351) (3,351)

Depreciation&Amortisation (56,084) (72,996) (66,133) (195,213)

IncomeTaxExpense – – – –

Total Loss Before Tax (968,614) (3,011,409) (2,936,692) (6,916,715)

Total Assets 160,212 1,104,192 10,958,383 12,222,787

Total Liabilities 40,086 208,636 828,862 1,077,584

Salesbetweensegmentsarecarriedoutatarm’slength.Therevenuefromexternalpartiesreported

to the Chief Executive Officer is measured in a manner consistent with that in the statement of

ComprehensiveIncome.

TheamountsprovidedtotheChiefExecutiveOfficerwithrespecttototalassetsandtotalliabilitiesare

measuredinamannerconsistentwiththatoftheFinancialStatements.Theseassetsareallocatedbased

ontheoperationofthesegmentandthephysicallocationoftheasset.“Reportablesegments”assets

arereconciledtototalassetsasfollows:

2014($) 2013($)

Segmentassetsforreportablesegments 22,731,183 12,222,787

Unallocated – –

Total Assets per the Balance Sheet 22,731,183 12,222,787

TheamountsprovidedtotheChiefExecutiveOfficerwithrespecttototalliabilitiesaremeasuredina

mannerconsistentwith thatof theFinancialStatements.These liabilitiesareallocatedbasedon the

operationsofthesegment.“Reportablesegments”liabilitiesarereconciledtototalliabilitiesasfollows:



SEGMENT INFORMATION (CONTINUED)

2014($) 2013($)

Segmentliabilitiesforreportablesegment 953,175 1,077,584

Unallocated – –

Total Liabilities per the Balance Sheet 953,175 1,077,584

Theresearchoperatingsegmentderivesrevenueprimarilyfromgrantincomeandthereportableoper-

atingsegmentlaboratoriesderiveitsrevenueprimarilyofsalesofCxbladderdetectiontests.TheChief

ExecutiveOfficerassessestheperformanceoftheoperatingsegmentbasedonnetprofit/(loss)forthe

period.

25. RECONCILIATION OF CASH USED IN OPERATING ACTIVITIES WITH LOSS AFTER TAX


Lossaftertax (9,951,055) (6,916,715) (9,433,060) (6,948,750)

Add Non Cash Items:

Depreciation 268,057 195,213 72,272 66,133

Amortisation 116,274 – 110,050 –

TranslationofForeignOperations 571,540 (33,163) – –

Interestchargedonadvancetosubsidiary – – (549,767) (210,728)

EffectofexchangeratesonNetCash (276) – 569,747 92,355

Writedownofinvestmentinandadvanceto

Subsidiary– – 4,624,375 4,805,160

Total Non Cash Items 955,595 162,050 4,826,677 4,752,920

Add Movements in Other Working Capital items:

IncreaseinGSTReceivable (33,013) – (48,477) –

(Increase)inReceivablesandOtherAssets (371,274) (73,766) (281,027) 150,575

(Increase)inInventory (241,845) – (98,332) –

Increase/(Decrease)inPayablesandAccruals 117,978 117,995 136,636 (142,573)

Total Movement in Other Working Capital (528,154) 44,229 (291,199) 8,002

Net Cash Flows to Operating Activities (9,523,613) (6,710,436) (4,897,583) (2,187,828)

Interestchargedonadvancestosubsidiarieshasbeenwrittendownaspartoftheimpairmentoninvest-

mentandadvancestosubsidiaries,thisisclassifiednon-cash.


26. FINANCIAL INSTRUMENTS

Managing Financial Risk

TheCompanyandGroup’sactivitiesexposeittothefinancialrisksofchangesininterestraterisk,credit

risk,liquidityriskandforeigncurrencyrisk.

Interest Rate Risk

TheCompanyandGroup’sbankdepositsareatfloatinginterestrates,whichmitigatestheriskofinterest

ratesbeinglessthanmarketrates.

Credit Risk

TheCompanyandGroupincurcreditriskfrombankbalances,receivablesinthenormalcourseofits

businessandotherassets.Regularmonitoringofreceivablesandotherassetsisundertakentoensure

thatthecreditexposureremainswithintheCompanyandGroup’snormaltermsoftrade.TheGroup’s

cashandshorttermdepositsareplacedwithhighcreditqualityfinancialinstitutions.Accordingly,the

Company andGroup have no significant concentration of credit risk other than bank depositswith

35.7%oftotalassetsattheBankofNewZealandand52.8%atANZBank.Thecarryingvaluesoffinan-

cialassetsrepresentmaximumexposuretocreditrisk.

Liquidity Risk

LiquidityriskistheriskthattheCompanyandGroupmayencounterdifficultyinraisingfundsatshort

noticetomeetitscommitmentsastheyfalldue.Managementmaintainssufficientcashandtheavail-

abilityoffundingthroughanadequateamountofcommittedcreditfacilitiesifrequired.

Fair Values

Intheopinionofthedirectors,thecarryingamountoffinancialassetsandfinancialliabilitiesapproxi-

matetheirfairvaluesatbalancedate.

Unrecognised Financial Instruments

Therearenounrecognisedfinancialinstruments,hedgesorforwardexchangecontractsat31March

2014(2013Nil).

Market Risk

The Company and Group purchase goods from overseas suppliers. It also operates Pacific Edge

DiagnosticsUSALimitedintheUSA.ThisexposestheCompanyandGrouptoforeigncurrencyrisk.The

Companymanagesforeigncurrencyriskbyonlypurchasingoverseasgoodswhennecessaryandwhen

foreignexchangesarefavourable.

ManagementisoftheopinionthattheCompanyandGroup’sexposuretomarketriskatbalancedate

isdefinedas:



RiskFactor Description Sensitivity

Currencyrisk AssetsandLiabilitiesaredenominatedinNZD,USD,AUD,andEURcurrencies Asbelow

Interestraterisk ExposuretochangesinBankinterestrates Asbelow

Otherpricerisk Nosecuritiesarebought,soldortraded Nil

BalancesinAUDandEURcurrenciesarenotsignificant.A1%increaseordecreaseinUSDwillreduce/

increasethelossreportedbyapproximately$31,000(2013:$46,000)respectivelyandincrease/reduce

equitybythesameamount.

A 1% increase or decrease in Bank deposit interest rateswill reduce/increase the loss reported by

approximately$155,600(basedonnormallevelsofbankdeposits)andincrease/reduceequitybythe

sameamount(2013:$2,500).


Liquidity/maturity profile of liabilities at 31 March 2014

GroupLiabilities 0–3Months($) 3–6Months($) 6–12Months($) 1–2Years($) 2+Years($) Total($)

Payables&Accruals 953,175 – – – – 953,175

RedeemableShares(PartPaid) – – – – – –

SeriesAConvertiblePreferenceShares – – – – – –

953,175 – – – – 953,175

ParentLiabilities 0–3Months($) 3–6Months($) 6–12Months($) 1–2Years($) 2+Years($) Total($)


RedeemableShares(PartPaid) – – – – – –

SeriesAConvertiblePreferenceShares – – – – – –

723,105 – – – – 723,105

Thisprofilerecognisestheearliesttimebandofshareconversionsorredemptions(asthereisnofixed

conversionorredemptiondate).

Liquidity/maturity profile of liabilities at 31 March 2013

GroupandParentLiabilities 0–3Months($) 3–6Months($) 6–12Months($) 1–2Years($) 2+Years($) Total($)


RedeemableShares(PartPaid) 3,000 – – – – 3,000

SeriesAConvertiblePreferenceShares 152,500 – – – – 152,500

1,077,584 – – – – 1,077,584

ParentLiabilities 0–3Months($) 3–6Months($) 6–12Months($) 1–2Years($) 2+Years($) Total($)


RedeemableShares(PartPaid) 3,000 – – – – 3,000

SeriesAConvertiblePreferenceShares 152,500 – – – – 152,500

828,862 – – – – 828,862



27. CONTINGENT LIABILITIES

Therewerenoknowncontingentliabilitiesat31March2014(2013Nil).TheCompanyandGrouphave

notgrantedanysecuritiesinrespectofliabilitiespayablebyanyotherpartywhatsoever.

28. BANK SECURITIES

TheCompanyhasprovidedadebenturetotheBankofNewZealandtosecureborrowings.Therewere

nobankborrowingsatbalancedate.

29. CAPITAL COMMITMENTS

TherearenocapitalcommitmentsfortheCompanyorGroupat31March2014(2013Nil).

30. LEASE COMMITMENTS

TheCompanyandGrouphavethefollowingleasecommitmentforbuildings.


Noncancellableoperatingleasecommitments

withinoneyear469,764 346,131 125,760 125,760

Laterthanoneyear,notlaterthantwoyears 353,041 330,414 20,960 125,760

Laterthantwoyears,notlaterthanfiveyears 565,679 925,119 – 125,760

Total Lease Commitments 1,388,484 1,601,664 146,720 377,280

The leaseof premises (in theCentre for Innovation)with theUniversity ofOtagowas renewedon

26May 2013 for a further two years at $125,760per annum, the rental in the 2014 year remains

unchangedfrom2013.PacificEdgeDiagnosticsNewZealandLimited’sleaseofpremisesis$24,840a

year.PacificEdgeDiagnosticsUSALimitedhasa5yearleasewhichexpireson30November2017.The

totalfinancialcommitment remaining for this lease is$1,212,784(2013:$1,577,104).Anadditional

AllowanceReimbursementispayabletothelandlordonamonthlybasis.Thetotalfinancialcommit-

mentforthisAllowanceReimbursementis$485,894(2013:$673,982).

31. SUBSEQUENT EVENTS

Therewerenoeventssubsequenttobalancedate.

32. MANAGEMENT OF CAPITAL

TheGroup’sobjectiveswhenmanagingcapitalare tosafeguardtheGroup’sability tocontinueasa

goingconcerninordertoprovidereturnsforshareholdersandbenefitforotherstakeholdersandto

maintainanoptimalcapitalstructuretosupportthedevelopmentofitsbusiness.TheCompanymeets

theseobjectivesthroughmanagingtheirliquiditypositionwithavailablefundsbyreducingcosts,issue

newsharesorsellassets.


33. PACIFIC EDGE INCENTIVE PLAN (PEIP)

InMarch2011 theCompanydevelopedan “IncentivePlan”asameansofprovidingDirectors and

Officersandcertainemployeeswiththeopportunitytoparticipateinthepotentialincreasingprofitabil-

ityoftheGroup.ThePlanisanEquityEquivalent(EE)SchemethatprovidesEEUnitsonthefollowing

terms:

• EEUnitsarevestedtotheparticipantoveraperiodof4yearsbutcannotberedeemedduringthe

firsttwoyearsfromthedateoftheirissue.

• EachEEUnithastheequivalentvalueofanordinaryshareintheCompany.

• RedemptionisincashforthedifferencebetweenthevalueoftheEEUnitsatthetimeofallocation

andtheirvalueatthetimeofredemption.

• TheCompanymustbetradinginacashflowpositiveconditionandtheCompany’ssharepriceon

theNZXmustbeataminimumpriceof$1.00perordinaryshare.

• Amaximumof25%ofaparticipant’svestedEEUnitscanberedeemedinanyoneyear.

• TheCompanycommencedissuingtheEEUnitsinlateMarch2011.Atbalancedate6,449,000EE

unitshadbeenvested.ThefairvalueoftheseEEUnitshasbeendeterminedasNilat31March

2014(2013:Nil)becausetheconditionsaboveareassessedasunlikelytobemetand,accordingly,

noexpenseorliabilityhavebeenrecordedintheseFinancialStatements.

Holding of EE units by current Directors and Officers as at 31 March 2014

Name 2014($)

ChrisSwann 412,500

ColinDawson 330,000

DavidDarling 1,800,000


Additional Stock Exchange Information

Thetotalnumberofissuedvotingsecuritiesis318,615,921OrdinaryShares.

TheCompany’sOrdinarySharesarelistedontheNZXMainBoard.

TheCompanycurrentlydoesnothaveacreditrating.

1. SUBSTANTIAL SECURITY HOLDERS

TheCompany’sregisterofSubstantialSecurityHolders,preparedinaccordancewithsection26ofthe

SecuritiesMarketsAct1988,recordedthefollowinginformationasat31March2014.Thesesharehold-

ershavearelevantinterestof5%ormoreinallclassesofsecurities.

NameNumberofOrdinary VotingSecurities

NumberofSeriesAConvertiblePreference ShareVotingSecurities

Partpaid RedeemableShares

KOneWOneLimited 20,286,297(6.37%) – –

HarbourAssetManagement 20,183,646(6.34%) – –

ACC(BlairTallot) 13,997,229(5.00%) – –

2. SPREAD OF SECURITY HOLDERS AT 30 APRIL 2014

No.of OrdinarySecurity Holders

PercentageofIssuedOrdinary

Equity

No.of SeriesA Security Holders

Percentage ofIssued SeriesA Equity

No.ofPartPaid

RedeemableShareHolders

PercentageofIssuedPartPaidRedeemable

Shares

1–1,000 537 0% – – – –

1,001–5,000 1,869 2% – – – –

5,001–10,000 952 2% – – – –

10,001–100,000 1,702 16% – – – –

100,001–500,000 247 16% – – – –

500,001–1,000,000 27 6% – – – –

1,000,001–2,500,000 16 8% – – – –

2,500,001–13,000,000 15 21% – – – –

13,000,001andOver 3 29% – – – –

Total Security Holders 5,368 100% – –% – –%


3. TWENTY LARGEST EQUITY SECURITY SHAREHOLDERS AS AT 30 APRIL 2014

OrdinaryShares

NewZealandCentralSecuritiesDepositoryLimited 55,320,404

KOneWOneLimited 20,286,297

SuperlifeTrusteeNomineesLimited 14,623,498

FNZCustodiansLimited 9,644,131

MasfenSecuritiesLimited 7,965,326

HypertechMedicalLimited 7,929,169

Christopher&BanksPrivateEquityLimited 6,249,000

SinclairLongTermHoldingsLimited 5,000,000

CustodialServicesLimited 4,054,481

CarolAnneEdwards&GraemeBrentRamsey 3,623,172

ForsythBarrCustodiansLimited 3,431,989

DavidDarling,YvonneMccallumandIndependentTrustees(Tauranga)Limited 2,978,900

EwanJohnBennie 2,920,077

ForsythBarrCustodiansLimited 2,851,711

UniversityofOtago 2,755,000

LeveragedEquitiesFinanceLimited 2,714,043

SuperlifeTrusteeNomineesLimited 2,647,913

StevenCyrilHancock&BronwynHildaHancock 2,550,000

LewisHoldingsLimited 2,161,920

DavidJohnMcCaulay&SallyAnneMcCaulay 2,020,644


4. DIRECTORS’ SHAREHOLDINGS

Listedbelow,equitysecuritiesinwhicheachdirector,andassociatedpersonofeachDirector,holdsa

relevantinterestatbalancedate:

2014($) 2013($)

NUMBER OF ORDINARY SHARES

C.E.Dawson 1,175,857 1,034,580

C.J.Swann 797,065 1,055,566

B.R.G.Williams 4,316 N/A

A.G.H.Masfen(MasfenSecurityLimited) 7,965,326 15,057,641

5. WAIVERS GRANTED BY NZX

NZXMarket Regulation granted the Company awaiver of Listing Rule 7.10.5 on 22October 2013

in relation to the oversubscription facility under its rights issue pursuant to a Simplified Disclosure

Prospectus.Thisoversubscriptionfacilityenabledeligibleshareholderstomakeapplicationsinexcess

oftheirpro-rataentitlementwhichwouldotherwisehavebeenprohibited.

6. EXERCISE OF NZX POWERS (LISTING RULE 5.4.2)

NZXdidnotexerciseitspowersundertheMainBoardListingRule5.4.2.

7. DIVERSITY

Asat31March2014allfiveDirectorsoftheCompanyweremale.TheChiefExecutiveOfficerwasalso

male.TheCompanydoesnothaveagenderdiversitypolicyasat31March2014.

8. INDEPENDENCE

• ThefollowingdirectorsareconsideredbytheBoardtobeIndependent(asdefinedundertheMain

Board/DebtMarketListingRules):C.J.Swann,C.E.Dawson,B.R.G.WilliamsandD.C.Band.

• ThefollowingdirectorsareconsideredbytheBoardtonotbeindependent:A.G.H.Masfen.

Additional Stock Exchange Information (continued)


Independent Auditors’ Reportto the shareholders of Pacific Edge Limited

Report on the Financial StatementsWe have audited the financial statements of Pacific Edge Limited on pages 23 to 57, whichcomprise the balance sheets as at 31 March 2014, the statements of comprehensive income,statements of changes in equity, statements of cash flows for the year then ended and the notesto the financial statements that include a summary of significant accounting policies and otherexplanatory information for both the Company and the Group. The Group comprises theCompany and the subsidiaries it controlled at 31 March 2014 or from time to time during thefinancial year.

Directors’ Responsibility for the Financial StatementsThe Directors are responsible for the preparation of these financial statements in accordancewith generally accepted accounting practice in New Zealand and that give a true and fair view ofthe matters to which they relate and for such internal controls as the Directors determine arenecessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with International Standards on Auditing (New Zealand) andInternational Standards on Auditing. These standards require that we comply with relevantethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditors’judgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorsconsider the internal controls relevant to the Company and Group’s preparation of financialstatements that give a true and fair view of the matters to which they relate, in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Company and Group’s internal control. Anaudit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates, as well as evaluating the overall presentation of thefinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.

We have no relationship with, or interests in, Pacific Edge Limited or its subsidiaries other thanin our capacities as auditors and providing tax services. These services have not impaired ourindependence as auditors of the Company and Group.

PricewaterhouseCoopers, Level 1, Westpac Building, 106 George Street, PO Box 5848, Dunedin 9058,New Zealand T: +64 (3) 470 3600, F: +64 (3) 470 3601, www.pwc.com/nz


Independent Auditors’ ReportPacific Edge Limited

OpinionIn our opinion, the financial statements on pages 23 to 57:

(i) comply with generally accepted accounting practice in New Zealand;

(ii) comply with International Financial Reporting Standards; and

(iii) give a true and fair view of the financial position of the Company and the Group as at 31 March 2014, and their financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory RequirementsWe also report in accordance with Sections 16(1)(d) and 16(1)(e) of the Financial Reporting Act1993. In relation to our audit of the financial statements for the year ended 31 March 2014:

(i) we have obtained all the information and explanations that we have required; and

(ii) in our opinion, proper accounting records have been kept by the Company as far as appears from an examination of those records.

Restriction on Distribution or UseThis report is made solely to the Company’s shareholders, as a body, in accordance with Section205(1) of the Companies Act 1993. Our audit work has been undertaken so that we might stateto the Company’s shareholders those matters which we are required to state to them in anauditors’ report and for no other purpose. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the Company and the Company’sshareholders, as a body, for our audit work, for this report or for the opinions we have formed.

Chartered Accountants30 June 2014

Dunedin


Risk AnalysisAsahighgrowthCompany,thereareanumberofrisksassociatedwithourbusiness.Webelieveitisimportantfor

ourshareholderstohaveanunderstandingoftheserisksandtheprocessestheBoardandmanagementhaveput

inplacetomitigatetheserisks.

MarketDisruptionWeoperateinanumberofdifferentinternationalmarketsandasweintroduceadditionalproductsinnewareas,wewilllimitourexposuretoanypotentialmarketdisruption

Acceptanceofourproductsbythemedicalcommunityandfunders/thirdpartypayers

Clinicalstudieshavevalidatedourtestresults

OurUserProgrammesareakeyingredientindrivingadoptionbyclinicians

WehaveCLIAcertifiedlaboratoriesinUSAandNewZealand

Acceptanceofourproductsfundersandthirdpartypayers

Wearebuildingstrongrelationshipsandhavenegotiatedanumberofagreementswiththirdpartypayersandfunders

Dependenceonfranchisepartnerstomarketandsellourproducts

GreatercontrolinthekeyUSmarketthroughourwhollyownedsubsidiary,PEDUSA

Closeworkingrelationshipswithfranchisepartners

CompetitorActivity

Wehaveyettoseeanyintensecompetitioninthebladdercancerdiagnosticfield

Weholdtheleadinclinicalvalidation

Wearefocusedonbuildingastrongandloyalcustomerbase

IPrelatedOpportunitiesandRisks

WehavemadegreatprogressinexpandingourIPportfolioandgettingseveralkeypatentsgranted

Insomecases,wehavetakenforwardlookinglicensestohedgetheeventofother’sIPimpactingonus

RegulatoryRisks

Wehavesoughtadvicefromexpertsintheregulatorylandscape

Weareawareoftherisksandcontinuouslymonitortheregulatoryenvironmentforchangesthatmayaffectourbusiness

ReimbursementRisks

WehavededicatedspecialistsworkingintheareaofAccountsandPayerRelationships

Wehavenegotiatedagreementsinplacewithmajorpaymentfacilitators

FinancialRisks

TheBoardbelieveswehavesufficientfundinginplacetocontinuewithourstrategicgrowthplanforthenexttwoyears

Afterthistime,weexpectthattradingrevenuewillbeamajorcontributortofuturegrowthfunding

Wehaveatrackrecordofachievingourobjectivesontimeandwithinbudget

Shouldnewopportunitiesarise,theCompanymayseektoraiseadditionalcapitaltoexpeditetheopportunity

RevenueGenerationWewouldreasonablyexpectrevenuetogrowaswerolloutourcommercialpresenceintheUSAandgainmomentuminNewZealand,AustraliaandSpain

ForeignExchangeRisksonExpectedRoyalties

TheBoardandmanagementmonitortheserisksregularlyandevaluatewhetherexposurecanbereducedbyhedgingtransactions

Otherenvironmental,HealthandSafety,OperationalandStatutoryRisks

Thesearemonitoredcontinuously

Functionsandprocesseshavebeenimplementedateachfacilitytoreducerisks

Weconsultwithexternalexpertsinourdecisionmaking,policiesandprocesses

ShareRegistryRisksWeareawareoftherisksassociatedwithoursharessuchaslowlevelsofliquidity,anumberoflargeinvestors,highvolatilityinsharepriceandexternalinfluencesfrominvestorconfidence

Dunedin


Pacific Edge Scientific Advisory BoardPacificEdgehasaworldclassScientificAdvisoryBoard(seetablebelow).Theskills,experienceandcapabil-

itycoverarangeofdisciplinesfromclinicalmedicineandpathologythroughtocommercialbiotechnology

researchanddevelopment.

MembersoftheScientificAdvisoryBoardadviseonscience,scientificprogressandclinicalopportunities.

VisitstoNewZealandbytheinternationalmembersalsoprovideastronglinkagetointernationalissuesand

opportunitieswhileenablingustokeepabreastoftherapidlychangingtechnology.

Name Position Organisation Country

P.GuilfordChiefScientificOfficer

AssociateProfessor

PacificEdge

UniversityofOtagoNewZealand

N.Kasabov

HeadofKnowledge

EngineeringDiscovery

ResearchInstitute

(KEDRI)

KnowledgeEngineering

SchoolofComputer&InformationSciences,

AucklandUniversityofTechnology

NewZealand

M.SullivanConsultant

PaediatricOncologistRoyalChildren’sHospital Melbourne

M.Brennan

Physician

VicePresidentfor

InternationalPrograms

MemorialSloanKetteringCancerCentre USA

B.Williams DirectorMonashInstituteofMedicalResearch,

MonashUniversityAustralia

O.OgawaProfessor

Chairman

DepartmentofUrology,

KyotoSchoolofMedicineJapan

P.Spence ManagingDirector PaulSpenceConsultants London


Clinical Advisory BoardPacificEdgehasaClinicalAdvisoryBoardtoprovideexpertadviceonglobalclinicalneedsandapplications

fortheCxbladdertechnology.

Name Position Organisation Country

R.GetzenbergDirectorofResearch

ProfessorofUrology

JamesBuchananBradyUrologicalInstitute

JohnsHopkinsUniversitySchoolofMedicineUSA

S.ShariatSurgeonandSpecialistin

UrologicOncology

DepartmentofUrology,

NewYorkPresbyterianHospital

WeillMedicalCollege

CornellUniversity

USA

J.Raman UrologistPennStateHersheySurgerySpecialists

Hershey,Pennsylvania,USAUSA

P.Cozzi Urologist

VMOatHurstvilleCommunityHospital

StGeorgePublicHospital

MaterPrivateHospital

Australia

P.Gilling

ConsultantUrologist

HeadofUrology

Department

TaurangaHospital

UROBopLtdNewZealand

M.Fraundorfer ConsultantUrologistTaurangaHospital

UROBopLtdNewZealand

P.DavidsonConsultantUrologist

TrusteeofCURT

UrologyAssociates

CanterburyUrologicalResearchTrust

(CURT)

NewZealand

J.Masters Urologist

AucklandCityHospital

ManukauSuperclinic

GilgitRoadSpecialists

NewZealand


Annual Report of DirectorsThe Directors present their Annual Report including Financial Statements of Pacific Edge Limited (“the

Company”)andGroupfortheyearended31March2014.TheGroupconsistsoftheCompanyanditssub-

sidiariesPacificEdgeDiagnosticsNewZealandLimited,PacificEdgeDiagnosticsUSALimited,PacificEdgePty

LimitedandPacificEdgeAnalyticalServicesLimited.

ThebusinessoftheCompanyisdevelopingandcommercialisingnewdiagnosticandprognostictoolsforthe

earlydetectionandmanagementofcancers.TheCompanyhaswhollyownedsubsidiariesinNewZealand,

AustraliaandtheUnitedStates.ThesubsidiariesinNewZealandandtheUnitedStateshavebeensetupto

manageandoperatethecommercial laboratoriesusedfor thedetectionofbladdercancer.TheAustralian

subsidiaryisaresearchanddevelopmentCompany.

ThenatureoftheCompany’sbusinesshasnotchangedduringtheyear.

AUDITORS

TheGroup’sAuditorsarePricewaterhouseCoopers.Auditfeespayablefortheyearwere$30,600.Pricewa-

terhouseCoopersarewillingtocontinueastheGroup’sAuditors.

DIRECTORS’ DISCLOSURES

Thefollowingdisclosureswererecordedintheinterestsregisterfortheyearended31March2014:

Share Dealings

Person/orAssociatedPersons No.Sold ClassSold No.Purchased ClassPurchased

A.G.H.Masfen(MasfenSecuritiesLimited) 8,500,000 OrdinaryShares 1,407,685 OrdinaryShares

C.J.Swann 350,000 OrdinaryShares 91,509 OrdinaryShares

C.E.Dawson 80,000 OrdinaryShares 41,277 OrdinaryShares


Directors’ Remuneration

Directors’remunerationpaidwasasfollows:

Directors’Fees 2014($) 2013($)

C.J.Swann(Chairman) 42,658 27,500

D.C.Band 28,520 17,000

A.G.H.Masfen 23,504 17,000

C.E.Dawson 23,504 17,000

B.R.G.Williams 20,671 –

B.Nogales 24,369 –

J.P.Foster(Resigned30/11/2012) 9,917

Total 163,226 88,417

Note:D.C.Band’sDirectorsFeeswerepaidbythesubsidiaryPacificEdgePty.LimitedfortheYearEnded31March2014.B.Nogales’DirectorsFeeswerepaidbythesubsidiaryPacificEdgeDiagnosticsUSALimitedfortheYearEnded31March2014.AllotherfeeswerepaidbyPacificEdgeLimited.

Transactions with Directors

TheCompanypaidconsultancyfeesforaccountingservicestoCJSAdvisoryServicesLimited.C.J.Swannis

aDirectorandShareholderofthisCompany.Thefeeschargedwereonnormaltermsandconditionsand

totalled$28,658(2013:$40,467).Atbalancedatenofeeswereoutstandingrelativetothesetransactions

(2013:$Nil).

Asignificantshareholder,theUniversityofOtago,providedrentalspaceandcarparkingtotheGroupcost-

ing$228,321(2013:$186,118)andtheCompanycosting$197,367(2013:$160,775).Asat31March2014

theGroupcommitmentis$150,600(2013:$147,360)andtheCompanycommitmentis$125,760(2013:

$125,760).Mr C. E. Dawson, aDirector of the Companywas also the Chief ExecutiveOfficer ofOtago

InnovationLimited,awhollyownedsubsidiaryoftheUniversityofOtago,duringthe2014financialyear.

The following Directors held office at 31 March 2014:

C.J.Swann(Chairman),D.C.Band,C.E.Dawson,B.R.G.WilliamsandA.G.H.Masfen.

B.NogalesandD.DarlingareDirectorsofPacificEdgeDiagnosticsUSALimited.OnlyD.Darlingdoesnot

receiveremunerationforthisposition.

NootherpersonwasaDirectoratanytimeduringtheyear.

TheBoardofDirectorsreceivednonoticesfromDirectorswishingtouseCompanyinformationreceivedin

theircapacityasDirectors,whichwouldnothaveordinarilybeenavailable.


Annual Report of Directors (continued)

Donations

TheGrouphasmadenodonationsduringtheyear.

Employee Remuneration

EmployeesoftheCompanyreceivingremunerationorbenefitsinexcessof$100,000wereasfollows:

Remuneration 2014($) 2013($)

$100,000–$109,999 1 –

$110,000–$119,999 1 2

$170,000–$179,999 1 –

$180,000–$190,000 1 1

$270,000–$279,999 – 1

$320,000–$329,999 1 -

Pacific Edge Diagnostics New Zealand Limited

TheCompanyhasawhollyownedsubsidiarycalledPacificEdgeDiagnosticsNewZealandLimitedwhich

wasincorporatedon15April2010inNewZealand.Thissubsidiarymanagesandoperatesalaboratoryused

forthedetectionofbladdercancerinDunedin.TheDirectorsofthesubsidiaryareDavidDarling(whois

theCEOoftheCompany)andChrisSwann(theCompany’sChairman).Noremunerationwaspaidbythe

subsidiarytothesedirectors.

There is one employee of Pacific Edge Diagnostics New Zealand Limited who received remuneration

between$170,000and$179,999intheyearended31March2014.Nodonationshavebeenmadebythe

subsidiary.NoamountshavebeenpaidtotheauditorbythesubsidiaryfortheYearEnded31March2014.

Pacific Edge Analytical Services Limited

The Company has awholly owned subsidiary called Pacific EdgeAnalytical Services Limitedwhichwas

incorporatedon8October2010inNewZealand.Thissubsidiaryiscurrentlynottrading.Thesoledirector

ofthesubsidiaryisDavidDarling.NoremunerationwaspaidbythesubsidiarytoDavidDarlingforhisrole

asdirector.

TherearenoemployeesofPacificEdgeAnalyticalServicesNewZealandLimitedwhoreceivedremuneration

exceeding$100,000intheyearended31March2014.Nodonationshavebeenmadebythesubsidiary.No

amountshavebeenpaidtotheauditorbythesubsidiaryfortheYearEnded31March2014.


Pacific Edge Diagnostics USA Limited

TheCompanyhasawhollyownedsubsidiarycalledPacificEdgeDiagnosticsUSALimitedwhichwasincor-

poratedintheUSAon15December2011.Thissubsidiarymanagesandoperatesalaboratoryusedforthe

detectionofbladdercancerinHershey,Pennsylvania.TheDirectorsofthesubsidiaryareChrisSwann,Jackie

Walker,BruceNogalesandDavidDarling.No remunerationwaspaiddirectlyby the subsidiary toChris

Swann,JackieWalkerorDavidDarling.However,DavidDarling’ssalaryasCEOhasbeenapportionedtothis

subsidiaryfromtheCompanyforworkdoneintheUnitedStatesof$140,000fortheyear.BruceNogales

wasappointedasadirectoron11March2013andwaspaiddirectorsfeesofNZ$24,369bythesubsidiary

fortheYearEnded31March2014.

TheUSsubsidiaryhasoneemployeewithremunerationbetweenUS$270,000andUS$279,999fortheYear

Ended31March2014.Nodonationshavebeenmadebythesubsidiary.Noamountshavebeenpaidtothe

auditorbythesubsidiaryfortheYearEnded31March2014.

Pacific Edge Pty Limited

TheCompanyhasawhollyownedsubsidiarycalledPacificEdgePtyLimitedwhichwas incorporated in

Australiaon4August2008.Thissubsidiary’spurpose is toresearchanddevelop theCxbladderproduct

alongwithotherdiagnostics andprognostic tools for early detection andmanagementof cancers. The

directorsofthesubsidiaryareDavidDarling,DavidBandandBryanWilliams.DavidBandwaspaidDirector’s

feesofNZ$28,520bythesubsidiary.

TherearenoemployeesofPacificEdgePtyLimitedwhoreceivedremunerationexceeding$100,000inthe

yearended31March2014.Nodonationshavebeenmadebythesubsidiary.Noauditfeewaspaidtothe

auditorbythesubsidiaryfortheYearEnded31March2014.

ForandonbehalfoftheBoardofDirectors,

Director Director

Datedthe30thdayofJune2014.


Directors’ Responsibility StatementTheDirectorsareresponsible forensuring that theFinancialStatementsgivea trueand fairviewof the

financialpositionoftheCompanyandGroupasat31March2014anditsfinancialperformanceandcash

flowsfortheyearendedonthatdate.

TheDirectorsconsiderthattheFinancialStatementsoftheCompanyandGrouphavebeenpreparedusing

appropriateaccountingpolicies, consistentlyappliedandsupportedby reasonable judgementsandesti-

matesandthatallrelevantfinancialreportingandaccountingstandardshavebeenfollowed.

TheDirectorsbelievethatproperaccountingrecordshavebeenkeptwhichenable,withreasonableaccu-

racy,thedeterminationofthefinancialpositionoftheCompanyandGroupandfacilitatecomplianceofthe

FinancialStatementswiththeFinancialReportingAct2013.

CORPORATE GOVERNANCE

Role of the Board of Directors

TheBoardofDirectorsofPacificEdgeLimitediselectedbytheshareholderstosupervisethemanagement

oftheCompany.TheBoardestablishestheCompany’sobjectives,strategiesforachievingtheseobjectives,

theoverallpolicyframeworkwithinwhichthebusinessoftheCompanyisconducted,monitorsmanage-

ment’sperformanceandensuresthatproceduresareinplacetoprovideeffectiveinternalfinancialcontrol.

Theday-to-daymanagementresponsibilitiesoftheCompanyhavebeendelegatedtotheChiefExecutive

Officer.

Corporate Governance Practices in the Constitution

TheCompany’sconstitutionsetsoutguidelinesforDirectorsandmanagementincarryingouttheirduties

andresponsibilities.TheconstitutionrequiresthattheBoardcomplywiththeNZX’sMainBoardListingRules

andtheCompaniesAct1993.TheprovisionsintheSecondScheduletotheCompany’sconstitutiongovern

theproceedingsoftheBoard.TheCompany’sconstitutioncoversmatterssuchas:

• GeneralCorporateGovernanceMatters

• RoleoftheBoard

• CompositionoftheBoard

• Directors’Responsibilities

• AppointmentandremovalofDirectors(includingexecutiveandalternateDirectors)

• PowersandrightsofDirectors

• RemunerationofDirectors

• ConfidentialityandprotectionofCompanyinformation

• Compliancewithlawsandregulations

• Shareholderparticipation,rights,andobligations

• CompanyTransactions

• ConflictsofInterest

• ProtectionofCompanyAssets


Theprimary responsibilities of theBoard include ensuring compliancewith theCompany’s constitution,

settingcleargoalsfortheCompanyandensuringthatthereareappropriatestrategiesinplaceforachiev-

ingthem,monitoringtheperformanceofmanagement,managingtheCompany’sfinancialpositionand

FinancialStatements,ensuringthattheCompanyfollowshighstandardsofethicalandcorporatebehaviour,

andensuringthattheCompanyhasappropriateriskmanagementpoliciesinplace.NewlyelectedDirectors

areexpectedtobefamiliarwiththeirobligationsundertheconstitution.Trainingisalsoprovidedtonewand

existingdirectorswherethisisrequiredtoenableDirectorstofulfiltheirobligationsundertheconstitution.

Board Membership

TheBoardhasbeenselectedontheirindividualskillsandcontributiontotheCompany.TheBoardiscom-

prisedof5non-executivedirectorsincludingtheChairmanC.J.Swann,D.C.Band,C.E.Dawson,A.G.H.

MasfenandB.R.G.Williams.TheChairmanisanon-executivedirectorwhoiselectedbytheDirectors.

InaccordancewiththeCompany’sconstitution,onethird,orthenumbernearesttoonethird,oftheBoard

retire by rotation at each annualmeeting. The directors to retire are those who have been longest in

officesincethelastelection.Directorsretiringbyrotationmay,ifeligible,standforre-election.Adirector

appointedsincethepreviousAnnualMeetingholdsofficeonlyuntilthenextAnnualMeetingbutiseligible

forre-electionatthatmeeting.

Committees

TheBoard formsCommittees fordesignated tasks tobeaddressed. SuchCommittees include theAudit

Committee,theNominationCommitteeandtheRemunerationCommittee.

Internal Financial Control

TheBoardhasoverallresponsibilityfortheCompany’ssystemof internalfinancialcontrol.TheDirectors

haveestablishedproceduresandpoliciesthataredesignedtoprovideeffectiveinternalfinancialcontrol.

Annualbudgetsandbusinessplansareprepared,andagreedbytheBoard.FinancialStatementsarepre-

paredmonthlyandreviewedby theBoard throughout theyear tomonitorperformanceagainstbudget

targetsandobjectives.

TheDirectorsareresponsibleforpresentingtheFinancialStatementsforeachFinancialYear.

Audit Committee

TheCompany’s constitution requires it tohaveanAuditCommitteecomprised solelyofdirectorsof the

Company,withthemajorityofmembersbeingIndependentDirectors.Theremustbeatleastthreemembers

ontheAuditCommitteeandatleastonemembermusthaveanaccountingorfinancialbackground.Under

theconstitutiontheresponsibilitiesoftheAuditCommitteeincludeasaminimum:

• EnsuringthattheprocessesareinplaceinmonitoringthoseprocessessothattheBoardisproperly

andregularlyinformedandupdatedoncorporatefinancialmatters.

• Recommendingtheappointmentandremovaloftheindependentauditor.


Directors’ Responsibility Statement (continued)

• Monitoringandreviewingtheindependentandinternalauditingpractices.

• Havingdirectcommunicationwithandunrestrictedaccesstotheindependentauditorsandanyinter-

nalauditorsoraccountants.

• Reviewingthefinancialreportsandadvisingalldirectorswhethertheycomplywiththeappropriate

lawsandregulations.

• Ensuringthattheexternalauditororleadauditpartnerischangedatleasteveryfiveyears.

TheAuditCommitteecomprises3IndependentDirectorsbeingChrisSwann,DavidBandandColinDawson.

Nominations Committee

TheBoardhasestablishedaNominationcommittee torecommenddirectorappointments to theBoard.

ThecommitteemembersareColinDawson,BryanWilliams,AnatoleMasfenandChrisSwann,whoareall

IndependentDirectors.

Remuneration Committee

TheBoardhasaRemunerationcommitteetorecommendtheremunerationforDirectorstothesharehold-

ers.ThemembersofthiscommitteeareBryanWilliams,DavidBandandChrisSwann.

Conflicts of Interest

TheconstitutionsetsoutaproceduretobefollowedwhereDirectorsarefacedwithapotentialconflictofinter-

est.AtalltimesaDirectormustbeabletoactintheinterestsoftheCompanyasawholeandinaccordancewith

allrelevantlawsincludingtheNZXMainBoardListingRulesandtheCompaniesAct1993.

ThepersonalinterestsofaDirectormustnotbeallowedtoprevailoverthoseoftheCompanyanditssharehold-

ersgenerally.TheconstitutionrequiresaDirectortodiscloseanypersonalintereststotheCompanywhichmay

conflictwiththeCompany’sinterest.

TheCompany’sconstitutionprovidesthataDirectormay:

• contractwiththeCompanyandbeapartytoanytransactionwiththeCompany.

• haveanypersonalinvolvementorinterestinanytransactionorarrangementtowhichtheCompanyis

apartyorisotherwiseinterestedorinvolved.

• becomeaDirectororotherofficerof,orotherwisebeinterestedin,anycorporationpromotedby

theCompanyorinwhichtheCompanymaybedirectlyorindirectlyinterestedasashareholderor

otherwise.

• retainanyremunerationprofitsorbenefitsinrelationtoanyofthesearrangements.

HoweveraDirectorwhois interested inatransactionwiththeCompanymayattendaBoardmeetingat

whichanymatterrelatingtothetransactionarisesbutwillnotbecountedforquorumpurposesandmay

notvoteonaBoardresolutioninrespectofanymatterrelatingtothetransactionunlessthatmatterisone

inwhichthedirectorsareeitherrequiredtosignacertificateorwherethematterrelatestoanindemnity.


Compliance with NZX and Financial Markets Authority Guidelines

TheCompany’sgovernancepoliciesareconsistentwiththeNZXCorporateGovernanceBestPracticeCode

andmeetthe9PrinciplesforCorporateGovernanceissuedbytheSecuritiesCommission(nowtheFinancial

MarketsAuthority)assetoutontheFinancialMarketsAuthoritywebsite.

Insummary,the9principlesare:

1.EthicalStandards–Directorsshouldobserveandfosterhighethicalstandards.

2.BoardComposition–Thereshouldbeabalanceof independence,skills,knowledge,experience,and

perspectivesamongdirectorssothattheboardworkseffectively.

3.BoardCommittees–TheBoardshouldusecommitteeswherethiswouldenhanceitseffectivenessinkey

areaswhileretainingboardresponsibility.

4.ReportingandDisclosure–TheBoardshoulddemandintegritybothinfinancialreportingandinthetimeli-

nessandbalanceofdisclosuresonentityaffairs.

5.Remuneration– TheremunerationofDirectorsandExecutivesshouldbetransparent,fair,andreasonable.

6.RiskManagement – TheBoardshouldregularlyverifythattheentityhasappropriateprocessesthatiden-

tifyandmanagepotentialandrelevantrisks.

7.Audits–TheBoardshouldensurethequalityandindependenceoftheexternalauditprocess.

8.ShareholderRelations – TheBoardshouldfosterconstructiverelationshipswithshareholdersthatencour-

agethemtoengagewiththeCompany.

9.Stakeholder Interests – theBoard should respect the interests of stakeholderswithin the context of a

Companystructureanditsfundamentalpurpose.

Reporting and Disclosure

TheBoardfocusesonprovidingaccurate,adequateandtimelyinformationbothtoexistingshareholders

andtothemarketgenerally.ThisenablesallinvestorstomakeinformeddecisionsabouttheCompany.All

significantannouncementsmadetoNZX,andreportsissued,arepostedontheCompany’swebsite.

TheDirectorshavepleasureinpresentingtheFinancialStatements,setoutonpages23to62forPacific

EdgeLimitedandtheconsolidatedGroupfortheyearended31March2014.

TheBoardofPacificEdgeLimitedauthorisedtheseFinancialStatementsforissueon30June2014.

ForandonbehalfoftheBoardofDirectors,

ChairmanDirectorChiefExecutiveOfficer

Datedthe30thdayofJune2014.


Glossary

Assay. Chemical reactions that allow detection

or quantification of substances or biomarkers in

samples.

Biomarker.Acharacteristicthatisobjectivelymeas-

uredandevaluatedasanindicatorofnormalbio-

logicorpathogenicprocessesorpharmacological

responsestoatherapeuticintervention.

Biopsy. Sample of tissue from a living body

extractedfordiagnosticpurposes.

Classification.Thedivisionofadiseaseintomedi-

cally relevant subtypes, such as aggressive and

nonaggressivesubclassesoftumoursinoncology.

CAP(CollegeofAmericanPathologists).Thelead-

ing organization of board-certified pathologists

thatservespatients,pathologists,andthepublicby

fosteringandadvocatingexcellenceinthepractice

ofpathologyandlaboratorymedicineworldwide.

(www.cap.org).

Clinical Laboratory Improvement Amendments

(CLIA). Regulate laboratory testing and require

clinicallaboratoriestobecertificatedbytheirstate

aswell as theCenter forMedicare andMedicaid

Services(CMS)beforetheycanaccepthumansam-

plesfordiagnostictesting.(www.fda.gov)

ClinicalTrial.Asinglestatisticallysignificanttrialfor

patientswithdisease.Theresultsofthetrialprovide

performance statistics for the testandarewritten

upandpublishedinapeerreviewedjournal.

CMS(CentersforMedicareandMedicaidServices).

The branch of the Department of Health and

HumanServicesthatadministersMedicare.(medi-

care.kaiserpermanente.org)

Colonoscopy. Invasive endoscopic examinationof

the large colon and the end sectionof the small

bowel with a CCD camera or a fibre optic cam-

era on a flexible tube passed through the anus.

Frequentlyusedtodiagnosecolorectalcancerand

othercolondiseases.

Commercial payers. private insurers. (Medical

DeviceandDiagnosticIndustry2006)

Company.PacificEdgeLimited.

DNA.Deoxyribonucleicacid.Thecarrierofgenetic

information for all complex organisms. DNA

consists of four different bases bound to a sugar

phosphate backbone: adenine (A), cytosine (C),

guanine(G),thymine(T).Thegeneticinformation

isencodedinthesequenceoffourbases.

Endoscope. Optical device for the inspection of

body cavitiesandminimally invasive surgery. See

alsocolonoscopy.

Endoscopy. Visual inspection of body cavities by

useofanendoscope.

False-positiverate.Percentageofhealthyindividu-

als,falselyidentifiedassickduetotheimprecision

ofadiagnosticprocedure.

FDA.FoodandDrugAdministration.U.S.govern-

mentagencyresponsiblefortheapprovalofdrugs

andmedicaldevices.(e.g.IVDtests)

FSS. Federal Supply Schedule – General Services

Administration’s (GSA) Federal Supply Schedules

arelargecontractsthroughwhichfederalcustom-

erscanacquiremorethan4millionproductsand

servicesdirectlyfrommorethan8,000commercial

suppliers. They offer a vast array of brandname

products-from office supplies and copier paper

to systems furniture, computers and laboratory-

and services ranging from accounting to graphic

designtolandscaping.(www.va.gov/osdbu/library/

dbwvaFss.asp)

Health care provider. an individual or an institu-

tionwho isauthorizedby theStateandperform-

ingwithinthescopeoftheirpracticeasdevinedby

state law that provides preventive, curative, pro-

motionalorrehabilitativehealthcareservicesina

systematicwaytoindividuals,families,orcommu-

nities.(Wikipediaandhrweb.berkeley.edu)


Incidence.Numberofnewcasesperyearinaspe-

cificdiseaseindication.

Indication. A valid reason to use a certain test,

medication,procedureorsurgery.

Integrated Health Care Delivery System. a man-

agedcaresystemintheUnitedStatesthatincludes

ahospitalorganizationthatprovidesacutepatient

care,amultispecialtymedicalcaredeliverysystem,

thecapabilityofcontractingforanyotherneeded

services, and a payer. Services are provided to

enrollees of the health plan. (http://medical-dic-

tionary.thefreedictionary.com/Integrated+Health+C

are+Delivery+System)

Invitro.Inatesttube.

IVD.Invitrodiagnostic.

LocalCoverageDetermination(LCD).Localcover-

agedeterminations(LCDS)aredefined inSection

1869(f)(2)(B)of theSocial SecurityAct (theAct).

This section states: “For purposes of this section,

the term ‘local coveragedetermination’means a

determination by a fiscal intermediary or a car-

rierunderpartAorpartB,asapplicable,respect-

ing whether or not a particular item or service

is covered on an intermediary- or carrier-wide

basisundersuchparts,inaccordancewithsection

1862(a)(1)(A).”(cms.gov)

Laboratory Developed Test (LDT). Laboratory

developed tests are in vitro diagnostic tests that

are developed, validated, and used for in-house

pathology and diagnostic purposes. (www.ascp.

org)

Medicaid. a program administered at the state

level, which provides medical assistance to the

needy.Familieswithdependentchildren,theaged,

blind,anddisabledwhoare infinancialneedare

eligibleforMedicaid.Itmaybeknownbydifferent

names in different states. (www.census.gov/hhes/

www/hlthins/methodology/definitions/cps.html)

Medicare. the Federal program which helps pay

healthcarecostsforpeople65andolderandfor

certainpeopleunder65withlong-termdisabilities.

(www.census.gov/hhes/www/hlthins/methodol-

ogy/definitions/cps.html)

Medicare Advantage (Medicare Part C). A plan

offeredbyaprivateorganizationasanalternative

to Parts A&B only. Part C plans and cost plans

may offer more benefits than original Medicare

andmay includePartDcoverage. (medicare.kai-

serpermanente.org)

NationalProviderNetwork.providerofhealthcare

costmanagementsolutions.(multiplan.com)

VA. Veterans Administration – An agency of the

federal government which provides a variety of

services forUnitedStates veterans. (businessdic-

tionary.com)

Milestone payment. One-time payment between

contractualpartiesuponreachingimportantgoals

withcollaboration.

Molecular classification test. Diagnostic test that,

basedon the analysis ofDNAorRNAallows the

morepreciseclassificationofadiseaseinclinically

orpathologicallyrelevantsubgroups.

Molecular Diagnostics. Diagnostics based on

geneticandepigeneticinformation.

Monitoring.Thetracingofpotentialrecurrenceor

assessmentofprogressionofadisease.

NMP22.NuclearMatrixProtein22,asingleprotein

biomarkertestusedtodetectbladdercancer.

Non exclusive licensing model. Strategy for the

commercialisation of patents by which several

licenseesinageographicregionobtaintherightsto

useoneormorepatentsforthesameapplication.

Nonexclusive partnerships. Business partnerships

of a company with several other companies in

whicheachofthecollaborationspursuesthesame

orsimilargoals.


Oncology. The branch of medicine that studies

tumours (cancer) and seeks to understand their

development,diagnosis,treatmentandprevention.

PCR.Polymerasechainreaction.Methodtomulti-

plyasectionoftheDNAinatesttube.

Privatehealth insurance.Privatehealth insurance

iscoveragebyahealthplanprovidedthroughan

employerorunionorpurchasedbyan individual

from a private health insurance company. (www.

census.gov/hhes/www/hlthins/methodology/defi-

nitions/cps.html)

Prognosis.Predictionofhowapatient’sdiseasewill

progress,andthechanceofrecovery.

Prototypeassay.Prototypeofa testprocedureas

astartingpointforthedevelopmentofdiagnostic

products.

Reagents.Chemicalsubstancesneededfortheper-

formanceofanassay.

Reimbursement.tomakerepaymenttoforexpense

or loss incurred (http://dictionary.reference.com/

browse/reimbursement)

Regulatory approval. approval required by State

and/orNationalregulatorybodiestosellaproduct

orserviceintheUSA

Relapse.Diseasereturnfollowingtreatmenttothe

primaryordistantorgan.

Recurrence. Disease return following medical

intervention.(seerelapse)

Researchmarket.Marketforlaboratoryequipment

andsuppliesnotintendedfortherapeuticordiag-

nosticuseinhumansoranimals.

RNA. Ribonucleic acid. Molecule build of similar

componentsasDNAthatmainlyasaninformation

carrierisinvolvedintheuseofgeneticinformation

to direct the synthesis of proteins. Compared to

DNA,RNAischemicallyandbiologicallyconsider-

ablylessstable.

RTPCR.Real-timePCR.PCRinwhichtheamplifi-

cationofaDNAsegmentiscontinuouslymeasured.

RUO.Research-Use-Only.Labelforproductsonly

intendedforresearchapplications.

Screening. The systematic and preventativemass

screeningofanasymptomaticpopulationforearly

detectionofdisease.

Sensitivity.Themeasureofatest’sabilitytoaccu-

ratelydetectthepresenceofadisease.Forexam-

ple, a sensitivity of 90% means that out of 100

patientswhichactuallyhavethedisease,onaver-

age90arecorrectlydiagnosed.

Specificity. The measure for a test’s ability to

exclude a disease if it is truly not present. For

example,aspecificityof90%meansthatoutof100

healthypeopletenarefalselyidentifiedashaving

thedisease.

Surveillance. Tight surveillance of individuals at

highriskofdevelopingadiseasebyusingdiagnos-

ticprocedure.

Test kit. Test reagent kit. A set of reagents, con-

sumablesandprocessinginstructionsnecessaryto

performadiagnosticlaboratorytest.

Testpanel.Combinationofdifferentbiomarkersin

adiagnostictest.

Tumour.Amassofexcess tissue that results from

abnormalcelldivision.

Urologist. Specialist clinicians for urological dis-

easesanddisorders.

User Program. formal evaluation program that

allows a physician, group practice, institution, or

healthcaresystemtoevaluatetheperformanceof

anewproductortechnology

Validation.Establishingdocumentedevidencethat

aprocessorsystem,whenoperatedwithinestab-

lished parameters, can perform effectively and

reproduciblyandmeetitspredeterminedspecifica-

tionsandqualityattributes.

Glossary (continued)


Company Directory

Issued Capital

318,615,921OrdinaryShares

Registered Office

Level10,OtagoHouse

CnrMorayPlace&PrincesStreet

Dunedin

Directors

C.J.Swann—Chairman

D.C.Band

C.E.Dawson

A.G.H.Masfen

B.R.G.Williams

Chief Executive Officer

D.Darling

Auditors

PricewaterhouseCoopers

Dunedin

Bankers

BankofNewZealand

Dunedin

Solicitors

AndersonLloydLawyers

OtagoHouse

481MorayPlace

Dunedin

Securities Registrar

LinkMarketServicesLimited

138TancredSt

Ashburton

Accountants

Deloitte

OtagoHouse

481MorayPlace

Dunedin

Company Number

119032

Date of Incorporation

27February2001

Nature of Business

Developandcommercialisenewdiagnosticand

prognostictoolsfortheearlydetectionand

managementofcancers.

87 St David Street, PO Box 56, Dunedin, New Zealand

P +64 3 479 5800 F +64 3 479 5801

W www.pacificedge.co.nz

annual report 2014 - pacificedgedx.com · pacific edge annual report 2014 75 incidence. number of...

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