2024 Anagenics Annual Report

Anagenics Limited 2024 Annual Report

CONTENTS

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Anagenics Limited 2024 Annual Report

DIRECTORS' REPORT

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Anagenics Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2024. Comparative financial information shown in this financial statement is for the year ended on 30 June 2023.

DIRECTORS

The names of each of the directors of the company in office during or since the end of the financial year are set out below, together with their qualifications, experience and special responsibilities are shown below.

Mr Alexander (Sandy) Beard, Chairman (non-executive) since 15 February 2022

Sandy is a seasoned Company Director, Investor and Investment professional focussed on driving value from small cap ASX listed companies and private equity and early-stage investments. He is a Fellow of the Institute of Chartered Accountants Australia and New Zealand and a member of the Australian Institute of Company Directors. He is Chairman and substantial holder in ASX listed Hancock and Gore Limited, a diversified investment company. Previously Sandy was CEO and MD of CVC Limited (2001 to 2019) where he oversaw investment returns in excess of 15% per annum over that period.

Sandy is Chairman of Hancock and Gore Limited (ASX: HNG) and Chairman of FOS Capital Limited (ASX:FOS).

In prior years: Pure Foods Limited (ASX: PFT), resigned 1 May 2022; Probiotec Limited (ASX: PBP), resigned 30 June 2021.

Interests in shares: 4,340,000 fully paid ordinary shares (1,215,100 indirectly held)

Ms Karen Matthews, Director since 14 February 2023

Karen was appointed as Chief Executive Officer (CEO) on 8 March 2024

Karen is a business mentor and advisor with over 25 years' experience leading strategic change and growth, built on brand led focus, function and accountability. Karen brings dynamic experience from the beauty and wellness, retail, wholesale and franchising industries working with some of Australia's most iconic retail businesses; her results being recognised with industry awards, including NSW Telstra Business Woman of the Year.

Interests in shares: 625,000 fully paid ordinary shares

Mr Scott Greasley, Director since 8 July 2022

Scott was appointed as Chief Executive Officer (CEO) on 1 April 2023 to 7 March 2024.

Scott has over 15 years' experience across retail, ecommerce and wholesale within the branded consumer segment. He has led successful teams transforming underperforming markets across APAC, Asia and the Middle East into highly profitable regions. Scott's key offering is identifying and building market-leading consumer businesses that deliver significant EBITDA growth, with minimal investment. Scott has experience working in both private equity and ASX- listed environments.

Previously, Scott was the CEO of Anagenics Limited leading the growth and expansion of the business via M&A activity whilst supporting day to day operations with the management team. Prior to joining Anagenics, Scott was Head of Greater China & Emerging Markets for Boardriders Inc based in Hong Kong, where he led the transformation of the China marketplace developing a strategic plan for the group across the region. He's also spent time with the Billabong Group in Singapore and Australia, operating across all verticals of the business.

Interests in shares: 2,382,255 fully paid ordinary shares (indirectly held) and 10,000,000 performance rights (directly held) convertible into ordinary shares subject to vesting conditions

Mr Phillip Christopher, Director (non-executive) since 5 November 2021

Investment Director of Hancock and Gore Limited, responsible for advising and guiding private investments including BLC Cosmetics prior to its acquisition by Anagenics Limited. Phillip also spent 6 years at Alceon Group where he was a director in the private equity team which made significant investments in e-commerce and proprietary brand-based businesses. Prior to that he was a member of the investment banking division of Goldman Sachs.

Interests in shares: 1,875,000 fully paid ordinary shares and 6,000,000 unlisted options

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Anagenics Limited 2024 Annual Report

DIRECTORS' REPORT (CONT'D)

DIRECTORS (CONT'D)

Dr Martin Cross, Director (non-executive) resigned on 27 November 2023

Dr Martin is a Fellow of the Australian Institute of Company Directors. He has over 35 years' experience working in the pharmaceutical and biotech industries primarily in all aspects of marketing, selling and business management. This included global roles at international headquarters of AstraZeneca and Novartis.

Former Country President for Novartis Australia/NZ, Managing Director for Alphapharm (Mylan) Australia/NZ with extensive retail experience in pharmacies and Chairman of the Generics Industry Association and Medicines Australia.

COMPANY SECRETARY

Mr Hemant Amin, Company Secretary, appointed 13 June 2024

Hemant is a certified practicing accountant (CPA) with over 32 years of accounting and finance experience. Hemant is an experienced finance professional previously working for various large multinational, public companies and smaller family-owned operations.

Hemant is Company Secretary and CFO of FOS Capital Limited (ASX: FOS).

PRINCIPAL ACTIVITIES

Anagenics is a health wellness and beauty business servicing wholesale and retail customers through omnichannel, offering premium branded products. The Group's underlying business strategy is to continue to grow revenue organically and efficiently, investing in brands and further expanding scale through a merger and acquisition strategy. As a brand and IP owner Anagenics receives royalty payments from numerous licencing agreements.

The Group operates through its holding entity, Anagenics Limited (corporate head entity) and its main operating subsidiary company BLC Cosmetics Pty Limited being an exclusive distributor of prestige beauty cosmetics and beauty equipment. BLC is a leading importer and distributor of prestige international and local skin care and wellbeing brands namely Thalgo, Comfort Zone, Priori and other premium brands. Operating under long term and exclusive distribution agreements, BLC services over 1,000 spas, clinics, salons, retail stores and online in Australia, New Zealand and the Pacific Islands.

REVIEW OF OPERATIONS AND SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Revenue and other income of the Group from continuing operations was up 11% in FY2024 to $10,803K (2023: $9,113K). Significant effort was put into reducing inventory levels, normalising liabilities and a return to ordering fast moving inventory and thereby improving cashflows.

Despite the acquisition of FMG and restructuring undertaken, the business has not yet achieved a sustainable level of profitability, and this remains the key focus of management and the Board for the near term.

As a result of the inability to achieve operating profit objectives, significant intangible and other asset impairments have been incurred as at the end of the financial year resulting in a total operating loss after tax loss of $7,744,206 (2023: $2,667,150). This result includes a write down of certain assets, namely - goodwill on both the BLC and FMG businesses ($2,870,028); lease right of use (ROU) ($101,436); fixed assets ($412,302) and additional stock provisioning on slow moving / obsolete stock to net realisable value ($502,154).

In February 2024 the Company announced the successful completion of a placement, through the issue of 40,355,000 ordinary fully paid shares to raise, $645,680, before costs. A further 42,187,000 shares were issued in April 2024 to raise $675,000, before costs.

Net cash used in operating activities was consistent on prior year with net cash outflows of $1,738,321 (2023: $1,758,914 outflow). Closing cash and cash equivalent on hand of $1,653,925 (2023: $2,567,061).

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Anagenics Limited 2024 Annual Report

DIRECTORS' REPORT (CONT'D)

The results above, reflect the needed restructuring of the business to achieve simplification and sustainability. The Board and major shareholders remain committed to the objective and FY25 year will see further restructuring, simplification and refinement of strategy.

DIVIDENDS

The Company has not paid or declared any dividends during the financial year (2023: $Nil).

ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS

The Group is committed to its corporate responsibilities and published its environmental, social and governance statement as follows.

Environmental

The Group undertakes to act responsibly and commit to continually reduce the environmental impact resulting from the business as follows:

• Distribute brands which support and drive environmentally sustainable practices and ethos
• Minimise contribution to landfill by using recyclable materials in our packaging
• Participate in industry funded recycling schemes,
• Evaluate new distribution partners for environmental impact, ensuring alignment with the Company's environmental principles
• When introducing new products, and when updating existing products, use innovative materials with improved recyclability and biodegradability.
• At an ingredients level aim to source those with minimal environmental footprint or those that are produced through organic and/or sustainable farming practices.

Social

The Group operates with the core values of diversity and respect of all genders, cultures, religions, and races and acts to live up these values and contribute to society:

• Encouraging support and respect for employees and endeavour to work with suppliers and vendors that respect internationally accepted labour and human rights.
• Provide an inclusive and supportive culture that is fair and responsible.
• Being committed to providing solutions for the problems faced by an aging population and develop products and services that contribute to healthy longevity.

Governance

The Group is committed to the delivery of the highest levels of honesty, integrity, and transparency in a way its business is conducted. The Group will:

• work against fraud, corruption and any action that would undermine the business.
• comply with the regulatory requirements in the jurisdictions we operate in, conducting our business with customers and suppliers according to local laws.
• maintain true and correct financial records of our business and undertake regular independent audits.

Given its size, the Group's operations are not regulated by any significant environmental law of the Commonwealth or of a State or Territory of Australia nor overseas.

INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS

During the financial year, the Group paid a premium to insure the Directors and Officers of the Group. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the Directors and Officers in their capacity as Officers of the Group, and any other payments arising from liabilities incurred by the Officers in connection with such proceedings. This does not include such liabilities (other than legal costs) that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for them or someone else or to cause detriment to the Group.

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Anagenics Limited 2024 Annual Report

DIRECTORS' REPORT (CONT'D)

During or since the end of the financial year, the Group has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums in favour of its Directors as follows:

• a right to access certain Board papers of the Group during the period of their tenure and for a period of seven years after that tenure ends;
• subject to the Corporations Act 2001, an indemnity in respect of liability to persons other than the Group and its related bodies corporate, that they may incur while acting in their capacity as an officer of the Company or a related body corporate, except for specified liabilities where that liability involves a lack of good faith or is for legal costs for defending certain legal proceedings; and
• the requirement that the Group maintain appropriate directors' and officers' insurance for the officer.

No liability has arisen under these indemnities as at the date of the report. There is no indemnity cover in favour of the auditor of the Group during the financial year.

DIRECTORS' MEETINGS

The number of Directors' meetings held during the financial year and the number of meetings attended by each director (while they were a director) are as follows:

SHARES UNDER OPTION

Unissued ordinary shares of the Company under share options at the date of this report are as follows:

2,700,000 share options lapsed or were forfeited during the financial year ended 30 June 2024 (2023: 32,621,668

options). There were 18,500,000 new options granted in the current year (2023: nil).

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is provided with this report on page 40.

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Anagenics Limited 2024 Annual Report

DIRECTORS' REPORT (CONT'D)

NON-AUDIT SERVICES

Non-audit services are approved by directors. Non-audit services were provided by the auditors of the Consolidated entity during the year, namely William Buck Audit (Vic) Pty Ltd, network firms of William Buck, and other non-related audit firms. The directors are satisfied that the provision of following non-audit services during the year by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 for the following reasons:

• All non-audit services were subject to the corporate governance procedures adopted by Anagenics Limited and have been reviewed and approved by the directors to ensure they do not impact on the integrity and objectivity of the auditor; and
• The non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants (including Independence Standards), as they did not involve reviewing or auditing the auditor's own work, acting in a management or decision making capacity for Anagenics Limited or any of its related entities, acting as an advocate for Anagenics Limited or any of its related entities, or jointly sharing risks and rewards in relation to the operations or activities of Anagenics Limited or any of its related entities.

REMUNERATION REPORT (AUDITED)

The remuneration report details the key management personnel (KMP) remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The KMP of the Group for and during the year consisted of the following directors and management of Anagenics Limited:

1. Scott Greasley was Managing Director & CEO of Anagenics Limited from 1 April 2023 to 7 March 2024. He continues to serve as a non-executive director.
2. Karen Matthews was appointed as non-executive director on 14 February 2023 and appointed as Executive director and CEO on 8 March 2024.
3. Matthew Dudek was Chief Financial Officer of Anagenics Limited from 1 April 2023 to 22 May 2024 whilst also serving as Company Secretary from 2 October 2023 to 30 June 2024.

The remuneration report is set out under the following main headings:

• Principles used to determine the nature and amount of remuneration
• Details of remuneration
• Share-basedcompensation

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Anagenics Limited 2024 Annual Report

DIRECTORS' REPORT (CONT'D)

REMUNERATION REPORT (AUDITED) (CONT'D)

Principles used to determine the nature and amount of remuneration

The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices:

• competitiveness and reasonableness
• acceptability to shareholders
• if and when appropriate, establish performance hurdles in relation to variable executive remuneration

The Board assesses the appropriateness of the nature and amount of remuneration of directors and senior managers of the Group on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality Board and executive team.

Non-executive directors remuneration

Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the Board. The Board may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration.

ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The most recent determination was at the Annual General Meeting held on 8 November 2018, where the shareholders approved a maximum annual aggregate remuneration of $400,000.

Executive remuneration

The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components.

The combination of these comprises the executive's total remuneration.

Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Board based on individual and business unit performance, the overall performance of the consolidated entity and comparable market remunerations.

Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.

1. Alexander Beard's directors fees was paid to Hancock and Gore Limited

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Anagenics Limited 2024 Annual Report

DIRECTORS' REPORT (CONT'D)

REMUNERATION REPORT (AUDITED) (CONT'D)

1. Alexander Beard's directors fees was paid to Hancock and Gore Limited

Share-based compensation

Issue of shares

There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2024.

Options

In December 2023 6,000,000 options with exercise price of $0.06 expiring on 31 December 2025 were issued to Phil Christopher as part of his remuneration, implied cost of $27,808 was recorded for issue of these option on the date of issue. Apart from this, no options over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2024.

Scott Greasley, was issued with 10,000,000 rights to ordinary shares on appointment to the Board in 2022. Under the terms of his employment agreement, these rights are convertible to ordinary shares upon achieving specific EBITDA and share price performance milestones whilst being employed with Anagenics Limited.

There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2024.

Group performance and link to remuneration

No performance-based cash bonus or incentive payments have been made during the reporting period. The table below details the last five years earnings and total shareholders return.

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Anagenics Limited 2024 Annual Report

DIRECTORS' REPORT (CONT'D)

REMUNERATION REPORT (AUDITED) (CONT'D)

The factors that are considered to affect total shareholders return ('TSR') are summarised below:

Remuneration structure

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

Directors' and Key Management Personnel (KMP) shareholdings

The number of shares held in the Group during the financial year by each Director and KMP of Anagenics Limited, including their related parties, are set out below:

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