Vita Life Sciences Limited Annual Report 2000

Head OfficeLevel 5, 432 St Kilda RoadMelbourne VIC 3000Telephone (613) 9867 2713Facsimile (613) 9867 5437

Asian Regional OfficeBlock 1, Pasir Panjang Road#10-32/34 Alexandria DistriparkSingapore 118478Telephone (65) 278 2778Facsimile (65) 274 7162

European Regional Office 2nd Floor, Nathan HouseChristchurch SquareDublin 8, IrelandTelephone (33) 2 4006 4788Facsimile (33) 2 4006 4787

[email protected]

Vita Life Sciences LimitedACN 003 190 421ABN 35 003 190 421

Vita Life Sciences Limited Annual Report 2000

PAGES 1-24(Matt) 12/04/2001 9:44 AM Page AA1

“…Changing lifestyle, greaterhealth awareness and adramatic change of the scienceand technology landscape hasseen Vita Life Sciences businessdivisions flourish… Revenuewas up 38% to $37.8m, withgroup performance exceedingexpectations…”

Corporate Directory

Contents

Directors Mr. V. R. Gould - ChairmanMr. S. M. Pang - Managing DirectorMr. O. C. Tang - Finance DirectorMs. S. M. Akeroyd - Non-Executive Director

Company SecretaryMr. D.H. Allison

Head OfficeLevel 5, 432 St Kilda RoadMelbourne VIC 3000Telephone (613) 9867 2713Facsimile (613) 9867 5437

Asian Regional OfficeBlock 1, Pasir Panjang Road#10-32/34 Alexandria DistriparkSingapore 118478Telephone (65) 278 2778Facsimile (65) 274 7162

[email protected]

European Regional Office 2nd Floor, Nathan HouseChristchurch SquareDublin 8, IrelandTelephone (33) 24 006 4788Facsimile (33) 24 006 4787

Auditors and Taxation AdvisorsGould Ralph and CompanyChartered AccountantsLevel 40, AMP Centre50 Bridge StreetSydney NSW 2000

Share RegistryGould Ralph Services Pty LtdLevel 40, AMP Centre50 Bridge StreetSydney NSW 2000Telephone (612) 9231 0500Facsimile (612) 9231 0501

Stock ExchangeThe Company is listed on the Australian StockExchange. The home exchange is Melbourne.

6 Financial Highlights

8 Chairmans’ Message

10 Operational Review

15 Directors’ Report

21 Corporate Governance

23 Financial Statements

PAGES 1-24(Matt) 12/04/2001 9:44 AM Page AA3

“Vita Medical…unit sales of ourworld-leading blood clotimaging Technegas® System arepredicted to grow in key medicalmarkets globally…”

“…Vita Health sales of $30.1mwere 40% higher than the$21.5m achieved during thecorresponding period in 1999. New products, including highprofile brands Sunkist andNestlé and Vita Health,contributed to the increase inrevenue…”

PAGES 1-24(Matt) 12/04/2001 9:44 AM Page 2

“…Vita Pharma will focus onthe formulation, manufactureand delivery of a range ofgeneric prescriptionmedicines, specialising ineffervescents…”

“Vimed BioSciences…our research team has developedalternative delivery methods forour world-leading technologyTechnegas®, which has fuelledimportant medical diagnostic andtherapeutic opportunities…”


7Vita Life Sciences Limited Annual Report 20006 Vita Life Sciences Limited Annual Report 2000

Group Margins

%

Revenue by Division

%

1998 1999 20001998 1999 2000

Revenue by Region

%

Asia 59%

Australia / NZ 29%

Europe 11%

Other 1%

GP Margin

EBIT Ratio

VHL

VML

PAT Ratio

10

20

30

40

50

60

70

5

10

15

20

25

30

35

40

Vita Life Sciences Limited - Period to 31 December

2000 1999* Change %

Revenue $m 37.80 27.40 38

EBITDA $m 7.28 4.44 64

Depreciation & amortization $m 0.52 0.32 63

Earnings before interest & tax (EBIT) $m 6.76 4.12 64

Net interest $m 0.11 0.24 (54)

Profit before tax $m 6.65 3.88 71

Tax $m 1.40 0.93 51

Net profit after tax $m 5.25 2.95 78

*Proforma. Only amounts from the Vita Health and Vita Medical businesses (12 months) have been included.

Financial Highlights Financial Review

RevenueVita Life Science’s revenue of $37.8m in 2000 exceededthe combined $27.4m revenue of Vita Health and VitaMedical in 1999 by 38%. This is primarily attributed tonew product ranges sold by Vita Health.

Vita Health and Vita Medical contributed 84% and16% of group revenue respectively during the year2000.

Vita HealthVita Health sales of $30.1m were 40% higher than the$21.5m achieved during the corresponding period in1999. New products including high profile brands,Sunkist and Nestlé, contributed to the increase inrevenue.

Vita MedicalThis division provided a contribution to group revenueof $5.9m up 8% on 1999.

ProfitabilityGroup profit after tax of $5.2m and EBIT of $6.8mexceeded expectations. Maintenance of gross profitmargins and lower than budgeted operating expenseswere the major factors in achieving this result. VitaHealth’s EBIT was $5.9m or 87% of group EBIT.

OtherThe group had cash of $3.9m at 31 December and noborrowings. Provisions of $2.0m included $1.7m for taxand the balance for sundry liabilities.

The launch of many new products by the Vita Healthdivision and the introduction of new distributionarrangements in the European Union (EU) resulted inextended credit terms being granted to the principaldistributors. In turn receivables increased to $28.0m. This isexpected to be a “one time” effect and receivables, as a percentage of sales will reduce over 2001.

There was a build-up of inventory during the year($8.6m at 31 December) as a result of higher sales andforward ordering of stock for product launches in Q12001.

During the year the company took advantage of theweak Australian dollar. Most of the foreign exchangegain resulted from sales of products in Singaporedollars, Euro and Malaysian Ringgit (pegged to USdollar). The net foreign exchange gain was $0.9m.



Chairmans’ Message

“Vita Life Sciences continues to successfullyimplement its growth model of bringingproprietary healthcare pharmaceuticals and theTechnegas

®

System to key global markets”.

Reflecting on our past year, since our IPO in April2000, we have many reasons to feel well satisfied. Of great interest to shareholders, is the financialperformance of the company. Directors are pleased toreport that Vita Life Sciences’ profit of $5.2m is 10%higher than the prospectus forecast.

During the year, the company achieved a number ofsignificant milestones toward our primary long termgoal of becoming a genuine global business, operatingin the worldwide medical and pharmaceutical markets.

A major building block has been the assembly andstrategic international positioning of a multi-disciplined senior management team. With people onthe ground in most key markets we are well poised forinternational growth. Our aim is to seamlesslyintroduce Vita Health products and our world-leadingTechnegas

®medical technology into selected niche

markets in Asia, Europe, North America and Australia.

Mr V. R.GouldChairman

Mr S. M. PangManaging Director

Ms S. M. AkeroydNon-Executive Director

Mr O. C. TangFinance Director

Following our successful listing in April 2000, we havecontinued to build our shareholder base, and nowhave over 1,600 shareholders. Presently we are one ofonly seven listed healthcare companies which areprofitable in our ASX sector.

Again touching on our management expertise, wehave experienced the benefits of the synergies whichhave brought together the health and medicalbusinesses. This has been particularly evident in ourAsian operation, where the established and trustedbrand name of Vita Health has paved the way for easyaccess to important markets for Vita Medical. We areexcited by the potential of Vita Medical in this regionand believe it has a wonderful opportunity to establishitself as a market leader in Asia alongside Vita Health.

An important achievement has been the final outcomeof negotiations in respect of marketing Vita Medical’spremier product in the key EU market. As a result,our world-leading lung imaging technology (used inthe detection of pulmonary embolism (PE) andchronic obstructive pulmonary disease (COPD)) cannow be marketed globally and positioned through onestrategy .

In order to ensure retention of key management, weplan to introduce a Directors Share Option Plan andan Employee Share Option Plan. This plan is designedto reward outstanding performance of executivedirectors and employees. At the Annual GeneralMeeting on 24 May 2001, shareholders will also beasked to approve a Dividend Reinvestment Plan andShare Purchase Plan in addition to the abovementioned Plans. Details of these initiatives arecovered in the AGM Notice of Meeting.

Vita Life Sciences’ research & development activitiescontinue to be a focus for the company and are nowfostered by Vimed Biosciences, a subsidiary of thegroup. Exciting developments in new proprietary

technology will present us with additional marketingopportunities. As a consequence this will precipitatefuture divisional growth.

In addition, Vita Life Sciences is continuing to pursuethe development of a third division of the company,Vita Pharma, to focus on the manufacture anddistribution of generic prescription medicines. Thissector will seek to utilise our established distributionchannels.

I take this opportunity to thank our management teamand shareholders for their support of Vita LifeSciences in this exciting growth phase.

We are pleased that a number of our employees arealso shareholders and look forward to the level ofparticipation increasing. I would like to personallythank all our staff for the contribution they have madeto the growth and development of the company duringthe past year. The Managing Director has beentireless in his efforts to grow our company and I amsure all shareholders will join with me in thanking himfor his vision and the outstanding contribution he ismaking to our company.

Presently our company is capitalised in excess of$100m and we will strive to drive shareholder valuefurther in the coming year.

I look forward to reporting to you on the furthersuccess and strengthened performance of the companyin the latter half of 2001.

Vanda Gould - Chairman


Vita Life Sciences Limited

Vita Health

An established division. Development and distribution of “Over the Counter” (OTC), complementary and alternative supplements and health foods.

Vita Medical

An established division. Marketing and distribution of proprietary medical equipment and drugs in the niche but expansive market of nuclear medicine.

Vita Pharma

A new division. Development, manufacture and distribution of generic prescription medicines specialising in effervescents.


Operational Review

OutlookVita Life Sciences remains confident of increasing salesgrowth in our key business divisions, despite signs of adeterioration in global economic conditions. Ourconfidence is underpinned by several key factors.

Firstly, a full year’s contribution of several new highprofile product brands which are being introduced tokey markets. Secondly, an acquisition since balancedate of a profitable Australian company, Herbs ofGold, which will be earnings positive to the Groupfrom April 2001. Finally, new contractual arrangementsfor Vita Medical’s product range in our key market –Europe.

Based on performance to date, the company is wellplaced to grow revenue by up to 30% whilstmaintaining existing profit margin ratios.

Vita HealthPrior to 2000, 100% of Vita Health’s product range wasexported. With over 550 registered products, VitaHealth at present remains the mainstay of grouprevenue. Going forward, Vita Health plans to expandits presence in Australia’s domestic naturceutical andOTC market. Initially, this will be attained by makingsynergistic acquisitions.

On 19 March 2001, the first such acquisition was made.Vita Life Sciences announced the purchase ofAustralian-based naturceutical company, Herbs ofGold, for $5.0m, comprising cash of $4.25m and$0.75m in equity over 3 years.

Herbs of Gold have over 140 registered products soldthrough over 1,000 Australian health food outlets andpractitioners. The Herbs of Gold distribution channelis a valuable asset for the group.

In addition, we have formed several relationships withmajor brand owners of healthcare products.

Vita Life Sciences now has alliances and distributionchannels with the major brands, Sunkist and Nestlé.These “cough and cold” and OTC products have highreceptivity in Asia.

Continued strong sales in the region strengthen thelikelihood of gaining further distribution territory forthese well-known brands.

We anticipate general growth in the pharmaceuticalmarket of 15 - 20%. This, coupled with Vita Health’sincreased domestic and overseas market share,provides every confidence for significant revenuegrowth.

Vita MedicalVita Medical continues to build its market for theTechnegas

®System, which is now installed in 630

hospitals worldwide. 160,000 patient studies, a newrecord, were completed in 2000 using the Technegas

®

System.

The Technegas®

System, including its consumable kit, isa proprietary drug delivery system used to diagnoselife-threatening conditions including PE and COPD. In the US and in many other countries, these diseasesare among the 4 leading causes of death.

In particular, the EU market which accounted for 65%of Vita Medical’s revenue in 2000, is expected toprovide substantial revenue growth in 2001/2002. VitaMedical’s revenue rose by 8% to record sales of $5.9m.It is expected that divisional revenue will rise to over$10m in the next 3 years.



The renegotiation of EU distribution agreements hasresulted in a greater contribution to net profit per unitsale. More significantly, as part of these successfulnegotiations, a major milestone was achieved. Sales ofour world-leading blood clot imaging system can nowbe marketed globally under the one recognised brandname – Technegas

®.

Vita Medical is poised to experience rapid revenuegrowth particularly in key EU markets, and notablyFrance and Germany. We have now patented theproprietary technology for our Technegas

®system to

2014 in all key markets. Looking forward, specificallyto sales, Vita Medical is expected to grow its installedbase for Technegas

®in Europe and surrounding

countries from 433 to around 1,000 hospitals andmedical centres over the next few years.

This will flow on to consumable kits required for eachpatient study, of which there were an estimated120,000 in the EU in 2000.

In Asia, acceptance of Vita Medical’s Technegas®

system has been much stronger than expected and wenow expect sales to exceed 30 units this year up on only4 in Asia in 1999.

In the US, our largest prospective market for theTechnegas

®system, regulatory approval with the

Federal Drug Administration (FDA) continues to besought. In mid-2001, we expect to conduct meetingswith the FDA, which we expect will determine thecourse for the final steps of approval.

The widespread and growing acceptance in hospitalnuclear imaging departments of Technegas

®as a lung

ventilator imaging agent establishes Vita Medical withthe commercial opportunity to introduce furthermedicinal imaging technologies directly to its customerbase.

Research and DevelopmentVimed Biosciences is a subsidiary company of Vita Life Sciences and was specifically incorporated toundertake the research and development for the group.

Our team has developed alternative delivery methodsfor our world-leading blood clot imaging technologyTechnegas

®, which has fuelled important medical

diagnostic and therapeutic opportunities.

Specifically, Vimed has developed and patented aunique technology to deliver an ultra fine radiopharmaceutical for oral and injectable administration.This “encapsulation technology” has the potential todeliver substantial commercial and medical outcomesin time. Potential applications include the diagnosis ofdeep vein thrombosis (DVT) and inflammatory boweldisease (IBD) and selected cancer treatments.

Vimed has identified ThromboTrace™, an injectableversion of Technegas

®, in laboratory conditions as

having a specific affinity for fibrin, the distinctivestructural component of blood clots. This has enabled‘hot-spot’ images to be taken of blood clots associatedwith DVT, a use of the company’s technology, whichcould complement the current diagnosis of PE.

Vimed is investigating whether ThromboTrace™, hasother potential applications in medical imaging. The association of ThromboTrace™ with fibrin is notlimited to DVT (or PE), but applies in other normaland disease states in which fibrin is involved. Both infectious diseases, which stimulate macrophageactivity and growth of cancer, involved a role of fibrin.

The company aims to qualify intravascularThromboTrace™ imaging protocols in a number ofcommercially promising areas for which adequateimaging technologies are currently unavailable.

Vita PharmaWe have established a third division - Vita Pharma, tocomplete the business with a separate pharmaceuticalarm. The division will concentrate on the manufactureand distribution of “ethical” drugs under licence in theAsian regions. These prescription drugs will primarilybe effervescents.

An advantage to the group is the sales leverage can begained with no addition to our present fixeddistribution costs. This division is not expected toprovide profit to the group for the next 2 to 3 years.Longer term, it will provide an expanded productrange and the diversification to the group of alternaterevenue generation.

Proposed Initiatives for Directors,Employees and Shareholders In this report we foreshadowed our intention tointroduce several initiatives for both shareholders andemployees. At the AGM on 24 May 2001, shareholderswill be asked to approve a dividend reinvestment plan,a share purchase plan, a director’s share option planand an employee share option plan. These plans aredesigned to benefit both shareholders and reward, aswell as retain, key management personnel andemployees.

The dividend reinvestment plan, if approved, willprovide two options for dividends for shareholders;

i. continue to receive cash dividends; and/or ii. dividends will be able to be reinvested

Shareholders will be given the opportunity to reinvestthe 4.5 cent dividend that is proposed to be paid on 29 May 2001.

The share purchase plan, if approved, will enableshareholders to increase their shareholding (amount tobe determined by the Board) without transaction costs.

The director’s share option plan and the employeeshare option plan, if approved, will enable the directorsto grant to executive directors and employees, optionsto Vita Life Sciences shares.

Further details on these proposed corporate initiativeswill be provided in the AGM Notice of Meeting.

Finally, we take the opportunity to thank ourhardworking employees for the excellent contributionthey have made to the company in this past year. As evidenced by the developments I have mentionedabove, we have many exciting opportunities of which totake advantage of.

We look forward to an even improved effort on behalfof our shareholders in the coming year.

S.M. Pang - Managing Director

Dividend TimetableEvent Date

VLS announces dividend and record date. 4 April 2001

Record date to identify shareholders entitled to the dividend. 19 April 2001

Date of dividend payment. 29 May 2001

Dispatch date: 30 May 2001


15Vita Life Sciences Limited Annual Report 2000

Directors’ Report

The directors present their report together with thefinancial statements of Vita Life Sciences Limited andthe consolidated accounts of the economic entity, beingthe Company and its controlled entities, for the 18months ended 31 December, 2000 (the financialperiod) and the Auditor’s Report thereon.

DirectorsThe directors of the company at any time during orsince the end of the financial period are:

Mr. V. R. GouldChairman Bachelor of Commerce University of NSW, Master ofCommerce University of NSW. Fellow of the Instituteof Chartered Accountants, Australia, Fellow of theAustralian Society of Certified Practising Accountants.

Vanda has broad business experience having practicedas a chartered accountant for more than 25 years. Asfounding Chairman in 1983 of Continental VentureCapital Limited (listed on the ASX) he has overseeninvestments in several companies involved in the healthservices/medical industries including Vita Medical. Heis also chairman of several other private and publiccompanies and educational establishments.

Vanda lives in Sydney and is 53 years old.

Mr. S. M. PangManaging DirectorBachelor of Arts, University of Singapore. Bachelor ofSocial Science Economics (Honours), University ofSingapore.

Seng Meng has 20 years experience in thepharmaceutical health foods supplements industryhaving commenced his career in 1980 as a managementtrainee at Vita Health. His primary roles were initially

in the sales and marketing areas until 1991, when hewas appointed Managing Director.

Seng Meng has played a significant role in VitaHealth’s success, particularly its achievement ofbecoming one of Australia’s largest exporters ofvitamins, minerals and supplements with sales in 11countries.

Seng Meng lives in Singapore and is 45 years old.

Ms. S.M. Akeroyd Non-Executive Director Victorian College of Pharmacy. Member of thePharmaceutical Society of Australia, RoyalPharmaceutical Society of Great Britain, RegulatoryAffairs Professionals Society, Association ofRegulatory and Clinical Scientists to AustralianPharmaceutical Industry, Australian College ofNutritional & Environmental Medicine and AmericanHerb Council. Sue is a past member of the AustralianGovernment’s Therapeutic Goods Committee (TGC)and Traditional Medicine Evaluation Committee(TMEC).

Sue commenced her career as a Pharmacist in 1966and has practised in Australia and the UnitedKingdom. From 1975 to 1990, she primarily workedfor multinational pharmaceutical companies in theareas of clinical trials and regulatory affairs. In 1990Sue established her own consultancy companyproviding technical support, service and advice onpharmaceuticals, alternative medicine, traditionalherbal medicine and dietary supplements withparticular emphasis on regulatory affairs, scientific andfactual resourcing interpretation and application.

Sue lives in Melbourne and is 56 years old.



In turn receivables increased to $28.0m. This is expected to be a “one time” effect and receivables, as a percentageof sales will reduce over 2001.

There was a build-up of inventory during the year ($8.6m at 31 December) as a result of higher sales and forwardordering of stock for product launches in Q1 2001.

During the year the company took advantage of the weak Australian dollar. Most of the foreign exchange gainresulted from sales of products in Singapore dollars, Euro and Malaysian Ringgit (pegged to US dollar). The net foreign exchange gain was $0.9m.

Directors’ MeetingsThe number of Directors’ Meetings and number of meetings attended by each of the Directors of the Companyduring the financial period were:

* reflects the number of meetings held during the time the directors held office during the year.

Group ResultsThe consolidated profit of the economic entity for the financial period after providing for income tax was$5,245,738 (Year ended 30 June 1999: Profit of $524,888).

State of AffairsListed below is a summary of key events of the Company since 1 July 1999.

•On 3 February 2000, a fully franked dividend for 1999 was paid at 1.96 cents per share.

•On 3 February 2000, a return of capital to shareholders was paid 0.74 cents per share.

•On 3 February 2000, the Company lodged with the ASX its consolidation of share capital, being that for every 2.72 of the existing shares shall constitute one share.

Director Vita Life Sciences Board Audit Committee Meeting Remuneration Committee Meeting

Held by Attended Held while Attended Held while AttendedMember* Member* Member*

Mr. V.R. Gould 11 10 2 2 2 2Mr. S.M Pang 7 7 - - 2 1Ms. S.M. Akeroyd 7 6 2 - - -Mr. O.C Tang 7 7 2 2 2 2Mr. J.D. Read 4 3 - - - -Mr. A.D.H. Beard 4 4 - - - -

Mr. O. C. TangFinance DirectorOyi Chuen is a Certified Public Accountant,Singapore. Fellow of the Institute of Certified PublicAccountants of Singapore and Fellow of the CertifiedChartered Accountants Association of the UnitedKingdom.

Oyi Chuen undertook various appointments whilstworking for the Port of Singapore, one of the largeststatutory bodies in Singapore, before joining VitaHealth as Financial Controller in 1997. His primaryresponsibilities at Vita Life Sciences have been raisingcapital, preparation of the company for public listingand overall financial management.

He lives in Singapore and is 45 years old.

Mr. J.D. ReadDirectorB.Sc (Hons)(Cant), M.B.A., (AGSM). Director ofContinental Venture Capital Limited and numerousprivate and public companies. Mr Read is a Fellow ofthe Australian Institute of company directors. Director since 1992Retired 28th February 2000

Mr. A.D.H. BeardDirectorB.Com (University of NSW), Associate of the Instituteof Chartered Accountants in Australia. Director ofnumerous private and public companies. Director since 1995Retired 28th February 2000

Review of OperationsRevenueVita Life Science’s revenue of $37.8m in 2000exceeded the combined $27.4m revenue of VitaHealth and Vita Medical in 1999 by (38%). This isprimarily attributed to new product ranges sold byVita Health.

Vita Health and Vita Medical contributed 84% and16% of group revenue respectively during the year2000.

Vita HealthVita Health sales of $30.1m were 40% higher than the$21.5m achieved during the corresponding period in1999. New products including high profile brands,Sunkist and Nestlé, contributed to the increase inrevenue.

Vita MedicalThis division provided a contribution to group revenueof $5.9m up 8% on 1999.

ProfitabilityGroup profit after tax of $5.2m and EBIT of $6.8mexceeded expectations. Maintenance of gross profitmargins and lower than budgeted operating expenseswere the major factors in achieving this result. Vita Health’s EBIT was $5.9m or 87% of group EBIT.

OtherThe group had cash net of $3.9m at 31 December andno borrowings. Provisions of $2.0m included $1.7m fortax and the balance for sundry liabilities.

The launch of many new products by the Vita Healthdivision and the introduction of new distributionarrangements in the EU resulted in extended creditterms being granted to the principal distributors.



Environmental RegulationThe consolidated entity’s operations are not subject to any significant environmental regulations under eitherAustralian Commonwealth or State legislation. However, the board believes that the consolidated entity hasadequate systems in place for the management of its environmental requirements as they apply to the consolidated entity.

Directors’ and Senior Executives’ EmolumentsThe Remuneration Committee is responsible for making recommendations to the Board on remuneration policiesand packages applicable to the Board members and senior executives of the Company. The board remunerationpolicy is to ensure the remuneration package properly reflects the person’s duties and responsibilities; and thatremuneration is competitive in attracting, retaining and motivating people of the highest quality.

Executive directors and senior executives may receive bonuses based on the achievement of specific goals relatedto the performance of the consolidated entity (including operational results and cash flow). Non-executivedirectors do not receive any performance related remuneration.

Details of the nature and amount of each major element of the emoluments of each director of the Company andeach of the five named officers of the Company and the consolidated entity receiving the highest emolument are:

Base Bonuses Non-Cash Super Other TotalEmolument Benefit Contributions Benefits

$ $ $ $ $ $Company DirectorMr. V.R Gould 25,000 25,000Ms. S.M Akeroyd 15,000 15,000Mr J.D. Read - -Mr A.D.H. Beard - -

Consolidated EntityDirectorMr. V.R Gould 25,000 25,000Ms. S.M Akeroyd 15,000 15,000Mr J.D. Read - -Mr A.D.H. Beard - -Mr. S.M. Pang 241,401 19,116 13,149 47,636 321,302Mr. O.C. Tang 173,248 19,990 12,172 17,769 223,179

Executive Officers (excluding directors)Mr. S.K. Khoo 80,369 41,890 10,849 31,470 164,579Mr. H.C. Gan 80,369 41,890 10,849 30,467 163,577Mr. K. S. H. Chiew 64,579 9,358 9,090 27,245 110,274Ms. M.E. Nicholas 90,207 6,614 8,968 4,423 110,212Mr. C. K. Chong 77,472 29,369 106,841

•On 3 February Knightsbridge Fidelity Corporation Pty Ltd was sold to CVC Investment Managers Pty Ltd for $254,892.

•On 3 February Tetley Medical Limited and its subsidiaries were acquired for $6,622,989 in cash and shares. The shares component being 6,182,032 shares issued at 50 cents.

•On 3 February Vita Corporation Pte Ltd and its subsidiaries were acquired for $11,777,815 in cash and shares. The share component being 23,000,000 shares issued at 50 cents.

•On 3 February the Raptis Loan was sold to Continental Venture Capital Limited for $681,434.

•On 4 February Short term investments were sold for $408,834.

•On 27 April 2000, the Company’s securities are reinstated to official quotation, and 4,000,000 shares issued in accordance with the Prospectus dated 10 March 2000.

Events Subsequent To Balance DateThe following subsequent events occurred after 31 December 2000.

European Distribution ArrangementsOn 2 February 2001 Vita Medical Limited entered into a Deed of Disengagement with MDS Nordion SA(Nordion), the now former distributor for Europe, West Asia and Africa.

Under this Deed, the EU Marketing Authorities are to be transferred to Vitamedica Europe Limited(Vitamedica) for the Technegas

®System, Vitamedica purchased 30 Technegas

®Systems and sundry spare parts for

A$614,481 and Nordion assigned or caused the assignment of various financing arrangements in relation to 46Technegas

®Systems installed in hospitals in Europe. Under the terms of the assignment, Vitamedica paid

A$1,071,440 to Nordion for the financing arrangements which entitle Vitamedica to receive lease and PASfinancing payments in relation to the 46 Technegas

®Systems.

Acquisition of Herbs of GoldVita Life Sciences Limited entered into a share sale agreement to acquire all of the share capital of Herbs of GoldPty Ltd (“Herbs”) on 16 March 2001. The acquisition consideration is $4.25 million cash and $750,000 of VLSshares to be issued over 3 years. Completion is scheduled for 9 April 2001.

Other than the matters disclosed above, there has not arisen in the interval between the end of the financialperiod and the date of this report, any item, transaction or event of a material and unusual nature, likely in theopinion of the Directors of the Company to affect significantly the operation of the consolidated entity, the resultsof these operations or the state of affairs of the consolidated entity in future financial years.



Corporate Governance

The Company is a holding company and its maincorporate governance practices, as applied to allsubsidiary companies, are summarised below.

Board CompositionThe Board is responsible to Shareholders for theCompany’s overall corporate governance. The Board iscurrently comprised of two non-executive Directorsand two executive Directors, in conformity with theCompany’s policy that the Board not have a majority ofnon-executive Directors. The chairman, Mr V.R.Gould, is a non-executive Director.

The Board’s responsibilities include:•establishing the criteria for Board membership;•reviewing the composition of the Board;•identifying and nominating possible new candidates forthe Board and assessing proposed new appointments;

•reporting to shareholders;•reviewing and determining strategic direction and policy; and establishing management goals and monitoring their achievement.

In addition to the eleven scheduled full meetings eachyear, other meetings may be held at short notice asrequired.

Appointment and Retirement of Non Executive DirectorsIt is the Board’s policy to consider the appointmentand retirement of non-executive Directors on a case bycase basis. In doing so, the Board must take intoaccount the requirements of the Constitution and theCorporations Law.

Currently, the Board requires Directors to be re-elected by rotation at least every three years, and theymust retire at the Annual General Meeting followingtheir seventieth birthday.

Remuneration Arrangements forDirectors and Senior ExecutivesThe Remuneration Committee currently comprises Mr. V.R. Gould, Chairman of the RemunerationCommittee, together with Mr. S.M. Pang and Mr. O.C. Tang.

The Remuneration Committee is responsible for:•reviewing and approving the remuneration of Directors and other senior executives; and

•reviewing the remuneration policies of the Company generally.

As Managing Director and Finance Director of theCompany, Mr. S.M. Pang and Mr. O.C. Tang,respectively, are not present during any discussion bythe Remuneration Committee in relation to their ownremuneration. In determining the remuneration to bepaid to non-executive Directors, consideration is givento the level of remuneration given by companies ofcomparable size and type.

Retiring non-executive Directors are not currentlyentitled to receive a retiree allowance.

Audit CommitteeThe audit committee comprises three Directors, themajority being non-executive Directors. The non-executive Directors are Mr. V.R. Gould, Chairman ofthe Audit Committee and Ms. S. Akeroyd, and arejoined by Mr. O.C. Tang, the Finance Director.

The Audit Committee meets at least twice yearly andits responsibilities include:

•recommending to the Board nominees for appointment as external auditors, and the terms and conditions of their appointment;

•reviewing the performance of the external auditors andmonitoring the level of fees charged;

•monitoring compliance with the Corporations Law, the

OptionsDuring or since the end of the financial year, the company did not grant options over unissued ordinary shares to any directors or the five most highly remunerated officers.

Options over unissued ordinary shares of the Company at 31 December 2001 were:

Number of Options Issue Date Exercise Price Expiry Date

1,000,000 03/02/00 $1.00 03/02/0359,990 06/03/00 $0.50 03/02/0356,000 27/04/00 $1.00 03/02/03

These options do not entitle the holder to participate in any share issue of the Company or any otherBody Corporate.

Indemnification and Insurance of Officers and AuditorsDuring the current financial period, the parent entity paid a premium of $46,139 to insure certain Officers of the Company and related corporate entities. The Officers of the company covered by the insurance policy include the Directors, the Company Secretary and Executive Officers.

The liabilities insured include costs and expenses that may be brought against the Officers in their capacity as Officers of the Company that may be incurred in defending civil or criminal proceedings that may be brought against the officers of the company or a controlled entity.

The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an auditor of the Company or any related body corporate against a liability incurred as such an auditor.

Directors’ InterestsThe relevant interest of each director in the share capital of the companies within the consolidated entity, as notified by the directors to the Australian Stock Exchange in accordance with S205G(1) of the Corporations Law, at the date of this report is as follows:

Director Ordinary Shares

Mr. V.R Gould 9,958,758Ms. S.M Akeroyd 12,500Mr. S.M. Pang 9,129,370Mr. O.C. Tang 295,849

Dated at 30 March 2001.Signed in accordance with a resolution of the Board of Directors.

V.R. Gould, Chairman S.M. Pang, Managing Director


Financial Statements Period Ended 31 December 2000

22 Vita Life Sciences Limited Annual Report 2000

ASX Listing Rules and other legal requirements;•reviewing internal and external audit reports and evaluating for the Board the adequacy of internal controls and management responses - this task includesidentifying any deficiencies or breakdowns in controls and ensuring that appropriate remedial action is taken;and

•assisting the Board to prepare the Company’s financialstatements and related releases to the ASX.

Investment and Business RiskManagementThe Board, based on the recommendations of theManaging Director, Mr. S.M. Pang and the Directorsmakes decisions on investments for the Company. The Board considers that the general retention by it ofthe power to make the final investment or divestmentdecision by majority vote, provides an effective reviewof the investment strategy.

A majority of the Directors must approve anymodification to the investment parameters applying tothe Company’s assets. Any modification to theinvestment strategy is notified to the ASX, and anyproposed major change in investment strategy is firstput to shareholders for their approval.

The Board is also responsible for identifying andmonitoring areas of significant business risk. Internalcontrol measures currently adopted by the Boardinclude:

•monthly reporting to the Board in respect of operations and the Company financial position, with a comparison of actual results against budget; and

•regular reports to the Board by appropriate members of the management team and/or independent advisers, outlining the nature of particular risks and highlightingmeasures which are either in place or can be adopted to manage or mitigate those risks.

The Board recognised the importance of the Year 2000computer problem and took appropriate steps toensure that the systems of the Company complied. The systems were monitored and checked and thebusiness was not interrupted by any inability tocorrectly process date references after 31 December1999, 1 January 2000 or 29 February 2000.

Independent Professional AdviceIn fulfilling their duties, each Director and eachcommittee of the Board dealing with corporategovernance matters may obtain independentprofessional advice at the Company’s expense. Prior approval of the Chairman is required, whichapproval must not be unreasonably withheld.

Shareholdings by DirectorsCompany policy restricts trading by the Directors intheir Shares to certain times and circumstances.Directors and senior executives will only be entitled totrade their Shares without restriction for up to fourweeks following announcements by the ASX of theCompany’s half yearly and preliminary final results,any detailed announcements concerning profitforecasts, and after the Annual General Meeting.

Ethical StandardsThe Board endeavours to ensure that the Directors,officers and employees of Vita Life Sciences act withintegrity and observe the highest standards ofbehaviour and business ethics in relation to theircorporate activities. All officers and employees areexpected to:

•comply with the law;•act in the best interests of the Company;•be responsible and accountable for their actions; and•observe the ethical principles of fairness, honesty and truthfulness, including disclosure of potential conflicts.



Profit and Loss Statementsfor the 18 months ended 31 December 2000

Note Consolidated Company18 months to 12 months to 18 months to 12 months to31 Dec 2000 30 June 1999 31 Dec 2000 30 June 1999

$ $ $ $

Revenue from ordinary activities 2 37,831,982 2,069,579 1,148,697 2,067,381

Operating profit before income taxand abnormal items 2,3 5,450,761 310,801 582,034 312,737Abnormal Items 5 1,201,892 214,087 - 214,087

Operating profit before income tax 6,652,653 524,888 582,034 526,824Income taxes attributable to operating profit 4 (1,406,915) - (218,914) -

Operating profit after income tax 5,245,738 524,888 363,120 526,824Outside Equity Interest in operating profit - - - -

Net Profit attributable to members of the Company 5,245,738 524,888 363,120 526,824Retained profits at the beginning of the financial period (1,918,504) (2,443,392) (2,125,237) (2,652,061)Available for appropriation 3,327,234 (1,918,504) (1,762,117) (2,125,237)Dividends provided for or paid 24 (400,000) - (400,000) -

Retained profits at the end of the financial period 2,927,234 (1,918,504) (2,162,117) (2,125,237)

The Profit and Loss Statements should be read in conjunction with the notes to and forming part of the financial statement.


Balance Sheetsas at 31 December 2000

Consolidated Company31 Dec 2000 30 June 1999 31 Dec 2000 30 June 1999

Note $ $ $ $

Current AssetsCash 6 3,863,619 2,053,805 1,918,100 1,986,973Receivables 7 29,346,483 407,278 2,357,713 407,207Inventories 8 9,063,173 - - -Investments 9 - 1,556,257 - 1,556,257Other 10 309,559 - 42,393 -

Total Current Assets 42,582,834 4,017,340 4,318,206 3,950,437

Non-Current AssetsInvestments 11 2,000 - 18,400,804 50,002Property, Plant & Equipment 12 488,545 - 107,394 -Intangibles 13 5,349,121 - - -Receivables 14 - 531,377 - 531,377Other 15 525,884 - 1,477 -

Total Non-Current Assets 6,365,550 531,377 18,509,675 581,379

Total Assets 48,948,384 4,548,717 22,827,881 4,531,816

Current LiabilitiesAccounts Payable 16 17,361,632 56,175 326,034 56,175Borrowings 17 78,636 - 1,549 189,832Provisions 18 2,163,963 - 192,198 -

Total Current Liabilities 19,604,231 56,175 519,781 246,007

Non-Current LiabilitiesProvisions 19 218,681 - 14,414 -Borrowings 20 181,156 - - -

Total Non-Current Liabilities 399,837 - 14,414 -

Total Liabilities 20,004,068 56,175 534,195 246,007

Net Assets 28,944,316 4,492,542 22,293,686 4,285,809

Shareholder's EquityIssued Capital 21 24,455,803 6,411,046 24,455,803 6,411,046Reserves 22 1,549,067 - - -Retained Profits 2,927,234 (1,918,504) (2,162,117) (2,125,237)

Shareholders’ equity attributableto members of the Company 28,932,104 4,492,542 22,293,686 4,285,809Outside Equity Interest in Controlled Entities 23 12,212 - - -

Total Shareholder's Equity 28,944,316 4,492,542 22,293,686 4,285,809

The Balance Sheets should be read in conjunction with the notes to and forming part of the financial statement.



Notes to and forming part of the FinancialStatements for the 18 months ended 31 December 2000

Note 1

1. Statement of Significant Accounting PoliciesThe significant policies which have been adopted in the preparation of these Financial Statements are:

(a) Basis of PreparationThe Financial Statements are a general purpose financial report which has been prepared in accordance with Accounting Standards, UrgentIssues Group Consensus Views and the Corporations Law. They have been prepared on the basis of historical costs and do not take intoaccount changing money values or, except where stated, current valuations of non current assets.

These accounting policies have been consistently applied by each entity in the economic entity and, except where stated, are consistent withthose of the previous year.

The carrying amounts of all non-current assets are reviewed a least annually to determine whether they are in excess of their recoverableamount. If the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the lower value. Inassessing recoverable amounts the relevant cash flows have not been discounted to their present value.

(b) Principles of ConsolidationThe consolidated accounts of the Economic Entity include the financial statements of Vita Life Sciences Limited, being the parent entity, andits controlled entities.

Where an entity either began or ceased to be controlled during the year, the results are included only from the date control commenced or upto the date control ceased.

The balances, and effects of transactions, between controlled entities included in the consolidated accounts have been eliminated.

Outside interests in the equity and results of the entities that are controlled by the Company are shown as a separate item in the consolidatedaccounts.

(c) GoodwillGoodwill, representing the excess of the purchase consideration over the fair value of the identifiable net assets acquired arising upon theacquisition of a business entity, is amortised on a straight line basis over a 20 year period being the period of time during which benefits areexpected to arise.

The unamortised balance of goodwill is reviewed at least annually. Where the balance exceeds the value of expected future benefits, thedifference is charged to the profit and loss account.

(d) Investments

Controlled Entities:Investments in controlled entities are carried in the Company's financial statements at the lower of cost and recoverable amount. Dividends arebrought to account in the profit and loss statement when they are declared by the controlled entities.

Associates:An associate is an entity, other than a partnership, over which the consolidated entity exercises significant influence and where the investmentin that entity has not been acquired with a view to disposal in the near future.

In the consolidated financial statements investments in associates are accounted for using equity accounting principles. Investments inassociates are carried at the lower of the equity accounted amount and recoverable amount. The consolidated entity’s share of the associates’net profit or loss after tax is recognised in the consolidated profit and loss statement after adjustments for: revisions in depreciation ofdepreciable assets and amortisation of goodwill arising from notional adjustments made as at the date of acquisition; dissimilar accountingpolicies; and the elimination of unrealised profits and losses on transactions between the associate and any entities in the consolidated entity oranother associate of the consolidated entity. Other movements in reserves are recognised directly in consolidated reserves.


Statement of Cash Flowsfor the 18 months ended 31 December 2000

Note Consolidated Company18 months to 12 months to 18 months to 12 months to31 Dec 2000 30 June 1999 31 Dec 2000 30 June 1999

$ $ $ $

Cash flows from operating activitiesReceipts from customers 31,508,544 (190,301) - (189,081)Payments to suppliers and employees (33,211,337) - (729,026) -Dividends received 16,000 6,889 16,000 6,875Interest received 395,948 340,621 271,016 338,497Borrowing costs (139,719) - - -Income taxes paid (419,422) - - -Other 54,566 55,875 40,163 55,875

Net cash provided by / (used in) operating activities 39 (1,795,420) 213,084 (401,847) 212,166

Cash flows from investing activitiesPayments for short term investments (2,610,000) (3,188,506) (2,610,000) (3,188,506)Proceeds from short term investments 3,540,708 1,749,013 3,480,571 1,749,013Payment for equity investments (3,607,001) - (3,607,001) -Loan to other entities (119,000) (182,737) (1,834,686) (182,930)Loans repaid from other entities 297,675 1,434,013 297,675 1,434,012Loan from other entities - - 280,000 -Payments for property, plant and equipment (3,943,267) - (3,597,237) -Proceed from sale of property, plant and equipment 1,098,872 - 740,822 -

Net cash flow from investing activities (5,342,013) (188,217) (6,849,856) (188,411)

Cash flows from financing activitiesProceeds from issue of shares 7,382,265 - 7,382,265 -Repayment of borrowings (2,033,656) - - -Dividends / distributions paid (400,000) - (400,000) -Other (191,797) - 200,565 -

Net cash flow from financing activities 4,756,812 - 7,182,830 -

Net increase (decrease) in cash held (2,380,621) 24,867 (68,873) 23,755

Cash at beginning of the financial period 2,053,805 2,028,938 1,986,973 1,963,218Cash from acquired entities 4,190,435 - - -

Cash at the end of the financial period 6 3,863,619 2,053,805 1,918,100 1,986,973

The cash flow statements are to be read in conjunction with the notes to and forming part of the financial statements.



(l) SuperannuationContributions are made by the Company and its controlled entities to an employee superannuation fund and are charged as expenses when incurred. The Economic Entity has no legal obligation to cover any shortfall in the fund’s obligation to provide benefits to employees on retirement.

(m)Operating LeasesPayments made under operating leases are charged against profits in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property.

(n) ReceivablesTrade debtors expected to be settled within 180 days are carried at amounts due. The collectability is assessed at balance date and specific provision ismade for any doubtful debts.

(o) Accounts PayableLiabilities are recognised for amounts to be paid in the future for goods or services received. Trade accounts are normally settled within 60 - 90 days.

(p) Deferred ExpenditureMaterial items of expenditure are deferred to the extent that management consider that it is probable that future economic benefits embodied in theexpenditure will eventuate and can be measured reliably, do not relate solely to revenue that has already been brought to account and will contribute to the future earning capacity of the entity.

Deferred expenditure is amortised over the period of realisation.

2. Change in Balance DateThe Australian Securities and Investments Commission provided relief from paragraph 323D(2) of the Corporations Law permitting Vita Life Sciences Limited and its subsidiaries ‘financial year’ to commence on the 1 July 1999 and end 31 December 2000. Each financial year thereafter shall be 12 months long and end on 31 December.

Consolidated Company18 months to 12 months to 18 months to 12 months to31 Dec 2000 30 June 1999 31 Dec 2000 30 June 1999

$ $ $ $

Note 2 Operating RevenueSales Revenue 36,000,889 - - -

Other operating revenueDividends received / receivable - 6,899 - 6,875Interest received / receivable 377,704 283,840 275,304 281,666Proceeds from sales of non-current assets - 1,749,013 186,008 1,749,013Net gain on foreign currency transactions 1,201,893 - - -Rent received / receivable 3,589 - - -Management fees received / receivable fromcontrolled entities - - 583,500 -Proceeds from sale of options 78,350 - 78,350 -Other Income 169,557 29,827 25,535 29,827

Total other operating revenue 1,831,093 2,069,579 1,148,697 2,067,381

Total operating revenue 37,831,982 2,069,579 1,148,697 2,067,381


(e) Income TaxThe Economic Entity adopts the liability method of tax effect accounting.

Income tax expense is calculated on operating profit, adjusted for any permanent differences between taxable and accounting income.

The tax effect of timing differences which arise from items being brought to account in different accounting periods for income tax andaccounting purposes is carried forward in the balance sheet as a future income tax benefit or a deferred income tax liability.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income taxbenefits which relate to tax losses are only brought to account when their realisation is virtually certain.

(f) Property, Plant and EquipmentProperty, plant and equipment are initially recorded at cost. Items of property, plant and equipment including buildings but excluding freeholdland, are depreciated over their estimated useful lives to the entity commencing from the time the asset is held ready for use.

The depreciation rate used for each class of asset are as follows:* Plant and equipment 10% - 33%* Leasehold improvements 20% - 50%* Motor vehicles 20% - 25%

(g) Foreign Currency TransactionsForeign currency transactions are translated to Australian currency at the rate of exchange ruling at the dates of the transactions. Amountsreceivable and payable in foreign currencies at balance date are translated at the rates of exchange ruling on that day.

Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account in the profit and loss account inthe financial year in which the exchange rates change, as exchange gains or loses.

Translation of Controlled Foreign Entities:

The balance sheets of the controlled entities incorporated overseas (being self sustaining foreign operations) are translated at the rates ofexchange ruling at balance date. The profit and loss accounts are translated at a weighted average rate for the year. Exchange differencesarising on translation are taken directly to the foreign currency translation reserve.

(h) InventoriesInventories are carried at the lower of cost and net realisable value. The cost of manufactured products include direct materials, direct labour,and an appropriate portion of variable and fixed overhead which is applied on the basis of normal operating capacity.

Net realisable value is determined on the basis of each entity’s known selling pattern. Expenses of marketing, selling and distribution tocustomers are estimated and are deducted to establish net realisable value.

(i) Project Work - in - ProgressProject work in progress comprises incomplete installation and supply contracts and is stated at cost less progress billings. Profit on contractsare recognised on the completion of the contracts. Provisions for foreseeable losses on uncompleted contracts are made in the period in whichsuch losses are determined.

(k) Provision for Employee Benefits

Annual Leave:The provisions for employee entitlements to annual leave represents the amount which the Economic Entity has a present obligation to payresulting from employees’ services provided up to balance date. The provisions have been calculated at normal amounts based on current wage& salary rates.

Long Service Leave:The liability for employee entitlements to long service leave represents the present value of the estimated future cash outflows to be made bythe employer resulting from employees’ services provided up to balance date. The provisions have been calculated at nominal amounts basedon current wage and salary rates.

Liabilities for employee entitlements which are not expected to be settled within twelve months are discounted using rates attaching to nationalgovernment securities at balance date, which most closely match the terms of maturity of the related liabilities.

In determining the liability for employee entitlements, consideration has been given to future increases in wage and salary rates, and theEconomic Entity’s experience with staff departures. Related on-costs have also been included in the liability.




Note $ $ $ $

Note 4 (Continued.)b) Provision for Current Income Tax

Movements during the year:Balance at the beginning of the year - - - -Addition through acquisition of controlled entities 489,545 - - -Current years income tax expense on operating profit 1,443,600 - 205,977 -Income tax payments (521,162) - (18,123) -

1,411,983 - 187,854 -

c) Provision for Deferred TaxProvision for deferred income tax comprises theestimate expense at current income tax rates on

income recognised for accounting purposes but deferred for tax purposes 19 186,716 - 14,414 -

d) Future Income Tax BenefitFuture income tax benefit comprises the estimated future benefit at current income tax rates on provisions not presently deductible for income tax purposes 15 60,186 - 1,477 -

Note 5 Abnormal ItemsLoan Receivable* - 214,087 - 214,087Foreign Exchange Gain 1,201,892 - - -Abnormal items before tax 1,201,892 214,087 - 214,087Tax effect on Abnormal items (299,736) - - -

Abnormal items after tax 902,156 214,087 - 214,087

Note 6 CashCash at bank and on hand 2,681,953 2,053,805 1,918,100 1,986,973Cash fixed deposit 1,247,903 - - -

3,929,856 2,053,805 1,918,100 1,986,973

Less Bank Overdraft (66,237) - - -

3,863,619 2,053,805 1,918,100 1,986,973

Note 7 Current ReceivablesTrade debtors 29,221,953 - 2,048 -Less provision for doubtful debts (1,047,847) - - -

28,174,106 - 2,048 -

Loans owing from non-related entity* 740,419 778,648 740,419 778,648Less provision for doubtful debts (378,648) (378,648) (378,648) (378,648)

361,771 400,000 361,771 400,000

Receivables from controlled entities - - 1,978,792 -Advances 594,913 - - -Other Debtors 215,693 7,278 15,102 7,207

29,346,483 407,278 2,357,713 407,207

* Secured by script lien over certain shares.



$ $ $ $

Note 3 Operating ProfitThe operating profit before income tax has been determined after charging as expenses:

Amortisation of:Goodwill on consolidation 227,997 - - -Leasehold Improvements 15,571 - - -

Depreciation of:Plant, equipment and motor vehicles 275,099 - 1,864 -

Provision for employee entitlements 67,245 - 4,344 -Provision for doubtful debts 139,180 - - -Research and development expenditure 564,421 - - -Net gain on foreign currency transactions 1,201,892 - - -

Interest attributable to:Other persons 100,007 - - -

Unrealised loss on short term investments - 23,280 - 23,280Realised losses on short term investments - 14,626 - 14,626

Note 4 Income Taxa) Income Tax ExpensePrima Facie income tax expense calculated at 34% onoperating result (1999 at 36%) 2,238,709 188,925 174,780 188,577

Increase in income tax expense due to non taxdeductible items:

Amortisation of intangibles 64,118 - - -Non deductible expenses (including entertainment) 9,040 (10,875) - (10,875)Difference in Tax Rate for 12 months toJune 2000 @ 36% 51,879 - 44,134 -

Decrease in income tax expense due to:Effect of different rates of tax on overseas income (861,292) - - -Research & Development (125% differencein tax deduction) (31,598) - - -

Tax losses transferred in (46,927) (178,050) - (177,702)

Net adjustment to deferred incomes tax liabilities and assets to reflect the decrease in company rate to 34% (488) - - -

Under (over) provision in previous year (16,526) - - -

Total income tax expense attributable to operating profit / (loss) 1,406,915 - 218,914 -

Income tax expense attributable to operating profit is made up of:Current income tax provision 1,443,600 - 205,977 -Deferred income tax provision (21,088) - 14,414 -Future income tax benefit 929 - (1,477) -Under (over) provision in prior year (16,526) - - -

1,406,915 - 218,914 -



* This company did not trade during 1999 or 2000 years.** Macarthur National Developments Pty Ltd changed its name to Power Herbs Pty Ltd on 23/12/1999.***Knightsbridge Fidelity Corporation Pty Limited was disposed of on 03/02/2000.Companies incorporated outside Australia carry on business in the country of incorporation.All entities other than the parent entity are audited by firms other than Gould Ralph and Company.


$ $ $ $

Note 12 Property, Plant and EquipmentPlant and Equipment – at cost 1,752,519 - 111,120 -Less: accumulated depreciation (1,502,064) - (3,726) -

250,455 - 107,394 -

Motor Vehicles – at cost 269,070 - - -Less: accumulated depreciation (269,070) - - -

- - - -

Buildings – at cost 226,033 - - -Less: accumulated depreciation - - - -

226,033 - - -

Leasehold Improvements – at cost 104,931 - - -Less: accumulated depreciation (92,874) - - -

12,057 - - -

488,545 - 107,394 -

Note 13 IntangiblesGoodwill – at cost 4,559,946 - - -Less: Accumulated amortisation (227,997) - - -

4,331,949 - - -

Trademarks – at cost 1,062,941 - - -Less: Accumulated amortisation (45,769) - - -

1,017,172 - - -

Total Intangibles 5,349,121 - - -

Note 14 Non-Current ReceivablesNon current receivables (a) - 531,377 - 531,377

- 531,377 - 531,377

a) Collateral arrangements include a right to register a joint second mortgage over certain real property

Note 15 Other Non-Current AssetsFuture income tax benefits 60,186 - 1,477 -Deferred Expenditure (FDA) 465,698 - - -

525,884 - 1,477 -


Consolidate Company31 Dec 2000 30 June 1999 31 Dec 2000 30 June 1999

$ $ $ $

Note 8 Current InventoriesRaw materials 6,418,789 - - -Work in progress 39,395 - - -Finished goods 2,604,989 - - -

9,063,173 - - -

Note 9 Current InvestmentsShares in listed corporations, at directors’ valuation (a) - 1,556,257 - 1,556,257

- 1,556,257 - 1,1556,257

a) The directors’ valuation of listed shares was based on the net fair value, representing the lower of cost and market selling price at year end.

Note 10 Other Current AssetsPrepayments & Deposits 309,559 - 42,393 -

309,559 - 42,393 -

Note 11 Non-Current Investmentsa) shares- in controlled entities (unlisted) - - 18,400,804 50,002- in other entities (unlisted) 2,000 - - -

2,000 - 18,400,804 50,002

b) Investments in controlled entities comprise:Interest Held

Place of Inc. 31 Dec 2000 30 June 1999 Class of Shares% %

Controlled Entities of Vita Life Sciences LimitedVita Medical Limited Aust 100 - OrdinaryPower Herbs Pty Limited** Aust 100 100 OrdinaryVita Corporation Pte Limited Sing 100 - OrdinaryVita Health Laboratories (Aust) Pty Limited Aust 100 - OrdinaryKnightsbridge Fidelity Corporation Pty Limited*** Aust - 100 Ordinary

Controlled Entities of Vita Medical LimitedVitamedica Europe Limited Ireland 100 - OrdinaryTetley Research Pty Limited Aust 100 - OrdinaryTetley Treadmills Pty Limited Aust 100 - OrdinaryTetley Medical Pty Limited Aust 100 - OrdinaryAllrad No 19 Pty Limited Aust 100 - OrdinaryAllrad No 28 Pty Limited Aust 100 - OrdinaryAllrad No 29 Pty Limited Aust 100 - Ordinary

Controlled Entities of Vita Corporation Pte LimitedVita Health Laboratories Pte Limited Sing 100 - OrdinaryVita Health Laboratories (HK) Limited H. Kong 100 - Ordinary

Controlled Entities of Vita Health Laboratories (Aust) Pty LimitedVita Health Laboratories Indochina Pte Limited Sing 100 - OrdinaryPremier Foods (Aust) Pty Limited Aust 100 - Ordinary

Controlled Entities of Vita Health Laboratories Pte LimitedVitaron Jaya Sdn Bhd Msia 100 - OrdinarySwiss Bio Pharma Sdn Bhd Msia 100 - OrdinaryVita Health Laboratories Malaysia Msia 100 - OrdinaryPharma Pak Lab Sdn Bhd* Msia 51 - Ordinary




$ $ $ $

Note 21 Issued CapitalIssued and paid up capital:

40,684,033 (1999: 20,370,973 )ordinary shares fully paid 24,455,803 6,411,046 24,455,803 6,411,046

Movement in Share Capital:Bal at beginning of financial period (20,370,973 Ord Shares) 6,411,046 6,411,046 6,411,046 6,411,046Consolidation of Shares – 1 for 22.717 share reduction (Shares on issue reduced by 12,870,972) - - - -Return of Capital to Shareholders (150,000) - (150,000) -23,000,000 Ordinary SharesIssued as part consideration for Vita Health 11,500,000 - 11,500,000 -6,184,032 Ordinary Shares issued as part consideration for Vita Medical 3,092,011 - 3,092,011 -4,000,000 issued pursuant to prospectus 4,000,000 - 4,000,000 -Prospectus costs (397,254) - (397,254) -

Closing Balance 40,684,033 ordinary shares fully paid (1999: 20,370,973) 24,455,803 6,411,046 24,455,803 6,411,046

Options:

Balance Allotted Exercised Lapsed Balance

30/06/99 During Yr During Yr No. 31/12/00

Normandy Finance and Investments Asia Ltd - 1,115,990 - - 1,115,990

Details of options over unissued ordinary shares of the company at 31 December 2000 were:

Issue Date Exercise Price Expiry Date Number of Options03/02/00 $1.00 03/02/03 1,000,00006/03/00 $0.50 03/02/03 59,99027/04/00 $1.00 03/02/03 56,000

1,115,990



$ $ $ $

Note 16 Current Accounts PayableUnsecured:Trade creditors 12,965,799 - 136,678 -Other creditors and accruals 4,395,833 9,000 189,356 9,000Unearned Income - 47,175 - 47,175

Total value of unsecured creditors 17,361,632 56,175 326,034 56,175

Note 17 Current BorrowingsLoans to related parties - - 1,549 189,832Hire Purchase 78,636 - - -

78,636 - 1,549 189,832

Note 18 Current ProvisionsTaxation 1,411,983 - 187,854 -Employee Entitlements 136,757 - 4,344 -Replacement of Goods 422,506 - - -Promotion 185,217 - - -Warranty 7,500 - - -

2,163,963 - 192,198 -

Note 19 Non-Current ProvisionsDeferred income taxes 186,716 - 14,414 -Employee entitlements 31,965 - - -

218,681 - 14,414 -

Note 20 Non-Current BorrowingsHire Purchase 181,156 - - -

181,156 - - -



Note 25 Financial Instruments Disclosures(a) Interest Rate RiskFixed Interest Rate Maturing in

Floating More Non- Average

Interest 1 yr Over 1 to than 5 Interest Interest

Rate (a) or less 5 years years Bearing Rate

2000 Note Total Float Fix

$ $ $ $ $ $ % %

Financial Assets

Cash 6 3,738,358 97,116 - - 94,382 3,929,856 3.5 5.85

Receivables 7 - - - - 29,346,483 29,346,483 - -

Investments 11 - - - - 2,000 2,000 - -

3,738,358 97,116 - - 29,442,865 33,278,339

Financial Liabilities

Bank Overdraft 6 66,237 - - - - 66,237 14.95 -

Payables 16 - - - - 17,361,632 17,361,632 - -

Hire Purchase 17,20 - 78,636 181,156 - - 259,792 - 9.9

66,237 78,636 181,156 - 17,361,632 17,687,661

1999

Financial Assets

Cash 6 2,053,805 - - - - 2,053,805 4.5 -

Receivables 7,14 - - 407,278 - 531,377 938,655 8.8 -

Investments 9 - - - - 1,556,257 1,556,257 - -

2,053,805 - 407,278 - 2,087,634 4,548,717

Financial Liabilities

Payables 16 - - - - 56,175 56,175 - -

- - - - 56,175 56,175

a) Floating interest rates represent the average rate applicable to the instrument for the entire financial period.

(b) Foreign Exchange RiskThe Company does not enter into forward foreign exchange contracts.

Foreign currency amounts are translated at rates current at the balance date.

(c) Credit Risk ExposuresCredit risk represents the loss that would be recognised if counter parties failed to perform as contracted.

On-Balance Sheet Financial InstrumentsThe credit risk on financial assets, excluding investments, of the consolidated entity which have been recognised on the balance sheet, is the carrying amount, net of any provision for doubtful debts.

Off-Balance Sheet Financial InstrumentsCredit risk on off-balance sheet derivative contracts is minimised as counter parties are recognised financial intermediaries with acceptable credit ratings determined by a recognised rating agency.


Consolidate Company31 Dec 2000 30 June 1999 31 Dec 2000 30 June 1999

$ $ $ $

Note 22 ReservesForeign currency translation 1,549,067 - - -

1,549,067 - - -

Movements in reserves

Foreign currency translation reserveBalance at the beginningof the financial year - - - -Adjustment from translation ofFinancial Statements of foreign operations 1,549,067 - - -

1,549,067 - - -

Note 23 Outside Equity InterestsShare capital of controlled entities held by outside equity interests is:Pharm Pak lab Sdn BhdInterest in:Share Capital 3Reserves 10,397Retained Profits: 1,812 - - -

Total Outside Equity Interests 12,212 - - -

Note 24 Dividendsa) Dividends proposed by the company are:

Cents Total Date of Tax Rate for PercentagePer Share Amount Payment Franking Credits Franked

1999:Final 1.96 400,000 20/01/00 36% (Class C) 100%

2000:Final Ordinary*

*The directors have decided not to provide for the final dividend in the 2000 financial statements due to the uncertainty relating to the proposed dividend re-investment plan.


$ $ $ $b) Dividend Franking Account:Balance of franking account adjusted for franking credits which will arise from the payment of income tax provided for in the financial statementsand, after deducting franking credits to be used in payment of the above dividends and those dividends required to be treated as interest expense:

Class C (2000: 34% (1999: 36%)) franking credits 1,865,686 725,403 755,149 725,403

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.




$ $ $ $

Note 28 Auditors RemunerationThe auditor of the parent Company for:Auditing and reviewing the Financial Statements 48,301 3,500 48,301 3,500Other services 2,000 1,500 2,000 1,500Auditors of Controlled Entities 70,852 - 70,852 -

Total Auditor's Remuneration 121,153 5,000 121,153 5,000

Note 29 Receivables and Payables denominated in foreign currenciesThe Australian dollar equivalents of unhedged amounts payable in foreign currencies, calculated at year end exchange rates, are as follows:

Consolidated31 Dec 2000 30 June 1999

$A $AUnited States Dollar

Amounts PayableCurrent 2,378 -

Amounts ReceivableCurrent 33,556 -

Singapore DollarsAmounts PayableCurrent 12,368,490 -

Amounts ReceivableCurrent 5,318,582 -

EurosAmounts PayableCurrent 827,200 -


Hong Kong DollarsAmounts ReceivableCurrent 95,918 -


(d) Net Fair Values of Financial Assets and LiabilitiesFinancial assets and liabilities are stated in the balance sheet at the carrying amounts which equate to estimated net fair values.

The net fair value of a financial asset or a financial liability is the amount at which the asset could be exchanged, or liability settled in a current transaction between willing parties after allowing for transaction costs.

Listed shares included in "Investments", are traded in an organised financial market. The net fair value of listed shares are determined by valuing them at the current quoted market bid price for an asset.

Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined by valuing them at the present value of contractual future cash flows on amounts due from customers (reduced for expected credit losses) or due to suppliers. The carrying amounts of bank term deposits, accounts receivable, loan receivables and accounts payable approximate net fair value.


$ $ $ $

Note 26 Remuneration of DirectorsTotal remuneration paid or payable, or otherwise made available including salary, bonus, superannuation and retirement benefits to Directors of the Company from the Company or any related party, and to all Directors of each entity in the consolidated entity fromcorporations of which they are Directors, or any related party.

Directors RemunerationIncome paid or is payable, or otherwise made available to Directors of the chief entity from the chief entity or any related party 584,481 100,000 584,481 100,000

The number of Directors whose total income falls with inthe following bands:

$0 - $19,999 3 - 3 -$20,000 - $49,999 1 3 1 3$200,000 - $299,999 1 - 1 -$300,000 - $399,999 1 - 1 -

In accordance with Accounting Standard AASB 1017, any personrequired to be a Director of a wholly - owned Controlled Entity,in order to discharge his or her duties as an executive officer of the parent entity, is excluded from the determination of Director's remuneration.

Note 27 Remuneration of ExecutivesThere are no executives of the Company (including Executive Directors) working mainly in Australia receiving over $100,000 or more from the Company or any related party or from the consolidated entity from entities in the consolidated entity or related party.



Consolidated CompanyNote 31 Dec 2000 30 June 1999 31 Dec 2000 30 June 1999

Note 30 Hire PurchaseHire purchase payments are payable as follows:

Not later than one year 99,787 - - -Later than one year, but not later than five years 79,240 - - -Later than five years 125,040 - - -

304,067 - - -

Future finance charges not provided for in the financial statements

Not later than one year (22,033) - - -Later than one year, but not later than five years (14,456) - - -Later than five years (7,786) - - -

(44,275) - - -

Total Hire purchase 259,792 - - -

Amounts provided for in the financial statementsCurrent 17 78,636 - - -Non Current 20 181,156 - - -

259,792 - - -

Note 31 Other CommitmentsCapital expenditure contracted but not provided forin the Financial Statements - 179,900 - 179,900

- 179,900 - 179,900

Analysis of other commitments which are payable:Not later that one year - 170,700 - 170,700Later than one year but not later than two years - 9,200 9,200

- 179,900 - 179,900

Note 32 Superannuation CommitmentsNeither the Company, nor any entity within the Economic Entity has established or sponsored a superannuation or retirement or benefit plan.

Entities contribute superannuation payments to third party funds in relation to statutory requirements.


Consolidated31 Dec 2000 30 June 1999

$A $AMalaysian Ringgit

Amounts PayableCurrent 27,760 -


New Taiwan DollarsAmounts PayableCurrent 58,301 -


Indonesian RupiahAmounts ReceivableCurrent 2,315 -

Swiss FrancAmounts PayableCurrent 107,057 -

Deutsche MarksAmounts PayableCurrent 57,279 -

New Zealand DollarsAmounts PayableCurrent 41,057 -



d) Loans to DirectorsThere is a loan from director Pang Seng Meng existing at the end of the financial year for $2,346.

e) Balances with Entities within the Wholly Owned Group31 Dec 2000 30 June 1999

$ $(i) Amounts owing to the Company:Vita Medical Limited 159,626 -Vita Health Laboratories (Aust) Pty Ltd 1,715,666 -Vita Corporation Pte Ltd 103,500 -

Total 1,978,792 -

(ii) Amounts owing by the Company:Power Herbs Pty Ltd 1,549 1,527Knightsbridge Fidelity Pty Ltd - 188,305

Total 1,549 189,832

f) Other Director TransactionsA director of Vita Life Sciences Limited, Sue Akeroyd, is also a director and shareholder of Datadeck Pty Ltd. Datadeck Pty Ltd have provided regulatory consulting services to certain Vita Life Sciences Limited controlled entities on normal commercial terms and conditions. The total value of services provided for the financial period by Datadeck Pty Ltd is $122,095.

Note 34 Economic DependencyZuellig Pharma Sdn Bhd is a company incorporated in Malaysia, whilst acting as the Vita Health Laboratories Pte Ltd distributor in Malaysia, accounts for approximately 56% of sales by the economic entity.

Note 35 Events Occurring After Reporting DateEuropean Distribution ArrangementsOn 2 February 2001 Vita Medical Limited entered into a Deed of Disengagement with MDS Nordion SA (Nordion), the now former distributor for Europe, West Asia and Africa.

Under this Deed, the EU Marketing Authorities are to be transferred to Vitamedica Europe Limited (Vitamedica) for the Technegas System, Vitamedica purchased 46 Technegas Systems and sundry spare parts for A$614,481 and Nordion assigned or caused the assignment of various financing arrangements in relation to 46 Technegas Systems installed in hospitals in Europe. Under the terms of the assignment, Vitamedica paid A$1,071,440 to Nordion for the financing arrangements which entitle Vitamedica to receive lease and PAS financing payments in relation to the 46 Technegas Systems.

Acquisition of Herbs of GoldVita Life Sciences Ltd entered into a share sale agreement to acquire all of the share capital of Herbs of Gold Pty Ltd ("Herbs") on 16 March 2001. The acquisition consideration is $4.25 million cash and $750,000 of VLS shares to be issued over 3 years. Completion is scheduled for April 2001.

Other than the matters disclosed above, there has not arisen in the interval between the end of the financial period and the date of this report, any item, transaction or event of a material or unusual nature , likely in the opinion of the directors of the company, to effect significantly the operation of the consolidated entity , the results of those operations, or the state of affairs of the consolidated entity in future financial years.


Note 33 Related Party Disclosuresa) The names of the Directors of Vita Life Sciences Limited during the financial year were:

Mr Pang Seng Meng (Appointed 28 February 2000)Mr Tang Oyi Chuen (Appointed 28 February 2000)Ms Sue Akeroyd (Appointed 28 February 2000)Mr Vanda GouldMr John Read (Resigned 28 February 2000)Mr Alexander Beard (Resigned 28 February 2000)

b) Directors' ShareholdingThe total shareholdings of the Directors and their associates in Vita Life Sciences Limited at year end were as follows:

Total Interest in Ordinary SharesDirector Quoted Unquoted Total

Mr Pang Seng Meng 5,289,370 3,840,000 9,129,370Mr Tang Oyi Chuen 295,849 - 295,849Ms Sue Akeroyd 13,500 - 13,500Mr Vanda Gould 6,118,758 3,840,000 9,958,758

11,717,477 7,680,000 19,397,477

The above total directors shareholdings comprise:

Directly held Not Directly heldby a Director by a Director Total

Mr Pang Seng Meng 2,937,333 6,192,037 9,129,370Mr Tang Oyi Chuen 295,849 - 295,849Ms Sue Akeroyd 12,500 1,000 13,500Mr Vanda Gould - 9,958,758 9,958,758

3,245,682 16,151,795 19,397,477

c) Directors' Transactions in SharesDuring the financial year the total direct shareholding by directors in Vita Life Sciences increased from zero to 3,245,682.

This comprises:

Opening Balance -Open Market Sales (300,000)Prospectus Offer 10/3/00 12,500Consideration Shares upon the acquisition of Vita Corporation Pte Ltd 3,533,182

Total 3,245,682



Note 37 Industry SegmentsHealth Medical Unallocated Consolidated

2000 2000 2000 2000 1999$ % $ % $ % $ $

Sales revenue 30,084,166 84 5,916,723 16 - - 36,000,889 -Other revenue 1,377,468 75 97,737 5 355,888 20 1,831,093 2,069,579

31,461,634 83 6,014,460 16 355,888 1 37,831,982 2,069,579

Segment operating profit 4,445,125 82 739,406 13 266,230 5 5,450,761 310,801

Operating profit beforetax and abnormal items 5,450,761 310,801

Abnormal items 1,201,892 214,087

Operating profit beforeincome tax 6,652,653 524,888

Income taxes attributableto operating profit (1,406,915) -

Operating profit after tax 5,245,738 524,888

Segment assets 37,452,724 77 9,047,347 18 2,448,313 5 48,948,384 4,548,717

Notes :The company operates predominately in two industries - Health and Medical.

The Health group operation comprises the manufacture (through contract manufacturers ) and sales of a range of more than 545 registered prescription and "Over the Counter" medicines as well as complementary and alternative medicines, dietary supplements and health foods.

The Medical operation comprises the manufacture and sale of a lung imaging process, which is primarily used in the specialised niche field of nuclear medicine to diagnose lung complaints including Pulmonary Embolism (blood clot in lung), a life threatening condition.


Note 36 Geographical SegmentsAsia Australia /NZ Europe Others Consol. 2000 Consol. 1999

$ % $ % $ % $ % $ $

Sales revenue 21,310,695 59 10,573,571 29 3,884,578 11 232,045 1 36,000,889 -Other revenue 1,177,237 64 506,024 28 - - 147,832 8 1,831,093 2,069,579

22,487,932 60 11,079,595 29 3,884,578 10 379,877 1 37,831,982 2,069,579

Segment operating profit 4,265,777 53 1,669,864 21 1,871,178 23 208,932 3 8,015,751 -

Unallocated expenses (2,564,990) -

Operating profit beforetax and abnormal items 5,450,761 310,801

Abnormal items 1,201,892 214,087

Operating profit beforeincome tax 6,652,653 524,888

Income taxes attributableto operating profit (1,406,915) -

Operating profit after tax 5,245,738 524,888

Segment Assets 29,581,930 64 14,987,681 32 1,930,460 4 - - 46,500,071 -

Unallocated Assets 2,448,313 4,458,717

Total Assets 48,948,384 4,548,717

Note :The basis of inter segment pricing is determined on an arm's length basis




$ $ $ $

Note 39 Notes to the Statement of Cash Flowsa) Reconciliation of net cash provided operating activities to operating profit after income taxes.

Operating profit after income taxes 5,177,750 524,888 295,146 526,824Depreciation / amortisation 337,145 - 1,864 -Unrealised foreign exchange (gain)/loss (1,131,532) - - -Prov for employee entitlements (67,245) - - -Prov for doubtful debts (139,180) - - -Net loss on sale of office equip 985 - - -Mvt in prov for income tax payable (327,230) - (192,198) -

(Increase) / decrease in:Trade Debtors (8,804,480) 33,764 (71) 33,814Inventory (1,304,889) - - -Other debtors and prepayments 61,353 - (42,393) -

(Profit)/Loss on sale of short term investments - (66,031) - (66,031)Loan write back / recovery - (243,310) - (243,310)Unrealised losses on short term investments - 23,279 - 23,279Interest Capitalised - 27,901 - 27,901

Increase / (decrease) in:Trade and other creditors 4,896,272 36,175 80,027 36,175Sundry Creditors 113,573 - (3,722) -Accrued Charges (285,117) - - -Loans from related party (current) (719,782) - (540,500) -Loans from related party (non current) 396,957 - - -Other provisions - (126,582) - (126,486)Other - 3,000 - -

Net cash provided by / (used in ) operating activities (1,795,420) 213,084 (401,847) 212,166


Note 38 Acquisition / Disposal of Controlled EntitiesThe following controlled entities were acquired or disposed of during the financial period:

NTA at date Consolidatedof Disposal / Profit on Company's

Consideration Acquisition Disposal interest$ $ $ %

Acquisitions2000

Vita Corp Pte Ltd 11,777,815 12,566,121 n/a 100Vita Medical Ltd 6,622,989 2,063,043 n/a 100

1999No Acquisitions

Disposals2000

Knightsbridge Fidelity Corporation Pty Ltd 254,892 254,892 11,089 n/a

1999No Disposals



d) Non-cash financing and investment activitiesDuring the financial period the consolidated entity acquired property, plant and equipment with an aggregate fair value of $168,500 by means of hire purchase arrangements. These acquisitions are not reflected in the Statement of Cashflows.

Consolidated Company31 Dec 2000 30 June 1999 31 Dec 2000 30 June1999

$ $ $ $

Note 40 Financing ArrangementsThe consolidated entity has the following finance facilities available:

Bank overdrafts:Limits 166,237 - - -Amounts used 66,237 - - -

Amount unused 100,000 - - -

Financing arrangements to the value of $3.0 million was terminated during the period ended 31 December 2000.

Note 41 Contingent LiabilitiesUnsecured guarantees by the parent entity in respect of:(a) Leases of controlled entities 168,500 - 168,500 -

Note 42 Earnings Per Share 31 Dec 2000 30 June1999Basic earnings per share (in cents) 16.4 2.6

The weighted average number of ordinary shares on issue in the calculation of basic earnings per share: Number of Shares

32,042,987 20,370,973

Diluted earnings per share is not materially different from basic earnings per share and therefore is not disclosed in the Financial Statements.


Consolidated Company Consolidated Company18 months to 12 months to 18 months to 12 months to31 Dec 2000 30 June 1999 31 Dec 2000 30 June 1999

$ $ $ $

b) Acquisitions of entitiesDuring the financial period the consolidated entitypurchased 100% of the ordinary shares ofVita Corporation Pte Ltd and 100% of theordinary shares of Tetley Medical LimitedDetails of the acquisitions are as follows:

Total Consideration8,481,032 ordinary shares issued at 50 cents 14,592,011Cash consideration 3,808,793

Total Consideration 18,400,804Cash acquired (3,659,778)

Net Consideration 14,741,026

Cash ConsiderationCash consideration 3,808,793Cash acquired (3,659,778)

149,015Fair value of net assets of entities acquiredProperty, plant & equipment 271,663Future Income Benefit 62,567Cash 3,659,778Inventories 3,698,505Trade Debtors 14,670,682Other Debtors 1,016,252Investments 2,017Trade Creditors (7,881,511)Borrowings (1,107,587)Other Provisions (499,377)

13,892,989Outside equity interests at acquisition (52,131)

13,840,858Goodwill on acquisition 4,559,946

Consideration 18,400,804

c) Disposal of entitiesDuring the financial year the consolidated entitydisposed of all the ordinary share ofKnightsbridge Fidelity Corporation Pty Ltd.Details of the disposal is as follows:

Consideration (cash) 254,892

Net assets of entity disposedCash 346,692Trade debtors 180Loan to consolidated entity (103,069)

243,803



We have audited the financial report of Vita Life Sciences Limited for the 18 month financial period ended 31 December 2000, consisting ofthe Profit and Loss Statements, Balance Sheets, Statements of Cash Flows, accompanying notes and the Directors Declaration as set out onpages 24 to 50. The financial report includes the consolidated financial statements of the consolidated entity, comprising the company and theentities it controlled at the period’s end or from time to time during the 18 month financial period. The company’s directors are responsiblefor the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the membersof the company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial reportis free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and otherdisclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have beenundertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with AccountingStandards and other mandatory professional reporting requirements and statutory requirements so as to present a view which is consistent withour understanding of the company’s and consolidated entity’s financial position, and performance as represented by the results of theiroperations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit OpinionIn our opinion, the financial report of Vita Life Sciences Limited is in accordance with:

(a) the Corporations Law including:

(i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 31 December 2000, and of their performance for the 18 month financial period ended on that date; and(ii) complying with Accounting Standards and the Corporations Regulations; and

(b) other mandatory professional reporting requirements.

Gould Ralph & CompanyChartered Accountants

GREG RALPH M.Com. F.C.A.Partner

Dated at Sydney this 30th day of March 2001

Limited Liability by the Acccountants Scheme, approved under the Professional Standards Act 1994 (NSW).


Directors’ Declaration for the 18 monthsended 31 December 2000

Independent Auditor’s Report to the Members

In the opinion of the Directors of Vita Life Sciences Limited:

The Financial Statements and notes set out on pages 24 to 49 are in accordance with the Corporations Law, including:

• giving a true and fair view of the financial position of the Company and consolidated entity as at 31 December 2000and of their performance, as represented by the results of their operations and cash flows, for the 18 months ended on that date;

• complying with Accounting Standards and the Corporations Regulations; and

• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Dated at Sydney this 30th day of March 2001.

Signed in accordance with a resolution of Directors.

_________________________________ __________________________________V.R. Gould S.M. PangChairman Managing Director


52 Vita Life Sciences Limited Annual Report 2000 53Vita Life Sciences Limited Annual Report 2000

Additional Information

1. Distribution of Shareholders as at 23 March 2001

Category (Size of Holding) Number of Ordinary Shareholders

1-1,000 362 1,001-5,000 844 5,001-10,000 250 10,001-100,000 177 100,001- and over 27

1,660

As at 23 March 2001, 55 shareholders held less than a marketable parcel.

2. 20 Largest Shareholders at 23 March 2001

Shareholder No. of Ordinary % of Ordinary No. of Options % of OptionsShares Held Shares Held Held Held

American Nutritionals Incorporated 5,954,037 14.63CVC Biz Vision Limited 3,785,000 9.30CVC Communication & Technology Pty Ltd 3,558,599 8.75Normandy Finance & Investments Asia Ltd 3,520,106 8.65 1,115,990 100Pang Seng Meng 2,937,333 7.22Normandy Nominees Ltd 1,849,518 4.55Campburn Pty Ltd 1,396,407 3.43Derrin Brothers Properties Ltd 1,330,503 3.27Universal Trustee (Malaysia) Bhd 946,484 2.33National Nominees Ltd 905,800 2.23Continental Venture Capital Ltd 727,914 1.79Chemical Trustee Limited 700,000 1.72Knightsbridge Fidelity Corporation Pty Ltd 618,116 1.52Abasus Investments Ltd 597,708 1.47Southsea Holdings Pty Ltd 305,112 0.75Tang Oyi Chuen 295,849 0.73Glen Nominees Ltd 263,630 0.65Michelle Nicholas 208,000 0.51Silverstand Property Group Ltd 175,227 0.43Alexander Kerng Ee Chen 147,616 0.36

40,684,033 74.29 1,115,990 100

3. Voting Rights

Rule No 11.14 of Vita Life Sciences Limited’s Constitution details the voting rights of members. The rule indicates that every member present in person or by proxy shall have one vote for every share registered in his/her name.

INSIDCOVE


Documents

Vita Life Sciences Limited Annual Report 2000