Interim Report FY2018

Interim Report 2018
AFT PHARMACEUTICALS LIMITED

Contents
01 Financial Calendar
02 Key Highlights
04 Interim Financial Results Summary
08 Financial Statements
21 NZX Waiver
22 Directory
Note: $ in this report are NZ$
unless otherwise stated.
Full report available online
at investors.aftpharm.com

Half-Year End30 September 2017
Interim Results Announcement23 November 2017
Financial Year End31 March 2018
Annual Results AnnouncementMay 2018
Annual MeetingAugust 2018
Financial
Calendar
This Interim Report is dated 23 November 2017.
Signed on behalf of the Board of
AFT Pharmaceuticals Limited by:
Hartley Atkinson
Managing Director and
Chief Executive Officer
David Flacks
Chairman
01

Key Highlights
Operating Revenues
Operating Revenues of $36.6m for the first half of FY2018
to 30 September 2017 (H1FY18) were up 23% over the
corresponding six month period ended 30 September 2016
(H1FY17) previous corresponding period (PCP).

Maxigesic
Maxigesic is now being sold in ten countries – Australia,
Brunei, Israel, Italy, Malta, New Zealand, Serbia, Singapore,
United Kingdom and United Arab Emirates. Further country
launches are in progress.
Maxigesic is licensed in 124 countries up from 110 in
F Y 2 0 1 7.

Clinical Studies
Product clinical studies on track with ten being conducted
in FY2018.

NasoSURF
NasoSURF development is on track with Class I Medical
Device completed in the key US market and the Class II
FDA development pathway now confirmed. Pilot production
batches are about to commence.

02AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017

Research and Development
Research and Development investment in our key global
products has increased to $5.6m
1
for the six months (PCP
$4.5m) and represents 15% of Operating Revenue (PCP
15%). We have successfully concluded our largest clinical
trial, the Phase 3 for the intravenous (IV) form of Maxigesic.
The completion of this study along with the Maxigesic Oral
Liquid study represents a significant amount of our
clinical trial expenditure planned at IPO.

Operating Loss
The Operating Loss of $6.7m
(PCP $8.4m) has reduced with
the growth in Operating Revenues
and an improved Gross profit
margin partially offset by the
increased investment in
Research and Development.

Cash Available
Cash available at 30 September
2017 of $7.2m following investment
in Research and Development.
In addition we have a US$10m
facility available with CRG.
1. Total Research and Development includes
the equity accounting for the joint venture
03

OPERATING REVENUE
Operating Revenue grew 23% to
$36.6m for the six month period ended
30 September 2017 (PCP $29.8m) due
primarily to the continued growth in
our primary Australian market and
the emerging Rest of World market.
Australia Operating Revenue
grew by 38% to $20.2m (PCP $14 .6m)
and this market now makes up 55% of
Group Operating Revenue. Strong
growth in its main over-the-counter
channel, with all products now available
following the previous supply issues.
Maxigesic continues to grow as the
market prepares for the re-scheduling
of codeine-based painkillers from
over-the-counter to prescription only
from 1 February 2018 (Maxigesic is
codeine-free and is therefore exempt
and remains available over-the-counter).
It is apparent that the shift away from
codeine is accelerating as the
rescheduling date approaches. The
speed of this shift and the relative
market share gained by Maxigesic will
contribute to the second half FY18 and
onwards. The Hospital channel also had
strong growth with successes in all of
the significant state and private tenders.
New Zealand Operating Revenue
grew by 5% to $14 .1m (PCP $13.5m)
and represents 39% of the Group
Operating Revenue. Good growth in the
over the counter market, which
included the launch of Crystawash and
Crystasoothe as extensions to the
market leading Crystaderm. The
Hospital channel also experienced good
growth with the addition of several new
products. Prescription declined as we
finish the transition away from the low
margin Metoprolol tender.

Rest of World Operating Revenue
grew by 38% to $1.6m (PCP $1.2m) and
now represents 4% of Group Operating
Revenue. Maxigesic sales were made to
Italy, United Arab Emirates and United
Kingdom together with sales to Israel
for the launch in that market. Additional
small markets have been added such as
Malta and Brunei.

Southeast Asia Operating Revenue
grew by 14% to $0.6m (PCP $0.5m)
and represents 2% of the Group
Operating Revenue. The main market
continues to be Singapore with
over-the-counter growth.
Interim Financial
Results Summary
AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017
04

GROUP OPERATING RESULTS
Six month period
ended 30 September
Change
($)
Change
(%)
$NZ000’s FY2018 FY2017
Revenue36,56129,787 +6,774+23
Cost of Sales(22,256) (19,018) +3,238+17
Gross Profit14,305 10,769 +3,536+33
Other income1,014 1,007 +7+1
Selling and distribution expenses(12,771)(12,575)+1 9 6+2
General and administrative expenses(3,618)(3,135)+483+1 5
Research and development expenses(4,9 8 2)(4, 276)+70 6+17
Equity accounted loss of joint venture entity(616)(210)+406+1 9 3
Operating loss(6,668)(8,420)-1,752-21
OPERATING REVENUE
Australia New Zealand Rest of the World Southeast Asia
FY2017 Interim
(NZ$m)
(NZ$000 and percentage)
FY2017 Annual
(NZ$m)
FY2018 Interim
(NZ$m)
Rest of
World
South
East Asia
New
Zealand
Australia
Rest of
World
South
East Asia
New
Zealand
Australia
0
5.0
10.0
20.0
15.0
Rest of
World
South
East Asia
New
Zealand
Australia
0
5.0
10.0
20.0
15.0
$ m
0
15.0
20.0
5.0
10.0
25.0
30.0
35.0
40.0
$ m
FY2016 H1FY2016 Annual
$ m
FY2017 H1
Rest of
World
South
East Asia
New
Zealand
Australia
Rest of
World
South
East Asia
New
Zealand
Australia
0
5.0
10.0
20.0
15.0
Rest of
World
South
East Asia
New
Zealand
Australia
0
5.0
10.0
20.0
15.0
$ m
0
15.0
20.0
5.0
10.0
25.0
30.0
35.0
40.0
$ m
FY2016 H1FY2016 Annual
$ m
FY2017 H1
Rest of
World
South
East Asia
New
Zealand
Australia
Rest of
World
South
East Asia
New
Zealand
Australia
0
5.0
10.0
20.0
15.0
Rest of
World
South
East Asia
New
Zealand
Australia
0
5.0
10.0
20.0
15.0
$ m
0
15.0
20.0
5.0
10.0
25.0
30.0
35.0
40.0
$ m
FY2016 H1FY2016 Annual
$ m
FY2017 H1
45.3%
1.8%
3.7%
49.2%
FY2017 H1
42.1%
1.5%
2.8%
53.6%
FY2017 ANNUAL
38.6%
1.7%
4.4%
55.3%
FY2018 H1
45.3%
1.8%
3.7%
49.2%
FY2017 H1
42.1%
1.5%
2.8%
53.6%
FY2017 ANNUAL
38.6%
1.7%
4.4%
55.3%
FY2018 H1
45.3%
1.8%
3.7%
49.2%
FY2017 H1
42.1%
1.5%
2.8%
53.6%
FY2017 ANNUAL
38.6%
1.7%
4.4%
55.3%
FY2018 H1
The following tables set out revenues from our four markets:
05

Gross Margin
Gross Profit grew 33% to $14 .3m
(PCP $10.8m) driven by the operating
revenue growth primarily in Australia
and supported by growth in Rest of
World and New Zealand.
The Gross Profit Margin improved to
39% (PCP 36%), driven by the growth of
the higher margin over-the-counter
products particularly in Australia and
Rest of World. New Zealand also
contributed with the growth in over-
the-counter products at higher margins
and the reduction in Prescription
revenues at lower margins.
We expect the Gross Profit Margin to
continue to improve as the strategy to
increase the sales of over-the-counter
products particularly in Australia and
Rest of World markets continue to grow.
The NZ$ has been relatively stable
on average over both the periods
against our primary purchasing
currencies of US$ at around 71.0 to
71.5 cents and Euro at around 62.0
to 62.5 cents and therefore has not
significantly influenced margins in
Australia, New Zealand or Southeast
Asia. Rest of World sales are
predominately in the purchasing
currency creating a natural hedge
to protect Gross Profit Margin.
This contribution will become more
significant as the additional launches
in the remaining 114 countries occur
over the next 2-3 years and drive
sales growth in Rest of the World.
Other Income
Licensing Income, which are the
milestone payments received from
the out-licensing agreements we have
in our Rest of World markets, are
classified in the Financial Statements
as Other Income. This was $0.8m
(PCP $0.7m) with a combination
of new out-licensing agreements
commencing and milestone payments
on existing agreements.
The balance of Other Income of $0.2m
(PCP $0.3m) is the Callaghan Innovation
growth grant that we receive on eligible
Research and Development expenditure.
Operating Overheads
• Research and Development
investment increased to $5.0m
(PCP $4.3m), and in addition our
50% of the spend on Pascomer
increased to $0.6m (PCP $0.2m).
This is reported under joint venture
equity accounting in the Financial
Statements as required by GAAP.

We are now well advanced in the
clinical trial programme we identified
at the time of IPO and, as recently
announced, we have successfully
concluded our most significant
clinical trial which was the Phase 3
for Maxigesic IV. The completion of
this study, along with the Maxigesic
Oral Liquid study, represents a
significant amount of our clinical
trial expenditure planned at IPO.
• Selling and Distribution expenses
increased marginally to $12.8m
(PCP $12.6m) in support of the strong
revenue growth we are seeing in the
over-the-counter channel in Australia.
• General and Administration
expenses increased to $3.6m
(PCP $3.1m) with increased
international travel and legal fees
primarily relating to out-licensing
discussions, together with some
additional increases in information
technology which drive efficiencies.
Cash Flow and Balance Sheet
Total Assets of $50.4m are down on
the March 2017 year end’s $58.2m.
This is mainly due to the investment
made into research and development
both directly and through the joint
venture reducing the cash balance.
Working Capital increased slightly
to $23.9m (PCP $23.1m) with the
$2.4m increase in inventory to $21.1m
(PCP $18.7m) for the stock build for
the larger sales volumes during the
summer months together, with the
$1.2m reduction in trade payables and
provisions to $13.8m (PCP $15.0m)
which was largely offset by the $2. 8m
reduction in receivables to $16.6m
(PCP $19.4m).
Cash holdings of $7.2m are down from
the $16m at the March 2017 year end,
primarily reflecting the investment
made into research and development.
The long term CRG loan of $23.2m has
a maturity date of 31 March 2020. There
is a further draw down available of
US$10m, with a mandatory US$5m to
be drawn down on or before 31 March
2018, and the balance available to be
drawn at the option of the company on
or before 30 September 2018.
Product Development
•
Maxigesic is now being sold in ten
countries – Australia, Brunei, Israel,
Italy, Malta, New Zealand, Serbia,
Singapore, United Kingdom and
United Arab Emirates. Further
country launches are in progress
with exact timings dependent upon
multiple factors around the finalising
of the regulatory processes at a
country and licensee level. These are
either completing registrations or
transfer of existing registrations to
local licensees in Europe. Getting to
launch requires a number of steps in
each country and these timings are
hard to forecast.

Registration across almost all of
Europe has been confirmed following
referral procedure at the European
Medicines Agency (EMA). The
remaining EU countries (Cyprus,
Greece and Lithuania) will be finalised
within the next six months. This is a
significant achievement as it removes
a large amount of regulatory risk
from many of the remaining countries
which in turn primarily rely upon the
EU registration.

Maxigesic is now licensed in 124
countries up from 110 in FY2017.
Additional significant markets
such as France – the second largest
potential market in the world – have
been added. Further countries are
under negotiation which we anticipate
will increase this number further.

Although the sales of Maxigesic are
yet to make a significant contribution
to the sales revenue line, a significant
number of key regulatory and licensing
steps have been achieved over the
last six months. These steps represent
an essential precursor to sales.

Clinical studies have progressed
with successful completion of the key
Maxigesic IV (intravenous dose form)
study in USA and the Maxigesic Oral
AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017
06

Liquid study in Australia, Mexico and
New Zealand. Preliminary analysis of
the Maxigesic IV study has confirmed
that the study met the primary
endpoints with a high degree of
clinical and statistical significance.
This is a significant achievement and
has reduced the clinical trial risk for
this product, which is a key factor
for any pharmaceutical company
involved in drug development.
Dossier preparation is underway for
both of these dose forms to meet
filing targets.

Development of three new Maxigesic
formulations, in two cases utilising
additional in-licensed technology,
are currently well underway with
these additional filings targeted
within the FY19 year.

•
Product clinical studies are on track
with ten being conducted in FY2018.
Four studies have been completed,
one study is ongoing and five studies
planned to commence during the
second half of FY18. The majority
of the Research and Development
programme flagged in the original
IPO document has now been
completed, with the remainder
about to commence.
•
NasoSURF development is
proceeding with the US Food and
Drug Administration development
pathway recently confirmed. Last
year registration as a Class I Medical
Device was completed. However
the major market opportunities lie
in indications covered by a Class II
Medical Device registration pathway
which is consequently the targeted
opportunity.

Manufacturing development work
is also proceeding to plan.

This FY2018 year, the clinical study
programme is well underway with
one study completed in the US, one
study underway, and a further two
studies to start in the second half
FY2018. A further two clinical studies
will be required during FY2019 in
order to move towards completion
of the development programme.
Outlook
Sales have grown well in the home
market of Australia during the first half
of the year. We anticipate Australia will
continue to experience strong growth,
particularly with the re-scheduling of
codeine based painkillers from over-
the-counter to prescription only from
1 February 2018. We anticipate the
most significant changes to occur
around the transition date although
there is the potential for a degree of
patient stock piling of codeine, which
could delay the uptake of alternative
analgesic products such as Maxigesic.
Although growth has been lower in
New Zealand we have continued to
transition sales to products in the
over-the-counter market. We also
expect growth to continue in
New Zealand with some additional
over-the-counter launches such as
the newly registered Maxigesic PE
which is a dose form of Maxigesic
designed specifically to treat colds
and flu. The loss of Metoprolol tender
sales will, however, suppress this during
the second half of the year.
The timing of Rest of World sales
remains difficult to determine due
to the multitude of countries and
differing regulatory requirements
and related timelines. There will be
further launches prior to our March
2018 year end, although this number
will be lower than previously thought
due to slower regulatory transfers of
the EU licenses, meaning that the
revenue will be pushed into the FY2019
year. The estimates from licensees
continues to indicate that the sales
will increase significantly over the
next 2-4 years with new launches,
growth in already launched markets,
and new line extensions.
The out-licensing programme is
proceeding well with the key
parameters being to increase
registrations and launches in rest
of world territories. Negotiations
continue at term sheet and due
diligence stages and a number of
these are for more significant
markets than previous agreements.
Successful conclusion will generate
significant upfront and milestone
payments. It is not possible
to predict exact timing accurately,
but it is noted that AFT has a strong
record in closing licensing deals.
The clinical trial programmes are
progressing well and remain on track,
notably with the successful conclusion
of the significant Maxigesic IV trial.
The successful and timely completion
of the remaining significant trials
remains an important factor for the
company. However the major Maxigesic
tablet, IV and Oral Liquid studies have
all been successfully completed
lowering the associated clinical risk
as these products will make up the
bulk of the Maxigesic product sales
going forward.
Although a number of studies are
planned during the second half of
FY2018 the costs are relatively lower,
and again lower in FY2019 unless
additional programmes are pursued.
However the focus is on completing
already shadowed developments and
achieving commercialisation prior to
additional development programmes.
Market research has identified that the
NasoSURF project represents significant
commercial opportunity. The device
design and first manufacturing runs
have been successfully completed,
the development programme
confirmed with FDA, the first study
completed and others underway.
Completion of this programme in order
to file the registration in major territories
is now a major development focus
given that the majority of the Maxigesic
development has been completed.
We remain confident that we will
return to profitability during the FY2018
or FY2019 time period. Timing will be
dependent upon finalisation of a number
of significant out-licensing agreements
currently under negotiation.
07

Financial
Statements
08AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017
09 Consolidated Income Statement
09 Consolidated Statement
of Comprehensive Income
10 Consolidated Statement
of Changes in Equity
11 Consolidated Balance Sheet
12 Consolidated Statement
of Cash Flows
13 Notes to the Financial Statements

09

CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2017
$NZ000’s Note
Unaudited
6 months
ended
30 Sep 2017
Unaudited
6 months
ended
30 Sep 2016
Revenue36,56129,787
Cost of sales(22,256)(19,018)
Gross profit14,30510,769
Other income1,0141,007
Selling and distribution expenses(12,771)(12,575)
General and administrative expenses(3,618)(3,135)
Research and development expenses(4,9 8 2)(4, 276)
Equity accounted loss of joint venture entity
8(616)(210)
Operating loss(6,668)(8,420)
Finance income96 291
Finance costs(1,590)(1,560)
Other gains/(losses) 1,589(1,260)
Loss before tax(6,573)(10,949)
Tax expense(300)(51)
Loss after tax attributable to owners of the parent(6,873)(11,000)
Basic and diluted earnings per share ($)(0.07)(0.40)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2017
$NZ000’s
Unaudited
6 months
ended
30 Sep 2017
Unaudited
6 months
ended
30 Sep 2016
Loss after tax(6,873)(11,000)
Other comprehensive income/(loss)
May be subsequently reclassified to profit and loss:
Foreign currency translation reserve(10)707
Other comprehensive income/(loss) for the period, net of tax(10)707
Total comprehensive loss for the period
attributable to owners of the parent(6,883)(10,293)

10AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2017
$NZ000’s Note
Share
capital
Share
options
reserve
Redeemable
preference
share reserve
Foreign
currency
translation
reserve
Retained
earnings
Total
equity
Balance as at 31 March 201653,90265–(100)(25,637)28,230
Unaudited
Loss after tax –– – –(11,000)(11,000)
Other comprehensive income –––707 –707
Movement in share options reserve –117– ––117
Balance as at 30 September 201653,902 182– 607(36,637)18,054
Audited
Loss after tax ––––( 7, 3 8 8 )( 7, 3 8 8 )
Other comprehensive income/(loss) –––(351) –(351)
Issue of redeemable
preference shares
5 9,124–– – – 9,124
Movement in share options reserve–113–––113
Capital raising expenses(82)–– – –(82)
Balance as at 31 March 201762,944 295–256 (4 4,025)19,470
Unaudited
Loss after tax –– – –(6,873)(6,873)
Other comprehensive income/(loss) –––(10)–(10)
Movement in share options reserve–104–––104
Movement in redeemable
preference shares reserve––291––291
Issue of ordinary shares
51,065 –– – –1,065
Capital raising expenses(266)–– – –(266)
Dividends paid and provided––––(451)(451)
Balance as at 30 September 201763,743399291246(51,349)13,330

11
CONSOLIDATED BALANCE SHEET
As at 30 September 2017
$NZ000’s Note

Unaudited
as at
30 Sep 2017
Audited
as at
31 Mar 2017

Unaudited
as at
30 Sep 2016
ASSETS
Current assets
Inventories21,137 18,718 21,451
Trade and other receivables16,640 19,3621 2,74 8
Cash and cash equivalents7, 1 9 7 15,980 16,054
Current income tax asset –– 19
Derivative assets
10127––
Total current assets
45,101 54,060 50,272
Non-current assets
Property, plant and equipment374 386 421
Intangible assets2,74 4 2,548 2,450
Deferred income tax assets342 610 490
Investment in joint venture entity
81,808 627177
Total non-current assets5,2684,171 3,538
Total assets
50,36958,231 53,810
LIABILITIES
Current liabilities
Trade and other payables10,685 11,069 11,131
Provisions3,110 3,950 1,841
Current income tax liability–112–
Derivative liabilities
10–204 745
Total current liabilities
13,79515,335 13,717
Non-current liabilities
Interest bearing liabilities
423,24423,426 22,039
Total liabilities
3 7,0 3 938,761 35,756
EQUITY
Share capital
563,743 62,944 53,902
Retained earnings/(losses)(51,349)(44,025)(36,637)
Share options reserve399295182
Redeemable preference share reserve291––
Foreign currency translation reserve246256 607
Total equity
13,33019,47018,054

Total liabilities and equity
50,36958,23153,810
Net tangible assets per ordinary share$0.11$0.17$0.16
For and on behalf of the Board who authorised these Financial Statements for issue on 23 November 2017.
Hartley Atkinson
Managing Director and
Chief Executive Officer
David Flacks
Chairman

12AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 September 2017
$NZ000’s Note
Unaudited
6 months
ended
30 Sep 2017
Unaudited
6 months
ended
30 Sep 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers40,322 33,422
Interest received96 186
Payments to suppliers and employees(4 7, 2 8 2 )(42,0 51)
Tax paid(143)(4)
Interest and finance cost paid(671)(1,823)
Net cash used in operating activities
7(7,678)(10,270)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment(4 6)(72)
Investment in joint venture
8(1,797)(201)
Purchases of intangible assets(301)(41 3 )
Net cash used in investing activities
(2,144)(686)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital
51,065 –
Share issue costs(188)–
Dividends paid
6(132)–
Net cash generated from financing activities
745–
Net decrease in cash(9,077)(10,956)
Impact of foreign exchange on cash and cash equivalents294 (1,045)
Opening cash and cash equivalents15,980 28,055
Closing cash and cash equivalents
7,197 16,054

13
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 September 2017
1. GENERAL INFORMATION
AFT Pharmaceuticals Limited (the ‘Company’) is a company which is incorporated and domiciled in New Zealand.
It is registered under the Companies Act 1993. These financial statements comprise AFT Pharmaceuticals Limited
and its subsidiaries (together referred to as the Group). The Group is a pharmaceutical distributor and developer
of pharmaceutical intellectual property.
These consolidated interim financial statements were approved by the Directors on 23 November 2017, and are
not audited, but reviewed by PricewaterhouseCoopers in accordance with the New Zealand Standard on Review
Engagement 2410.
2. BASIS OF PREPARATION
These general purpose financial statements for the six months to 30 September 2017 have been prepared in accordance
with New Zealand Generally Accepted Accounting Practice (NZ GAAP). They comply with NZ IAS 34 and IAS 34, Interim
Financial Reporting. The Group is a for-profit entity for the purposes of complying with NZ GAAP.
These condensed consolidated interim financial statements do not include all the notes normally included in an annual
financial report. Accordingly, this report should be read in conjunction with the audited financial statements for the
year ended 31 March 2017, which have been prepared in accordance with the New Zealand equivalents to International
Financial Reporting Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
All accounting policies have been applied on a basis consistent with those used in the audited financial statements for
the year ended 31 March 2017, as described in those annual financial statements.
3. GOING CONCERN ASSUMPTION
At 30 September 2017, the Group has drawn an interest bearing loan of $23.2m ($23.4m at 31 March 2017) and held
a cash balance of $7.2m ($16.0m as at 31 March 2017). During the period ended 30 September 2017 a new loan facility
of US$10m was entered into which is available for drawdown and $1m of additional share capital was raised (refer to notes
4 and 5). The Group incurred a net loss in the period of $6.9m (30 September 2016 net loss of $11.0m) and had
a net operating cash outflow for the period of $7.7m (30 September 2016 $10.3m).
The loan is due for repayment in full on 31 March 2020 (refer to note 4).
The Directors have a reasonable expectation that the Group will be in a position to repay this loan on or before
31 March 2020 from a combination of positive cash flow, issuance of new equity, if required, and refinancing from
debt market sources. Accordingly the Directors have adopted the going concern assumption for the purposes of
the preparation of these financial statements.
The Company’s listing on NZX and ASX, and resultant ready access to new capital support the Directors’ confidence.
The Directors have approved internal forecasts through to 31 March 2019, considered achievability of the assumptions
under these forecasts, reviewed the existing working capital against Group requirements and considered forecast
compliance with applicable debt covenants. The key revenue assumptions, which like all assumptions, are subject
to a degree of uncertainty are:
• the ability to execute further licensing agreements for the key innovative products, Maxigesic, Pascomer and
NasoSURF;
• the ability to generate future international revenues from the existing and potential licensing agreements for the key
innovative products, Maxigesic, Pascomer and NasoSURF; and
• the continued Australian sales growth for Maxigesic as the market prepares for the re-scheduling of codeine-based
painkillers from over-the-counter to prescription only from 1 February 2018 (Maxigesic is codeine-free and is therefore
exempt and remains available over-the-counter).
In respect of each matter identified above:
• The Directors are confident that with the successful clinical trial program for Maxigesic tablets, oral liquid and
Intravenous (IV) now completed and in place and with the state of current negotiations for licensing arrangements,
further and significant licensing agreements and income will be secured for further Maxigesic and Maxigesic IV
territories and potentially newer development projects such as Pascomer. Historically in the Pharmaceutical industry
significant upfront payments to the licensor are attained for prescription products such as Maxigesic IV. The timing,
structure and up front component for the completion of these licensing agreements is uncertain.

14AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 30 September 2017
3. GOING CONCERN ASSUMPTION (Continued)
• There are 124 countries licensed for Maxigesic and sales are currently being made in 10 countries. The timing and
amount of sales for the remaining licensed countries and potential countries is uncertain due to the regulatory
requirements and related timelines for each of the countries, and the ability to secure market share in each country.
Registrations of Maxigesic have been achieved in the challenging EU regulatory jurisdiction and most of the remaining
licensed countries rely upon the EU as a reference which has reduced regulatory risk.
• The analgesic market in Australia is currently in a significant transition with the re-scheduling of codeine-based
painkillers from over-the-counter to prescription only from 1 February 2018. The current codeine market is large
and there is potential to significantly increase Maxigesic sales. The number of patients that will, post 1 February 2018,
go to their Doctors for codeine-based painkiller prescriptions and the number that will switch to over-the-counter
codeine-free painkillers such as Maxigesic, cannot be predicted with any degree of certainty. There are also
uncertainties as to the market shares that will be achieved by Maxigesic with its unique and patented ratio of
Paracetamol: Ibuprofen and the other codeine-free Paracetamol and Ibuprofen combinations which are generic
and have a different Paracetamol: Ibuprofen ratio to Maxigesic.
The Directors actively monitor and manage these key revenue growth plans, together with their associated uncertainties,
and have also taken into account the ability of the Group to significantly reduce and or defer forecast development and
marketing spend should this be required, in order to preserve funds.
After considering the uncertainties and mitigations described above, the directors have a reasonable expectation that the
Company will be in a position to repay the loan on or before 31 March 2020 and to establish a replacement debt facility if
required. CRG have confirmed that they would be willing to provide an extension of the maturity date or refinancing of
the existing term loan arrangement with a similar or equivalent sized debt facility that would extend the maturity date at
least another year. This refinancing or extension would be subject to investment committee approval similar to all other
CRG financings. Should circumstances change and the directors expect that the Company will not be in a position to
repay the loan on or before 31 March 2020 nor to be able to re-negotiate the facility on the basis of a partial repayment or
establish a replacement debt facility then a further share capital raise would be considered by the directors.
4. INTEREST BEARING LIABILITIES
$NZ000’s
Unaudited
as at
30 Sep 2017
Audited
as at
31 Mar 2017
Unaudited
as at
30 Sep 2016
CRG (Capital Royalty Group) loans23,24423,426 22,039
The term loan agreement with CRG commenced in May 2014 and had a facility draw down of up to USD$30 million by
October 2016. USD$15 million was drawn down. Initially this facility was for a six year term with the first four years being
interest only, and the principal to be repaid in equal quarterly instalments in years five and six.
In September 2017, a new loan facility of USD$10 million was entered into, which includes a minimum mandatory
drawdown of USD$5 million on or before 31 March 2018. A second drawdown for the balance is available at the
Company’s option on or before 30 September 2018.
The repayment terms for all facilities were amended in September 2017 to interest only until maturity, and the principal
to be repaid in full on 31 March 2020.
The loans have a general security over the assets of the Group together with a Group guarantee. Interest is fixed at
13.5% p.a. The loans are denominated in United States dollars (USD) and during the period NZD$699,000 was recognised
as unrealised foreign exchange gains. The carrying amount of the CRG loans are substantially in line with the fair market
value as at balance sheet date.
5. SHARE CAPITAL
FY 2017:
On 24 March 2017, the Company issued 3,330,000 redeemable preference shares at $2.74 each. These shares attract
a dividend of 9.4% accruing quarterly which may be satisfied in cash or with additional redeemable preference shares
at the Company’s option.

15
They do not carry any right to vote except at meetings of an “interest group” of holders of redeemable shares.
They may be redeemed at the option of the Company at any time two years or more after issue. On redemption,
the Company would pay the issue price plus dividends accrued to the date of redemption.
After three years from issue, they may be converted to ordinary shares at the option of the holder in multiples of 100,000.
The holder would receive one ordinary share for every redeemable share held and a number of ordinary shares calculated
by dividing the amount of any accumulated dividends by the issue price.
Optional conversion events arise if one of a number of conditions occur. These conditions were notified to NZX and ASX
at the time of issue of the redeemable preferences shares, and are available on the Company website.
FY 2018:
On 16 June 2017, the Company issued 473,181 ordinary shares at $2.25 (AUD$2.11) each pursuant to the share purchasing
plan offered to existing shareholders. This share issue raised $1.06 million of additional ordinary share equity.
6. DIVIDENDS PAID
Ordinary shares
No dividends have been paid or declared for the ordinary shares.
Redeemable preference shares
The redeemable preference shares issued on 24 March 2017 attract a dividend rate of 9.4% per annum, or 25.8 cents per
share per annum. For the 31 March 2017 and 30 June 2017 quarter ends, 50% of the dividend was paid in cash, a total of
$132k. For the 30 September quarter end no dividends were paid. The remaining 50% of dividends net of withholding
taxes for the 31 March 2017 and 30 June 2017 quarter ends together with all of the dividends net of withholding taxes for
the 30 September 2017 quarter end have been accumulated in the redeemable preference share reserve.
7. RECONCILIATION OF LOSS AFTER TAX WITH NET CASH FLOW
FROM OPERATING ACTIVITIES
$NZ000’s
Unaudited
as at
30 Sep 2017
Unaudited
as at
30 Sep 2016
Loss after tax(6,873)(11,000)
Non-cash items:
Depreciation6066
Amortisation10574
Unrealised foreign exchange(909)87
Share options expense104117
Interest costs capitalized to loan532–
Share of JV loss616210
Movement in working capital:
Decrease/(increase) in inventories(2,419)(3,765)
Decrease/(increase) in trade and other receivables2,4604,212
Increase/(decrease) in trade and other payables(1,511)(350)
Increase/(decrease) in income tax15779
Net cash used in operating activities(7,678)(10,270)
Note – there have been some classification changes to the H1 FY 2017 comparatives above to align with the current
period disclosures.

16AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 30 September 2017
8. INVESTMENT IN JOINT VENTURE PARTNERSHIP
$NZ000’s
Unaudited
as at
30 Sep 2017
Unaudited
as at
30 Sep 2016
Interest in joint venture company at cost3,140 387
Equity accounted earnings of joint venture partnership(1,332) (210)
Net equity investment in joint venture partnership1,808 177
The joint venture partnership of the Group and its activies are as follows:
% interest held
Dermatology Specialties LP50%50%
Principal activities: Development and distribution of pharmaceuticals
Dermatology Specialties LP was incorporated on 22 June 2015. Movements in investment in the
joint venture partnership during the year comprise:
$NZ000’s
Balance at start of period627 186
Investment during the period1,797 201
Share of current period loss(616) (210)
Dividend received– –
Balance at end of period1,808 177
The following table summarises the financial information relating to the Group's joint venture
partnership, and represents 100% of the joint venture partnership net assets, revenues and net profits.
$NZ000’s
Extracts from joint venture partnership balance sheet (unaudited)
Current assets– –
Non-current assets2,1782,175
Current liabilities(181)(340)
Non-current liabilities– –
Net assets1,997 1,835
$NZ000’s
Extracts from joint venture partnership income statement (unaudited)
Revenue – –
Net loss after taxation(1,232) (420)
The joint venture did not have any contingent liabilities or capital commitments at balance date (H1 2017: nil).

17
9. SEGMENT REPORTING
Operating Segments
Unaudited
September 2017
$NZ000’s AustraliaNew ZealandAsiaRest of WorldTotal
Revenue20,206 14,113 618 1,624 36,561
Other income–– –1,014 1,014
Depreciation and amortisation(10) (152) (3) –(165)
Loss before tax(171)(2,294)(371)(3,737)(6,573)
Finance income294 – –96
Finance costs–(1,590)– -(1,590)
Other (gains)/losses(66)1,63718–1,589
Total assets22,836 2 7, 2 2 3 310 –50,369
Property, plant and equipment45309 20 –374
Intangible assets– 2,74 4 – – 2,74 4
Capital expenditure23369–347
Unaudited
September 2016
$NZ000’s AustraliaNew ZealandAsiaRest of WorldTotal
Revenue14,569 13,498 543 1,177 29,787
Other income – – –1,007 1,007
Depreciation and amortisation(12)(125) (3) –(140)
Loss before tax(2,831)(4,493)(664)(2,961)(10,949)
Finance income –291 – –291
Finance costs(2)(1,558)– –(1,560)
Other (gains)/losses(357)(801)(102)–(1,260)
Total assets10,143 44,560 (893) –53,810
Property, plant and equipment57 349 15 –421
Intangible assets –2,450 – –2,450
Capital expenditure24785 –485

18AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the six months ended 30 September 2017
10. FOREIGN EXCHANGE RISK
The Group purchases goods and services from overseas suppliers in a number of currencies, primarily NZD, AUD,
USD, EUR and GBP and has borrowings which are denominated in US Dollar amounts. This exposes the Group to
foreign currency risk. The Group manages foreign currency risk through use of forward exchange contracts (derivative
arrangements). The exposure is monitored on a regular basis based on Group foreign exchange policies. Future revenues
from markets outside Australasia will be denominated primarily in USD and EUR which will provide a natural hedge
against these costs.
Forward foreign exchange contracts are entered into to reduce exposure to risk associated with foreign exchange
volatility:
Forward Foreign Exchange Contracts
Buy currency
Buy currency
amount (’000)
Sell amount
NZD (’000)
30 Sep 2017
value
NZD (’000)
Fair value
NZD (’000)
EUR3,3165,3025,454152
GBP524 94998031
USD5,0807, 1 1 87, 0 6 2(56)
Total as at 30 September 2017:127
All contracts mature within one year from 30 September 2017.
Forward Foreign Exchange Contracts
Buy currency
Buy currency
amount (’000)
Sell amount
NZD (’000)
31 Mar 2017
value
NZD (’000)
Fair value
NZD (’000)
EUR3,0124,8064,656(150)
GBP5441,027979(4 8)
USD2,7303,9023,9097
AUD(750)(807)(794)(13)
Total as at 31 March 2017:(204)
All contracts mature within one year from 31 March 2017.
Forward Foreign Exchange Contracts
Buy currency
Buy currency
amount (’000)
Sell amount
NZD (’000)
30 Sep 2016
value
NZD (’000)
Fair value
NZD (’000)
EUR3,136 5,212 4,902 (310)
GBP556 1,163 1,003 (160)
USD3,280 4,8254,550 (275)
Total as at 30 September 2016:(745)
All contracts mature within one year from 30 September 2016.

19
11. RELATED PARTIES
The Group had related party relationships with the following entities:
Related party Nature of relationship
CRG (Capital Royalty Group) Shareholder
The following transactions were carried out with these related parties:
(i) Loans
$NZ000’s Note
Unaudited
as at
30 Sep 2017
Audited
as at
31 Mar 2017
Unaudited
as at
30 Sep 2016
CRG (Capital Royalty Group)423,24423,426 22,039
Total loan balances23,24423,426 22,039
(ii) Key management compensation
$NZ000’s
Unaudited
as at
30 Sep 2017
Audited
as at
31 Mar 2017
Unaudited
as at
30 Sep 2016
Directors' fees143289138
Executive salaries5271,092 827
Short term benefits13423840
Key management compensation8041,619 1,005
Key management includes external Directors, the Chief Executive Officer, the Chief of Staff, the Chief Financial Officer and the Director of International Business
Development. These positions are mainly responsible for the planning, controlling and directing the activities of the business. The Chief of Staff is the spouse of the
Chief Executive Officer.
12. CONTINGENT LIABILITIES
In May 2015, AFT Pharmaceuticals Ltd signed as guarantor of AFT Pharmaceuticals Pty Ltd for its 5-year lease contract
for the premises occupied in Sydney, Australia. AFT Pharmaceuticals Pty Ltd has placed AUD$71,939 on term deposit with
NAB in favour of the landlord of the business premises to support this guarantee. The Company has placed NZD$75 ,000
on term deposit with the BNZ. This sum is security for a guarantee issued by the BNZ in favour of the NZX, should the
Company ever default on any of its payment obligations to NZX.
13. CAPITAL COMMITMENTS
The Group has no capital commitments at 30 September 2017 (31 March 2017: nil; 30 September 2016: nil).
14. SUBSEQUENT EVENTS
There were no material events occurring after balance date and before the date of approval of the financial statements
requiring recognition or disclosure.

20AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017
INDEPENDENT REVIEW REPORT
to the shareholders of AFT Pharmaceuticals Limited
REPORT ON THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
We have reviewed the accompanying condensed consolidated interim financial statements (“financial statements”)
of AFT Pharmaceuticals limited (“the Company”) and its subsidiaries (“the Group”) on pages 9 to 19, which comprise
the consolidated balance sheet as at 30 September 2017, and the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the period ended on that date, and selected explanatory notes.
DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Directors are responsible on behalf of the Company for the preparation and presentation of these financial
statements in accordance with New Zealand Equivalent to International Accounting Standard 34 Interim Financial
Reporting (NZ IAS 34) and for such internal controls as the Directors determine are necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
OUR RESPONSIBILITY
Our responsibility is to express a conclusion on the accompanying financial statements based on our review. We
conducted our review in accordance with the New Zealand Standard on Review Engagements 2410 Review of Financial
Statements Performed by the Independent Auditor of the Entity (NZ SRE 2410). NZ SRE 2410 requires us to conclude
whether anything has come to our attention that causes us to believe that the financial statements, taken as a whole, are
not prepared in all material respects, in accordance with NZ IAS 34. As the auditor of the Group, NZ SRE 2410 requires
that we comply with the ethical requirements relevant to the audit of the annual financial statements.
A review of financial statements in accordance with NZ SRE 2410 is a limited assurance engagement. The auditor
performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. The procedures performed in a review are
substantially less than those performed in an audit conducted in accordance with International Standards on Auditing
(New Zealand) and International Standards on Auditing. Accordingly, we do not express an audit opinion on these
financial statements.
We are independent of the Group. Other than in our capacity as auditors and providers of other assurance services
relating to Callaghan grants, we have no relationship with, or interests in, the Group.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that these financial statements of the
Group are not prepared, in all material respects, in accordance with NZ IAS 34.
WHO WE REPORT TO
This report is made solely to the Company’s shareholders, as a body. Our review work has been undertaken so that we
might state to the Company’s shareholders those matters which we are required to state to them in our review report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the shareholders, as a body, for our review procedures, for this report, or for the conclusion we have formed.
For and on behalf of:
Chartered Accountants Auckland
23 November 2017

21
On 21 December 2015, NZX granted the Company a waiver (Original Waiver) from NZX Main Board Listing Rule 5.2.3
in respect of its quoted shares (“Shares”) for a period of 12 months to the extent the Rule required the Company to have
at least 25% of Shares held by Members of the Public holding at least a Minimum Holding (as that term is defined in the
NZX Main Board Listing Rules). The Original Waiver has subsequently expired. On 21 December 2016, a further waiver
from NZX Main Board Listing Rule 5.2.3 was granted to AFT for a further 12 month period.
The waiver was granted on the following conditions:
• NZX receives an undertaking from the Atkinson Family Trust (“AF Trust”) that it will not increase its holding in AFT
during the term of the waiver, otherwise than as a result of an allotment pursuant to an offer or issue of shares that
is made pro-rata to all AFT shareholders;
• at least 10% of shares are held by more than 500 Members of the Public, with each Member of the Public holding
at least a Minimum Holding;
• AFT clearly and prominently discloses this waiver, its conditions, and its implications in AFT’s half year and annual
reports, and in any Offer Documents relating to any offer of shares undertaken by AFT, during the period of the waiver;
• AFT consistently monitors the total number of Members of the Public holding shares and the percentage of shares held
by Members of the Public holding at least a Minimum Holding;
• AFT notifies NZX as soon as practicable if there is any material reduction to the total number of Members of the Public
holding at least a Minimum Holding of shares, and/or the percentage of shares held by Members of the Public holding
at least a Minimum Holding; and
• AFT provides NZX with a written quarterly update of the total number of Members of the Public holding shares holding
at least a Minimum Holding and the percentage of shares held by Members of the Public holding at least a Minimum
Holding. The quarterly updates are from the date the waiver is granted, for the period of the waiver. The updates are
to be provided to NZX within ten business days of the end of each quarter.
• AFT provides NZX, with the second quarterly update, an update on:
o the proposed initiatives AFT intends to undertake to materially increase the percentage of shares held by Members
of the Public before the expiry of the waiver; and
o the intentions of the parties under the Escrow Arrangements in respect of their ongoing holding or sale of any of
the shares released from escrow during the waiver period (following engagement by AFT with such parties).
The implication of the waiver is that the Shares may not be widely held and that there may be reduced liquidity
in the Shares following quotation. A copy of the waiver can be viewed at www.aftpharm.com.
NZX WAIVERS

AFT is a company incorporated with limited liability under the New Zealand Companies Act 1993
(Companies Office registration number 873005).
Registered OfficeLevel 1, 129 Hurstmere Road, Takapuna, Auckland 0622, New Zealand
+64 9 488 0232
www.aftpharm.com

Mertons, Level 7, 330 Collins Street, Melbourne, Victoria 3000, Australia
+61 3 8689 9997
Principal
Administration
Office
Level 1, 129 Hurstmere Road, Takapuna, Auckland 0622, New Zealand
+64 9 488 0232
www.aftpharm.com
113 Wicks Road, North Ryde NSW 2113, Australia
+61 2 9420 0420
ARBN: 609 017 969
Directors
(as at date of this
Interim Report)
Dr Hartley Atkinson
Marree Atkinson
Dr James (Jim) Burns
David Flacks
Nathan (Nate) Hukill
Jon Lamb
Dr Douglas (Doug) Wilson
Share RegistrarComputershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna, Auckland 0622, New Zealand
+64 9 488 8777
enquiry@computershare.co.nz

Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street, Abbotsford VIC 3067, Australia
+61 3 9415 4083
enquiry@computershare.co.nz
AuditorPricewaterhouseCoopers
Level 22, PwC Tower, 188 Quay Street, Auckland 1010, New Zealand
+64 9 355 8000
DIRECTORY
22AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017

AFT PHARMACEUTICALS LIMITED
Interim Report for the period ended 30 September 2017