Ann: Acrux Appendix 4D - December 2015, page-30

Solid performance ■ Solid 1HFY16 result – Axiron market share is steady and lower AUD helps. ■ Expect costs to be higher in 2H as investment in earlier programs increases. ■ Stock is relatively illiquid, hard to get excited. ■ HOLD recommendation maintained. Result ahead of expectations ACR posted a solid 1HFY16 result of A$9.7m (up 39% on the pcp). Revenues increased 26.6% to A$18.0m benefiting from higher royalty revenue of A$1.5m and a A$2.5m milestone received from Gedeon Richter. Operating costs increased by 19.5%, which management states is a well controlled cost base and in line with its growth strategy. It should be noted that strong NPAT results were attributed to a favourable AUD/USD exchange rate over the last quarter contributing an additional A$1.4m in royalty revenue. In the conference call, management noted that ACR had maintained a stable market share of 14.4% with flat sales growth over the previous quarter. ACR finished the half with cash reserves of A$21.5m (up from A$15.8m on the pcp).