Ann: Preliminary Final Report-AJX.AX, page-44

Thought I would paste these parts of the report that some may not have read I am sure most of us have read them but just in case dont want anyone to miss what the company is saying now they are the end pages all interesting


Highlights of Alexium’s operating performance during the period ended June 30, 2016, include sales in various industries including bedding, outdoor and home furnishings. The military sector was also a focus, and the Company continued to make significant progress with its strategy to replace incumbents of several major government programs such as Flame Resistant Army Combat Uniform (FR ACU) prime suppliers and Tier 2 suppliers. Alexium expanded its product lines and launched Alexiflam NF, an environmentally friendly, flame retardant for cotton and cotton blends, along with Alexicool, a costeffective chemical finish for fabrics that absorb heat while providing a cool-to-the touch feel. The market for the Company’s products was expanded with the addition of distribution partners in Australia, Europe, and South America. Alexium was added to the S&P/ASX 300 Index. 13.4 Segment Information An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. The Company has applied IFRS 8 Operating Segments which requires a ‘management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. For management purposes, the Group is organised into one main operating segment which involves the development and licensing of its proprietary flame retardant (FR) chemicals and reactive surface treatment (RST) technologies, and selling its specialized chemistry to customers. All of the Group’s activities are interrelated and discrete financial information is reported to the Chief Executive Officer (Chief Operating Decision Maker) as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. 13.5 Report on trends in performance Alexium’s typical sales pipeline has four distinct stages: 1) opportunity evaluation, 2) lab prototype, 3) customer scale up and implementation, and 4) ongoing revenue. During the first two stages, Alexium screens opportunities and produces customer samples which pass all required testing. Getting opportunities to the third stage is a crucial milestone, because once a customer commits to scale-up, that company is essentially committed to using Alexium’s products and historically, over 90% of customers are retained after initial trials. Common challenges during the implementation stage are navigating customers’ very busy production schedules and normal internal quality control testing demands to keep projects moving forward quickly and efficiently. Over the last fiscal year, Alexium sales pipeline has increased dramatically, highlighted by the following points: • Our total number of clients in the sales pipeline increased from 22 to 165, a seven-fold increase in customers evaluating or implementing Alexium’s chemistries. • The number of clients in the crucial scale-up and implementation stage increased by over 500%. • Of those clients in the pipeline at the beginning of calendar year 2016, Alexium has retained 100% of those clients. They are in the final stages of scale-up and/or sampling final products to their customers, and in many cases, our customers are using Alexium chemical solutions to capitalize on new opportunities and expanded their product lines. Appendix 4E Preliminary final report Year ended 30 June 2016 Page 10 13.6 Report any factors which have affected the results during the reporting period or which are likely to affect results in the future, including those where the effect could not be quantified. During the reporting period ended June 30, 2016, the Company launched two proprietary chemistries: Alexiflam NF and Alexicool. Approved for sale to Europe, Alexiflam NF is an innovative chemistry that is superior to products currently on the market for treatment of cotton and cotton blends such as those commonly used in work-wear, and apparel. Applications for Alexicool include bedding and apparel, and the market for the technology is global. Regulatory and legislative trends continue to be favorable for the Company. A number of states in the U.S. are considering or have adopted bans of toxic flame retardants for applications to children’s products and residential upholstered furniture. Alexium’s flame retardants are a safer alternative and are environmentally friendly. The U.S. Congress has been considering legislation that contains report language encouraging the use of environmentally friendly flame retardants for military uniforms. Alexium has developed flame retardant solutions for use on nylon cotton blends, the fabric that is widely used for uniforms. Any