Annual Financial Report

ABN 92 009 147 924

For the year ended 30 June 2015

DelectaLimited

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Delecta Limited ANNUAL REPORT2015

Directors: Bradley Moore - Non-Executive Chairman

Malcolm Day - Managing Director

Hans-Rudolf Moser - Non-Executive Director

Company Secretary: John Burness

Registered Office: 170-180 Buckhurst Street

South Melbourne, Victoria, 3205

Telephone: (61 3) 9695 5858

Facsimile: (61 3) 9686 0644

Principal Business Office: Level 1, 170-180 Buckhurst Street

South Melbourne, Victoria, 3205

Telephone: (61 3) 9695 5858

Facsimile: (61 3) 9686 0644

Share Register: Advanced Share Registry Services

110 Stirling Highway

NEDLANDS WA 6009

PO Box 1156

NEDLANDS WA 6909

Telephone: (61 8) 9389 8033

Facsimilie: (61 8) 9262 3723

Quoted on: Australian Stock Exchange Code: DLC

German Stock Exchanges WKN 873083

General Information

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Delecta Limited ANNUAL REPORT 2015

2015

Contents

Chairmans Report .................................................................................................................. 5

Managing Directors Report .................................................................................................... 6

Directors Report .................................................................................................................... 7

Auditors Independence Declaration ..................................................................................... 17

Consolidated Statement of Comprehensive Income ............................................................. 18

Consolidated Statement of Financial Position ...................................................................... 19

Consolidated Statement of Cash Flow .................................................................................. 20

Consolidated Statement of Changes in Equity ...................................................................... 21

Notes to the Financial Statements ........................................................................................ 22

Directors Declaration ........................................................................................................... 60

Independent Audit Report ..................................................................................................... 61

Corporate Governance Policy ................................................................................................ 63

Additional Shareholder Information ...................................................................................... 67

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Delecta Limited ANNUAL REPORT2015

2015

Chairmans Report

Dear Shareholders,

I present to you the Annual Report for Delecta Limited (Delecta or the Company) for the year ending 30 June 2015.

This year has seen the Company deliver on a number of initiatives earmarked for the 2015 Financial Year. Throughout the year we have seen:

A rationalisation of costs within our Calvista Australia Pty Ltd (Calvista) business under the guidance of its new General Manager, Roger Sheldon-Collins that have included:

The closure of the Media division and restructuring of supporting departments.

The closure of the New Zealand office and distribution centre whilst maintaining sales and service to New Zealand from Australia.

A 74% reduction in aged inventory, freeing up working capital and warehouse space.

The relocation of Calvistas Melbourne warehouse resulting in occupancy costs savings of in excess of $800,000 over a 5 year period.

A restoration of customer and supplier relationships highlighted by:

A successful Adultex 2015 event in which sales lifted by 25% on the previous year.

Positively trending sales revenues in the second half of 2015FY against budgets.

Partnering with suppliers of innovative new products such as the Womanizer, whilst continuing to support and grow the businesses existing suppliers brands in the Australian market.

The Completion of the acquisition of an 80% Operating Interest and 58% Net Revenue Interest in the Wise # 1-25 Oil & Gas Well in Oklahoma, USA which formed part of the Canadian River Field Development Project, and the commencement of production and sales of oil and gas from the non-primary formation of the Wise # 1-25 Well.

The Boards outlook for the 2016FY is cautiously optimistic.

Calvista is expected to improve on the previous years results, benefiting from the array of business improvement initiatives implemented in 2015. Furthermore, competitor activity during 2015 is expected to be unsustainable and the consistent, customer centric model offered by Calvista is expected to assist in driving sales and product partnering growth into 2016.

Production from the Wise # 1-25 Well to 30 June 2015 totalled 3,708 BBL Oil and 29,139 McF of Gas with proceeds received by the Companys wholly owned subsidiary Canadian River Inc. of $168,000. This initial production has come from the secondary Viola formation, with the primary Wilcox Sandstone formation yet to be accessed due to high downhole pressure rendering it unsafe at this point to remove a bridge plug.

The Operator of the Wise # 1-25 Well, Inland Oil & Gas, continues to monitor the wells pressure with a view to accessing the primary zone. Upon accessing the primary Wilcox formation an electric submersible pump will be installed which is anticipated to increase production rates considerably once complete.

Whilst Oil prices have fallen and remain low with an average 2015FY sale price of $47.64 per barrel, this is being offset to some extent by a low Australian dollar.

Though the planned divestment of the Canadian River Field Development Project to Paynes Find Gold Limited (ASX code PNE) (Paynes Find) did not reach finalisation with Paynes Find unable to secure the required investor support, the Company maintains its investment in Paynes Find which at the date of this report sat at 37% of issued capital. The Company continues to support the Board of Paynes Finds endeavours to identify and acquire a suitable project to enable its recapitalisation.

Your Board and Management will look to consolidate its position following the developments of 2015FY, building on improved results from Calvista, and increasing production from the Wise # 1-25 Well.

The Board thanks you for your continued support.

Bradley Moore

CHAIRMAN

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Delecta Limited ANNUAL REPORT 2015

2015

Managing Directors Report

The 2014/2015 year was a year in which the Company focused on restructuring the core business of wholesaling adult products through its wholly owned subsidiaries, Calvista Australia Pty Ltd and Calvista New Zealand Ltd (Calvista). Additionally the Company spent considerable resources on the Canadian River Field Development Project.

Whilst Calvista closed down its under-performing adult DVD business in the previous year its taken most of this year to sell the large stockholding of DVDs located at the Canberra warehouse. Calvista has now closed this warehouse and is trying to sub-lease the premises.

The appointment of Roger Sheldon-Collins as General Manager in August 2014 has provided a fresh outlook to Calvista which has led to changes and restructuring of the business model resulting in reduced costs, repaired vendor and customer relationships and recaptured market share.

During the year Calvista New Zealand Ltd closed its warehouse in Auckland. Calvista is now focused on selling and distributing into the New Zealand market from its Melbourne based headquarters.

This years Adultex (business to business trade show) organised by Calvista was well supported. Sales increased by 25% compared to the previous year and plans are well under way for Adultex 2016.

The opportunity to review all Calvista property leases arose this year. A search was conducted to find a new head office and warehouse in Melbourne, however this task proved difficult. The decision was made to split the office and warehouse. In August 2015 Calvista shifted into a larger warehouse in West Footscray. Calvista also negotiated a better deal to keep the head office and showroom at Buckhurst St, South Melbourne. Overall the costs saving of the lease review and move will equate to approximately $800,000 over five years.

Wholesale revenues for Calvista reduced by 6% to $16,946,000 this financial year resulting in a net loss of $171,000 for the division compared to a net loss of $632,000 last financial year. The fall in wholesale revenue was primarily due to the closure of the DVD business, the loss of exclusivity of one of the divisions major suppliers, the decision by another major supplier to do their own distribution in Australia and New Zealand and the falling Australian dollar.

Calvista is now consolidating the business after the major restructure and warehouse move. The Company plans to continue cutting costs in the business whilst also implementing further changes to the business strategy. We expect the division to return to profitability this financial year.

On 25th September 2014, the Company acquired an 80% working interest and a 58% net revenue interest in an oil and ga