BABYLON PUMP & POWER LIMITED — Capital/Financing Update 2007

Sep 4, 2007

FUtUre in HealtH ManageMent

September 2007

Head Office: IM Medical Ltd, Level 12, 484 St Kilda Road Melbourne VIC 3004, Australia Email: admin@immedical.com.au Phone: +613 9860 0900 Fax: +613 9860 0999

Update

New markets and products in growth plan

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----- Start of picture text ----- IM Medical CEOTommas Bonvino----- End of picture text -----

IM Medical’s breakthrough Cardanal technology will be used on patients within weeks after being incorporated into the company’s unique Intelliheart test.

“We are delighted that Cardanal is making its debut assessing the health of Australian patients,” said IM Medical CEO Tommas Bonvino.

The introduction of Cardanal co-incides with IM Medical’s first steps into new markets in the retail and workplace sectors. This will produce new revenue streams and higher margins while reducing exposure to risks.

Mr Bonvino said the last financial year was about laying solid foundations and the year ahead was about expansion and new markets for Intelliheart and Cardanal.

in the largely untapped consumer market and among private health insurers.

“The next step is to take our products into the global marketplace. That is a central focus for the company, and talks are being held with several interested parties,” he said

“We have expanded our network of medical clinics in four States in the past few months, and now our strategy is to increase the number of clinics to 200 in the next 12 months,” Mr Bonvino said.

The Cardanal technology, developed over 18 years in Melbourne, has two distinct products: the Cardanal Predictive Index, a software package that uses unique algorithms to diagnose and predict heart conditions; and the Cardanal platform, which allows the transport of digitised waveforms across the Internet.

“The focus of this expansion will be on “wellness” and “health” clinics, where patients will pay outright for a test. This will complement our strong base of medical clinics where our income derives from a Medicare rebate. This strategy both diversifies our business, and offers higher margins.”

“The software technology has the potential to improve the sensitivity of data analysis that comes from ECGs,” said Mr Bonvino

In workplace, the company has secured some important contracts, including a recent deal with the Department of Defence. “Workplace wellness is a growing field, and our product provides exactly what employers want – a thorough assessment of their staff and their risk of coronary disease, the nation’s biggest killer,” Mr Bonvino said.

“Combined with the transport system – which would allow IM Medical to charge a fee for each ECG result – Cardanal makes an attractive package.

“Providing ECG data management puts us squarely in a growing market segment. This is an exciting space to be in.”

Adding the Cardanal Predictive Index to the existing Intelliheart test would greatly enhance the test’s medical findings, and further strengthen Intelliheart ’s growing reputation.

The company is also set to enter the consumer market, offering an Intelliheart test through a national chain of pharmacies. “We have also started working with gymnasiums, health clubs and weight-loss companies about the benefits of Intelliheart to their members,” Mr Bonvino said.

“IM Medical conducted more than 13,400 tests and allied health services last financial year, and we are confident this number will grow as we expand the test into new markets,” Mr Bonvino said.

Another exciting development is a project with a health insurer which is using Intelliheart to test hundreds of members to assess their risk of heart disease. u SEE P2

The company’s strategy is to expand from the existing markets of medical clinics and the workplace arena into new markets - especially

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FUtUre in HealtH ManageMent

“Monash University research has shown that Intelliheart is an effective and powerful tool, and health insurance companies have picked this up. This opens up a substantial new market for the company.”

Mr Bonvino said IM Medical had met key milestones in the past six months, and was set for an exciting year ahead.

“The company is exceptionally well positioned for our next phases of growth,” said Mr Bonvino. “We are cashed up, have identified new revenue streams and have a solid strategy for our two key products, Cardanal and Intelliheart . The business is well placed to move into profit now that the fundamentals are in place.”

Last month a shareholder exercised 30 million options, paying the company three cents a share, or $900,000. This came days after a placement by Bell Potter Securities of 120 million shares. The issue raised 2.6 cents a share, netting the company $3.1 million.

CARDANAL DATA PLATFORM WINS TGA APPROVAL

The data management platform for IM Medical’s innovative Cardanal technology has been approved for use by the Australian regulator, the Therapeutic Goods Administration.

The technology allows cardiologists to transmit high-quality data in the form of ECG waves over the Internet in real time, paving the way for the remote diagnosis of heart problems.

IM Medical Chief Executive Officer Mr Tommas Bonvino said the approval paved the way for the rollout of the unique technology.

The approval was announced to the market in August. IM Medical has also applied for TGA approval for the Cardanal Predictive Index, which provides cardiologists with faster and more reliable tools to diagnose heart conditions. “We expect to hear back on this application soon,” Mr Bonvino said.

IM Medical acquired the Cardanal ECG software technology earlier this year. It has been developed in Melbourne over 18 years of research.

The Cardanal technology will be marketed worldwide, with an initial focus on hospitals and specialist medical practices. It will also be incorporated into IM Medical’s Intelliheart tests, which are conducted in medical clinics across Australia and increasingly used by companies to assess the health of their workers.

INTELLIhEART EXCELS IN MONASh CLINICAL TRIALS

IM Medical’s (unique diagnostic test results strongly correlate with the severity of coronary artery disease in patients undergoing angiography, according to new research findings.

An abstract presented to the annual scientific meeting of the Cardiac Society of Australia and New Zealand in Christchurch in August found a strong association between features of the Intelliheart report, including Heart Rate Variability, and the presence and

severity of coronary artery disease.

“This is an outstanding finding that shows the value of Intelliheart in predicting coronary heart disease and other cardiovascular events,” said the Chief Executive of IM Medical, Mr Tommas Bonvino.

The research is being conducted by Monash University among 500 high-risk patients at the Alfred Hospital, Box Hill Hospital and the Northern Hospital. IM Medical is funding the research.

These initial findings, in 153 patients presenting for coronary angiography, have been accepted for publication in the Internal Medicine Journal, the official journal of the Royal Australasian College of Physicians.

“We are very pleased with these findings, and expect more positive research results in coming months that demonstrate the importance of this technology,” Mr Bonvino said.

Intelliheart combines a number of diagnostic tools, including heart rate variability, electrocardiograms and pulse wave analysis, to provide one of the best available predictors of heart disease, Mr Bonvino said.

WORKPLACE WELLNESS A NEW MARKET FOR INTELLIHEART

IM Medical has secured a contract to test workers in the Aerospace Systems Division of the Department of Defence.

CEO Tommas Bonvino said that the contract was symbolically important because it was the company’s first Workplace Wellness contract in the public sector.

Mr Bonvino said Workplace Wellness was a key plank of IM Medical’s growth strategy.

“Companies now understand the importance of preventing, detecting and managing chronic disease. And the issue is just as important in the public sector as the private sector,” Mr Bonvino said.

IM Medical will use the innovative Intelliheart technology to assess staff in the Aerospace Systems Division.

“We are excited to provide our validated technology to such an important group of people,” Mr Bonvino said.

Business manager at the Common Services Systems Support Office in the Aerospace Systems Division, Rick Nolan, said the Intelliheart program was viewed as a way of reducing lost time off work and providing important information to staff about their health. He said: “We saw this as an excellent opportunity to improve staff health and wellbeing.”

Intelliheart uses a unique set of diagnostic

tools that allow doctors

to comprehensively assess a patient’s cardiovascular system. IM Medical is the only company offering Intelliheart .

Rick Nolan, Business Manager in the Aerospace Systems Division of the Department of Defence (centre)with IM Medical’s Allied Health and Clinical Manager Lauren Sacks (left) and IM Medical Chief Operating Officer Elizabeth Mazeva.