Immuron Ltd — Annual Report 2009

Aug 30, 2009

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31 August 2009

The Manager The Company Announcement Office Australian Stock Exchange Limited Sydney NSW

Dear Sir

Attached is the Appendix 4E in respect of the year ended 30 June 2009.

Yours faithfully

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Graeme Stevens Company Secretary Immuron Limited

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Immuron Limited Year ended 30 June 2009 Results for Announcement to the Market

						$
Revenue from continuing operations	Up		72.5%		To	550,928
(Loss) from continuing operations after tax attributable to members	Down		13.1%		To	(2,549,959)
Net (loss) for the period attributable to members of Immuron Limited	Down		21.5%		To	(2,242,814)
Dividends/distributions			Amount per security			Franked amount per security
Final dividend			NIL			NIL
Interim dividend			NIL			NIL
Record date for determining entitlements to the dividend						N/A
						N/A

A summary of the loss attributable to members of Immuron Limited for the year ended 30 June 2009 is as follows

Income Income from sale of goods and interest received Grants received Total Income Expenses Loss before income tax Income tax benefit Loss from continuing operations Profit from discontinuing operations Loss attributable to members of Immuron Limited

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Income

The major increase in the revenues from the sale of goods was from the initial sale of bulk Travelan powder to Alaven Consumer Healthcare (Alaven) in the United States for the production of Travelan™ capsules under the terms of the licence agreement with Alaven.

In respect of the income from tied government grants income there has been a reduction of $446,000 as a number of projects have either been completed or are close to reaching their completion date. Our major influenza project has received ongoing funding through the recently announced ARC Linkage grant with the University of Melbourne.

Expenses

Expenses decreased overall by $868,000 with the main variations being in the following categories:

Research & Development

With the reduced level of R & D activity within Australia there has been a reduction in employee costs of approximately $208,000, together with a reduced requirement for consultants and other costs directly linked to the R & D projects. Offsetting the reductions in the level of local R & D, there has been an increase in the R & D activities being conducted overseas with two clinical trials being conducted in Israel, together with the costs associated with acquiring the intellectual property from Hadasit. These costs amounted to $213,000 in the current financial year.

Other expenses

There has also been a significant reduction in general corporate and marketing expenses due partly to the sale of the manufacturing business in the 2008 financial year that were not directly attributable to that business. The major savings in this area has been associated with outside consultants, which have reduced by $176,000, a reduction in direct product and marketing expenses of $148,000, together with a reduction in personnel costs of $304,000 directly related to product marketing.

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Immuron Limited. ABN 80 063 114 045

ASX Preliminary final report – 30 June 2009

Appendix 4E - Lodged with the ASX under Listing Rule 4.3A

Contents Results for Announcement to the Market 1 Comments on Results for Year 1 Preliminary Income Statement 4 Preliminary Balance Sheet 5 Preliminary Statement of Recognised Income and Expense 6 Preliminary Cash Flow Statement 7 Notes to Preliminary Financial Statements 8 Other Appendix 4E Information 15

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Notes Revenue from continuing operations 2 Other income 3 Raw materials & consumables used Employee benefits expense Depreciation Research and development – external Directors' fees Travel expenses Product marketing & export development- external Consultants costs Shareholder relations Corporate and administrative expenses Loss before income tax Income tax benefit Loss from continuing operations Profit from discontinued operations Loss attributable to members of Immuron Limited Loss per share for loss from continuing operations attributable to the ordinary equity holders of the company Basic earnings per share 7 Diluted earnings per share 7 Loss per share attributable to the ordinary equity holders of the company Basic earnings per share 7 Diluted earnings per share 7 Net Tangible Asset backing per Ordinary Share

Immuron Limited Preliminary Income Statement For the year ended 30 June 2009 2009 2008 $ 550,928 319,432 319,696 766,395 (172,936) (271,032) (1,275,524) (1,635,368) (157,315) (85,339) (697,841) (784,509) (230,605) (217,546) (111,558) (144,003) (75,807) (224,901) (153,795) (260,700) (115,949) (185,151) (429,253) (481,483) (2,549,959) (3,204,205) - 268,441 (2,549,959) (2,935,764) 307,145 77,427 (2,242,814) (2,858,337) Cents Cents (1.87) (2.79) (1.87) (2.79) (1.64) (2.72) (1.64) (2.72) (0.001) 0.01

The above preliminary Income Statement should be read in conjunction with the accompanying Notes.

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Immuron Limited Preliminary Balance Sheet As at 30 June 2009

Notes ASSETS Current Assets Cash & cash equivalents Trade & other receivables Inventories Other assets Total Current assets Non-Current Assets Property, plant and equipment Investments Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade & other payable Provisions Other Total Current Liabilities Non-Current Liabilities Provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 6 Reserves 6 Accumulated losses TOTAL EQUITY	2009 $ 149,670 27,662 96,376 148,407 422,115 70,883 31 70,914 493,029 520,547 33,172 46,978 600,697 2,203 2,203 602,900 (109,871) 21,458,898 442,972 (22,011,741) (109,871)	2008 $ 1,090,824 269,086 161,263 155,441
		1,676,614
		223,307 31
		223,338
		1,899,952
		630,810 23,956 134,926
		789,692
		22,944
		22,944
		812,636
		1,087,316
		20,583,347 272,896 (19,768,927)
		1,087,316

The above preliminary Balance Sheet should be read in conjunction with the accompanying Notes.

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Immuron Limited Preliminary Statement of Recognised Income and Expense For the year ended 30 June, 2009

Notes 2009 2008 $ $ Net income recognised directly in equity Loss for the financial year (2,242,814) (2,858,337) Total recognised income and expense for the year (2,242,814) (2,858,337)

Movements in accumulated losses were as follows Balance 1 July 2008 Loss for the financial year Accumulated losses 30 June 2009	Statement of Accumulated Losses (19,768,927) (16,910,590) (2,242,814) (2,858,337) (22,011,741) (19,768,927)	Statement of Accumulated Losses (19,768,927) (16,910,590) (2,242,814) (2,858,337) (22,011,741) (19,768,927)
		(19,768,927)

The above Statements should be read in conjunction with the accompanying Notes.

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Immuron Limited Preliminary Cash Flow Statement For the year ended 30 June 2009

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees (inclusive of goods and services tax) Interest received Grants received R&D tax rebate Interest paid Net Cash (outflow) from Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for plant and equipment Proceeds from sale of functional foods division Investments in subsidiary and associated companies Net Cash inflow/(outflow) from Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares & other equities Share placement cost Net Cash inflow from Financing Activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year	2009 Inflow / (Outflow) $ 869,338 (3,239,322) (2,369,984) 26,826 271,998 - (988) (2,072,148) (4,890) 320,445 - 315,555 836,159 (20,720) 815,439 (941,154) 1,090,824 149,670	2008 Inflow / (Outflow) $ 7,028,000 (9,911,546)
		(2,883,546) 26,528 519,049 268,441 (4,942)
		(2,074,470)
		(14,414) 763,334 (31)
		748,889
		1,812,950 (69,188)
		1,743,762
		418,181 672,643
		1,090,824

The above preliminary Cash Flow Statement should be read in conjunction with the accompanying Notes.

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Immuron Limited Notes to Preliminary Financial Statements For the year ended 30 June 2009

This preliminary financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2008 and any public announcements made by Immuron Limited during the year in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Note 1. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are consistent with those applied in the 30 June 2008 financial report. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

(b) Going concern

At 30 June 2009, the Company’s cash and investments were approximately $150k, and for the year ended 30 June 2009, the Company experienced an operating loss of $2.2 million and a net cash outflow of $2.1 million from operating activities. Also, at 30 June 2009 the Company had negative net assets amounting to $110k, and current liabilities of $601k exceeding current assets of $422k by $179k. As a result of the continuing losses, cash outflows from operations, negative net assets and the working capital deficiency, the Directors have assessed the Company's ability to continue as a going concern and to pay its debts as and when they fall due.

The Directors have undertaken a number of initiatives to improve the Company’s financial position subsequent to year end. Full details of the capital raised and the obligations arising out of the agreement entered into with Hadasit Medical Research Services & Development Limited (Hadasit) is set out in note 9 of this preliminary report. The ultimate ability of the Company to fund its ongoing operations will be dependent upon obtaining income from the commercialisation of its research and development projects, supplemented by the receipt of funds from various Government and non Government grants.

As a result of the difficulty in predicting the timing and quantum of income from the commercialisation of its products and technology, there is significant uncertainty whether the Company will be able to continue as a going concern and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

However, the Directors are confident that the Company's planned initiatives will be successfully achieved during the next twelve months and provide adequate access to financial resources. The company has had a successful history of obtaining research grants and the Directors are very confident that along with the ongoing receipts from existing grants the company will be successful in obtaining new grants. The Directors are also confident of the company’s ability to raise further capital if the need arises. The Company has re-negotiated the terms of its $5 million line of credit with Fortrend Small Cap Investors Limited which provides the Company added flexibility in making draw downs under the facility.

Accordingly, the Directors have prepared the financials on a going concern basis. As such, the financial statements do not include any adjustments as to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the entity not continue as a going concern.

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Note 2. Revenue
	2009	2008
From continuing operations	$	$
Sales revenue
Sale of goods and services	524,102	292,904
Other revenue
Interest	26,826	26,528
	550,928	319,432
From discontinued operations
Sale of goods	-	5,444,078
Other income	307,145	-
	307,145	5,444,078
Note 3. Other income
Government research & development grants	319,696	750,143
Other Government grants	-	16,252
	319,696	766,395
Government grants
The following government grants were recognised as other income by	the Company during the financial year:
Department of Industry, Tourism & Resources	225,020	277,828
Victorian Department of Innovation, Industry and Regional
Development	94,676	-
National Food Industry Strategy Ltd	-	117,636
Department of Prime Minister & Cabinet	-	354,679
Austrade	-	16,252
Total Other Income	$319,696	$766,395

There are no unfulfilled conditions or other contingencies attaching to these grants. The Company did not benefit directly from any other forms of government assistance.

Note 4 Discontinued operations

(a) Description

In February 2008, the company sold its functional foods division. This division operated a manufacturing plant principally for the contract manufacture of third party health food products. The financial results of this division are recorded in the income statement as a discontinued operation.

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(b) Financial performance

The financial performance information presented for the year ended 30 June 2009 represents the final share of profits earned in accordance with the sale of business agreement.

The 2008 comparative figures relate to the period of ownership of the business from 1 July 2007 to the date of sale in February 2008.

Revenue Expenses Profit / ( loss) before income tax Income tax expense Profit /(loss) after income tax of discontinued operations Gain on sale of division before income tax Income tax expense Gain on sale of division after income tax Profit from discontinued operations Net cash inflow from operating activities Net cash inflow ( outflow) from investing activities ( 2008 includes an inflow of $763,334 from the sale of the division) Net cash from financing activities Net increase in cash generated by the division	2009 $ - - - - - 307,145 - 307,145 307,145 - 320,445 - 320,445	2008 $ 5,444,078 5,461,804
		(17,726) -
		(17,726)
		95,153 -
		95,153
		77,427
		829,610 753,500 -
		1,583,110

(c) Carrying amounts of assets and liabilities

The carrying amounts of the division’s assets and liabilities sold as at the date of the sale are:

Plant & equipment, furniture & office machines Inventories Total assets Provision for employee benefits Total liabilities Net assets	2009 $ - - - - - -	2008 $ 304,847 480,144
		784,991
		66,810
		66,810
		718,181

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(d) Details of sale of the division

Consideration received or receivable Cash Present value of amount receivable Total disposal consideration Carrying amount of net assets sold Gain on sale before income tax Income tax expense Gain on sale after income tax	2009 $ 270,445 36,700 307,145 307,145 - 307,145	2008 $ 763,334 50,000
		813,334 718,181
		95,153 -
		95,153

The gain on sale after income tax is disclosed as profit from discontinued operations in the Preliminary Income Statement.

Note 5. Segment Information

Business Segment:

During the year the Company operated in two business segments:

• the conduct of Research & Development activities, and

• the manufacture of colostrums hyper immune products, including Travelan.

The contract manufacturing division was sold in February 2008. The revenue for the 2009 financial year represents the final share of profits earned in accordance with the sale of business agreement.

Geographical Segment :

The Company has operated principally in one geographical segment, Australia.

Primary reporting format- business segments

		Hyper		Total
2009		Immune		Continuing	Discontinued
	R & D	Products	Other	Operations	Operations	Total
Segment revenue
Sales to external	-	524,102		524,102	-	524,102
customers
Interest revenue	-	-	26,826	26,826	-	26,826
Other income	319,696	-	-	319,696	-	319,696
Total segment revenue	319,696	524,102	26,826	870,624	-	870,624
Segment result
Loss before income tax	(880,014)	351,167	(2,021,112)	(2,549,959)	307,145	(2,242,814)
Income tax expense	-	-	-	-	-	-
Loss for year	(880,014)	351,167	(2,012,112)	(2,549,959)	307,145	(2,242,814)
Segment assets	-	126,383	329,963	456,346	36,683	493,029
Segment liabilities	248,803	25,468	328,629	602,900	-	602,900

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Other segment
information
Acquisition of plant&
office equipment	-	3,100	1,790	4,890	-	4,890
Depreciation expense	-	996	72,140	73,136	-	73,136
Loss on disposal of plant
& office equipment	-	-	84,179	84,179	-	84,179
		Hyper		Total
2008		Immune		Continuing	Discontinued
	R & D	Products	Other	Operations	Operations	Total
Segment revenue
Sales to external customers	-	267,904	25,000	292,904	5,444,078	5,736,982
Interest revenue	-	-	26,528	26,528	-	26,528
Other income	750,143	-	16,252	766,395	-	766,395
Total segment revenue	750,143	267,904	67,780	1,085,827	5,444,078	6,529,905
Segment result
Loss before income tax	(894,931)	(566,688)	(1,742,586)	(3,204,205)	77,427	(3,126,778)
Income tax expense	268,441			268,441		268,441
Loss for year	(626,490)	(566,688)	(1,742,586)	(2,935,764)	77,427	(2,858,337)
Segment assets	178,144	192,642	1,439,517	1,810,303	89,649	1,899,952
Segment liabilities	447,331	12,668	352,637	812,636		812,636
Other segment
information
Investment in associates			31	31		31
Acquisition of plant &	272		4,308	4,580	9,834	14,414
office equipment
Depreciation			85,339	85,339	43,379	128,718
Impairment of inventories	-	-	-	-	-	-
Impairment of financial
assets – receivables	-	-	-	-	390,000	390,000

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Note 6. Contributed equity and reserves

Note 6. Contributed equity and reserves
(a) Issued and Paid Up Capital 144,569,108 (2008: 126,732,766) ordinary shares fully paid (b) Movements in ordinary share capital Date Notes 1/07/07 Opening balance 11/07/07 Issue of shares 22/08/07 Issue of shares with attaching option Value attributable to attaching option 18/04/08 Issued for cash Issued to staff in lieu of bonuses Issued to Directors in lieu of Directors fees 10/06/08 Issued under shareholder share purchase plan Less costs associated with issuing shares Shares on issue as at 30 June 2008 20/11/08 20/11/08 Issued for cash and in lieu of placement fees Issued to Director in lieu of salary 16/12/08 Issued for cash to Alaven Consumer Healthcare Inc. 9/01/09 Issued to Directors in lieu of Directors fees 30/03/09 Issued for cash to Alaven Consumer Healthcare Inc. Less costs associated with issuing shares Shares on issue as at 30 June 2009 ( c ) Options reserve Balance of reserve 1 July Value attributable to options attaching to shares Options issued to investors Options issued to employees Balance of reserve 30 June 2009	2009 $ 21,458,898 Number of Shares Issue Price 98,346,153 650,000 $0.152 5,039,361 $0.14 4,692,800 $0.05 1,257,310 $0.065 287,142 $0.0838 16,460,000 $0.05 126,732,766 7,705,950 805,000 $0.05 $0.05 7,516,674 $0.05 308,163 $0.064 1,500,555 $0.05 144,569,108 2009 $ 272,896 - 170,076 442,972	2008 $ 20,583,347
		$ 18,750,743 98,800 705,510 (65,944) 234,640 81,725 24,062 823,000 (69,189) $20,583,347 385,297 40,250 375,834 19,862 75,028 (20,720) $21,458,898 2008 $ 80,320 65,945 126,631 272,896

Under the terms of employment contracts with the former Chief Executive Officer and Vice President Business Development, the following options were issued:

• 4,913,370 options at an exercise price of 33 cents per share

• • 4,913,370 options at an exercise price of 43 cents per share.

These options vested as to 20% immediately upon issue with the remainder vesting in four parcels of 20% through to December 2009. In addition, the above two former employees were entitled to additional options upon achieving certain capital raising milestones. Those options have not been granted as the capital raising milestones were not achieved.

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The value attaching to the above options, using the Black-Scholes valuation model, is approximately $337,837. Of this amount $296,707 has been amortised to 30 June 2009.

Employee benefits expense in the Income Statement includes the amounts of $170,076 and $126,631 respectively for the 2009 and 2008 financial years.

d) Movements in options during year

	Issued during	Expired
	year	during year	Total
Option outstanding at 1 July 2008
			11,969,027
Options expiring and not exercised during year
Series ANXAC		200,000
Series ANXAF		100,000
Series ANXAJ		162,500
Series ANXAI		1,679,787
Total movements for year	Nil	(2,142,287)	(2.142,287)
Total options outstanding 30 June 2009			9,826,740
Note 7. Earnings Per Share
		2009	2008
		Cents	Cents
(a) Basic earnings per share
Loss from continuing operations attributable to the ordinary equity holders of
the company		(1.87)	(2.79)
Profit from discontinued operations		0.23	.07
Loss attributable to the ordinary equity holders of the company		(1.64)	(2.72)
(b) Diluted earnings per share
Loss from continuing operations attributable to the ordinary equity holders of
the company		(1.87)	(2.79)
Profit from discontinued operations		0.23	.07
Loss attributable to the ordinary equity holders of the company		(1.64)	(2.72)
(c) Reconciliation of earnings used in calculating earnings per share
Basic earnings per share		2009	2008
Loss from continuing operations		(2,549,959)	(2,935,764)
Profit from discontinued operations		307,145	77,427
Loss attributable to the ordinary equity holders of Immuron Limited in
calculating basic earnings per share		(2,242,814)	(2,858,337)

There are no reconciling items to the above two loss amounts in calculating the earnings per share.

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(d) Weighted average number of shares used as the denominator

	2009	2008
Weighted average number of ordinary shares used as the denominator in
calculating loss per share from continuing operations	136,531,628	105,383,371
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating loss per share attributable to ordinary
equity holders	136,531,628	105,383,371

(e) Information concerning the classification of securities

Options

Options that have been granted are considered to be potential ordinary shares, however their conversion to ordinary shares does not increase the loss per share, as such the options are not dilutive and have not been included in the determination of diluted earnings per share.

The options have not been included in the determination of basic earnings per share.

Note 9 Events occurring after balance sheet date

Subsequent to 30 June 2009 the following significant events have occurred:

1. Increase in Issued Capital and Cash Funds

The Company issued 43,370,625 fully paid ordinary shares to Hadasit on 27[th] of August in accordance with the terms of the agreement entered into on 17 April 2009, and the deed of variation dated 22 July 2009, for the acquisition of the Oral Immune Modulation technology.

Those shares represent 19.99% of the total issued ordinary shares of the Company after the allotment to Hadasit. In addition to the above issue of shares, the Company completed a successful share purchase plan with the issue of 43,370,625 shares at 3 cents a share, raising $1,301,119. Those shares were issued on 21 August 2009.

2. Service and consulting agreements with Hadasit and Professor Yaron Ilan.

In addition to the agreement for the acquisition of IP, the Company has entered into a service agreement with Hadasit for the supply of research and development services in respect of the IP acquired. The agreement required a prepayment of $599,000 ($US 500,000 )for the future services and that amount has been paid.

In respect to the consulting agreement with Professor Ilan there is an ongoing obligation to pay for those services at the rate of $US5,000 per month.

3. Legal claim from former Chief Executive Officer

On 6[th] July2009 the Company received notification from solicitors acting for Dr Zeil Rosenberg of a potential legal claim in respect of the non renewal of his employment contract.

The potential claim is up to $500,000.

The Company is currently holding a form of mediation with Dr Rosenberg in an attempt to settle any potential claim. No liability has been recorded in the accounts to 30 June in respect of this potential claim.

Other Appendix 4E information

Annual Meeting

The date of the annual general meeting will be advised to members at a subsequent date.

Audit

This preliminary final report is based on accounts which are in the process of being audited. The Audit Report will be made available with the Company’s financial report.

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