Immuron Ltd — Regulatory Filings 2004

Aug 12, 2004

13 August, 2004.

The Company Announcement Office, Australian Stock Exchange Limited, Sydney.

Subject: Preliminary Final Report 30 June, 2004 - Appendix 4E.

Dear Sir/Madam,

Following is the above Report for release.

For further information contact

Conor Graham CEO 03 9358 6388 Phone: Email: info@anadis.com.au

On Behalf Of ANADIS LIMITED

CONOR GRAHAM Managing Director & CEO

ANADIS Limited. ABN 80 063 114 045

ASX Preliminary final report - 30 June 2004

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

Contents

Results for Announcement to the Market	3.
Preliminary consolidated statement of financial performance	4
Preliminary consolidated statement of financial position	5.
Preliminary consolidated statement of cash flows	6.
Notes to preliminary consolidated financial statements	7.
Other Appendix 4E Information	12

ANADIS Limited Year ended 30 June 2004 (Previous corresponding period: Year ended 30 June 2003)

Results for Announcement to the Market

Revenue from ordinary activities	up	24.9%	ŧο	4,284,872
(Loss) from ordinary activities after tax attributable to members	down	$9.2\%$	to	(1,162,035)
Net (loss) for the period attributable to members	down	$9.2\%$	to	(1,162,035)

Dividends/distributions	Amount per security	Franked amount per security
Final dividend
Interim dividend

Record date for determining entitlements to the dividend

$N/A$

Explanation of revenue

Sale of goods (\$3,677,553) represented the largest contribution (86%) to revenue. Additional revenue received comprised \$520,731 in outside research and development funding and \$86,588 interest received on cash deposits.

Explanation of Profit/(loss) from ordinary activities after tax

The reduction in the loss $(9.2\%)$ from the previous year is attributed to an increase in research and development grants and a 20% rise in customer sales.

ANADIS Limited Preliminary consolidated statement of financial performance
For the year ended 30 June 2004

	Note	2004	2003
		\$	\$
Revenue from ordinary activities	1	4,284,872	3,429,488
Raw materials and consumables used		(2,354,881)	(2,018,555)
Employee benefits expense		(1,641,501)	(1,250,612)
Depreciation and amortisation expenses		(183, 341)	(162, 381)
Borrowing costs		(2,434)	(974)
Research and development - external		(587,072)	(961, 905)
Factory overheads		(244, 021)	(207, 194)
Directors' fees		(162, 500)	(125, 738)
Travel expenses		(81,522)	(85,780)
Corporate and administrative expenses		(522, 055)	(231,662)
Profit/ (loss) from ordinary activities before income tax
benefit	$\overline{2}$	(1,494,788)	(1,615,313)
Income tax benefit		332,753	335,729
Profit/ (loss) from ordinary activities after income tax
benefit	3	(1,162,035)	(1, 279, 584)
		Cents	Cents
Basic earnings per share		(1.43)	(1.58)
Diluted earnings per share		(1.43)	(1.58)

ANADIS Limited
Preliminary consolidated statement of financial position
As at 30 June 2004

	Note	2004	2003
		$\mathbb S$	\$
CURRENT ASSETS
Cash		311,834	381,820
Receivables		605,313	654,093
Investments		1,000,000	2,130,000
Inventories		802,309	600,902
Other assets		128,130	46,605
TOTAL CURRENT ASSETS		2,847,586	3,813,420
NON-CURRENT ASSETS
Plant and equipment		1,769,059	1,830,224
Intangible assets		293,119	311,065
TOTAL NON-CURRENT ASSETS		2,062,178	2,141,289
TOTAL ASSETS		4,909,765	5,954,709
CURRENT LIABILITIES
Accounts payable		677,483	666,093
Interest bearing liabilities		26,974	10,195
Provisions		127,234	79,953
Other			113,828
TOTAL CURRENT LIABILITIES		831,691	870,069
NON-CURRENT LIABILITIES
Interest bearing liabilities			26,974
Provisions		46,746	14,303
TOTAL NON-CURRENT LIABILITIES		46,746	41,277
TOTAL LIABILITIES		878,437	911,346
NET ASSETS		4,031,328	5,043,363
EQUITY
Share capital		12,742,048	12,592,048
Accumulated losses	3	(8,710,720)	(7,548,685)
TOTAL EQUITY		4,031,328	5,043,363

ANADIS Limited Preliminary consolidated statement of cash flows
For the year ended 30 June 2004

	Note	2004 $\ln \frac{1}{\ln x}$ (Outflow) \$	2003 Inflow / (Outflow) \$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of goods and services ${ax}$ Payments to suppliers and employees (inclusive of goods		4,079,287	3,193,836
and services tax)		(6,081,966)	(4,822,377)
Interest received		101,389	180,101
Grants received		335,409	340,879
R&D tax rebate		332,753	335,729
Borrowing costs		(2, 434)	(974)
Net Cash Flow from Operating Activities	4	(1, 235, 562)	(772, 806)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment		(114, 424)	(91, 516)
Proceeds from maturing debentures		1,130,000	670,000
Net Cash Flow from Investing Activities		1,015,576	578,484
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares
		150,000
Net Cash Flow from Financing Activities		150,000
Net increase/(decrease) in cash held		(69,986)	(194, 322)
Cash at beginning of financial year		381,820	576,142
Cash at end of financial year	5	311,834	381,820

ANADIS Limited Notes to preliminary consolidated financial statements For the year ended 30 June 2004

Note 1. Revenue

	2004	2003
	S	S
Revenue from Operating Activities
Sale of goods	3,677,553	3,058,560
Revenue from Outside Operating Activities
Interest	86,588	143,877
Government grants	424,019	200,773
Other grants	96,712	26.278
	607,319	370,928
Total Revenue	4,284,872	3,429,488

Operating loss Note 2.

Operating profit/(loss) before income tax expense includes the following specific expenses:

Cost of sales of goods	3,072,443	2,563,106
Amortisation – Goodwill	17.946	17.946
Depreciation	165,395	144,435
Borrowing costs expensed	2.434	-974
Research and development expenditure - total	762.872	1,189,667

Accumulated losses Note 3.

Accumulated losses at the beginning of the financial year	(7.548.685)	(6,269,101)
Net (loss) profit attributable to the members of Anadis	(1,162,035)	(1,279,584)
Accumulated (losses) at the end of the financial year	(8,710,720)	(7,548,685)

ANADIS LIMITED. Notes (Continued)

Note 4. Reconciliation of net cash used in operating activities to operating loss after income tax

	2004 S	2003 \$
Operating loss after income tax	(1,162,035)	(1,279,584)
Adjustments:
Depreciation and amortisation	183.341	162.381
Change in Assets & Liabilities:
Decrease/(Increase) in inventories	(201, 408)	(171.644)
Decrease/(Increase) in debtors and prepayments	(32,746)	(141.463)
(Decrease)/Increase in accounts payable	11,389	464.209
(Decrease)/Increase in other liabilities	(113,828)	113,828
(Decrease)/Increase in borrowings		37.169
(Decrease)/Increase in employee benefits	79,725	42,298
Net cash used by operating activities	(1,235,562)	(772, 806)

Note 5. Cash Reconciliation for the Statement of Cash Flows

2004	2003
\$	S
203,409	160.713
108.425	221.107
311.834	381.820

Material factors affecting the revenues and expenses of the economic entity for the current period

During the period revenue from ordinary activities increased 20% over the previous financial year and receipts from customers (inclusive of goods and services tax) increased by $27%$ over the previous financial year. One customer, Aussie Bodies Pty. Ltd., accounted for 85% of customer receipts (2003 -89%)

Material factors affecting the assets, liabilities and equity of the economic entity for the current period

Research and development expenditure and corporate costs continued to exceed the cash flow generated by the manufacturing division.

Material factors affecting the cash flows of the economic entity for the current period

During the period the company received a research and development tax refund for the previous financial year of \$332,753 (2003 - \$335,729). Grants for research and development activities totalled \$335,409 (2003 - \$340,729).

ANADIS LIMITED.

Notes (Continued)

Reconciliation of income tax expense

The income tax expense for the financial year differs from the amount calculated on the profit/(loss). The differences are reconciled as follows	2004	2003
Loss from ordinary activities before income tax expense	(1.494788)	(1,615,313)
Income tax calculated $\omega$ 30%	(448, 436)	(484, 594)
Tax effect of permanent differences:
Research and development tax concession	(57,270)	(73, 866)
Research and development tax rebate	(332,753)	(335, 729)
Timing differences and tax losses not brought to account	498,182	551,595
Other items	7,524	6,864
Income tax expense/(benefit) attributable to operating profit/(loss)	(332,753)	(335, 729)
The future income tax benefit arising from tax losses not brought to account at balance date as a result of realisation of the benefit not being virtually certain:	2,155,546	2.042,166

This benefit for tax losses will only be obtained if:

(a) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised;

(b) the Company continues to comply with the conditions for deductibility imposed by the tax legislation; and

(c) no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the losses

ANADIS LIMITED. Notes (Continued)

Segment note

Business Segment:

The Company conducts Research & Development activities and manufactures health foods.

Geographical Segment:

The Company operates within Australia.

2004	S Manufacturing	S Research & Development	S Unallocated	S Total
Operating revenue	3,677,553			3,677,553
Other revenue		520,731		520,731
Interest revenue			86,588	86,588
Total segment revenue	3,677,553	520,731	86,588	4,284,872
Segment result	605,110	(762, 872)	(1,337,026)	(1,494,788)
Taxation		332,753		332,753
Profit/(Loss) after tax	605,110	(530, 119)	(1,337,026)	(1,162,035)
Segment assets	2,987,583	435,910	1,486,272	4,909,765
Segment liabilities	318,802	310,304	249,331	878,437
Depreciation & amortisation expense	98,398	55,612	29,331	183,341
Other non-cash expense	8,285	17,438	54,002	79,725
Acquisition of non-current segment assets	82,793		21,437	104,230
2003	\$ Manufacturing	S Research &	S Unallocated	S Total
		Development
Operating revenue Other revenue	3,058,560	227,051		3,058,560 227,051
Interest revenue			143,877	143,877
Total segment revenue	3,058,560	227,051	143,877	3,429,488
Segment result	537,966	(1,189,667)	(963, 612)	(1,615,313)
Taxation		335,729		335,72
Profit/(Loss) after tax	537,966	(853,938)	(963, 612)	(1279,5)
Segment assets	2,827,204	420,028	2,707,477	5,954,709
Segment liabilities	366,142	416,858	128,346	911,346
Depreciation & amortisation expense	91,742	45,477	25,162	162,381
Other non-cash expense	$\overline{\phantom{a}}$		21,034	21,034

ANADIS LIMITED.

Notes (Continued)

Events occurring after reporting date

On 21 July, 2004 the Company announced that it would make a Placement of 10,900,000 fully paid ordinary shares at 39 cents each to raise \$4.251,000. The Placement, which was arranged directly by the Company without commissions or placement fees, was completed on 29 July, 2004.

After the Placement the number of fully paid shares on issue was 92,563,403 and the Paid Up Capital was \$16,993,048

International Financial Reporting Standards (IFRS)

The Australian Accounting Standards Board (AASB) is adopting IFRS for application to reporting periods beginning on or after 1 January 2005. The AASB will issue Australian equivalents to IFRS, and the Urgent Issues Group will issue abstracts corresponding to IASB interpretations originated by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee. The adoption of Australian equivalents to IFRS will be first reflected in the company's financial statements for the half-year ending 31 December 2005 and the year ending 30 June 2006.

Entities complying with Australian equivalents to IFRS for the first time will be required to restate their comparative financial statements to amounts reflecting the application of IFRS to that comparative period. Most adjustments required on transition to IFRS will be made, retrospectively, against opening retained earnings as at 1 July 2004.

The Company Secretary has recently attended an IFRS implementation workshop run by the company's auditors to assess the financial reporting implications of the above standards and a transition plan is currently being prepared for the consideration of the Audit & Risk Committee to ensure the timely implementation of the new standards.

Major changes identified to date that will be required to the company's existing accounting policies include the following:

1 Intangible assets $-$ goodwill

Under the Australian equivalent to IFRS 3 Business Combinations, amortisation of goodwill will be prohibited, and will be replaced by annual impairment testing focusing on the cash flows of the related cash generating unit.

This will result in a change to the current accounting policy, under which goodwill is amortised on a straight line basis over the period during which the benefits are expected to arise and not exceeding 20 years.

2 Equity-based compensation benefits.

Under the Australian equivalent to IFRS 2 Share-based Payment, equity-based compensation to employees will be recognised as an expense in respect of the services received. This will result in a change to the current accounting policy, under which no expense is recognised for equity based compensation.

ANADIS Limited Supplementary Appendix 4E information

N I A Backing
	2004	2003
Net tangible asset backing per ordinary share	\$0.046.	\$0.0583
Commentary on results
Earnings per share
	2004	2003
	Cents	Cents
Basic earnings per share	(1.43)	(1.58)
Diluted earnings per share	(1.43)	(1.58)
	2004	20032
	Number	Number
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share	81.310,802	81, 163, 403
Weighted average number of ordinary shares and
potential ordinary shares used as the denominator in
calculating diluted earnings per share	81,310,802	81, 163, 403

In future, the weighted average number of ordinary shares used as the denominator will be impacted by the post reporting date event referred to above.

Reconciliation of earnings used in calculating earnings per share

The numerator used in calculation of both Basic EPS and Diluted EPS is a loss of \$1,162,035 and there are no reconciling items to the loss from ordinary activities before income tax expense.

Options

WITH A TO LOCAL LINE

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.

Annual Meeting

The annual meeting will be held as follows;

Place:	St. Michael's Church Hall, 120 Collins Street Melbourne.
Date:	9 November, 2004.
Time:	2.00 pm
Approximate date the annual
Report will be released:	5 October, 2004

Audit

This preliminary final report is based on accounts which have been audited. The audit report, which was unqualified, will be made available with the Company's financial report.