Immuron Ltd — Regulatory Filings 2005

Feb 10, 2005

10 February, 2005.

Dear Sir/Madam.

Appendix 4D & Chairman's Half Yearly Report, 31 December, 2004.

Anadis is pleased to report total revenue for the six months ended December 31, 2004 of \$2,750,856. This is an increase of 34% over the previous corresponding period.

Trading results.

This sales figure reflects the continued growth in the quantity of products being manufactured. These revenues, after allocation of direct overheads associated with manufacturing, make a positive contribution to the research and development activities of Anadis. We continue to actively seek additional manufacturing opportunities as well as the development of our own products. The increased loss arises from those costs associated with the launch of Travelan, some of which will not be reoccurring.

Share Placement

During July 2004 Anadis raised \$4.25 million by way of a private share placement. 10,900,000 new fully paid ordinary shares at a price of 39c were placed to Tatura Milk Industries and Paracroft Pty Ltd: Anadis' existing largest shareholder. This placement was made directly by Anadis, with no commissions or placement fees required. We are delighted that our business partner, Tatura Milk Industries, decided to become a major shareholder. This further strengthens the important linkage between the two companies.

Travelan

In the second half of 2004, the Travelan product became available for sale in Victorian pharmacies and a marketing campaign began to educate the public about this new product. Interest in Travelan has grown quickly with enquires from interstate and, perhaps more excitingly, from overseas. Travelan is now available in parts of NSW and will soon be available from airports all over Australia as well as pharmacies on the East Coast, shortly moving across the nation. Overseas, Travelan is currently being evaluated for the US, UK, Korean and Taiwanese markets.

ANADIS LIMITED ABN 80 063 114 045

4 Capital Link Drive Campbellfield Victoria Australia 3061 Ph (61) 3 9358 6388 Fax (61) 3 9358 6399 email: info@anadis.com.au website: www.anadis.com.au

Anadis has in the first half of this financial year hyperimmunised and collected bovine colostrum antibodies from 2400 cows from the dairy herds in the Goulburn Valley for further Travelan production. Anadis is delighted to have commericalised and begun the marketing of is first research based product.

H.pylori Study

The first product from the anti-H. pylori program, Protectyn, is now being assessed for scale-up and commercialisation. Negotiations are proceeding with several interested pharmaceutical companies in our target markets in Asia. Our work with $H$ . pylori antigen identification (vaccine) is also proceeding well. Intellectual property development is now rigorously underway to capitalise on these latest advances. Further provisional patents are expected to be filed in the near future, with additional information to be released at that time.

The Directors anticipate significant international demand for a natural product, free from the side effects associated with antibiotic use, which can reduce symptoms associated with H.pylori infection. This research has been assisted through funding under a Commonwealth Government START Grant.

Enterovirus 71

During August 2004, Anadis announced the development of a candidate protective therapy against Enterovirus 71 (EV-71). This project is the subject of a joint venture between Anadis and the Taiwanese Development Center for Biotechnology (DCB).

The Enterovirus 71 project is expanding after significant laboratory-scale success. Excellent progress is being made by our new Senior Virologist, Dr David Delaney, who is now concentrating on the scale-up of the technology enabling commercialisation to proceed.

Bioshield

Our Bioshield relates to technologies that can protect proteins in the harsh stomach environment. Patents involving Bioshielding technologies have entered the international phase and these technologies are already being used to shield two of our new products in development (EV-71 and Protectyn). We see the use of these technologies in our own products and extending to applications in the functional food and nutrition markets.

Biodefence / Respiratory project

Good progress is being made in the Biodefence program and a joint venture between Starpharma Holdings Ltd and Anadis has been established to combine relevant technologies of dendrimers and antibodies for use in the area of respiratory protection. This is one of a number of possible avenues being examined in this area of research. This work is being funded through a Commonwealth Government Grant to facilitate Anadis' research into Biodefence. More information in regards to this project will be released to the market in the coming months.

Immune Stimulating Infant Formula

Tatura Milk Industries and Anadis have recently received a \$1 million Commonwealth FIG Grant to develop improved child milk formulas for the Asian market. The aim is for the new product to contain naturally high levels of anti-oxidants - which appears to be important in the immune development of children. With an annual infant formula market size in Asia in excess of AUD\$1.6 billion and growing, this is an exciting new opportunity for both companies. This project has been activated with the appointment of a Project Coordinator, Sheila Matthews.

We look forward to 2005 with the expectation of more exciting results.

Yours sincerely, Anadis Limited

Register

Philip Molyneux Chairman

ANADIS Limited ABN: 80 063 114 045 ASX Half-year information - 31 December 2004.

Lodged with the ASX under Listing Rule 4.2A.
This information should be read in conjunction with the 30 June 2004 Annual Report.

Contents

Results for Announcement to the Market	$(A$ ppendix 4D item 2)	$\sim$
Half-year report (ASX Listing rule 4.2A1)		6 to 17
Supplementary Appendix 4D Information (Appendix 4D items 3 to 9)		18

ANADIS Limited Half-year ended 31 December 2004 (Previous corresponding period: Half-year ended 31 December 2003)

Results for Announcement to the Market

Revenue from ordinary activities (Appendix 4D item 2.1)	up	34%	Ŧо	2,750,856
Profit/(loss) from ordinary activities after tax attributable to members (Appendix 4D item 2.2)	up	20%	Ŧо	(507,799)
$\vert$ Net profit/(loss) for the period attributable to members (Appendix 4D item 2.3)	up	20%	Ŧо	(507,799)

Dividends/distributions $\sim$ (Appendix 4D item 2.4)	Amount per security	Franked amount per security
Final dividend (prior year)	Nil	Nil
l Interim dividend	Nil	Nil

Record date for determining entitlements to the interim dividend (Appendix 4D item 2.5)

Day/Month/Year $N/A$

Explanation of Revenue (Appendix 4D item 2.6)

Include a brief explanation to enable figures to be understood if necessary

Sales of goods (\$2,258,823) represented the largest contribution (82%) to revenue. Additional revenue received comprised \$373,620 in outside research and development funding and \$118,413 interest received on cash deposits.

Explanation of Profit/(loss) from ordinary activities after tax (Appendix 4D item 2.6)

Include a brief explanation to enable figures to be understood if necessary

The increase in the loss (20%) from the previous year is primarily due to the costs associated with the launch of Travelan and a lower R&D tax refund of \$300,763 (2003 - \$332,753)

Explanation of Net Profit/(loss) (Appendix 4D item 2.6)
Include a brief explanation to enable figures to be understood if necessary	N/A
Explanation of Dividends (Appendix 4D item 2.6)	'N / A
Include a brief explanation to enable figures to be understood if necessary

ANADIS Limited Half-year report $-31$ December 2004

Contents

Directors' Report
Auditor's Independence Declaration	8
Statement of financial performance	9
Statement of financial position	10
Statement of cash flows	11
Notes to the financial statements	12
Directors' declaration	15
Independent review report to the members	16

This interim 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 2004 and any public announcements made by Anadis Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Anadis Limited. Directors' Report.

Your directors present their report on Anadis Limited for the half year ended 31 December, 2004.

Directors.

The following persons were directors of Anadis Limited during the half year and up to the date of this report:

Philip G. Molyneux, Conor J. Graham. Dr. Peter J. Jenkins, Prof Roy Robins-Browne, and Roman Zwolenski

Review of operations and results.

The directors are pleased to report that in the six months to 31 December, 2004, a number of important milestones were achieved. These achievements are set out in the accompanying letter to the Australian Stock Exchange Ltd., signed by the Chairman and dated 10 February, 2005.

Auditors Independence

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 8.

Signed in accordance with a resolution of the directors.

Rup Marine

P. Molyneux Director.

a kamalang kalendar yang mengenali dan kamalang dan mengenali dan kamalang dan kamalang dan mengenali dan kama
Kamalang dan kamalang dan mengenali dan kamalang dan mengenali dan kamalang dan kamalang dan kamalang dan kama

C. Graham Director

Melbourne, 10 February, 2005.

PRICEWATERHOUSE COPERS

PricewaterhouseCoopers ABN 52 780 433 757

333 Collins Street MELBOURNE VIC 3000 GPO Box 1331L MELBOURNE VIC 3001 DX 77 Melbourne Australia www.pwc.com/au Telephone +61 3 8603 1000 Facsimile +61 3 8603 1999

Auditors' Independence Declaration

As lead auditor for the review of Anadis Limited for the half year ended 31 December 2004, I declare that to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Anadis Limited during the period.

Viz bake

Anton Linschoten Partner PricewaterhouseCoopers

Melbourne 10 February 2005

ANADIS Limited Statement of financial performance For the half-year ended 31 December 2004

	Half-year
	2004	2003
	S	S
Revenue from ordinary activities	2,750,856	2,047,096
Raw materials and consumables used	(1,497,441)	(1,217,737)
Employee benefits expense	(925, 942)	(812, 657)
Depreciation and amortisation expenses	(92, 134)	(89, 395)
Borrowing costs	(1,460)	(974)
Research and development - external	(386, 651)	(255, 494)
Factory overheads	(87, 737)	(85, 547)
Directors' fees	(85,000)	(81,250)
Travel expenses	(39, 471)	(29, 802)
Product promotion	(204, 032)
Corporate and administrative expenses	(239, 550)	(228, 649)
Profit/ (loss) from ordinary activities before income tax benefit	(808, 562)	(754, 409)
Income tax benefit	300,763	332,753
Profit/ (loss) from ordinary activities after income tax
benefit	(507,799)	(421, 656)
	Cents	Cents
Basic earnings per share	(0.56)	(0.52)
Diluted earnings per share	(0.56)	(0.52)

The above statement of financial performance should be read in conjunction with the accompanying notes.

ANADIS Limited Statement of financial position
As at 31 December 2004

	December 2004	June 2004
	\$	\$
CURRENT ASSETS
Cash	780,797	311,834
Receivables	1,132,783	605,313
Investments	3,909,097	1,000,000
Inventories	883,604	802,309
Other assets	65,598	128,131
TOTAL CURRENT ASSETS	6,771,879	2,847,587
NON-CURRENT ASSETS
Plant and equipment	1,735,576	1,769,059
Intangible assets	284,146	293,119
TOTAL NON-CURRENT ASSETS	2,019,722	2,062,178
TOTAL ASSETS	8,791,601	4,909,765
CURRENT LIABILITIES
Accounts payable	823,072	677,483
Interest bearing liabilities	21,877	26,974
Provisions	129,289	127,234
TOTAL CURRENT LIABILITIES	974,238	831,691
NON-CURRENT LIABILITIES
Provisions	51,322	46,746
TOTAL NON-CURRENT LIABILITIES	51,322	46,746
TOTAL LIABILITIES	1,025,560	878,437
NET ASSETS	7,766,041	4,031,328
EQUITY
Share capital	16,984,560	12,742,048
Accumulated losses	(9,218,519)	(8,710,720)
TOTAL EQUITY	7,766,041	4,031,328

The above statement of financial position should be read in conjunction with the accompanying notes

ANADIS Limited Statement of cash flows For the half-year ended 31 December 2003

2004 2003 Inflow/ Inflow/ (Outflow) (Outflow) \$ \$ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of goods and services ${ax}$ 2,022,339 1,876,200 Payments to suppliers and employees (inclusive of goods and services tax) (3,616,509) (3,076,639) Interest received 53,308 34,366 423,075 127,377 Grants received R&D tax refund 300,763 280,753 Borrowing costs (1,460) (974) (818, 484) (758, 917) Net Cash Flow from Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment (40, 872) (25, 911) Proceeds from maturing debentures 660,000 Investment in debentures (2,909,097) (2,949,969) 634,089 Net Cash Flow from Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares 4,242,513 Repayment of borrowings (5,097) (5,097) 4,237,416 Net Cash Flow from Financing Activities (5,097) Net increase/(decrease) in cash held 468,963 (129, 925) Cash at beginning of financial year 311,834 381,820		Half-year
	Cash at end of financial year	780,797	251,895

The above statement of cash flows should be read in conjunction with the accompanying notes.

ANADIS Limited Notes to the financial statements For the half-year ended 31 December 2004

Note 1. Basis of preparation of half-vear financial report

Basis of Accounting $(a)$

This general purpose financial report for the interim half-year reporting period 31 December, 2004 has been prepared in accordance with Accounting Standard AASB 1029 Interim Financial Reporting, other mandatory professional reporting requirements (Urgent issues Group Consensus Views), other authoritative pronouncements of the Accounting Standards Board and the Corporations Act 2001.

This interim 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 of the year ended 30 June. 2004 and any public announcements with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

International Financial Reporting Standards (IFRS) $(b)$

The Australian Accounting Standards Board (AASB) is adopting IFRS for application to reporting periods beginning on or after 1 January 2005. The AASB has issued 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 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 has been prepared for and considered by 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:

$\mathbf{1}$ 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 vears.

$2 -$ 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.

Note 2. Segment information

Geographical Segment:

The Company operates within Australia.

Business Segment:

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

2004	\$ Manufacturing	Ŝ Research & Development	4 Unallocated	4 Total
Operating revenue	2,189,981		68,842	2.258,823
Other revenue		373,620		373,620
Interest revenue			118,413	118,413
Total segment revenue	2,189,981	373,620	187,255	2,750,856
Segment result	328,572	(561,084)	(576,050)	(808, 562)
Taxation		300,763		300,763
Profit/(Loss) after tax	328,572	(260, 321)	(576,050)	(507,799)
Segment assets	3,165,620	358,669	5,267,312	8,791,601
Segment liabilities	458,340	269,758	297,462	1,025,560
Depreciation & amortisation expense	52,262	27,786	12,086	92,134
Other non-cash expense	(3.008)	(771)	10.409	6,630
Acquisition of non-current segment assets	39,687		1,185	40,872

2003	S Manufacturing	S Research & Development	S Unallocated	S Total
Operating revenue	1,798,900			1,798,900
Other revenue		199,018		199,018
Interest revenue			49,178	49,178
Total segment revenue	1,798,900	199,018	49,178	2,047,096
Segment result	256,907	(376, 299)	(635, 017)	(754, 409)
Taxation		332,753		332,753
Profit/(Loss) after taxation	256,907	(43, 546)	(635, 017)	(421, 656)
Segment assets	2,907,771	415,443	1,913,566	5,236,780
Segment liabilities	284,965	221,072	109,035	615,072
Depreciation & amortisation expense	47,608	27,808	13,979	89,395
Other non-cash expense	(2,007)	(4,358)	40,666	34,301
Acquisition of non-current segment asse	18,995		6,916	25,911

Note 3. Earnings per share

		Half-year
	2004	2003
	Cents	Cents
Basic earnings per share	(0.56)	(0.52)
Diluted earnings per share	(0.56)	(0.52)
	2004	2003
	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	90,825,360	81,163,403
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share	90,825,360	81,163,403

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 \$508k (2003 - \$422k) and there are no reconciling items to the loss from ordinary activities before income tax expense.

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 4 Share Capital

		December 2004 \$		June 2004 S
	Issued and Paid Up Capital
	92,563,403 (June 2004: 81,663,403) ordinary shares fully paid	16,984,561		12,742,048
	Movements in share capital
Date	Details	Number of	Issue	S
		Shares	Price
1/01/2003	Balance	81,163,403		12,592,048
1/01/04	Balance	81,163,403		12,592,048
29/01/04	Share Issue/exercise of options	500,000	0.30	150,000
21/07/04	Share placement	800,000	0.39	312,000
30/07/04	Share placement	10.100.000	0.39	3,939,000
30/07/04	Share placement costs			(8,488)
31/12/2004	Balance	92,563,403		16,984,560

ANADIS Limited Directors' Declaration

In the Director's opinion:

• a) the financial statements and notes set out on pages 9 to 14 are in accordance with the Corporations Act 2001, including
• i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• ii) give a true and fair view of the Company's financial position as at 31 December 2004 and of its performance, as represented by the results of its operations and its cash flows, for the financial year ended on that date. and
• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Directors.

Dely Marsach

and a straight of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state

P Molyneux Director

C Graham Director

Melbourne 10 February 2005

PRICEWATERHOUSE COPERS ®

PricewaterhouseCoopers ABN 52 780 433 757

333 Collins Street MELBOURNE VIC 3000 GPO Box 1331L MELBOURNE VIC 3001 DX 77 Melbourne Australia www.pwc.com/au Telephone +61 3 8603 1000 Facsimile +61 3 8603 1999

Independent review report to the members of Anadis Limited

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the financial report of Anadis Limited:

• does not give a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position of Anadis Limited as at 31 December 2004 and of its performance for the halfvear ended on that date, and
• is not presented in accordance with the Corporations Act 2001, Accounting Standard AASB $\bullet$ 1029: Interim Financial Reporting and other mandatory financial reporting requirements in Australia, and the Corporations Regulations 2001.

This statement must be read in conjunction with the rest of our review report.

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for Anadis Limited, for the half-year ended 31 December 2004

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

PRICEVIATERHOUSE COPERS ®

Review approach

We conducted an independent review in order for the company to lodge the financial report with the Australian Securities and Investments Commission. Our review was conducted in accordance with Australian Auditing Standards applicable to review engagements. For further explanation of a review, visit our website http://www.pwc.com/au/financialstatementaudit.

We performed procedures in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report does not present fairly, in accordance with the Corporations Act 2001, Accounting Standard AASB 1029; Interim Financial Reporting and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the entity's financial position, and its performance as represented by the results of its operations and cash flows.

We formed our statement on the basis of the review procedures performed, which included:

• inquiries of company personnel, and
• analytical procedures applied to financial data. $\bullet$

Our procedures include reading the other information included with the financial report to determine whether it contains any material inconsistencies with the financial report.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than that given in an audit. We have not performed an audit, and accordingly, we do not express an audit opinion.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our review was not designed to provide assurance on internal controls

Our review did not involve an analysis of the prudence of business decisions made by directors or management.

Independence

In conducting our review, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Process to boss (open

PricewaterhouseCoopers

VI brez kazlen

Anton Linschoten Partner

Melbourne 10 February 2005

Liability is limited by the Accountant's Scheme under the Professional Standards Act 1994 (NSW)

ANADIS Limited Supplementary Appendix 4D information

$\blacksquare$
Net tangible asset backing per ordinary share	\$0.08

NTA Backing (Appendix 4D item 3)