Immuron Ltd — Annual Report 2007

Aug 30, 2007

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Friday 31 August 2007

The Company Announcement Office Australian Stock Exchange Limited Sydney

Subject: Preliminary Final Report 30 June, 2007 - Appendix 4E.

Dear Sir/Madam

Anadis Limited total revenue for the financial year ending 30 June 2007 was $4.3 million, an increase of 4.5% on the previous year. Revenue is anticipated to rise at least 85% in the 20072008 financial year as a result of new contract manufacturing business already being processed through the company’s Functional Foods Division. Further increases in revenue are also anticipated from Anadis’ antibody-based products and technologies.

A recently completed capital-raising of approximately $700,000 has considerably improved Anadis’ cash reserves.

The result for the 2006-2007 financial year was a net loss of $3.3 million, which included two exceptional items: a severance payment of $375,000 to the company’s former Managing Director/CEO and a non-cash write down of $868,000 for inventory. The inventory write down was largely for hyperimmune colostrum raw material which had been built up over several years. It was considered appropriate to reduce the carrying value of this inventory as a result of uncertainty as to the timing and quantum of future sales. However, the bulk raw material has been confirmed to have strong bioactivity and will be retained for use if and when required in future products.

Anadis commenced the 2007 financial year confident that its two lead products, Travelan and EV-Protec (the latter originally scheduled for launch mid-2007), would generate significant revenue through selected export markets. As explained in the company’s previous announcements there have been delays with the export business development of these products, but there are encouraging signs that perseverance will produce an export breakthrough.

Domestic sales of Travelan have shown a promising uplift, particularly after the “new blue” packaging was introduced in February this year. Although Australia is not a large market the growing acceptance of Travelan domestically is an important commercial endorsement for the proprietary polyclonal antibody technology platform upon which this product is based.

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This technology platform is the foundation of future products which Anadis, working together over the past year with USA consulting firm Biovance Medical LLC, has identified to address high-value markets with unmet needs.

This work culminated in the appointment in April 2007 of Biovance principal, Dr Zeil Rosenberg, to guide Anadis as its CEO through an international business expansion agenda. This rapidly unfolding agenda, of which more will be announced in the coming months, is repositioning Anadis towards becoming a global leader in polyclonal antibody technology. Anadis is confident that Dr Rosenberg’s experience and location, the USA, will provide many opportunities for the company that are not available in Australia.

R. Zwolenski Chairman

For further information contact:

Roman Zwolenski – Chairman Email: Roman.z@anadis.com.au Tel: 03 9358 6388

Dr Zeil Rosenberg (US) – CEO Email: zeil.r@anadis.com.au Tel: +1 201 750 4799

Arie Nudel – Investor Relations Email: arie.n@anadis.com.au Tel: 03 9358 6388

______________ 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

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ANADIS Limited. ABN 80 063 114 045

ASX Preliminary final report – 30 June 2007

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

Contents
Results for Announcement to the Market	4
Preliminary Income Statements	5
Preliminary Balance Sheets	6
Preliminary Statement of Changes in Equity	7
Preliminary Cash Flow Statements	8
Notes to preliminary Financial Statements	9
Other Appendix 4E Information	16

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ANADIS Limited Year ended 30 June 2007 (Previous corresponding period: Year ended 30 June 2006)

Results for Announcement to the Market

				$
Revenue from ordinary activities	Up	4.5%		4,292,258
(Loss) from ordinary activities after tax attributable to members	Down	7.8%		(3,281,236)
Net (loss) for the period attributable to members	Down	7.8%		(3,281,236)

Dividends/distributions	Amount per security		Franked amount per security
Final dividend	0		0
Interim dividend	0		0
Record date for determining entitlements to the	dividend
			N/A

Record date for determining entitlements to the dividend

Explanation of revenue

Sale of goods ($4,249,324) represented the largest contribution (99%) to revenue. Additional revenue was interest received on cash deposits. In addition, Other Income (profit on sale of property and grants received) totalled $912,512

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

The decrease in the loss (7.8%) from the previous year is mainly attributed to the profit on sale of property

For further details concerning the revenue and loss, please refer to the covering letter from the Chairman.

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ANADIS Limited Preliminary Income Statements For the year ended 30 June 2007

Notes Revenue from continuing operations 2 Other income 3 Change in inventories of finished goods & work in progress Raw materials & consumables used Employee benefits expense Depreciation Impairment charge 5 Research and development – external Grant applications costs Factory overheads Directors' fees Travel expenses Product marketing - external Export development Consultants costs Shareholder relations Corporate and administrative expenses Loss before income tax Income tax benefit Loss attributable to members of Anadis Limited Loss from continuing operations Net loss for the year 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	2007 $ 4,292,258 912,512 82,025 (3,830,426) (2,699,109) (156,710) - (699,500) (313) (223,487) (256,150) (59,351) (151,072) (58,829) (173,435) (140,793) (401,380) (3,563,760) 282,524 (3,281,236) (3,281,236) (3,281,236) Cents (3.34) (3.34)	2006 $ 4,108,587 704,834 120,655 (2,697,826) (2,270,001) (174,187) (293,119) (762,660) (50,475) (205,269) (256,150) (122,863) (939,601) (49,048) (178,353) (138,838) (355,617)
		(3,559,931) -
		(3,559,931)
		(3,559,931)
		(3,559,931)
		Cents (3.84) (3.84)

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

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ANADIS Limited Preliminary Balance Sheets As at 30 June 2007

Notes ASSETS Current Assets Cash & cash equivalents Trade & other receivables Held to maturity investments Inventories 9 Other assets Total Current assets Non-Current Assets Property, plant and equipment Intangible assets 5 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 Accumulated losses TOTAL EQUITY	2007 $ 672,643 1,011,406 - 824,047 145,423 2,653,519 642,459 - 642,459 3,295,978 882,339 24,325 405,042 1,311,706 63,799 63,799 1,375,505 1,920,473 18,750,743 80,320 (16,910,590) 1,920,473	2006 $ 1,434,265 815,670 1,100,000 1,589,705 58,805
		4,998,445
		1,626,806 -
		1,626,806
		6,625,251
		1,181,920 53,239 151,325
		1,386,484
		60,120
		60,120
		1,446,604
		5,178,647
		18,729,796 78,205 (13,629,354)
		5,178,647

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

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ANADIS LIMITED Preliminary Statements of Changes in Equity For the year ended 30 June, 2007

Notes Total equity at the beginning of the financial year Net income recognised directly in equity Profit/(Loss) for the financial year Total recognised income and expense for the year Transactions with equity holders in their capacity as equity holders: Contributions of equity, net of transaction costs 6 Share options Total equity at the end of the financial year	2007 $ 5,178,647 (3,281,236) (3,281,236) 20,947 2,115 23,062 1,920,473	2006 $ 6,958,398
		(3,559,931)
		(3,559,931)
		1,745,235 34,945
		1,780,180
		5,178,647

The above preliminary Statements of Changes to Equity should be read in conjunction with the accompanying Notes.

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ANADIS Limited Preliminary Cash Flow Statements For the year ended 30 June 2007

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 Net Cash (outflow) from Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for plant and equipment Sale of property Proceeds from maturing debentures Security bond 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	2007 Inflow / (Outflow) $ 4,577,719 (8,691,446) (4,113,727) 63,735 772,813 282,524 (2,994,655) (17,967) 1,176,000 1,100,000 (25,000) 2,233,033 - - - (761,622) 1,434,265 672,643	2006 Inflow / (Outflow) $ 4,517,234 (8,257,036)
		(3,739,802) 143,905 789,371 -
		(2,806,526)
		(62,321) - 2,379,217 -
		2,316,896
		1,824,001 (78,766)
		1,745,235
		1,255,605 178,660
		1,434,265

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

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ANADIS Limited Notes to preliminary Financial Statements For the year ended 30 June 2007

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 2006 and any public announcements made by Anadis 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 2006 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 2007 and 2006, the Company’s cash and investments were approximately $672k and $2.5 million, respectively, and for the year ended 30 June 2007 and 2006, the Company experienced operating losses of $3.2 million and $3.6 million, and operating net cash outflows of $3 million and $2.8 million, respectively. These outflows arose from expenses associated with research and development programs, commercialisation initiatives and $800k from a non cash item as a result of inventory provisions. As a result of the continuing losses and cash outflows from operations 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 Company's ability to fund its operations is dependent upon obtaining income from the commercialisation of its research and development projects, supplemented by functional food contract manufacturing and grant incomes, and from the raising of additional capital through new sources of financing. Ultimately, the Company's continuation as a going concern is dependent upon achieving profitable operations through the successful commercialisation of its products and technology.

As a result of the difficulty in predicting the timing and quantum of income from the commercialization of its products and technology, including Travelan and EVProtec, 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 12 months providing access to adequate financial resources. Specifically, increased income flows from the manufacturing segment are expected, resulting from a new business relationship entered into in August 2007.. Furthermore, the company has a history of successful capital raising and has recently completed a capital raising of over $700k (refer Note 8 Subsequent Events). The directors are confident of the company’s ability to raise further capital if the need arises. The Company has also established an Equity line of Credit (Standby Subscription Arrangement, refer Note 6 Contributed Equity and Note 8 Subsequent Events) of $5 million, whereby the company has the ability to draw down cash through the issue of equity. The amount of any drawdown is restricted by the Company’s share trading volumes and share price (refer Note 6 Contributed equity)..

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

Note 2. Revenue
From continuing operations Sales revenue Sale of goods Other revenue Interest Note 3. Other income Net gain on sale of land & buildings Government grants Other grants Government grants		2007 $ 4,249,324 42,934 4,292,258 330,396 582,116 - 912,512		2006 $ 4,002,371 106,216 4,108,587 - 691,312 13,522
				704,834

The following government grants were recognised as other income by the Company during the financial year:

• National Food Industry Strategy Ltd. • Dept. of Education, Science & Training • Dept of Industry, Tourism & Resources • Dept of Employment, Education & Training • Dept of Prime Minister & Cabinet • AusTrade Total - 2007	$240,688 $ 55,970 $216,383 $ 16,500 $ 34,694 $ 17,881
	$582,116

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.

Segment Information

Note 4. Business Segment:

The Company operates in two business segments being the conduct of Research & Development activities and the manufacture of health products.

The consumer health market segments of nutraceuticals and functional foods have been the primary targets for the research-driven biotechnologies and products that Anadis has been developing over some ten years. More recently the commercial targets for the company’s technologies have expanded to include disease prevention and therapy in hospital patients under professional medical care.

A further field of commercial interest for Anadis, which leverages the Company’s capabilities of large scale antibody production, is the diagnosis and containment of lethal bacterial and viral contamination such as applicable to the bio-defense industry.

Anadis has established a strong R&D and Quality maintenance capability to drive the technology innovation and product development for its target markets. The Company’s first product in the consumer health target market, Travelan was launched in Australia in financial year 2005 and export sales activity commenced in financial year 2007.

Anadis has also established a high standard manufacturing plant certified for the manufacture and blending of Functional Foods. The Functional Foods division of Anadis currently operates its manufacturing plant principally for the contract manufacture of third party health food products. Whilst maintaining manufacturing know-how and

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Note 4. Segment Information (continued)

formulation expertises through the contract manufacturing activity this business generated over $4million revenue and positive cash flow in the 2007 financial year and is set to grow sharply in the 2008 financial year.

Geographical Segment:

Geographical Segment:	Geographical Segment:	Geographical Segment:
The Company has operated principally in one geographical segment, Australia
Primary reporting format – business segments	$	$	$	$
	Manufacturing	Research &	Other	Total
2007		Development
Sales to external customers	4,249,324	-	-	4,249,324
Interest revenue	-	-	42,934	42,934
Other income	346,896	565,616	-	912,512
Total segment revenue/income	4,596,220	565,616	42,934	5,204,700
Segment result	(188,796)	(1,076,803)	(2,298,161)	(3,563,760)
Taxation	-	282,524	-	282,524
Profit/(Loss) after tax	(188,796)	(794,279)	(2,298,161)	(3,281,236)
Segment assets	2,820,463	288,542	835,228	3,944,233
Segment liabilities	424,976	641,284	309,245	1,375,505
Depreciation & amortisation expense	85,427	43,783	27,060	156,270
Impairment charge	-	-	-	-
Other non-cash expenses/(income)	6,081	17,465	(110,831)	(87,285)
Acquisition of non-current segment assets	10,712	9,753	7,255	27,720

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Note 4. Segment Information (continued)

Primary reporting format – business segments 2006 Sales to external customers Interest revenue Other income Total segment revenue/income Segment result Taxation Profit/(Loss) after tax Segment assets Segment liabilities Depreciation & amortisation expense Impairment charge Other non-cash expenses Acquisition of non-current segment assets	$ Manufacturing $ Research & Development $ Other $ Total 4,002,371 - - 4,002,371 - - 106,216 106,216 - 704,834 - 704,834
	4,002,371 704,834 106,216 4,813,421
	(667,102) (1,091,508) (1,801,321) (3,559,931)
	- - - -
	(667,102) (1,091,508) (1,801,321) (3,559,931)
	3,649,061 262,332 2,713,858 6,625,251
	766,056 402,684 277,864 1,446,604
	94,726 51,424 28,037 174,187
	293,119 - - 293,119
	12,180 14,959 53,462 80,601
	44,276 443 17,603 62,322

Segment information is prepared in conformity with the accounting standard AASB 114 Segment Reporting

Note 5. Non-current assets - Intangible assets

At 1 July, 2005 Cost Accumulated amortisation and impairment Net book amount Year ended 30 June, 2006 Opening net book amount Impairment Closing net book amount At 30 June, 2006 Cost Accumulated amortisation and impairment Net book amount Year ended 30 June, 2007 Opening net book amount Impairment charge Closing net book amount At 30 June, 2007 Cost Accumulated amortisation and impairment Net book amount	Goodwill 358,921 (65,802)
	293,119
	293,119 (293,119)
	-
	358,921 (358,921)
	-
	- -
	-
	- -
	-

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Note 6. Contributed equity

(a) Issued and Paid Up Capital 98,346,153 (2006: 98,267,403) ordinary shares fully paid (b) Movements in ordinary share capital Date Details Notes 1/7/05 Opening balance 29/11/05 Option conversion (d) 29/11/05 Option conversion (d) 9/12/05 Option conversion (d) 13/12/05 Cancelled shares (e) 1/6/06 Option conversion (d) 5/6/06 Share placement (c) 5/6/06 Issue of share options (d) 5/6/06 Share placement (c) 5/6/06 Share placement costs 30/6/06 Balance 15/2/07 Employee shares 30/6/07 Balance		2007 $ 18,750,743 Number of Shares Issue Price 92,563,403 50,000 0.24 50,000 0.27 250,000 0.35 (644,277) 50,000 0.22 3,448,276 0.28 - 2,500,001 0.28 - 98,267,403 78,750 98,346,153	2006 $ 18,729,796 $ 16,984,561 12,000 13,500 87,500 - 11,000 960,949 39,051 700,000 (78,765) 18,729,796 20,947 18,750,743

(c) Ordinary Shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amount paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(d) Options

Information relating to details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set out in the Directors Report

In conjunction with the share placement on 5 June, 2006, the Company issued 862,069 options to an investor. The fair value of the options was determined to be $39,051 and was recorded as additional share capital. These options have now lapsed without being exercised.

(e) Cancelled Shares

Shares in the Company totalling 644,277, held in escrow for an entity in which Mr. C. Graham is a related party, were

cancelled on 13 December, 2005 due to the escrow conditions not being met.

(f) Share buy-back

There is no current on-market buy-back.

(g) Standby Subscription Agreement

As announced to the market on 18 June, 2007 the Company has entered into an agreement with Fortrend Small Cap Investors Limited for a facility to draw up to $5million by the issue of shares and options. The draw downs are at Anadis’ discretion and the facility is available for three years.

The pricing of the shares is based on the market price of Anadis’ listed shares. Draw downs can be made monthly but the number of shares that can be placed each month is restricted by shares on issue, trading volumes and the share price.

In July, 2007, the Company placed 650,000 shares at 15.2 cents. The 650,000 shares were restricted to this amount by trading volumes in the fifteen day period preceding the drawn down.

Of significance is that no issue of shares can occur if the share price trades at less than 16.5 cents for the five days commencing on the day Anadis notifies Fortrend of the intent to draw down.

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Note 7. Earnings Per Share

Note 7. Earnings Per Share
	2007	2006
	Cents	Cents
(a) Basic earnings per share
Loss from continuing operations attributable to the ordinary equity	(3.34	(3.84)
holders of the Company
(b) Diluted earnings per share
Loss from continuing operations attributable to the ordinary equity	(3.34)	(3.84)
holders of the Company
	2007	2006
	Number	Number
(c) 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	98,346,153	92,820,926
Weighted average number of ordinary shares and potential ordinary
shares used as the denominator in calculating diluted earnings per
share	98,346,153	92,820,926

(d) 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 $3,281,236 (2006 - $3,559,931) and there are no reconciling items to the loss from continuing operations before income tax expense.

(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. Current assets - Inventories

Raw materials and stores – at cost Work in progress – at cost Finished Goods – at cost	2007 $ 544,138 73,265 206,644 824,047	2006 $ 1,227,771 59,772 302,162
		1,589,705

Inventory expense

Inventories recognised as expense during the year ended 30 June, 2007 amounted to $3,830,426 (2006: $2,697,826)

Write down of inventories to net realisable value recognised as an expense during the year ended 30 June, 2007 amounted to $868,317 (2006: $2,053) The expense has been included in ‘raw materials and consumables used’ in the Income Statement.

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Note 8 Events occurring after balance sheet date

• 1 On 13 July, 2007 the Company issued shares to Fortrend Small Cap Investors Limited pursuant to a Standby Subscription Agreement (Note 6(g)). The Company issued 650,000 fully paid ordinary shares at 15.2 cents per share and 162,500 options with a strike price of 15.2 cents per share which expiry on 12 January, 2009. Anadis received cash of $88,920 after expenses. The options were valued at $10,968 using a Black-Scholes option pricing model and will be credited to contributed equity.

• 2 On the 31st August 2007 the Company completed a capital raising from Australian and US investors netting over $700,000. The placement was issued at a price of 14c per share (representing a 6.33% discount to the 5 day VWAP ending 17th August 2007), plus one 18c option for every three shares, with a 12 month expiry. Members of the Anadis Board and their related parties have participated in the capital raising with significant new cash investment. Issuance of shares subscribed to by directors (and related parties) of the company (1,214,285 shares and 404,761 options relating to $168,000 of new investment) will be issued following and subject to shareholder approval at the Company’s Annual General Meeting in November. Exact number of new shares issued is yet to be announced due to exchange rate variations .

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ANADIS Limited Supplementary Appendix 4E information

NTA Backing

NTA Backing
	2007	2006
Net tangible asset backing per ordinaryshare	$0.020	$0.053

Commentary on results

Refer to ‘Explanation of Profit/(loss) from ordinary activities after tax’ on page 4 and the covering letter from the Chairman.

Annual Meeting

The annual meeting will be held as follows;

Place: Waratah Room, St Michael’s Church Hall, 120 Collins Street Melbourne. Date: 13 November, 2007. Time: 2.00pm Approximate date the Annual Report will be released: 9 October, 2007

Audit

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

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