Immuron Ltd — Annual Report 2011

Aug 30, 2011

Immuron Limited. ABN 80 063 114 045

ASX Preliminary final report – 30 June 2011

Appendix 4E - Lodged with the ASX under Listing Rule 4.3A
Contents
Preliminary Statement of Comprehensive Income	2
Preliminary Balance Sheet	3
Preliminary Statement of Changes in Equity	4
Preliminary Cash Flow Statement	5
Notes to Preliminary Financial Statements	6
Other Appendix 4E Information	12

1

Immuron Limited Preliminary Statement of Comprehensive Income For the year ended 30 June 2011

Notes Revenue from continuing operations 2 Other income 3 Raw materials & consumables used Employee benefits expense Depreciation and loss on disposal of fixed assets Research and development – external Directors' fees Travel expenses Product marketing & export development- external Consultants costs Shareholder relations Finance costs Corporate and administrative expenses Loss before income tax Income tax benefit Loss for year attributable to members of Immuron Limited Total comprehensive loss for year Loss per share attributable to the ordinary equity holders of the company Basic earnings (loss) per share 7 Diluted earnings (loss) per share 7 Net Tangible Asset backing per Ordinary Share	2011 297,891 - (216,641) (205,886) (21,327) (1,560,892) (234,546) (153,288) (33,998) (426,714) (69,816) (3,735) (180,126) (2,809,078) 213,899 (2,595,179) (2,595,179) Cents (0.82) (0.82) 0.004	2010 $ 498,075 62,137 (275,430) (258,480) (39,591) (1,097,933) (201,650) (53,812) (16,864) (280,085) (97,993) (3,382) (401,149)
		(2,166,157) 263,732
		(1,902,425)
		(1,902,425)
		Cents (0.73) (0.73) 0.008

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

2

Immuron Limited Preliminary Balance Sheet As at 30 June 2011

Notes ASSETS Current Assets Cash & cash equivalents Trade & other receivables Inventories Other assets Total Current assets Non-Current Assets Property, plant and equipment Intangible assets Investments Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade & other payables 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	2011 $ 750,814 33,594 290,900 96,127 1,171,435 28,162 1,460,587 31 1,488,780 2,660,215 329,128 300 595,408 924,836 3,000 3,000 927,836 1,732,379 27,721,517 595,207 (26,584,345) 1,732,379	2010 $ 1,882,224 153,129 22,567 248,564
		2,306,484
		31,292 1,460,587 31
		1,491,910
		3,798,394
		393,503 39,500 -
		433,003
		2,100
		2,100
		435,103
		3,363,291
		26,964,091 388,366 (23,989,166)
		3,363,291

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

3

Immuron Limited Preliminary Statement of Changes in Equity For the year ended 30 June, 2011

Balance 1 July 2009 Total comprehensive loss for year Transactions with owners in their capacity as owners Contributions of equity, net of transaction costs Employee share options – value of employee services Employee option costs written back to comprehensive loss for year Balance 30 June 2010 Total comprehensive loss for year Transactions with owners in their capacity as owners Contributions of equity, net of transaction costs Employee share options – value of employee services Balance 30 June 2011	Notes 6 6		Contributed equity 21,458,898 5,505,193 26,964,091 757,426 27,721,517	Reserves 442,972 8,716 29,372 (92,694) 388,366 200,613 6,228 595,207		Accumulated losses (22,086,741) (1,902,425) (23,989,166) (2,595,179) (26,584,345)	Total
							(184,871) (1,902,425) 5,513,909 29,372 (92,694)
							3,363,291 (2,595,179) 958,039 6,228
							1,732,379

The above unaudited Preliminary Statement of Changes in Equity should be read in conjunction with the accompanying Notes.

4

Immuron Limited Preliminary Cash Flow Statement For the year ended 30 June 2011

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 R&D tax rebate Interest paid Net Cash (outflow) from Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for plant and equipment 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	2011 Inflow / (Outflow) $ 386,215 (2,618,421) (2,232,206) 52,606 213,899 (3,735) (1,969,436) (18,197) (18,197) 908,549 (52,326) 855,223 (1,131,410) 1,882,224 750,814	2010 Inflow / (Outflow) $ 382,599 (2,939,021)
		(2,556,422) 36,185 263,732 (3,382)
		(2,259,887)
		-
		-
		4,120,932 (128,491)
		3,992,441
		1,732,554 149,670
		1,882,224

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

5

Immuron Limited Notes to Preliminary Financial Statements For the year ended 30 June 2011

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 2010 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 2010 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 2011, the Company’s cash and investments amounted to $750,814 and for the year ended 30 June 2011, the Company experienced an operating loss of $2,595,179 and a net cash outflow of $1.969,436 from operating activities. As a result of the continuing losses, and the on-going net 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.

Since year end the Company has raised additional capital of $516,600 and has announced a non- renounceable rights issue to shareholders, which if the issue is taken up in full by shareholders through the rights and top up issues, will raise up to $4.3million after the expenses of the issue.

The ultimate ability of the Company to fund its on-going operations will be dependent upon obtaining income from the commercialisation of its research 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 Directors are also confident of the company’s ability to raise further capital if the need arises.

Accordingly, the Directors have prepared the financial statements 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

From continuing operations Sales revenue Sale of goods and services Other revenue Interest Note 3. Other income Government research & development grants Note 4 Expenses The loss before income tax includes the following specific expenses Cost of goods sold Depreciation Loss on disposal of fixed assets Research and product commercialisation expenditure Rental expense relating to operating leases- minimum payment Finance costs – interest paid Defined contribution superannuation expense	2011 $ 245,285 52,606 297,891 - - 216,641 19,847 1,480 1,889,852 35,000 3,735 28,886	2010 $ 461,890 36,185
		498,075
		62,137 62,137
		275,430 39,348 243 1,456,585 103,408 3,382 41,022

Note 5. Segment Information

(a) Description of segments

Management has determined that the business segments of research, development and commercialisation (R & D) and hyperimmune products are the main business segments used for internal reporting purposes to the Management Executive Team. Other items of income and expense not directly attributable to those two segments are disclosed as a corporate cost segment.

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(b) Segment information provided to the Management Executive Team

2011 Segment revenue Revenue from external customers Interest revenue Grant income Total segment revenue Adjusted EBITDA (loss) Depreciation expense Loss on disposal of fixed assets Interest expense Income tax benefit Total segment assets Total assets includes: Investments in associates Additions to non-current assets Total segment liabilities 2010 Segment revenue Revenue from external customers Interest revenue Grant income Total segment revenue Adjusted EBITDA Depreciation expense Loss on disposal of fixed assets Income tax benefit Total segment assets Total assets includes: Investment in associates Additions to non-current assets Total segment liabilities	R & D Hyper Immune Products Corporate Total
	- 213,951 31,334 245,285 - - 52,606 52,606 - - - -
	- 213,951 83,940 297,891
	(1,889,852) (2,690) (937,852) (2,830,394)
	- 886 18,961 19,847 - - 1,480 1,480 - - 3,735 3,735 213,899 - - 213,899 1,461,920 361,408 836,887 2,660,215
	- - 30 30 - - 18,198 18,198
	516,660 88,074 323,102 927,836
	R & D Hyper Immune Products Corporate Total
	- 416,035 45,855 461,890 - - 36,185 36,185 62,137 - - 62,137
	62,137 416,035 82,040 560,212
	(1,446,687) 123,741 (899,745) (2,222,691)
	- 1,550 37,798 39,348 - - 243 243 263,732 - - 263,732 1,616,494 193,222 1,988,678 3,798,394
	- - 30 30 1,460,587 - - 1,460,587
	190,452 73,705 170,946 435,103

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(c) Other segment information

The Company is domiciled in Australia. The revenues from external customers were derived as follows:

Within Australia Outside Australia	2011 245,285 - 245,285	2010 401,310 60,580
		461,890

(d) Adjusted EBITDA

A reconciliation of earnings before interest, tax, depreciation and amortisation (EBITDA) to net loss for the financial year from continuing operations is as follows:

Adjusted EIBTDA ( loss) Interest revenue Finance costs Depreciation and loss on disposal of fixed assets Amortisation of share option costs Write back of option costs from options reserve Loss for year before income tax from continuing operations	(2,830,394) (52,606) 3,735 21,327 6,228 - (2,809,078)	(2,222,691) (36,185) 3,382 39,591 29,372 (92,694)
		(2,166,157)

Note 6. Contributed equity and reserves

a) Reserves

a) Reserves
Share based payments reserve Balance 1 July 2010 Value attributable to options attaching to shares Option expense Options issued to consultants and former employees Write back of employee option costs that had been expensed in prior years Balance 30 June 2011 b) Issued and Paid Up Capital 325,714,800 (2010: 311,051,948) ordinary shares fully paid	595,207 388,366 200,613 6,228 - 595,207 27,721,517	388,366
		442,972 8,716 29,372 (92,694)
		388,366
		26,964,091

9

Movements in ordinary share capital

Date Shares on issue as at 1 July 2009 21/08/2009 Issued under Shareholder Share Purchase Plan 27/082009 Issued to Hadasit Medical Research Services & Development Limited in accordance with Acquisition and Licence Agreement 1/09/2009 Issued for cash 8/09/2009 Issued for cash 8/08/2009 Issued to Directors in lieu of Directors fees 8/09/2009 Issued to Hadasit Medical Research Services & Development Limited in accordance with the Deed of Variation 14/01/2010 Shares issued for cash Shares issued to Hadasit Medical Research Services & Development in accordance with the Deed of Variation Shares issued to Director in lieu of Directors fees 28/01/2010 Shares issued for cash Shares and options issued for cash Value of options issued transferred to options reserve Shares issued under Immuron Executive Share Plan 11/05/2010 Shares issued to Directors in lieu of Directors fees 22/06/2010 Shares issued for cash under shareholder share purchase plan 30/06/2010 Shares issued for cash Shares issued to consultant in lieu of fees Shares issued to Directors in lieu of Directors fees Less costs associated with issuing shares Shares on issue at 30 June 2010 02/07/2010 Shares issued for cash 02/08/2010 Shares issued for cash 18/02/2011 Issued to consultants in lieu of fees Issued to Chief Executive Officer 13/05/2011 Shares and options issued for cash Value of options issued transferred to options reserve Issued to consultants in lieu of fees Shares issued to Directors in lieu of Directors fees Shares issued to staff 28/06/2011 Shares and options issued for cash Value of options issued transferred to options reserve Issued to consultant in lieu of fees Less costs associated with issuing shares Shares on issue at 30 June 2011	Number of Shares Issue Price 144,569,108 43,370,625 $0.03 46,966,139 $0.0259 3,600,000 $0.0494 34,200,000 $0.025 337,500 $0.03 8,745,625 $0.0259 4,545,455 $0.055 772,259 $0.0259 60,729 $0.0741 275.000 $0.055 950,000 $0.08892 400,000 $0.08892 79,291 $0.0804 10,636,702 $0.065 11,477,168 $0.065 23,077 $0.065 43,270 $0.065 311,051,948 2,523,076 $0.065 843,142 $0.065 465,952 $0.0696 500,000 $0.072 7,877,143 $0.07 301,643 $0.07 131,257 $0.07 14,285 $0.07 1,976,354 $0.07 30,000 $0.07 325,714,800	$ $21,458,898 1,301,119 1,214,470 177,811 855,000 10,105 226,148 250,000 19,969 4500 15,125 84,474 (8,716) 35,568 6,375 691,387 746,016 1,500 2,813 (128,491)
		26,964,091 164,000 54,804 32,413 36,000 551,400 (160,757) 21,115 9,188 1,000 138,345 (39,856) 2,100 (52,326)
		27,721,517

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(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 up on the shares held. All current shares on issue are fully paid ordinary shares.

(d) Movements in options during year

Issued during year Option outstanding at 1 July 2010 Options issued during year  Issued to Chief Executive Officer  Attaching to shares issued to investors in May and June 2011. Options expiring during year 1,250,000 3,315,929 Net movements for year 4,565,929 Total options outstanding 30 June 2011 Details of options outstanding Option Code Expiry Date IMCAL 19 July 2011 IMCJB1 31 January 2012 IMCAM 31 May 2012 IMCAJ 30 June 2012 IMCJB2 31 May 2013 Total options Note 7. Earnings Per Share (a) Basic earnings per share Loss from continuing operations attributable to the ordinary equity holders of the company Loss attributable to the ordinary equity holders of the company (b) Diluted earnings per share Loss from continuing operations attributable to the ordinary equity holders of the company Loss attributable to the ordinary equity holders of the company	Issued during year	Expired during year		Total
	1,250,000 3,315,929	(9,826,740)		10,064,240 1,250,000 3,315,929 (9,826,740)
		(9,826,740) Exercise Price $0.08892 $0.085 $0.10 $0.10 $0.0945 2011 Cents (0.82) (0.82) (0.82) (0.82)		(5,260,811)
				4,803,429
				Number on issue 237,500 500,000 2,657,144 658,785 750,000
				4,803,429
				2010 Cents (0.73) (0.73) (0.73) (0.73)

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(c) Reconciliation of earnings used in calculating earnings per share

Basic earnings per share	2011	2010
Loss from continuing operations	(2,595,179)	(1,902,425)
Loss attributable to the ordinary equity holders of Immuron Limited in
calculating basic earnings per share	(2,595,179)	(1,902,425)

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

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

	2011	2010
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share from continuing operations	315,683,833	263,066,911
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings per share	315,683,833	263,066,911

(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 8 Events occurring after balance sheet date

Subsequent to 30 June 2011 the following significant event occurred:

• On 25 August the Company raised additional capital of $516,600 with the issue of 7,380,000 fully paid shares, together with 2,460,000 attaching options, for cash. The options have an expiry date of 31 August 2012 and are exercisable at $0.10 per option.

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 unaudited accounts. The Audit Report will be made available with the Company’s annual financial report.

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