Immuron Ltd — Regulatory Filings 2011

Feb 28, 2011

Immuron Limited ABN: 80 063 114 045 ASX Half year information – 31 December 2010.

Lodged with the ASX under Listing Rule 4.2A.

This information should be read in conjunction with the 30 June 2010 Annual Report.

Contents

Results for Announcement to the Market	(Appendix 4D item 2)	2
Half-year report (ASX Listing rule 4.2A1)		3

Immuron Limited Half-year ended 31 December 2010 (Previous corresponding period: Half-year ended 31 December 2009)

Results for Announcement to the Market

				\$
Revenue from ordinary activities (Appendix 4D item 2.1)	Down	59.8%	to	100,560
Net (loss) from continuing activities after tax attributable to members (Appendix 4D item 2.2)	Up	29.2%	to	(1,444,771)
Net profit/ (loss) for the period attributable to members (Appendix 4D item 2.3)	Up	29.2%	to	(1,444,771)

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

Record date for determining entitlements to the interim dividend N/A

Immuron Limited Interim financial report for the half year ended 31 December 2010

Contents	Page
Directors' Report	4
Auditor's Independence Declaration	6
Statement of Comprehensive Income	7
Statement of Financial Position	8
Statement of Changes in Equity	9
Statement of Cash Flows	10
Notes to the financial statements	11
Directors' Declaration	15
Independent Auditor's 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 2010 and any public announcements made by Immuron Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The Directors have the power to amend and reissue the condensed interim financial report.

Immuron Limited Directors' Report 31 December 2010

Your directors present their report on Immuron Limited for the half-year ended 31 December, 2010.

Directors

The following persons were Directors of Immuron Limited during the half-year and up to the date of this report:

Prof. Colin B Chapman (Chairman) Prof. Roy Robins-Browne Simon S Sallka Dr Elane Zelcer

Review of operations

The loss for the six months of \$1,444,771 was \$326,441 greater than that for the corresponding period in 2009. This increase is essentially attributable to an increase in the level of product development, including the NASH Phase 2A clinical trial, and research activity, and a lower profit contribution from the sale of hyper immune products.

The following summary sets out the contributions from each of the main business segments to the loss for the current period, compared with the same period in 2009.

	2010 \$'000	2009 \$'000	Variation \$'000
Research & Product Development Segment
Revenues	-	74	(74)
Expenditures	(990)	(686)	(304)
Segment contribution	(990)	(612)	(378)
Hyper immune Products
Revenues	101	229	(128)
Cost of sales & other expenses	(90)	(153)	63
Segment contribution	11	76	(65)
Corporate overheads, net of interest & other income	(466)	(582)	116
Total Loss for period	(1,445)	(1,118)	(327)

The increase in expenditure in the research and product development segment reflects a full six months of research and clinical trials being conducted at the Hadassah Medical Center in Israel as against only four months for the corresponding period in 2009. In the current period the R&D focus was on influenza, both in Israel and Australia; and the completion of the 20 person clinical trial testing the use of Imm 122-I and Imm 124E products in patients with NASH. The successful results from the clinical trial were announced on 23 August 2010 and were also presented by Professor Yaron Ilan and Dr Grant Rawlin at the American Association for the Study of Liver Diseases held in Boston in October/November.

Following the positive results from the NASH clinical trial, the Company is proceeding to apply to the US Federal Drug Administration (FDA) for approval to conduct a larger multi-site trial in the current calendar year. The costs incurred in the current period preparing for the FDA application amount to approximately \$104,000.

All research & product development previously conducted with the assistance of grant funds have concluded and the Company is presently not entitled to any further grant income for past or current projects.

The reduced contribution from the hyper immune segment reflects the reduced level of sales of bulk colostrum products in the current period. In the 2009 period one off sales of bulk powder amounted to \$98,000 which was not repeated in the current period. Export sales of Travelan capsules were lower in this period as no sales were made to the United States distributor, Alaven Consumer Healthcare (now Meda Consumer Healthcare Inc.) due to the delays in their regulatory approvals for the US market.

From March 2010, the Company licensed Nycomed Pty Ltd to be the Company's exclusive distributor of Travelan in Australia and New Zealand. The quantities of Travelan sold in the current six months were comparable with the 2009 quantities. Whilst the level of sales was in line with the indicative numbers provided by Nycomed for the current period, the Company has been advised that Nycomed are forecasting an increase of approximately 50% in their Travelan revenue numbers for the 2011 calendar year.

Auditor's Independence Declaration

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6.

Signed in accordance with a resolution of the Directors.

E Zelcer S Sallka

Director Director

Melbourne, 28 February, 2011

PRICEWATERHOUSE COPERS

PricewaterhouseCoopers ABN 52 780 433 757

Freshwater Place 2 Southbank Boulevard SOUTHBANK VIC 3006 GPO Box 1331 MELBOURNE VIC 3001 DX77 Telephone 61 3 8603 1000 Facsimile 61 3 8603 1999 Website:www.pwc.com/au

Auditor's Independence Declaration

As lead auditor for the review of Immuron Limited for the half year ended 31 December 2010, 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 Immuron Limited during the period.

Lisa Harket

Lisa Harker Partner PricewaterhouseCoopers

Melbourne 28 February 2011

Immuron Limited Statement of Comprehensive Income for the half year ended 31 December 2010 Half year

	Notes	2010	2009
		\$	\$
Revenue from continuing operations		100,560	250,224
Other income		40,796	97,270
Raw materials and consumables used		(84,546)	(134,565)
Employee benefits expense		(161,471)	(177,816)
Depreciation		(8,922)	(19,344)
Research and development – external		(771,611)	(534,639)
Directors' fees		(111,800)	(111,306)
Shareholder relations		(51,864)	(73,537)
Travel expenses		(70,374)	(22,779)
Product marketing & export development		(17,250)	(19,056)
Consultants costs		(226,469)	(171,379)
Corporate and administrative expenses		(81,820)	(201,403)
Loss before income tax		(1,444,771)	(1,118,330)
Income tax benefit		-	-
Loss from continuing operations	2	(1,444,771)	(1,118,330)
Net loss for the half year		(1,444,771)	(1,118,330)
Total comprehensive loss for the half year		(1,444,771)	(1,118,330)
		Cents	Cents
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		(0.46)	(0.45)
company		(0.46)	(0.45)
Diluted earnings per share
(Loss) from continuing operations attributable to the
ordinary equity holders of the company		(0.46)	(0.45)
(Loss) attributable to the ordinary equity holders of the company		(0.46)	(0.45)
NTA Backing
Net tangible asset backing per ordinary share		Cents 0.21	Cents 0.36

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Immuron Limited Statement of Financial Position 31 December 2010

	Notes	31 December 2010	30 June 2010
		\$	\$
ASSETS
CURRENT ASSETS
Cash & cash equivalents		1,015,599	1,882,224
Trade & other receivables		38,411	153,129
Inventories		162,379	22,567
Other assets		85,552	248,564
TOTAL CURRENT ASSETS		1,301,941	2,306,484
NON-CURRENT ASSETS
Property, plant and equipment		38,774	31,292
Intangible assets		1,460,587	1,460,587
Investments		31	31
TOTAL NON-CURRENT ASSETS		1,499,392	1,491,910
TOTAL ASSETS		2,801,333	3,798,394
LIABILITIES
CURRENT LIABILITIES Trade & other payables		602,649	393,503
Provisions		69,500	39,500
TOTAL CURRENT LIABILITIES		672,149	433,003
NON-CURRENT LIABILITIES
Provisions		2,800	2,100
TOTAL NON-CURRENT LIABILITIES		2,800	2,100
TOTAL LIABILITIES		674,949	435,103
NET ASSETS		2,126,384	3,363,291
EQUITY
Contributed equity	3	27,171,955	26,964,091
Reserves		388,366	388,366
Accumulated losses		(25,433,937)	(23,989,166)
TOTAL EQUITY		2,126,384	3,363,291

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

Immuron Limited Statement of Changes in Equity For the half-year ended 31 December 2010

	Contributed equity \$	Reserves \$	Accumulated losses \$	Total \$
Balance at 1 July 2009	21,458,898	442,972	(22,086,741)	(184,871)
Total comprehensive loss for the half year	-	-	(1,118,330)	(1,118,330)
Transactions with owners in their capacity as owners Contributions of equity, net of
transaction costs	3,743,712	-	-	3,743,712
Employee share options	-	41,130	-	41,130
Balance 31 December 2009	25,202,610	484,102	(23,205,071)	2,481,641
Balance 1 July 2010	26,964,091	388,366	(23,989,166)	3,363,291
Total comprehensive loss for the half year	-	-	(1,444,771)	(1,444,771)
Transactions with owners in their capacity as owners
Contributions of equity, net of transaction costs	207,864	-	-	207,864
Balance 31 December 2010	27,171,955	388,366	(25,433,937)	2,126,384

The above Statement of changes in equity should be read in conjunction with the accompanying notes.

Immuron Limited Statement of Cash Flows For the half year ended 31 December 2010

	Half year
	2010	2009
	Inflow /	Inflow /
	(Outflow)	(Outflow)
	\$	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of goods and services
tax)	225,334	231,140
Payments to suppliers and employees (inclusive of goods
and services tax)	(1,319,095)	(1,891,433)
	(1,093,761)	(1,660,293)
Interest received	37,796	23,270
Interest paid	(2,120)	(2,758)
Net Cash (outflow) from Operating Activities	(1,058,085)	(1,639,781)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(16,404)	-
Net Cash inflow/(outflow) from Investing Activities	(16,404)	-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares & other equities	218,804	2,333,930
Share placement costs	(10,940)	(40,961)
Net Cash inflow from Financing Activities	207,864	2,292,969
Net increase/(decrease) in cash & cash equivalents	(866,625)	653,188
Cash and cash equivalents at beginning of the half year	1,882,224	149,670
Cash and cash equivalents at the end of the half-year	1,015,599	802,858

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

Note 1. Summary of significant accounting policies

Basis of preparation

This general purpose financial report for the half-year reporting period ended 31 December, 2010 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting 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, 2010 and any public announcements made by Immuron Limited during the interim reporting period 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.

Going concern

At 31 December 2010 and 30 June 2010, the Company's cash and investments were \$1,015,599 and \$1,882,224, respectively, and for the half year's ended 31 December 2010 and 31 December 2009, the Company experienced operating losses of \$1,444,771 and \$1,118,330, and operating net cash outflows of \$1,058,085 and \$1,639,781, respectively. These outflows arose primarily from expenses associated with research and development programs and commercialisation initiatives. 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 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.

Subsequent to the half year the directors have planned a Private Placement program which will commence in early March 2011, the aim of which is to raise at least \$1.5 million in funding from sophisticated investors by the end of March. These funds will enable the Company to continue its current influenza trials, expand the global markets for Travelan, progress planning for the Federal Drug Administration approval to conduct a larger multi-site trial for the Company's NASH product and fund corporate overheads. The directors are confident that the Company will be successful in raising the additional capital to fund this ongoing research and product development program. However, to the extent that the proposed funding does not achieve the level indicated, the Directors will review the extent and timing of its ongoing research program.

As a result of the difficulty in predicting the timing and quantum of income from the commercialisation of its products and technology, funds available from capital raising and adherence to cash flow budgets, there is material uncertainty whether the Company will be able to continue as a going concern and realise its assets, settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial report.

The directors are confident that the Company's planned initiatives will be successfully achieved in the next twelve months and these will continue to provide access to financial resources. The Company has had a successful history of raising additional capital to fund the ongoing research and development program and to fund corporate overheads and the Directors are confident that this will continue in the future. 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 Company not continue as a going concern.

Note 2. Segment information

Management has determined that the business segments of research and product development 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.

(a) Primary reporting format- business segments

		Hyper Immune
2010 Half year	R & PD	Products	Corporate	Total
	\$	\$	\$
Total segment revenue	-	100,560	-	100,560
Total segment other income	-	-	40,796	40,796
Revenue and other income from
external customers	-	100,560	40,796	141,356
EBITDA	(990,386)	16,014	(497,153)	(1,471,525)
Total assets	1,462,587	253,501	1,085,245	2,801,333
2009 Half year
Total segment revenue	-	229,380	20,844	250,224
Total segment other income	74,000	-	23,270	97,270
Revenue and other income from
external customers	74,000	229,380	44,114	347,494
EBITDA	(612,011)	75,836	(542,187)	(1,078,362)
Total assets	1,830,800	127,091	953,532	2,911,423

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

	Half year 2010 \$	Half year 2009 \$
EBITDA loss	(1,471,525)	(1,078,362)
Interest revenue	37,796	23,270
Finance costs	(2,120)	(2,758)
Depreciation and loss on disposal of fixed assets	(8,922)	(19,350)
Amortisation of share option costs	-	(41,130)
Loss for half year from continuing operations	(1,444,771)	(1,118,330)

Note 3. Equity movements

( 1 ) Contributed equity	2010 Shares	2009 Shares	2010 \$	2009 \$
Contributed equity at beginning of half year	311,051,948	144,569,108	26,964,091	21,458,898
Issue of ordinary shares and options during the half-year Shares issued for cash at 6.5cents per share on 21 July 2010 Shares issued for cash at 6.5 cents per share on 2 August 2010	2,523,076 843,142		164,000 54,804
Shares issued under Shareholder Share Purchase Plan at \$0.03 per share on 21 August 2009		43,370,625		1,301,119
Shares issued to Hadasit Medical Research Services & Development Limited at \$0.0259 per share on 27 August 2009 in accordance with the Acquisition and Licence		46,966,139		1,214,470
Agreement Issue of shares for cash on 1 September2009 at \$0.0494 per share		3,600,000		177,811
Issues of shares on 8 September 2009:  Issued for cash at \$0.025 per share  Issued to Directors in lieu of Directors fees at \$0.03		34,200,000		855,000
per share  Issued to Hadasit Medical Research Services &		337,500		10,125
Development Limited at \$0.0259 per share in accordance with the Deed of Variation		8,745,625		226,148
Less costs associated with equity raisings	-		(10,940)	(40,961)
		137,219,889	207,864	3,743,712
Contributed equity at end of half year	314,418,166	281,788,997	\$27,171,955	\$25,202,610

Note 4 Contingencies

Contingent liability \$ 142,016

The Company has received grant funds totalling \$142,016 from the State Government of Victoria under the terms of the Vistech Grant. Under the terms of the grant agreement, the Company has the obligation to repay the grant monies received upon the receipt of any funds from the commercial exploitation of the technology developed under the grant project. Therefore, a contingent liability exists in respect of the amount up to \$142,016 if the Company receives any future proceeds from the commercialisation of the grant technology.

Note 5 Events occurring after the reporting period

On 18 February 2011 the Company issued the following shares and options:

.

• 965,952 shares issued for a total value of \$68,412 representing; 500,000 granted to the Chief Executive Officer, Mt Joe Baini as part of his remuneration package at a value of \$36,000; and 465,952 shares issued to consultants in lieu of payment of their fees at a value of \$32,412
• 1,250,000 options issued to the Chief Executive Officer as part of his remuneration package. The options were issued for nil consideration. These options vest and are exercisable on the following terms:
• 1. 500,000 options vesting immediately exercisable at any time prior to 31 January 2012 at an exercise price of 8.5 cents per share.
• 1. 750,000 options vesting on 31 May 2011, exercisable at any time before 31 May 2013. The exercise price will be 140% of the VWAP for the month of May 2011.

Immuron Limited Directors' Declaration

In the Directors' opinion:

• (a) the financial statements and notes set out on pages 7 to 14 are in accordance with the Corporations Act 2001, including;
• 1. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• 1. giving a true and fair view of the Company's financial position as at 31 December 2010 and of its performance for the half 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.

E Zelcer S Sallka Director Director Melbourne 28 February, 2011

PRICEWATERHOUSE COPERS

PricewaterhouseCoopers ABN 52 780 433 757

Freshwater Place 2 Southbank Boulevard SOUTHBANK VIC 3006 GPO Box 1331 MELBOURNE VIC 3001 DX77 Telephone 61 3 8603 1000 Facsimile 61 3 8603 1999 Website:www.pwc.com/au

Independent auditor's review report to the members of Immuron Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Immuron Limited, which comprises the statement of financial position as at 31 December 2010, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the halfvear ended on that date, selected explanatory notes and the directors' declaration for Immuron Limited.

Directors' responsibility for the half-year financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity. in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the entity's financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Immuron Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. It also includes reading the other information included with the financial report to determine whether it contains any material inconsistencies with the financial report. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. 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.

Independent auditor's review report to the members of Immuron Limited (continued)

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Immuron Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the entity's financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Material Uncertainty Regarding Continuation as a Going Concern

Without qualifying our conclusion, we draw attention to Note 1 in the interim financial report which indicates that the company incurred a net loss of \$1.4m and net cash outflows from operating activities of \$1.1 million during the half year ended 31 December 2010. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern and therefore. whether it will realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report.

Picentatethouse Coopera

PricewaterhouseCoopers

Lisa Hatker

Lisa Harker Partner

Melbourne 28 February 2011