IMUGENE LIMITED

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ASX ANNOUNCEMENT

27 AUGUST 2009

2009 FINANCIAL REPORT

Imugene’s audited Financial Report for the year ended 30 June 2009 is attached herein together with the Appendix 4E statement.

Imugene is pleased to report a Net Profit after tax of $650,286 for the 2009 year. Net cash inflow from operations was $881,768.

The Company strengthened its financial position during the year following trial successes with its unique ‘PRRS’ vaccine for pigs and the resultant Strategic Alliance Agreement with the large international animal health company, Merial Limited.

The Merial alliance has established the key financial terms for granting Merial access to Imugene’s intellectual property. These financial terms include an initial payment totalling A$2.9million received in December 2009, followed by set periodic payments and minimum royalties over the next 6 years. Additional income may be generated from additional product Sub Licenses and Milestone fees and royalties on sales.

The current year profit has been achieved against a backdrop of expenditure on several trials that were undertaken early in the financial year in the US and Australia. An important financial feature of the alliance is that Merial is now responsible for the trial related and development costs for each vaccine.

About Imugene

Imugene Limited (ASX Code: IMU) specialises in the development and commercialisation of novel animal health products for pigs and poultry. Our range of products under development includes vaccines to prevent important livestock diseases and productivity enhancers to improve the economics of raising commercial livestock.

Our Strategic Alliance with Merial Limited brings the strength of Merial’s vast commercial experience and infrastructure to the development of Imugene’s innovative range of vaccine candidates.

Imugene owns the worldwide rights to the Fowl Adenoviral Vector Delivery System for poultry and the Porcine Adenoviral Vector Delivery System for pigs. Since establishing a laboratory at La-Trobe University, Victoria, additional vaccine technology has been developed for the pig & poultry industries.

ABN 99 009 179 551

Registered Office Level 20, Allendale Square, 77 St Georges Terrace, Perth WA 6000 Tel +61 8 94402660 Fax +61 8 9 4402699

www.imugene.com

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Imugene's poultry and pig vaccine portfolio is targeting a worldwide US$3 billion annual market with several lead vaccine products under development and a strong product pipeline. Consumer demands for disease free and residue free food will bolster Imugene's prospects.

For more information please visit the Imugene Website www.imugene.com or contact:

Dr Warwick Lamb Mr Graham Dowland Managing Director Executive Chairman +61 8 9440 2660 +61 8 9440 2660

Page 2 of 2

Appendix 4E Preliminary final report Year ended 30 June 2009

Rule 4.3A

Appendix 4E

Preliminary final report Year ended 30 June 2009

Name of entity

ABN 99 009 179 551	Financialyear ended (“currentyear”)
	30 June 2009
	Comparativeyear ended(“prioryear”)
	30 June 2008

Statement

This report is based on information extracted from the attached audited Annual Financial Report of Imugene Limited (Company) and the entities it controlled at the end of, or during the year ended 30 June 2009 (Consolidated Entity or Group).

Results for announcement to the market

	2009 $’000	2008 $’000	CHANGE $’000	% CHANGE
Revenues from ordinary activities	3,024	92	2,932	3187%
Revenue from ordinary activities for the year has increased as a result of Imugene entering into a comprehensive and binding Strategic Alliance Agreeement with Merial Limited. During the year ended 30 June 2009, Imugene received initial payments from Merial totalling US$ 2m (AUD $2.9m) for research costs and sublicencing fees for the PRRS vaccine. Refer to the summary review of operations in the directors’ report attached for further information.
Profit / (loss) from ordinary activities after tax attributable to members.	650	(1,911)	2,561	134%

Net profit / (loss) for the period attributable to members	650	(1,911)	2,561	134%

No dividends have been paid during or are proposed in respect of the financial year ended 30 June 2009.

			2009 ¢	2008 ¢
Net Tangible Assets per Security				0.97
			1.66

30/6/2009

Appendix 4E Page 1

Appendix 4E – Contents and checklist of requirements For the year ended 30 June 2009


1.	Reporting period and the previous corresponding period.	Refer Page 1 of this Appendix 4E

2.	Results for announcement to the market.	Refer Page 1 of this Appendix 4E

3.	Statement of financial performance with notes to the	Refer Financial Report attached
	statement.
4.	Statement of financial position with notes to the statement.	Refer Financial Report attached

5.	Statement of cash flows with notes to the statement.	Refer Financial Report attached

6.	Details of individual and total dividends or distributions and	No dividends or other distributions have been paid during or are proposed in respect of the financial year ended 30 June2009.
	dividend or distribution payments.
7.	Details of dividend or distribution reinvestment plans in	No dividends or other distributions plans are in operation in respect of the financial year ended 30 June 2009.
	operation and the last date for the receipt of an election notice for participation in any dividend or distribution reinvestment plan.
8.	Statement of retained earnings.	Refer Financial Report attached

9.	Net tangible assets per security.	Refer Page 3 of this Appendix 4E

10.	Details of entities over which control has been gained or	Not applicable
	lost during the period.
11.	Details of joint venture entities and associated entities.	The Company has no material associated orjoint venture entities.

12.	Any other significant information needed by an investor to	Refer Page 3 of this Appendix 4E
	make an informed assessment of the entity’s financial performance and financial position
13.	Accounting standards used in compiling reports by foreign	Not applicable.
	entities (e.g. International Accounting Standards).
14.	A commentary on the results for the period.	Refer Page 3 of this Appendix 4E and the Directors Report in the attached Financial Report.

15.	A statement as to whether the report is based on accounts	Refer Page 1 of this Appendix 4E. This report is based on accounts which have been audited.
	which have been audited or subject to review, are in the process of being audited or reviewed, or have not yet been audited or reviewed.
16.	If the accounts have not yet been audited or subject to	Not applicable.
	review and are likely to be subject to dispute or qualification, a description of the likely dispute or qualification.
17.	If the accounts have been audited or subject to review and	Not applicable.
	are subject to dispute or qualification, a description of the dispute or qualification

Appendix 4E Preliminary final report Year ended 30 June 2009

Commentary on results

For the year ended 30 June 2009

Trends in other income

Other income is $91,220 lower than 2008, a decrease of 29%, This decrease is due to successful completion during the third quarter of the year of a project with matched funding from the Commercial Ready Grant fund.

Other Significant Features of Operating Performance

Commercialisation spend has increased by $270,940 (47%) in comparison to last year as the Group continues to strengthen its intellectual property rights.

30/6/2009

Appendix 4E Page 3

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ABN 99 009 179 551
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Financial Report

For The Year Ended

30 June 2009

ABN 99 009 179 551 Imugene Limited Financial Report – 30 June 2009

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Page Corporate directory Directors’ report Remuneration report Auditor’s independence declaration 15 Independent audit report to members 16 Financial Report Income statement 18 Balance sheet 19 Cash flow statement 20 Statement of changes in equity 21 Notes to the financial statements 22 Directors’ declaration 46

Corporate Directory

Directors

Mr Graham Dowland – Executive Chairman Dr Warwick Lamb – Managing Director Mr Roger Steinepreis – Non-Executive Director

Chief Scientific Officer

Dr Michael Sheppard

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Solicitors

Steinepreis Paganin

Patent Attorney

McAndrews Held & Malloy Ltd 500 West Madison Street 34[th] Floor Chicago, IL 60661

Company Secretary

Ms Julie Foster

Registered and Principal Office

Level 20, Allendale Square 77 St Georges Terrace Perth WA 6000 Australia Telephone: (61 8) 9440 2660 Facsimile: (61 8) 9440 2699

Investor Relations Consultant

Buchan Consulting Pty Ltd Level 13, 499 St Kilda Road Melbourne VIC 3004

Auditor

BDO Kendalls Audit & Assurance (WA) Pty Ltd 128 Hay Street Subiaco WA 6008

Laboratory

C/- La Trobe University Kingsbury Drive Bundoora Victoria 3086

Bankers

Australia and New Zealand Banking Group Limited

Stock Exchange Listing

Share Register

Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace Perth WA 6000 Australia Telephone: 1300 557 010 International: (61 8) 9323 2000 Facsimile: (61 8) 9323 2033

Imugene Limited shares are listed on the Australian Securities Exchange (Symbol: IMU).

Website and Email

www.imugene.com [email protected]

Directors’ Report 30 June 2009

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The Directors of Imugene Limited present their report on the Consolidated Entity consisting of Imugene Limited (“the Company” or “Imugene”) and the entities it controlled at the end of, or during, the year ended 30 June 2009 (“Consolidated Entity” or “Group”).

Directors

The names of directors in office at any time during the financial year or since the end of the financial year are:

Mr Graham Dowland Dr Warwick Lamb Mr Roger Steinepreis

Each director held their office from 1 July 2008 until the date of this report.

Current directors

Mr Graham Dowland - Chairman Qualifications - B.Com, CA

Mr Dowland has for the past 20 years, been involved as either a significant shareholder, director or senior consultant / advisor with a number of public companies listed on Stock Exchanges in Australia, Canada and the United Kingdom with operations internationally. These companies have been and continue to be involved in various industries including pharmaceutical research and development – specifically human and animal biotechnology, gold mining and exploration, oil and gas exploration and production, manufacturing, and industrial technology development and marketing.

Mr Dowland has been involved in the development phase of numerous businesses that have achieved listings and capital raisings from the various major international Stock Exchanges.

Other Current Directorships of Australian Listed Public Companies

Mr Dowland is also a non-executive director of Aurora Oil & Gas Limited (appointed 22 February 2005)and Chairman of Eureka Energy Limited (appointed 15 June 2006).

Former Directorships of Australian Listed Public Companies in the last 3 years Mr Dowland previously held the position of Chairman of Mint Wireless Ltd between October 2006 and January 2008.

Special responsibilities Chair of the Board Chair of the nomination committee

Directors’ Report 30 June 2009 (continued)

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Dr Warwick Lamb - Managing Director

Qualifications – BVSc, M Vet Clin Stud, FACVSc

Dr Lamb is a specialist veterinarian with broad experience within the profession and animal health industry. He has worked in private general practice, private specialist practice and University practice both in Australia and the USA. Prior to forming Imugene with Mr Graham Dowland in mid 2002, Dr Lamb founded one of Australia’s first stand-alone specialist and emergency veterinary practice in Australia. He has had extensive interactions with major global animal health companies throughout his career.

Since the formation of Imugene, Dr Lamb has overseen the selection and development of Imugene’s animal health technologies, managed and expanded the intellectual property portfolio and overseen the design and execution of a comprehensive animal trial program in Australia and the USA. Most importantly Dr Lamb has formulated and executed a commercial strategy culminating in the comprehensive Strategic Alliance with Merial, one of the top three animal health companies in the world owned jointly by Merck and sanofi-aventis.

Other Current Directorships of Australian Listed Public Companies None.

Former Directorships of Australian Listed Public Companies in the last 3 years None.

Special responsibilities Managing Director. Chair of remuneration committee

Mr Roger Steinepreis - Non-Executive Director Qualifications - B.Juris LLB

Roger Steinepreis graduated from the University of Western Australia where he completed his law degree. He was admitted as a barrister and solicitor of the Supreme Court of Western Australia in 1987 and has been practising as a lawyer for over 20 years.

He is the legal adviser to a number of public companies on a wide range of corporate related matters. His areas of practice focus on company restructures, initial public offerings and takeovers.

Other Current Directorships of Australian Listed Public Companies

Mr Steinepreis is a director of: Comtel Corporation Ltd (appointed March 2006) Avonlea Minerals Ltd (appointed May 2007) Adavale Resources Ltd (appointed May 2007)

Special responsibilities

Lead non-executive director of the Company. Chair of audit committee.

Company Secretary

Ms Julie Foster Qualifications – BA(Hons), ACA (ICAEW), ACIS Appointed 29 May 2008

Ms Foster has a degree in Accounting and Finance and is a Chartered Accountant (UK). She is also currently Company Secretary for ASX Listed Eureka Energy Limited. Ms Foster previously worked for Chartered Accounting firms in both the UK and Perth.

Directors’ Report 30 June 2009 (continued)

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Principal activities

The principal activity of the Consolidated Entity during the financial year was animal health biopharmaceutical development and commercialisation. No significant change in the nature of this activity occurred during the financial year.

Dividends

No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2009 (2008 : nil)

Summary review of operations

For the financial year ending 30 June 2009 the Group recorded a net profit after tax of $650,286 (2008: net loss ($1,910,925)) and a net cash inflow from operations of $881,768 (2008: net cash outflow of ($1,272,900)).

In the first quarter of the financial year, Imugene successfully completed pig trials in the US testing the ‘optimised’ PRRS vaccine. The results showed that the new modified PRRS vaccine provided a very high degree of protection against the PRRS disease when two doses were administered in pigs either orally or by injection.

The results of these trials enabled detailed discussions and negotiations with major international animal health companies.

Negotiations concluded on 30 December 2008, when Imugene entered into a comprehensive and binding Strategic Alliance Agreement with one of the world’s largest animal health companies, Merial Limited. Under the alliance Merial has agreed to pay a range of scheduled payments and royalties on future sales, to maintain exclusive use of Imugene’s intellectual property and technology. Merial is able to progress selected Imugene’s vaccine candidates through the product development process to global sales under individual product sublicenses. For these products, Merial will fund all product development, regulatory and trial costs.

Imugene has received initial payments from Merial totalling US$2m (AUD$2.9m) for research costs and sublicensing fees for the PRRS vaccine. Further research and minimum milestone payments continue for up to a total of 7 years which allows Merial to assess and commercialise any vaccine candidates developed using the Imugene technology.

Merial have the exculsive right to take out a sub-license on any part of the Imugene intellectual property that forms all or part of a vaccine product for commercialisation. Merial will pay sublicense fees (in addition to the above research fees) for each vaccine product, and milestone payments upon first registration for sale of each product. Imugene will generate further income through royalties on sales of any vaccine product sold by Merial that utilises any part of the Imugene technology. The alliance contains minimum royalty payments.

During the second half of the financial year, the Group has focussed on technology transfer with Merial and laboratory development and testing of additional vaccines to supply to Merial. These additional vaccines included several swine flu vaccine candidates.

Consolidated results

Consolidated profit / (loss) before income tax benefit Income tax benefit Net profit / (loss)	2009 $ 252,500 397,786 650,286	2008 $ (2,149,664) 238,739
		(1,910,925)

Directors’ Report 30 June 2009 (continued)

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Significant changes in the state of affairs

The following significant changes in the state of affairs of the Consolidated Entity occurred during the financial year and to the date of this report.

The Strategic Alliance agreed with Merial on 30 December 2008 represented a significant change in the affairs of the Consolidated Entity. As detailed elsewhere in this report, Merial has been granted exclusive rights to the Groups intellectual property portfolio to develop vaccines for international sale. Merial will pay development costs and has agreed to pay the Group research and other fees over a period of 7 years. In addition, milestone fees based on product registration and royalties based on sales will also be payable to the Group by Merial with such fees payable for longer periods related to patent life or a minimum period from date of first sale of each vaccine product.

Post balance date events

As at the date of this report there are no matters or circumstances, which have arisen since 30 June 2009 that have significantly affected or may significantly affect:

(a) the Consolidated Entity’s operations in future financial years, or
(b) the results of those operations in future financial years, or
(c) the Consolidated Entity’s state of affairs in future financial years.

Likely developments

Due to the nature of the Consolidated Entity’s business activities, the Directors are not able to state:

(a) likely developments in the entities’ operations; or
(b) the expected results of these operations,

as to do so would result in unreasonable prejudice to the Consolidated Entity.

Environmental regulation

The Consolidated Entity’s environmental obligations are regulated under both State and Federal laws. The Company has a policy of exceeding or at least complying with its environmental performance obligations.

During the financial year, the Consolidated Entity did not materially breach any particular or significant Commonwealth, State or Territory regulation in respect to environmental management.

Greenhouse gas and energy data reporting requirements

The Consolidated Entity has reviewed its obligations under the Energy Efficiency Opportunities Act 2006 and the National Greenhouse and Energy Reporting Act 2007 and does not consider that it has any reporting requirements under these Acts.

Information on directors’ interests in securities of Imugene

	Interest in Securities at the date of this Report	Interest in Securities at the date of this Report
	Fully Paid Ordinary Shares	Executive Performance Options
Graham Dowland Warwick Lamb Roger Steinepreis	7,667,576 8,670,002 -	500,000 2,500,000 -

There were no shares or options granted to directors during the year as remuneration.

Directors’ Report 30 June 2009 (continued)

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Meetings of Directors

The following table sets out the number of meetings of the Company's directors held during the year ended 30 June 2009, and the number of meetings attended by each director (includes matters decided by circulating resolution).

cided by circulating resolution).
	No. eligible to attend	No. attended
Full board meetings Graham Dowland Warwick Lamb Roger Steinepreis Audit committee meetings Graham Dowland Warwick Lamb Roger Steinepreis Remuneration committee meetings Graham Dowland Warwick Lamb RogerSteinepreis	8 8 8 2 2 2 2 2 2	8 8 8 2 2 2 2 2 2

Share Options

At the date of this report the following options have been granted over unissued capital:

Description	2009	Exercise	Expiry
	Number	Price
Unlisted performance options
	4,350,000	$ 0.25	31-Dec-09
Unlisted advisor incentive options
	3,000,000	$ 0.20	31-Mar-11
Total	7,350,000

No shares were issued during or since the end of the financial year on exercise of share options. Upon exercise each option is convertible into one fully paid ordinary share.

Directors’ Report

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30 June 2009 (continued) – Remuneration report

This remuneration report is set out under the following main headings:

A Principles used to determine the nature and amount of remuneration B Details of remuneration C Service agreements D Share-based compensation E Additional information

This remuneration report outlines the director and executive remuneration arrangements of the Company and Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key management personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the Parent Company, and includes the executives in the Company and the Group receiving the highest remuneration.

The information provided in this remuneration report has been audited as required by section 308(3c) of the Corporations Act 2001.

Details of key management personnel

(i) Directors

Mr Graham Dowland Executive Chairman Dr Warwick Lamb Managing Director Mr Roger Steinepreis Non-Executive Director

(ii) Other key management personnel of the Group

Dr Michael Sheppard Chief Scientific Officer

(iii) Details of executives

Ms Julie Foster Company Secretary

The directors and other key management personnel represent the highest paid executives of the Group.

No remuneration was paid to directors or other key management personnel of the Group by Group companies other than Imugene Limited, accordingly remuneration paid to key management personnel of the Group is the same as that paid to key management personnel of the Company.

A. Principles used to determine the nature and amount of remuneration

At present the functions of the remuneration committee in relation to the remuneration of the Company’s executives (including share and benefit plans) are carried out by the full board. No directors are present at meetings of the board in this function where their own remuneration is being considered. Issues of remuneration are considered annually or otherwise as required.

The objective of the Board, acting in its capacity as remuneration committee, is to ensure that pay and rewards are competitive and appropriate for the results delivered. The remuneration committee charter adopted by the Board aims to align rewards with achievement of strategic objectives and the creation of value for shareholders. The remuneration framework applied provides a mix of fixed and variable pay and a blend of short and long-term incentives as appropriate.

Directors’ Report

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30 June 2009 (continued) – Remuneration report

A. Principles used to determine the nature and amount of remuneration (continued)

Non-executive directors

The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at General Meeting. The Company’s policy is to remunerate nonexecutive directors at market rates (for comparable companies) for time, commitment and responsibilities. Fees for non-executive directors are not linked to the performance of the Company, however to align directors’ interests with shareholders’ interests, directors are encouraged to hold shares in the Company. Non-executive directors do not receive share options.

Non-executive directors’ fees and payments are reviewed annually by the Board.

Retirement benefits and allowances

No retirement benefits or allowances are paid or payable to directors of the Company.

Other benefits

No motor vehicle, health insurance or other similar allowances are made available to directors (other than through salary-sacrifice arrangements).

Executive pay

Executive pay and reward consists of base pay, short-term performance incentives, long-term performance incentives and other remuneration such as superannuation.

Base pay

Executives are offered a competitive level of base pay which comprises the fixed (unrisked) component of their pay and rewards. Base pay for senior executives is reviewed annually to ensure market competitiveness. There are no guaranteed base pay increases included in any senior executives’ contracts.

Short-term incentives

Contractual agreements with directors and other key management personnel provide for the provision of performance-related cash bonuses to be determined by the remuneration committee.

The contractual agreement with Dr Michael Sheppard includes a specific provision for the payment of an incentive bonus linked to the achievement of development and commercialisation milestones in relation to key strategic, non-financial measures linked to drivers of performance in future reporting periods.

Short-term bonus payments may be adjusted up or down in line with under or over achievement relative to target performance levels at the discretion of the remuneration committee.

Directors’ Report

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30 June 2009 (continued) – Remuneration report

A. Principles used to determine the nature and amount of remuneration (continued)

For the year ended 30 June 2009, the short-term incentives paid or payable to key management personnel of the Company / Group totalled $282,500 as follows:

		Performance related cash bonus	Performance related cash bonus	Performance related cash bonus
2009	Grant date	Contractual performance bonus $	Discretionary performance bonus $	Total $	Paid	Forfeited
Executive directors Graham Dowland Warwick Lamb Other key management personnel Michael Sheppard	Feb 09 Feb 09 Feb 09	- - 20,000	87,500 125,000 50,000	87,500 125,000 70,000	100% 100% 100%	- - -
2008
Executive directors Graham Dowland Warwick Lamb Other key management personnel MichaelSheppard	Nov06	- - 20,000	- - -	- - 20,000	- - -	- - -

Discretionary bonuses paid during the financial year ended 30 June 2009 were specifically related to the successful execution of and value attributed to the Strategic Alliance Agreement entered into with Merial Limited. The achievement of this significant milestone was considered to be directly linked to an increase in the value of the Group’s portfolio of assets.

The bonuses paid took into account the significant effort that the small and dedicated management team have applied in the development of the Groups intellectual property assets over the past five years. In particular, the implementation and execution of the Groups commercialisation strategy which commenced in late 2005 has directly resulted in the securing of the Strategic Alliance. During this period base pay for all directors has not been increased and no bonuses have been paid.

No other key management personnel or executives were entitled to bonuses during the year.

Long-term incentives

Long term performance incentives to date have comprised options granted at the discretion of the Remuneration Committee in order to align the objectives of executives with shareholders and the Company.

The grant of share options is not directly linked to previously determined performance milestones or hurdles as the current stage of the Group’s activities makes it difficult to determine effective and appropriate key performance indicators and milestones.

There is currently no board policy in relation to the person granted the option limiting his or her exposure to risk in relation to the securities. The remuneration committee intends to review whether such a policy would be likely to be of benefit during the coming financial year.

Vesting conditions for options granted during the year are linked to periods of service.

Directors’ Report

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30 June 2009 (continued) – Remuneration report

B. Details of remuneration

Amounts of remuneration

Details of the remuneration of the directors and key management personnel of Imugene Limited and the Group are set out in the following tables.

Julie Foster is not key management personnel of the Group but is a Company executive.

	Short-term benefits	Short-term benefits	Short-term benefits	Post-employment benefits	Post-employment benefits	Share-based payment
2009	Cash salary and fees $	Cash bonus $	Non- monetary benefits * $	Super- annuation $	Retirement benefits $	Options $	Total $
Non-executive directors Roger Steinepreis	39,600	-	-	-	-	-	39,600
Sub-Total non-executive directors	39,600	-	-	-	-	-	39,600
Executive directors Graham Dowland Warwick Lamb Other key management personnel Michael Sheppard Executives - Company secretary Julie Foster	174,996 197,873 160,550 -	87,500 125,000 65,872 -	- 41,986 - -	- 20,642 18578 -	- - - -	- - - -	262,496 385,501 245,000 -
Totals	573,019	278,372	41,986	39,220	-	-	932,597

	Short-term benefits			Post-employment benefits		Share-based payment
2008	Cash salary and fees $	Cash bonus $	Non- monetary benefits * $	Super- annuation $	Retirement benefits $	Options $	Total $
Non-executive directors Roger Steinepreis	25,000	-	-	-	-	-	25,000
Sub-Total non-executive directors	25,000		-	-	-	-	25,000
Executive directors Graham Dowland Warwick Lamb Other key management personnel Michael Sheppard Executives - Company secretary Alex Neuling (1/7/07 to 29/05/08) Julie Foster (Appointed 29/05/08)	174,996 180,762 160,550 - -	- - 20,000 - -	- 37,42 - - -	- 20,642 14,450 - -	- - - - -	23,703 118,515 11,540 - -	198,699 357,344 206,540 - -
Totals	541,308	20,000	37,425	35,092	-	153,758	787,583

relates to salary sacrificed novated car lease payments.

Directors’ Report

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30 June 2009 (continued) – Remuneration report

B. Details of remuneration

Amounts of remuneration (continued)

The relevant proportions of remuneration that are linked to performance and those that are fixed are as follows.

	Fixed remuneration	Fixed remuneration	At risk	-STI	At risk - LTI	At risk - LTI
	2009	2008	2009	2008	2009	2008
Directors of Imugene Limited
Graham Dowland Warwick Lamb	67% 68%	88% 67%	33% 32%	- -	- -	12% 33%
Other key management personnel of the Group
Michael Sheppard	71%	85%	29%	10%	-	5%

C. Service agreements

On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of director.

Remuneration and other terms of agreement for the Chairman are formalised in a consultancy agreement with an associated Company of Mr Dowland. Remuneration and other terms of agreement with the Company Secretary are not formalised in an agreement. Remuneration and other terms of agreement with the Managing Director and the other key management personnel are formalised in service agreements. Each of these agreements provide for the provision, if any, of performance-related cash bonuses and / or grant of options. Other major provisions of the agreements relating to remuneration are set out below.

All contracts with executives may be terminated by either party with varying notice periods, subject to termination payments as detailed below.

Mr Graham Dowland, Chairman

Term of agreement – indefinite
Consultancy fee inclusive of superannuation and taxes, but excluding GST of $175,000 per annum, to be reviewed annually by the board
Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to six months consultancy fees

Dr Warwick Lamb, Managing Director

Term of agreement – indefinite
Base salary, inclusive of superannuation for the year ended 30 June 2009 of $250,000, to be reviewed annually by the board
Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to base salary for twelve months

Directors’ Report

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30 June 2009 (continued) – Remuneration report

C. Service agreements (continued)

Dr Michael Sheppard, Chief Scientific Officer

Term of agreement – rolling annual, anniversary on 21 March.
Base salary, inclusive of superannuation for the year ended 30 June 2008 of $175,000.
Payment of three potential incentive bonuses for the successful achievement of three development and commercialisation milestones
Payment of a termination benefit on early termination by the Company, other than for gross misconduct, equal to base salary and benefits for the remainder of the contract term.

D. Share-based compensation

Options

The terms and conditions of each grant of options affecting remuneration in the previous, this or future reporting periods are as follows:

Grant date	Date vested and exercisable	Expiry date	Exercise price	Value per option at grant date	% vested
18 Jan 2007 18 Jan 2007	18 Jan 2007 18 Jan 2008	31 Dec 2009 31 Dec 2009	$0.25 $0.25	$0.16 $0.17	100% 100%

Details of options over ordinary shares in the Company provided as remuneration to each director of Imugene and each of the key management personnel of the Parent Entity and the Group are set out below.

	No. of options granted during the year	No. of options granted during the year	No. of options vested during the year	No. of options vested during the year
	2009	2008	2009	2008
Directors of Imugene Limited
Graham Dowland Warwick Lamb	- -	- -	- -	250,000 1,250,000
Other key management personnel of the Group
Michael Sheppard	-	-	-	150,000

The fair value of each option is estimated on the date of grant using the Black-Scholes Option Valuation Model.

No options were granted to key management personnel during the year ended 30 June 2009

Options granted carry no dividend or voting rights. Upon exercise, each option is convertible into one fully paid ordinary share to rank pari passu with fully paid ordinary shares then on issue.

No options provided as remuneration to directors or key management personnel as remuneration were exercised during the year (2008: nil).

Directors’ Report

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30 June 2009 (continued) – Remuneration report

E. Additional Information

Share –based compensation: Options

Additional information required by section 300A (1) of the Corporations Act 2001 in relation to share-based compensation is set below.

Name	A Remuneration consisting of options %	B Value at grant date $	C Value at exercise date $	D Value at lapse date $
Directors of Imugene Limited
Graham Dowland Warwick Lamb Roger Steinepreis	- - -	- - -	- - -	- - -
Other key managementpersonnel of the Group
Michael Sheppard	-	-	-	-

A = The percentage of the value of remuneration consisting of options, based on the value of options expensed during the current year. B = The value at grant date calculated in accordance with AASB2 Share-based Payment of options granted / cancelled during the year as part of remuneration. C = The value at exercise date of options that were granted as part of remuneration and were exercised during the year, being the intrinsic value of the options at that date. D = The value at lapse date of options that were granted as part of remuneration that lapsed during the year because a vesting condition was not satisfied.

Details of remuneration: Cash bonuses and options

All bonuses were paid during the year. No cash bonuses were forfeited during the year by directors or key management personnel.

All options granted to directors or key management personnel have vested. No options were exercised or forfeited during the year.

Relationship between the remuneration policy and Company performance

As detailed under headings A & B, remuneration of executives consists of an unrisked element (base pay) and cash bonuses based on performance in relation to key strategic, non-financial measures linked to drivers of performance in future reporting periods. As such, remuneration is not linked to the financial performance of the Company in the current or previous reporting periods.

The tables below set out summary information about the Consolidated Entity’s earnings and movement in shareholder wealth for the five years to June 2009:

	$ 30 June 2009	$ 30 June 2008	$ 30 June 2007	$ 30 June 2006	$ 30 June 2005
Revenue Net profit /(loss) before tax Net profit /(loss)after tax	3,024,028 252,500 650,286	92,214 (2,149,664) (1,910,925)	165,534 (2,561,309) (2,304,263)	63,251 (2,439,279) (2,187,219)	389,501 (2,116,968) (1,794,208)

No dividends have been paid for the five years to 30 June 2009.

Directors’ Report

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30 June 2009 (continued) – Remuneration report

E. Additional Information (continued)

	30 June 2009	30 June 2008	30 June 2007	30 June 2006	30 June 2005
Share price at start of year Share price at end of year Basic earnings /(loss)per share Diluted earnings /(loss) per share	$0.07 $0.07 0.5 0.4	$ 0.25 $ 0.07 (1.4) (1.4)	$ 0.10 $ 0.25 (1.8) (1.8)	$ 0.13 $ 0.10 (1.7) (1.7)	$ 0.21 $ 0.13 (1.5) (1.5)

End of audited remuneration report

Non-Audit Services

No non-audit services were provided to the Group by the auditor during the year (or by another person or firm on the auditor’s behalf) and accordingly the directors are satisfied that the auditor has complied with the general standard of independence for auditors imposed by the Corporations Act 2001 .

Insurance and Indemnity of Officers and Auditors

During the year, the Company has paid a premium in respect of a contract insuring the directors of the Company (as named above) and the Company Secretary Ms Julie Foster against liabilities incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001 . The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor

Auditor’s Independence Declaration

The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included on page 15 of the Annual Report.

This report is made in accordance with a resolution of the directors made pursuant to section 298(2) of the Corporations Act 2001 .

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GRAHAM DOWLAND Executive Chairman Perth, Western Australia

27 August 2009

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27[th] August 2009

The Directors Imugene Limited Level 20, Allendale Square 77 St Georges Terrace Perth WA 6000

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Dear Sirs

DECLARATION OF INDEPENDENCE BY PETER TOLL TO THE DIRECTORS OF IMUGENE LIMITED

As lead auditor of Imugene Limited for the year ended 30 June 2009, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Imugene Limited and the entities it controlled during the period.

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Peter Toll Director

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BDO Kendalls Audit & Assurance (WA) Pty Ltd Perth, Western Australia.

BDO Kendalls is a national association of separate partnerships and entities. Liability limited by a scheme approved under Professional Standards Legislation.

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INDEPENDENT AUDITOR’S REPORT

To the members of Imugene Limited

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We have audited the accompanying financial report of Imugene Limited, which comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the disclosing entity and the entities it controlled at the year’s end or from time to time during the financial year[. ]

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 would be in the same terms if it had been given to the directors at the time that this auditor’s report was made.

BDO Kendalls is a national association of separate partnerships and entities. Liability limited by a scheme approved under Professional Standards Legislation.

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Auditor’s Opinion

In our opinion:

(a) the financial report of Imugene Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2009 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 ; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included in paragraphs A to E of the directors’ report for the year ended 30 June 2009. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion, the Remuneration Report of Imugene Limited for the year ended 30 June 2009, complies with section 300A of the Corporations Act 2001.

BDO Kendalls Audit & Assurance (WA) Pty Ltd

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Peter Toll

Director

Perth, Western Australia Dated this 27[th ] day of August 2009

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Income Statements

For the financial year ended 30 June 2009

Note Revenue from continuing operations (5) Other income (6) Total income Research and development Business development Commercialisation expenses Corporate and administration costs Impairment write back / (writedown) of investment in controlled entities Profit / (loss) before income tax benefit Income tax benefit (8) Net profit / (loss) attributable to members of the Company Earnings / (loss) per share Basic earnings / (loss) per share (cents per share) (25) Diluted earnings / (loss) per share (cents per share) (25)	Consolidated 2009 2008 $ $ 3,024,028 92,214 224,410 315,630 3,248,438 407,844 (1,047,477) (1,132,644) (240,546) (191,582) (841,872) (570,932) (866,043) (662,350) - - 252,500 (2,149,664) 397,786 238,739 650,286 (1,910,925) 0.5 (1.4) 0.4 (1.4)	Parent entity 2009 2008 $ $ 42,097 825,975 224,410 315,630 266,507 1,141,605 (1,226,512) (1,350,341) (240,546) (191,582) (449,225) (226,878) (773,390) (644,331) 2,675,666 (878,137) 252,500 (2,149,664) 397,786 238,739 650,286 (1,910,925)	Parent entity 2009 2008 $ $ 42,097 825,975 224,410 315,630 266,507 1,141,605 (1,226,512) (1,350,341) (240,546) (191,582) (449,225) (226,878) (773,390) (644,331) 2,675,666 (878,137) 252,500 (2,149,664) 397,786 238,739 650,286 (1,910,925)
			1,141,605 (1,350,341) (191,582) (226,878) (644,331) (878,137)
			(2,149,664) 238,739
			(1,910,925)

The above income statements should be read in conjunction with the accompanying notes.

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Balance Sheets

As at 30 June 2009

Note Current assets Cash and cash equivalents (9) Trade and other receivables (10) Tax assets (11) Total current assets Non-current assets Receivables (12) Other financial assets (13) Property, plant and equipment (14) Intangible assets (15) Total non-current assets Total assets Current liabilities Trade and other payables (16) Provisions (17) Total liabilities Net assets Equity Contributed equity (18) Reserves (19) Accumulated losses (19) Total equity	Consolidated 2009 2008 $ $ 2,487,316 1,619,678 40,873 60,771 290,000 189,869 2,818,188 1,870,318 - - - - 2,853 9,944 2,942,025 3,283,165 2,944,878 3,293,109 5,763,066 5,163,427 317,833 400,940 118,885 92,425 436,718 493,365 5,326,348 4,670,062 14,907,453 14,907,453 966,003 960,003 (10,547,108) (11,197,394) 5,326,348 4,670,062	Parent entity 2009 2008 $ $ 862,272 1,482,886 33,629 54,635 290,000 189,869 1,185,901 1,727,390 1,852,620 3,391,834 2,985,998 310,332 2,853 9,944 - - 4,841,472 3,712,110 6,027,373 5,439,500 582,139 677,013 118,885 92,425 701,025 769,438 5,326,348 4,670,062 14,907,453 14,907,453 966,003 960,003 (10,547,108) (11,197,394) 5,326,348 4,670,062	Parent entity 2009 2008 $ $ 862,272 1,482,886 33,629 54,635 290,000 189,869 1,185,901 1,727,390 1,852,620 3,391,834 2,985,998 310,332 2,853 9,944 - - 4,841,472 3,712,110 6,027,373 5,439,500 582,139 677,013 118,885 92,425 701,025 769,438 5,326,348 4,670,062 14,907,453 14,907,453 966,003 960,003 (10,547,108) (11,197,394) 5,326,348 4,670,062
			1,727,390
			3,391,834 310,332 9,944 -
			3,712,110
			5,439,500
			677,013 92,425
			769,438
			4,670,062
			14,907,453 960,003 (11,197,394)
			4,670,062

The above balance sheets should be read in conjunction with the accompanying notes.

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Cash flow statements

For the financial year ended 30 June 2009

Not Cash flows from operating activities Receipts from customers Payments to suppliers and employees Income tax repayments received Other income Net cash inflow / (outflow) from operating activities (24) Cash flows from investing activities Payments for property, plant and equipment Interest received Net cash inflow from investing activities Cash flows from financing activities Proceeds from issue of shares Issue costs Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the year (9)	Consolidated 2009 2008 $ $ 2,940,164 25,488 (2,598,356) (2,111,826) 297,655 574,331 242,305 239,107 881,768 (1,272,900) - (2,499) 76,608 68,440 76,608 65,941 - 1,828,072 - (100,661) - 1,727,411 958,376 520,452 1,619,678 1,099,226 (90,738) - 2,487,316 1,619,678	Parent entity 2009 2008 $ $ - 500 (1,202,671) (1,986,137) 297,655 574,331 242,305 239,107 (662,711) (1,172,199) - (2,499) 42,097 61,555 42,097 59,056 - 1,828,072 - (100,661) - 1,727,411 (620,614) 614,268 1,482,886 868,618 - - 862,272 1,482,886	Parent entity 2009 2008 $ $ - 500 (1,202,671) (1,986,137) 297,655 574,331 242,305 239,107 (662,711) (1,172,199) - (2,499) 42,097 61,555 42,097 59,056 - 1,828,072 - (100,661) - 1,727,411 (620,614) 614,268 1,482,886 868,618 - - 862,272 1,482,886
			(1,172,199)
			(2,499) 61,555
			59,056
			1,828,072 (100,661)
			1,727,411
			614,268 868,618 -
			1,482,886

The above cash flow statements should be read in conjunction with the accompanying notes.

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Statements of changes in equity

For the financial year ended 30 June 2009

Consolidated 2009 2008 $ $ 14,907,453 13,180,042 - 1,828,072 - (100,661) 14,907,453 14,907,453 960,003 806,245 6,000 153,758 966,003 960,003 (11,197,394) (9,286,469) 650,286 (1,910,925) (10,547,108) (11,197,394) 4,670,062 4,699,818 5,326,348 4,670,062 650,286 (1,910,925) 650,286 (1,910,925)	Parent entity 2009 2008 $ $ 14,097,453 13,182,042 - 1,828,072 - (100,661) 14,907,453 14,907,453 960,003 806,245 6,000 153,758 966,003 960,003 (11,197,394) (9,286,469) 650,286 (1,910,925) (10,547,108) (11,197,394) 4,670,062 4,699,818 5,326,348 4,670,062 650,286 (1,910,925)	Parent entity 2009 2008 $ $ 14,097,453 13,182,042 - 1,828,072 - (100,661) 14,907,453 14,907,453 960,003 806,245 6,000 153,758 966,003 960,003 (11,197,394) (9,286,469) 650,286 (1,910,925) (10,547,108) (11,197,394) 4,670,062 4,699,818 5,326,348 4,670,062 650,286 (1,910,925)
		14,907,453
		806,245 153,758
		960,003
		(9,286,469) (1,910,925)
		(11,197,394)
		4,699,818 4,670,062 (1,910,925)
650,286	650,286	(1,910,925)

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

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1. Corporate information

Imugene Limited ( “Parent Entity” ) is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The financial report includes separate financial statements for Imugene as an individual entity and the consolidated entity consisting of Imugene and its subsidiaries (“Group or Consolidated Entity”).

The nature of the operations and principal activities of the Group are described in the Directors’ Report.

2. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

a) Basis of preparation

The financial report is a general-purpose financial report, which 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 .

The financial report has also been prepared on a historical cost basis.

Statement of compliance

The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report of Imugene Limited complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the reporting period ending 30 June 2009.

The Directors have assessed the impact of these new or amended Standards and Interpretations (to the extent relevant to the Group) and no such revisions or new Standards and Interpretations are expected to have any impact on the accounting policies of the Group other than as follows:

AASB 3: Business Combinations, AASB 127: Consolidated and Separate Financial Statements, AASB 2008-3: Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 (applicable for annual reporting periods commencing from 1 July 2009) and AASB 2008-7: Amendments to Australian Accounting Standards — Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate [AASB 1, AASB 118, AASB 121, AASB 127 & AASB 136] (applicable for annual reporting periods commencing from 1 January 2009). These standards are applicable prospectively and so will only affect relevant transactions and consolidations occurring from the date of application. In this regard, its impact on the Group will be unable to be determined at this time.
AASB 101: Presentation of Financial Statements, AASB 2007-8: Amendments to Australian Accounting Standards arising from AASB 101, and AASB 2007-10: Further Amendments to Australian Accounting Standards arising from AASB 101 (all applicable to annual reporting periods commencing from 1 January 2009). The revised AASB 101 and amendments supersede the previous AASB 101 and redefines the composition of financial statements including the inclusion of a statement of comprehensive income. No material measurement or recognition impact on the Group is envisaged
. AASB 8: Operating Segments and AASB 2007-3: Amendments to Australian Accounting Standards arising from AASB 8 (applicable for annual reporting periods commencing from 1 January 2009). AASB 8 replaces AASB 114 and requires identification of operating segments on the basis of internal reports that are regularly reviewed by the Group’s Board for the purposes of decision making. The impact of this standard is not expected to identify any further potential segments

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2. Summary of significant accounting policies (continued)

b) Principles of consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Imugene Limited as at 30 June 2009 and the results of all subsidiaries for the year then ended.

Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries are consistent with the policies adopted by the Group.Investments in subsidiaries are accounted for at cost in the individual financial statements of Imugene Limited.

c) Segment reporting

A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments.

A geographical segment is identified when products or services are provided within a particular economic environment subject to risks and returns that are different from those segments operating in other economic environments.

d) Foreign currency

Functional and presentation currency

Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the Group operates ( ‘the functional currency’ ). The consolidated financial statements are presented in Australian dollars, which is Imugene’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.

Foreign currency monetary assets and liabilities at the reporting date are translated at the exchange rate existing at reporting date.

Exchange differences are recognised in profit or loss in the period in which they arise.

e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below:

Management fees to subsidiaries

Revenue from management fees charged by the Company to its wholly owned subsidiaries is recognised in the accounting period in which management services are rendered.

Sale of goods

Revenue from the sale of goods and disposal of other assets is recognised when the Consolidated Entity has transferred to the buyer the significant risks and rewards of ownership of the goods.

Royalties, licence fees and milestone payments

Royalty revenue, revenue from the sale of sub-licences and milestone payments are recognised on an accruals basis in accordance with the substance of the relevant agreement.

Interest income

Interest income is recognised on a time proportionate basis using the effective interest method.

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2. Summary of significant accounting policies (continued)

f) Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in the income statement over the period necessary to match them with the costs that they are intended to compensate.

g) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Deferred tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the Parent Entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

Tax consolidation

Imugene Limited and all its wholly-owned Australian controlled entities are part of a tax consolidated group under Australian taxation law. Imugene Limited is the head entity in the tax-consolidated group. Imugene Limited and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, Imugene Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax-sharing agreement with the head entity. Under the terms of the tax funding arrangement, Imugene Limited and each of the entities in the tax-consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. Assets or liabilities arising under this arrangement are recognised as amounts receivable from or payable to other entities in the Group and amounts are determined by reference to amounts recognised in the financial records of members in the Group.

Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

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2. Summary of significant accounting policies (continued)

h) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cashgenerating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

An impairment loss is recognised immediately in profit or loss

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

i) Cash and cash equivalents

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

j) Financial assets

Investments in subsidiaries are measured at cost.

Other financial assets only consist of ‘loans and receivables’. The classification of financial assets depends on the nature and purpose for which the financial assets were acquired and is determined at the time of initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Recognition and derecognition

Purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through the profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Subsequent measurement

Loans and receivables are subsequently recorded at amortised cost, using the effective interest method, less impairment.

Impairment

The Consolidated Entity assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired.

If there is evidence of impairment for any of the Consolidated Entity’s financial assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flow, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in the income statement.

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2. Summary of significant accounting policies (continued)

k) Property, Plant and equipment

Plant and equipment and fixtures and fittings are stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

Depreciation is calculated on a straight line basis so as to write off the cost of each asset, net of residual values over their estimated useful lives, as follows:

Fixtures and fittings 5 years Plant and equipment 5 - 15 years

The estimated useful lives, residual values and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.

l) Intangible assets

Patents, trademarks and licenses

Patents, trademarks and licences previously recognised as an asset upon the acquisition of Vectogen Pty Limited have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is charged on a straight line basis over their expected useful lives of 15 years. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period.

Subsequent expenditure on patents is recognised as an expense in the period in which it is incurred.

Research and development costs

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will, after considering its commercial and technical feasibility, be completed and generate future economic benefits and its costs can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Intangible assets acquired in a business combination

All potential intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair value can be measured reliably.

m) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

n) Provisions

Provisions are recognised when the Consolidated Entity has a present obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects the current market assessments of the time value of money and the risks specific to the liability.

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2. Summary of significant accounting policies (continued)

o) Employee benefit

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in the provision for employee benefits in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Consolidated Entity in respect of services provided by employees up to reporting date.

p) Defined contribution superannuation plans

Contributions to defined contribution superannuation plans are recognised as an expense as they become payable.

q) Share–based payments

Share-based compensation benefits are provided to employees where the Board considers that this provides a cost-effective and efficient means of remunerating and incentivising employees.

The fair value of the options granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at the grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Black-Scholes Option Pricing Model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.

r) Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.

s) Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

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2. Summary of significant accounting policies (continued)

t) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of associated goods and services tax (GST), except:
- i. where the amount of GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense; or
- ii. for receivables and payables which are stated inclusive of GST receivable or payable.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of other receivables or payables in the balance sheet. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which are recoverable from, or payable to, the taxation authority are classified as operating cash flows.

3. Financial risk management

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed.

Imugene’s board of directors (Board) performs the duties of a risk management committee in identifying and evaluating sources of financial and other risks. The Board provides written principles for overall risk management which balance the potential adverse effects of financial risks on Imugene’s financial performance and position with the “upside” potential made possible by exposure to these risks and by taking into account the costs and expected benefits of the various methods available to manage them. A written policy has been adopted for overall risk management.

The Group and the Parent Entity hold the following financial instruments:

Financial assets Cash and cash equivalents Loans and receivables Financial liabilities Amortised cost	Consolidated 2009 2008 $ $ 2,487,316 1,619,678 40,873 60,771 2,528,188 1,680,449 302,499 400,940	Parent Entity 2009 2008 $ $ 862,272 1,482,886 33,629 54,635 895,901 1,537,521 582,139 677,013	Parent Entity 2009 2008 $ $ 862,272 1,482,886 33,629 54,635 895,901 1,537,521 582,139 677,013
			1,537,521
			677,013

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3. Financial risk management (continued)

a) Market risk

i. Foreign exchange risk

Imugene Limited is based in Australia, its shares are listed on the Australian Securities Exchange and the Group reports its financial performance and position in Australian dollars (A$). The Group operates internationally, with the result being that the Group is to some extent exposed to foreign exchange risk arising from fluctuations in the A$ / US$ exchange rate.

As at balance date, the Board has formed the view that it would not be beneficial for the Group to purchase forward contracts or other derivative financial instruments to hedge this foreign exchange risk. Factors which the Board considered in arriving at this position included: The expense of purchasing such instruments; the inherent difficulties associated with forecasting the timing and quantum of US$ cash inflows and outflows at a time when the Consolidated Entity is still at the commercialisation and development stage of monetising its intellectual property. The Board may reconsider its position with regard to hedging against foreign exchange risk in the future as the Group’s activities evolve and / or in response to industry or macro-economic factors.

The Parent Entity’s financial assets and liabilities are all denominated in Australian dollars. The carrying amounts of the Groups financial assets and liabilities are denominated in Australian dollars except as set out below:

Financial assets Cash and cash equivalents	Consolidated 2009 2008 USD $ USD $ 486,750 12,798	Parent Entity 2009 2008 USD $ USD $ - -

Group sensitivity

Based on the financial instruments held at 30 June 2009, had the Australian dollar weakened / strengthened by 10% against the US dollar with all the other variables held constant, the Group’s profit for the year would have been $60,500 lower / higher (2008 - $1,300 lower / higher) mainly as a result of foreign exchange gains/losses on translation of US dollar denominated financial instruments as detailed in the above table. The results are more sensitive to movements in the Australian dollar / US dollar exchange rates in 2009 than 2008 because of the increased amount of US dollar denominated cash and cash equivalents. A 10% movement represents management’s assessment of the reasonably possible change in Australian dollar / US dollar exchange rates. The Group’s exposure to other foreign exchange movements is not material.

Parent Entity sensitivity

The Parent Entity’s exposure to foreign exchange movements is not material.

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ii. Interest rate risk

As at and during the year ended on balance date the Group had no significant interest-bearing assets or liabilities other than liquid funds on deposit. As such, the Group’s income and operating cash flows (other than interest income from funds on deposit) are substantially independent of changes in market interest rates. The Group’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and liabilities is set out below:

Financial assets Cash and cash equivalents Floating rate*	Consolidated 2009 2008 $ $ 2,487,316 1,619,678	Parent Entity 2009 2008 $ $ 862,272 1,482,886

Weighted average effective interest rate 2.55% (2008 : 6.1%)

Group sensitivity

At 30 June 2009, if interest rates had changed by -/+ 100 basis points from the year end rates with all other variables held constant, the profit for the year would have been $25,000 lower / higher (2008 – change of 80 basis points: $13,000 lower / higher), mainly as a result of lower / higher interest income from cash and cash equivalents.

Parent Entity sensitivity

At 30 June 2009, if interest rates had changed by -/+ 100 basis points from the year end rates with all other variables held constant, the profit for the year would have been $9,000 lower / higher (2008 – change of 80 basis points: $10,000 lower / higher), mainly as a result of lower / higher interest income from cash and cash equivalents.

The 100 basis points movement represents management’s assessment of the reasonably possible change in interest rates.

iii. Commodity price risk

The Group is not exposed to commodity price risk.

b) Credit risk

Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. The Group trades only with recognised, trustworthy third parties. It is the Group’s policy to perform credit verification procedures in relation to any customers wishing to trade on credit terms with the Group. These include taking into account the customers financial position and any past experience to set individual risk limits as determined by the Board.

The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised on page 28.

Cash at bank and short-term bank deposits AA Rated	Consolidated 2009 2008 $ $ 2,487,316 1,619,678	Parent Entity 2009 2008 $ $ 862,272 1,482,886

There are no allowances for credit losses and no collateral is held for security for trade and other receivables (parent and group). No trade or other receivables are past due or have been renegotiated.

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3. Financial risk management (continued)

c) Liquidity risk

Prudent liquidity risk management involves the maintenance of sufficient cash and access to capital markets. It is the policy of the board to ensure that the Group is able to meet its financial obligations and maintain the flexibility to pursue attractive investment opportunities through keeping committed credit lines available where possible, ensuring the Group has sufficient working capital and preserving the 15% share issue limit available to the Company under the ASX Listing Rules. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows.

Maturities of financial liabilities

Group – As at the reporting date the Group have total financial liabilities of $317,833 (2008: $400,940), comprised of non interest-bearing trade creditors and accruals with a maturity of 1 - 3 months.

Parent Entity – As at the reporting date the Parent Entity had total financial liabilities of $582,139 (2008: $677,013), comprised of non interest-bearing trade creditors and accruals with maturity of 1-3 months.

d) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement and/or disclosure purposes.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

e) Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders.

The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the Parent Entity.

None of the Group’s entities are subject to externally imposed capital requirements.

4. Critical accounting estimates & judgements

In preparing this financial report the Group has been required to make certain estimates and assumptions concerning future occurrences. There is an inherent risk that the resulting accounting estimates will not equate exactly with actual events and results.

a) Significant accounting judgements

In the process of applying the Group's accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Strategic Alliance Agreement

During the year the Group entered into a strategic alliance which entitles the company to receive funding at scheduled dates, milestone fees subject to the satisfaction of specified targets and royalties in the future based on sales.

The alliance is expected to generate sufficient cash flows such that the directors are of the opinion that the previously recognised impairment relating to the investment in the subsidiary should be reversed to the extent that it represents the net cash flows received to date as a result of the strategic alliance.

However, due to the early stage of the ongoing research collaborations and estimates of the commercial viability of the technologies the directors are still assessing the probability of the future cash flows arising from the agreement, therefore no further impairment reversal or deferred tax asset has been recognised relating to the future potential cash flows from this agreement.

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4. Critical accounting estimates & judgements (continued)

b) Significant accounting estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

Impairment of assets

In the absence of readily available market prices, the recoverable amounts of assets are determined using estimations of the present value of future cashflows using asset-specific discount rates. For patents, licences and other rights, these estimates are based on various assumptions concerning, for example future sales profiles and royalty income, market penetration, milestone achievement dates and production profiles.

As at 30 June 2009, the carrying value of patents, licences and other rights is $2,942,025 (2008: $3,283,165).

5. Revenue

Sales revenue Management fees Other revenue Sub-license / contract research fees Interest	Consolidated 2009 2008 $ $ - - - - 2,947,420 25,000 76,608 67,214 3,024,028 92,214 3,024,028 92,214	Parent 2009 $ - - - 42,097 42,097 42,097	entity 2008 $ 765,647
			765,647
			- 60,328
			60,328
			825,975

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6. Other income

Government grants Other	Consolidated 2009 2008 $ $ 223,530 315,130 880 500 224,410 315,630	Parent 2009 $ 223,530 880 224,410	entity 2008 $ 315,130 500
			315,630

The Company’s accounting policy in relation to Government Grants is disclosed in note 2 (f).

Imugene announced on 8 November 2006 that it had been awarded an Australian government Commercial Ready grant to produce and test vaccines to protect chickens from avian influenza. The total grant amount was expected to be approximately $880,000 on a matched funding basis Originally the payments were to be drawn over two years in line with the Company’s actual and forecast spending on the project. During the year ended 30 June 2008, the Company was granted a variation to extend the project period by a further six months to a total of two years and six months. The project period ended on 31 March 2009. The total amount receivable under the grant was $818,046. As at balance sheet date, an amount of $30,755 has been classified as accrued income in relation to the final outstanding receipt under the grant (refer to note 10). (2008: $45,680).

Previously, funding has also been received under two Biotechnology Innovation Fund grants (also on a matched funding basis) for projects which have been completed.

7. Expenses

Depreciation of non-current assets Tangible fixed assets Research and development Employee benefits Business development Employee benefits Commercialisation expenses Patent expenses Employee benefits Amortisation of intangibles Impairment writedown Investments in wholly-owned subsidiaries	Consolidated 2009 2008 $ $ 2,035 2,706 580,996 526,288 240,546 191,582 197,793 38,210 240,546 191,582 341,140 341,140 779,479 570,932 - -	Parent entity 2009 2008 $ $ 2,035 2,706 580,996 526,288 240,546 191,582 175,734 35,296 250,546 191,582 - - 426,280 226,878 2,675,666 (878,137)	Parent entity 2009 2008 $ $ 2,035 2,706 580,996 526,288 240,546 191,582 175,734 35,296 250,546 191,582 - - 426,280 226,878 2,675,666 (878,137)
			226,878
			(878,137)

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8. Income Tax

	Consolidated	Consolidated	Parent	entity
	2009	2008	2009	2008
	$	$	$	$
Current tax	290,000	189,869	290,000	189,869
Under provision recognised in prior
years	107,786	48,870	107,786	48,870
	397,786	238,739	397,786	238,739
A reconciliation between tax expense and the product of		accounting result before	income tax multiplied by the
Group's applicable income tax rate is as follows:
Accounting profit / (loss) before tax from
continuing operations	252,500	(2,149,664)	252,500	(2,149,664)
Tax at the Australian statutory income tax
rate of 30% (2008: 30%)	75,750	(644,899)	75,750	(644,899)
Tax effect of amounts which are not
deductible /(taxable) in calculating taxable
income
Research & development expenses
(claimed under Tax Concession)	256,367	187,148	256,367	187,148
Share-based payment expense	1,800	46,127	1,800	46,127
Sundry other	-	-	-	-
Tax effect of temporary timing differences in relation to
unrecognised deferred tax assets: (i)
Impairment (writeback) / writedown	-	-	(802,700)	263,441
Patent costs	59,338	11,463	52,720	10,589
Sundry other	(32,780)	(65,574)	3,725	(54,605)
	360,475	(465,735)	(412,338)	(192,199)
Less tax losses utilised in year	(360,475)	-	-
Less tax losses not recognised (ii)	-	465,735	412,338	192,199
	-	-	-	-
Research & Development Tax
Concession
Current Year	290,000	189,869	290,000	189,869
Under provision recognised in prior year	107,786	48,870	107,786	48,870
Income tax benefit	397,786	238,739	397,786	238,739
(i) Deferred tax assets not recognised
Arising from temporary differences
attributable to:
Carried forward tax losses	1,864,046	2,224,522	1,864,046	2,224,522
Intangible assets	115,388	68,921	-	-
Share issue expenses	26,323	53,391	26,323	53,391
Employee benefits	35,666	27,728	35,666	27,728
Impairment writedown	-	-	1,112,225	1,914,925
Other	20,738	16,680	20,738	16,680
Deferred tax asset not yet brought to
account	2,062,161	2,391,242	3,058,998	4,237,246

A reconciliation between tax expense and the product of accounting result before income tax multiplied by the Group's applicable income tax rate is as follows:

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9. Current assets – Cash and cash equivalents

Cash at bank and in hand – AUS dollars Cash at bank and in hand – US dollars	Consolidated 2009 2008 $ $ 1,882,305 1,606,354 605,011 13,324 2,487,316 1,619,678	Parent entity 2009 2008 $ $ 862,272 1,482,886 - - 862,272 1,482,886	Parent entity 2009 2008 $ $ 862,272 1,482,886 - - 862,272 1,482,886
			1,482,886

The carrying amount of cash and cash equivalents is a reasonable approximation of fair value.

(a) Foreign exchange and Interest rate risk exposure

Information about the Group’s and the Parent Entity’s exposure to foreign exchange risk and interest rate risk in relation to cash and cash equivalents is provided in note 3.

10. Current assets – Trade and other receivables

Accrued income (refer note 6) Goods and services tax recoverable Other	Consolidated 2009 2008 $ $ 30,755 45,680 - 6,136 10,118 8,955 40,873 60,771	Parent entity 2009 2008 $ $ 30,755 45,680 - - 2,874 8,955 33,629 54,635	Parent entity 2009 2008 $ $ 30,755 45,680 - - 2,874 8,955 33,629 54,635
			54,635

(a) Fair value

Due to the short-term nature of these receivables, their carrying value approximates fair value.

11. Current assets – Tax assets

Research and Development Tax Concession receivable 2. Non-current assets – Receivables Receivables from wholly-owned subsidiaries At amortised cost a) Fair values Receivables from wholly-owned subsidiaries	Consolidated 2009 2008 $ $ 290,000 189,869 Consolidated 2009 2008 $ $ - - Consolidated 2009 2008 $ $ - -	Parent 2009 $ 290,000 Parent 2009 $ 1,852,620 Parent 2009 $ 1,852,620	entity 2008 $ 189,869
			entity 2008 $ 3,391,834 entity 2008 $ 3,391,834

12. Non-current assets – Receivables

(a) Fair values

The loans to subsidiaries are interest free and have no fixed repayment terms. No allowance has been made for doubtful debts.

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13. Non-current assets – Other financial assets

Investments in wholly-owned subsidiaries At cost Less impairment write-down	Consolidated 2009 2008 $ $ - - - - - -	Parent entity 2009 2008 $ $ 6,695,912 6,695,912 (3,709,914) (6,385,580) 2,985,998 310,332	Parent entity 2009 2008 $ $ 6,695,912 6,695,912 (3,709,914) (6,385,580) 2,985,998 310,332
			310,332

The impairment write back of $2,675,666 (2008: write down of $878,137) relates to the reassessment of the recoverable amount of the Parent Entity’s investment in wholly-owned subsidiaries, on a value in use basis, as a result of the positive cash flows generated for the year ended 30 June 2009 from the Strategic Alliance entered into with Merial Limited by Vectogen Pty Ltd, a controlled entity.

(a) Wholly-owned Group

Details of interests in wholly-owned controlled entities are set out at part (b) of this note. Details of dealings with controlled entities are as follows:

Inter-company account

Imugene provides working capital to its controlled entities. Transactions between Imugene and other controlled entities in the wholly owned Group during the year ended 30 June 2009 consisted of:

(i) Working capital advanced by Imugene Limited;
(ii) Provision of management and other services by Imugene Limited, and
(iii) Expenses paid by Imugene Limited on behalf of its controlled entities

The above transactions were made interest free with no fixed terms for the repayment of principal on the working capital advanced by Imugene Limited.

At balance date amounts receivable from controlled entities totalled $1,852,620 (2008: $3,391,834).

(b) Investments in Controlled Entities

Name of Entity	Country of	Class of Shares	Equity	Holding
	Incorporation
			2009	2008
			%	%
Controlled Entities
Brightsun Investments Pty Ltd	Australia	Ordinary	100	100
Vectogen Pty Ltd	Australia	Ordinary	100	100
BioMimic Technologies Pty Ltd	Australia	Ordinary	100	100
Paragen Pty Ltd	Australia	Ordinary	100	100

(c) Ultimate Parent Company

The ultimate parent company of the wholly-owned Group is Imugene Limited, a company incorporated in Australia.

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14. Non-current assets – Property, plant & equipment

Plant & equipment At cost Accumulated depreciation Total plant and equipment (a) Fixtures and Fittings At cost Accumulated depreciation Total fixtures and fittings (a) Total net book value (a) Reconciliations Plant and Equipment Carrying amount at beginning of year Disposals Depreciation expense Total plant & equipment Fixtures and Fittings Carrying amount at beginning of year Disposals Total fixtures and fittings	Consolidated 2009 2008 $ $ 20,848 32,366 (17,995) (24,857) 2,853 7,509 - 3,675 - (1,240) - 2,435 2,853 9,944 7,509 7,518 (2,621) - (2,035) (2,508) 2,853 7,509 2,435 2,633 (2,435) (198) - 2,435	Parent entity 2009 2008 $ $ 20,848 32,366 (17,995) (24,857) 2,853 7,509 - 3,675 - (1,240) - 2,435 2,853 9,944 7,509 7,518 (2,621) - (2,035) (2,508) 2,853 7,509 2,435 2,633 (2,435) (198) - 2,435	Parent entity 2009 2008 $ $ 20,848 32,366 (17,995) (24,857) 2,853 7,509 - 3,675 - (1,240) - 2,435 2,853 9,944 7,509 7,518 (2,621) - (2,035) (2,508) 2,853 7,509 2,435 2,633 (2,435) (198) - 2,435
			7,509 3,675 (1,240)
			2,435
			9,944
			7,518 - (2,508)
			7,509
			2,633 (198)
			2,435

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15. Non-current assets –Intangible assets

Patents, licences and other rights Opening cost Closing cost Accumulated amortisation at the start of the year Amortisation charge Accumulated amortisation at the end of the year Opening net book amount Closing net book amount	Consolidated 2009 2008 $ $ 5,117,095 5,117,095 5,117,095 5,117,095 (1,833,930) (1,492,790) (341,140) (341,140) (2,175,070) (1,833,930) 3,283,165 3,624,305 2,942,025 3,283,165	Parent entity 2009 2008 $ $ - - - - - - - - - - - - - -	Parent entity 2009 2008 $ $ - - - - - - - - - - - - - -
			- - -
			- -
			-

The Group holds a range of intellectual property including patent applications, knowhow and licences to patents and patent applications. The intellectual property portfolio forms biological technologies that are being applied to disease prevention vaccines and biologically based productivity enhancers for the pig and poultry industry. There are no unfulfilled performance conditions in relation to the Group’s rights to use any part of the intellectual property portfolio, however under the terms of the licences the Group is responsible for the upkeep of the patents and patent applications. Imugene’s R&D expenditure during the period relates principally to the continued development of the intellectual property and the vaccines and vaccine candidates derived from them.

The carrying amount of these patents and licences of $2,942,025 (2008: $3,283,165) will be fully amortised in 9 years (2008: 10 years). During the year, Imugene realised the next stage of its commercialisation strategy with the commencement of a Strategic Alliance with Merial Limited, an international animal health company. Merial now has the rights to the Imugene intellectual property portfolio and is entitled to progressing vaccines derived from the Imugene technologies through the remaining regulatory, marketing and manufacturing processes for ultimate sale. Pursuant to the terms of the alliance, Merial must pay Imugene scheduled minimum fees and royalties.

16. Current liabilities – Trade and other payables

Trade payables Other payables	Consolidated 2009 2008 $ $ 269,140 379,526 48,693 21,414 317,833 400,940	Parent 2009 $ 269,130 313,009 582,139	entity 2008 $ 379,516 297,497
			677,013

The average credit period on purchases is 45 days from the date of invoice. Group policy is to pay all invoices not in dispute within 30 days from date of invoice.

(a) Fair value

The carrying amount of trade payables is a reasonable approximation of fair value due to their short-term nature.

(b) Foreign exchange risk exposure

Information about the Group’s and Parent Entity’s exposure to foreign exchange risk is provided in note 3.

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17. Current liabilities – Provisions

Employee benefits - annual leave	Consolidated 2009 2008 $ $ 118,885 92,425 118,885 92,425	Parent 2009 $ 118,885 118,885	entity 2008 $ 92,425
			92,425

(a) Amounts not expected to be settled within the next 12 months

The entire obligation for annual leave is presented as current, since the Group does not have an unconditional right to defer settlement. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave within the next 12 months.

18. Contributed equity

(a) Share capital Fully paid ordinary shares	Consolidated & 2009 Shares 143,637,220	Parent entity 2008 Shares 143,637,220	Consolidated & 2009 $ 14,907,453	Parent entity 2008 $ 14,907,453

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting or by proxy, is entitled to one vote. Upon a poll every holder is entitled to one vote per share held.

(b) Movements in ordinary share capital

Description Date Opening balance 01 July 2007 Rights issue (i) 23 January 2008 Placement 31 January 2008 Less:transaction costs arising on issue Balance 30 June 2008 Closing balance 30 June 2009	Number of shares 130,579,564 4,212,495 8,845,161 143,637,220 143,637,220	$ 13,180,042 589,749 1,238,323 (100,661)
		14,907,453
		14,907,453

Information in relation to options on issue, including details of all options issued, exercised and lapsed during the financial year and options outstanding at the end of the financial year is set out in note 20.

(i) Rights issue

On 3 December 2007, the Company invited its shareholders to subscribe to a fully underwritten, non-renounceable rights issue on the basis of 1 share for every 10 fully paid ordinary shares held at an issue price of $0.14 per share.

4,212,495 ordinary shares were taken up in the rights issue raising $589,749 before costs of issue.

The first $200,000 (1,428,571 shares) of the shortfall was sub-underwritten by the Directors of Imugene. 7,416,590 shortfall shares were issued to professional and sophisticated investor clients nominated by the underwriter. The total amount raised from the underwritten shares was $1,238,323 before costs of issue.

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19. Reserves and accumulated losses

(a) Share-based payment reserve Balance 1 July Option expense Balance 30 June (b) Accumulated losses Balance 1 July Net profit / (loss) for the year Balance 30 June	Consolidated 2009 2008 $ $ 960,003 806,245 6,000 153,758 966,003 960,003 (11,197,394) (9,286,469) 650,286 (1,910,925) (10,547,108) (11,197,394)	Parent entity 2009 2008 $ $ 960,003 806,245 6,000 153,758 966,003 960,003 (11,197,394) (9,286,469) 650,286 (1,910,925) (10,547,108) (11,197,394)	Parent entity 2009 2008 $ $ 960,003 806,245 6,000 153,758 966,003 960,003 (11,197,394) (9,286,469) 650,286 (1,910,925) (10,547,108) (11,197,394)
			960,003
			(9,286,469) (1,910,925)
			(11,197,394)

With respect to the payment of dividends (if any) by Imugene in subsequent financial years, no franking credits are currently available, or are likely to become available in the next 12 months.

Expenses arising from share-based payment transactions recognised during the year are as follows:

Recognised as part of Research & development expense Business development expense Commercialisation expense Corporate and Administration expense	Consolidated & Parent entity 2009 2008 $ $ - 81,494 - 36,132 - 36,132 6,000 - 6,000 153,758	Consolidated & Parent entity 2009 2008 $ $ - 81,494 - 36,132 - 36,132 6,000 - 6,000 153,758
		153,758

Imugene does not have a formal employee share option plan however the Board has from time to time granted options to employees and officers on a discretionary basis where it is considered that this provides a cost-effective and efficient means of remunerating and incentivising employees. In addition, shareholders have, in general meeting, approved the grant of incentive options to Directors. The share-based payment expenses above have been recognised in respect of the fair value of options granted as remuneration.

The fair value of options granted was calculated using the Black-Scholes Option Pricing Model. The expense has been apportioned pro-rata to reporting periods where vesting periods apply.

No options were granted during the year ended 30 June 2009.(2008: nil)

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20. Options

As at balance date, the Company and Consolidated Entity has the following classes of options on issue:

Description 2009 Number Unlisted performance options Type 9 4,350,000 Type 10 3,000,000 Total 7,350,000	2008 Exercise Expiry Number Price 4,350,000 $ 0.250 31-Dec-09 3,000,000 $ 0.200 31-Mar-11 7,350,000

The Type 10 options issued during the year ended 30 June 2008 vested on 30 September 2008. There were no specific vesting conditions attached.

Options carry no dividend or voting rights. Upon exercise, each option is convertible into one ordinary share to rank pari passu in all respects with the Company’s existing fully paid ordinary shares.

(a) Movements in the number of options on issue during the year are as follows:

At 1 July Granted during the year Type 10 Expired during the year Listed Options Type 1 Type 6 Type 7 At 30 June	2009 Number 7,350,000 - - - - 7,350,000	2008 Number 9,516,666 3,000,000 (4,633,333) (333,333) (200,000)
		7,350,000

21. Key management personnel disclosures

(a) The Directors of Imugene Limited during the year were:

Mr Graham Dowland (Executive Chairman)

Dr Warwick Lamb (Managing Director)

Mr Roger Steinepreis (Non-executive Director)

(b) Other than the directors, Dr Michael Sheppard (Chief Scientific Officer) also had authority and responsibility for planning, directing and controlling certain activities of the Group, directly or indirectly during the current and prior financial years.

In addition, the Company Secretary, Julie Foster is deemed a Company executive under section 9 of the Corporations Act 2001.

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21. Key management personnel disclosures (continued)

Short - term employee benefits Post-employment benefits Share-based payments	Consolidated 2009 2008 $ $ 893,377 598,733 39,220 35,092 - 153,758 932,597 787,583	Parent 2009 $ 893,377 39,220 - 932,597	entity 2008 $ 598,733 35,092 153,758
			787,583

Equity instrument disclosures relating to key management personnel

(i) Option holdings

The numbers of options over ordinary shares in the Company held during the financial year by each director of Imugene Limited and other key management personnel of the Group, including their personally related parties, are set out below.

	Balance at start of the year	Granted as compensation	Exercised	Other changes	Balance when ceased to hold office	Balance at the end of the year	Vested and exercisable	Unvested
2009
Directors of ImugeneLimited
Graham Dowland Warwick Lamb Roger Steinepreis	500,000 2,500,000 -	- - -	- - -	- - -	- - -	500,000 2,500,000 -	500,000 2,500,000 -	- - -
Other keymanagement personnelofthe Group
Michael Sheppard	1,250,000	-	-	-	-	1,250,000	1,250,000	-
2008
Directors of ImugeneLimited
Graham Dowland Warwick Lamb Roger Steinepreis	500,000 2,500,000 -	- - -	- - -	- - -	- - -	500,000 2,500,000 -	500,000 2,500,000 -	- - -
Other keymanagement personnelofthe Group
Michael Sheppard	1,500,000	-	-	(250,000)	-	1,250,000	1,250,000	-

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21. Key management personnel disclosures (continued)

(ii) Share holdings

The numbers of shares in the Company held during the financial year by each director of Imugene Limited and other key management personnel of the Group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.

	Balance at start of the year	Acquired	Otherchanges	Balance at the end of the year
2009
Directors of ImugeneLimited
Graham Dowland Warwick Lamb Roger Steinepreis	7,667,576 7,670,002 4,990,046		(3,181,776)	7,667,576 7,670,002 1,808,270
Other keymanagement personnel	ofthe Group
Michael Sheppard	272,248			272,248
2008
Directors of ImugeneLimited
Graham Dowland Warwick Lamb Roger Steinepreis	6,790,002 6,400,001 4,263,678	877,574 1,270,001 726,368	- - -	7,667,576 7,670,002 4,990,046
Other keymanagement personnel	ofthe Group
Michael Sheppard	156,589	115,659	-	272,248

(iii) Loans to key management personnel

There were no loans made to directors of Imugene Limited or other key management personnel of the Group (or their personally related entities) during the current or previous financial year.

(iv) Other transactions with key management personnel

During the year, Vetspec Pty Ltd and VSC Services Pty Ltd, companies of which Dr Warwick Lamb is a director and beneficial shareholder, provided a serviced office (in Sydney) and other administration services to the Company. For the year ended 30 June 2009, the Company paid totalling $31,500 (2008: $66,000) to Vetspec Pty Ltd and VSC Services Pty Ltd and this has been recognised in the financial statements as an expense.

The aggregate amount recognised as an expense in relation to these transactions is $31,500 (2008: $66,000).

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22. Remuneration of auditors

During the year the following fees were paid or payable for services provided by the auditor of the Parent Entity, its related practices and non-related audit firms:

Deloitte Touche Tohmatsu for: - an audit or review of financial reports and other audit work under the Corporations Act 2001 BDO Kendalls Audit & Assurance (WA) Pty Ltd for: - an audit or review of financial reports and other audit work under the Corporations Act 2001 Unrelated audit firms for audit of regulatory returns Total remuneration for audit services	Consolidated 2009 2008 $ $ - 53,700 - 43,500 - 2,400 1,200 45,900 54,900	Parent 2009 $ - - 43,500 2,400 45,900	entity 2008 $ 35,000 - - 1,200
			36,200

23. Segment information

The Company and Consolidated Entity operates in one geographical and business segment, being the research, development and commercialisation of animal health technologies in Australia.

24. Reconciliation of profit / (loss) after income tax to net cash outflow from operating activities

Profit / (loss) for the year Depreciation and amortisation Share based payment (note 19) Interest income Provision for employee benefits Impairment (writeback) /writedown on investments in wholly-owned subsidiaries Loss on disposal of fixed assets Net exchange differences Decrease /(increase) in working capital Net cash inflow / (outflow) from operating activities	Consolidated 2009 2008 $ $ 650,286 (1,910,925) 343,175 343,846 6,000 153,758 (76,608) (67,214) 26,460 4,493 - - 5,056 - 90,738 - (163,339) 203,142 881,768 (1,272,900)	Parent entity 2009 2008 $ $ 650,286 (1,910,925) 2,035 2,706 6,000 153,758 (42,097) (60,328) 26,460 4,493 (2,675,666) 878,137 5,056 - - - 1,365,215 (240,040) (662,711) (1,172,199)	Parent entity 2009 2008 $ $ 650,286 (1,910,925) 2,035 2,706 6,000 153,758 (42,097) (60,328) 26,460 4,493 (2,675,666) 878,137 5,056 - - - 1,365,215 (240,040) (662,711) (1,172,199)
			(1,172,199)

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25. Earnings / (Loss) per share

Basic earnings / (loss) per share Profit / (loss) attributable to the ordinary equity holders of the Company Diluted earnings / (loss) per share Profit / (loss) attributable to the ordinary equity holders of the Company Profit / (loss) used in calculation of basic / diluted earnings / (loss) per share Profit / (loss) Weighted average number of ordinary shares / potential ordinary shares used as the denominator in calculating basic earnings / (loss) per share Adjustments for calculation of diluted earnings per share: Options Weighted average number of ordinary shares / potential ordinary shares used as the denominator in calculating diluted earnings / (loss) per share	Consolidated 2009 2008 Cents Cents 0.5 (1.4) 0.4 (1.4) $ $ 650,286 (1,910,925) Number Number 143,637,220 136,431,579 7,350,000 - 150,987,220 136,431,579	Consolidated 2009 2008 Cents Cents 0.5 (1.4) 0.4 (1.4) $ $ 650,286 (1,910,925) Number Number 143,637,220 136,431,579 7,350,000 - 150,987,220 136,431,579
		(1.4)
		$ (1,910,925)
		Number 136,431,579 -
		136,431,579

For the year ended 30 June 2009, the options on issue (note 20) represent potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive.

For the year ended 30 June 2008, the options on issue are not considered dilutive as they would decrease the loss per share. Accordingly they have been excluded from the weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share.

26. Subsequent events

No event has arisen since 30 June 2009 that would be likely to materially affect the operations of the Consolidated Entity, the results of the Consolidated Entity or the state of affairs of the Consolidated Entity not otherwise disclosed in the Consolidated Entity’s financial report.

27. Contingencies

The Consolidated Entity has no contingent assets or liabilities at balance date (2008: none).

28. Related party transactions

There have been no transactions with related parties during the year ended 30 June 2009 other than as disclosed elsewhere in the financial report (2008: none).

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In the directors’ opinion:

(a) the financial statements, notes and audited remuneration disclosures included in the directors’ report of the Company and Consolidated Entity 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) giving a true and fair view of the Company’s and Consolidated Entity’s financial position as at 30 June 2009 and of their performance, 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.
(c) the remuneration disclosures set out in the directors’ report (as part of the audited remuneration report) for the year ended 30 June 2009 comply with section 300A of the Corporations Act 2001.

The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001 .

Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations Act 2001.

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GRAHAM DOWLAND Chairman Perth, 27 August 2009

AI assistant

IMUGENE LIMITED — Annual Report 2009

65124_rns_2009-08-27_38330b21-7483-41c8-b1fb-b7f488fd578b.pdf

ASX ANNOUNCEMENT

27 AUGUST 2009

2009 FINANCIAL REPORT

About Imugene

Appendix 4E

Preliminary final report Year ended 30 June 2009

Name of entity

IMUGENE LIMITED

Statement

Results for announcement to the market

Commentary on results

Trends in other income

Other Significant Features of Operating Performance

Financial Report

For The Year Ended

30 June 2009

ABN 99 009 179 551 Imugene Limited Financial Report – 30 June 2009

Contents

Corporate Directory

Directors

Chief Scientific Officer

Solicitors

Patent Attorney

Company Secretary

Registered and Principal Office

Investor Relations Consultant

Auditor

Laboratory

Bankers

Stock Exchange Listing

Share Register

Website and Email

Directors’ Report 30 June 2009

Directors

Current directors

Other Current Directorships of Australian Listed Public Companies

Directors’ Report 30 June 2009 (continued)

Dr Warwick Lamb - Managing Director

Qualifications – BVSc, M Vet Clin Stud, FACVSc

Special responsibilities

Company Secretary

Principal activities

Dividends

Summary review of operations

Consolidated results

Directors’ Report 30 June 2009 (continued)

Significant changes in the state of affairs

Post balance date events

Likely developments

Environmental regulation

Greenhouse gas and energy data reporting requirements

Information on directors’ interests in securities of Imugene

Directors’ Report 30 June 2009 (continued)

Meetings of Directors

Share Options

Directors’ Report

30 June 2009 (continued) – Remuneration report

Details of key management personnel

(i) Directors

(ii) Other key management personnel of the Group

(iii) Details of executives

A. Principles used to determine the nature and amount of remuneration

Directors’ Report

30 June 2009 (continued) – Remuneration report

A. Principles used to determine the nature and amount of remuneration (continued)

Non-executive directors

Retirement benefits and allowances

Other benefits

Executive pay

Base pay

Short-term incentives

Directors’ Report

30 June 2009 (continued) – Remuneration report

A. Principles used to determine the nature and amount of remuneration (continued)

Long-term incentives

Directors’ Report

30 June 2009 (continued) – Remuneration report

IMUGENE LIMITED Annual Report 2009