MACH7 TECHNOLOGIES LIMITED — Annual Report 2008

Aug 28, 2008

Safety Medical Products Limited

ABN 26 007 817 192

Appendix 4E Preliminary final report Period ended 30 June 2008

The following information is provided to the ASX under listing rule 4.3A.

1. The reporting period is the financial year ended 30 June 2008 including comparative information for the year ended 30 June 2007

2. "Results for announcement to the Market".

3. 2.1 The amount and percentage change up or down up by 459% to $4,777,000 from the previous corresponding period of revenue from ordinary activities.

4. 2.2 The amount and percentage change up down down by 2.51% to $(1,554,000) from the previous corresponding period of profit (loss) from ordinary activities after tax attributable to members.

5. 2.3 The amount and percentage change up or down down by 178% to $(4,229,000) from the previous corresponding period of net profit (loss) for the period attributable to members.

6. 2.4 The amount per security and franked amount nil per security of final and interim dividends.

7. 2.5 The record date for determining not applicable entitlements to the dividends (if any).

8. 2.6 A brief explanation of any of the figures in 2.1 to Please refer to the attached financial 2.4 necessary to enable the figures to be report. understood.

9. 1. An income statement together with notes to the Please refer to the attached financial statement, prepared in compliance with AASB report. 101 or the equivalent foreign accounting standard.
10. 1. A balance sheet together with notes to the Please refer to the attached financial statement. report.
11. 1. A cash flow statement together with notes to the Please refer to the attached financial statement. report.
12. 1. Details of individual and total dividends or No dividends or distributions were distributions and dividend or distribution made during the period. payments.
13. 1. Details of any dividend or distribution Not applicable reinvestment plans in operation and the last date for the receipt of an election notice for participation in any dividend or distribution reinvestment plan.
14. 1. A statement of retained earnings showing Please refer to the attached financial movements. report.

1

1. Net tangible assets per security with the 2007/08 – 1.78c comparative figure for the previous 2006/07 – 3.47c

corresponding period.

1. Details of entities over which control has been gained or lost during the period, including the following.

2. Name of the entity.

3. Details of associates and joint venture entities including the following.

4. Any other significant information needed by an investor to make an informed assessment of the entity’s financial performance and financial position.

5. For foreign entities, which set of accounting standards is used in compiling the report (e.g. International Accounting Standards).

6. A commentary on the results for the period.

7. A statement as to whether the report is based on accounts 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

Not applicable

Not applicable

Please refer to the attached financial report. Not applicable

Please refer to the attached financial report. This report is based upon accounts that are currently in the process of being audited. The Directors do not anticipate any items arising that would give rise to a dispute or qualification.

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J Riemelmoser Managing Director 29 August 2008

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SAFETY MEDICAL PRODUCTS LIMITED

ABN 26 007 817 192

3

Safety Medical Products Limited FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2008

Income statements Statements of changes in equity Balance sheets Cash flow statements

NOTES TO THE FINANCIAL STATEMENTS

Note	1	Reporting entity
Note	2	Basis of preparation
Note	3	Significant accounting policies
Note	4	Determination of fair values
Note	5	Segment reporting
Note	6	Acquisition of subsidiaries
Note	7	Revenue
Note	8	Other income
Note	9	Personnel expenses
Note	10	Financial income and expense
Note	11	Auditors’ remuneration
Note	12	Income tax expense
Note	13	Earnings per share
Note	14	Trade and other receivables
Note	15	Inventories
Note	16	Financial assets
Note	17	Tax assets and liabilities
Note	18	Property, plant and equipment
Note	19	Intangible assets
Note	20	Trade and other payables
Note	21	Loans and borrowings
Note	22	Share capital
Note	23	Reserves
Note	24	Employee benefits
Note	25	Financial instruments
Note	26	Operating Leases
Note	27	Capital and other commitments
Note	28	Consolidated entities
Note	29	Cash and cash equivalents
Note	30	Reconciliation of cash flows from operating activities
Note	31	Related parties
Note	32	Dividends
Note	33	Events subsequent to reporting date

4

Safety Medical Products Limited and its controlled entities Income statements For the year ended 30 June 2008

For the year ended 30 June 2008
	Consolidated	Company
Note	2008 $’000 2007 $’000	2008 $’000 2007 $’000
Revenue 7 Cost of sales Gross profit Other income 8 Research and development expenses Business development, marketing and intellectual property expenses Administrative expenses Results from operating activities Financial income 10 Financial expense 10 Net Financial expense Impairment Loss Loss before tax Income tax (expense)/benefit 12 Loss for the year attributable to equity holders of the company Earnings per share for profit attributable to the ordinary equity holders of the company from continuing operations: Basic earnings per share (cents) 13 Diluted earnings per share (cents) 13	4,777 855 (3,494) (358) 1,283 497 38 246 - (33) (131) (475) (2,744) (1,751) (1,554) (1,516) 12 46 (90) (178) (78) (132) (2,644) - (4,276) (1,648) 47 129 (4,229) (1,519) (4.5) (2.6) (4.5) (2.6)	10 3 (26) (2)
		(16) 1 17 244 - (33) (107) (470) (1,451) (1,012)
		(1,557) (1,270) 12 45 (37) (174)
		(25) (129) (2,644) -
		(4,226) (1,399) - 36
		(4,226) (1,363)

The income statements are to be read in conjunction with the attached notes to the financial statements.

5

Safety Medical Products Limited and its controlled entities

Statements of changes in equity For the financial year ended 30 June 2008

Consolidated

Consolidated 2008 Note	Issued Capital Accumulated losses Equity compensation reserve Total equity $’000 $’000 $’000 $’000
Opening balance at 1 July 2007 Total recognised income and expense for the period Shares Issued 22 Transaction costs Closing balance at 30 June 2008 Amounts are stated net of tax	9,821 (3,353) 742 7,210 ~~-~~ (4,229) - (4,229) 882 - 26 908 (81) - - (81)
	10,622 (7,582) 768 3,808

2007 Note	Issued Capital Accumulated losses Equity compensation reserve Total equity $’000 $’000 $’000 $’000
Opening balance at 1 July 2006 Total recognised income and expense for the period Shares Issued 22 Transaction costs Closing balance at 30 June 2007 Amounts are stated net of tax	2,887 (1,834) 742 1,795 ~~-~~ (1,519) - (1,519) 6,993 - - 6,993 (59) - - (59) 9,821 (3,353) 742 7,210

The statements of changes in equity should be read in conjunction with the notes to the financial statements.

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Safety Medical Products Limited and its controlled entities

Statements of changes in equity For the financial year ended 30 June 2008

Company 2008 Note	Issued Capital Accumulated losses Equity compensation reserve Total equity $’000 $’000 $’000 $’000
Opening balance at 1 July 2007 Total recognised income and expense for the period Shares Issued 22 Transaction costs Closing balance at 30 June 2008 Amounts are stated net of tax	9,821 (3,197) 742 7,366 ~~-~~ (4,226) - (4,226) 882 - 26 908 (81) - - (81)
	10,622 (7,423) 768 3,967

2007 Note	Issued Capital Accumulated losses Equity compensation reserve Total equity $’000 $’000 $’000 $’000
Opening balance at 1 July 2006 Total recognised income and expense for the period Shares Issued 22 Transaction costs Closing balance at 30 June 2007 Amounts are stated net of tax	2,887 (1,834) 742 1,795 ~~-~~ (1,363) - (1,363) 6,993 - - 6,993 (59) - - (59) 9,821 (3,197) 742 7,366

The statements of changes in equity should be read in conjunction with the notes to the financial statements.

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Safety Medical Products Limited and its controlled entities Balance sheets As at 30 June 2008

As at 30 June 2008
Note	Consolidated 2008 $’000 2007 $’000	Company 2008 $’000 2007 $’000
Assets Cash and cash equivalents 29 Trade and other receivables 14 Inventories 15 Current tax assets 17 Total current assets Non-current assets Financial assets 16 Net deferred tax assets 17 Property, plant and equipment 18 Intangible assets 19 Total non-current assets Total assets 5 Liabilities Trade and other payables 20 Loans and borrowings 21 Employee benefits 24 Total current liabilities Non-current liabilities Loans and borrowings 21 Employee benefits 24 Total non-current liabilities Total liabilities 5 Net assets Equity Issued capital 22 Reserves 23 Accumulated losses Total equity attributable to equity holders of the company	283 476 843 615 682 460 - 90 1,808 1,641 - - 81 48 2,219 1,966 2,036 4,680 4,336 6,694 6,144 8,335 539 884 910 21 373 142 1,822 1,047 436 14 78 64 514 78 2,336 1,125 3,808 7,210 10,622 9,821 768 742 (7,582) (3,353) 3,808 7,210	180 363 54 7 376 229 - 36
		611 635
		3,290 5,850 - - 1,303 1,107 - -
		4,593 6,957
		5,204 7,592
		100 159 817 - 135 61
		1,052 220
		176 - 9 6
		185 6
		1,237 226
		3,967 7,366
		10,622 9,821 768 742 (7,423) (3,197)
		3,967 7,366

The balance sheets are to be read in conjunction with the attached notes to the financial statements.

8

Safety Medical Products Limited and its controlled entities

Cash flow statements

For the year ended 30 June 2008

For the year ended 30 June 2008
Note	Consolidated 2008 $’000 2007 $’000	Company 2008 $’000 2007 $’000
Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Interest paid Other receipts Income taxes (paid) / received Net cash from operating activities 30 Cash flows from investing activities Interest received Dividends received Proceeds from sale of investments Acquisition of other investments Intercompany & investment of subsidiaries Acquisition of subsidiary, net of cash acquired Acquisition of property, plant and equipment 18 Net cash from investing activities Cash flows from financing activities Proceeds from issue of share capital 22 Proceeds from issue of convertible notes Option Reserve Proceeds from borrowings Repayment of borrowings Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 July Cash and cash equivalents at 30 June 29	5,135 955 (7,009) (2,563) (1,874) (1,608) (81) (4) 14 - 91 65 (1,850) (1,547) 12 45 - 1 - 75 0 (250) - - - (1,235) (493) (1,779) (481) (3,143) 801 3,434 775 - 26 - 4,568 35 (4,032) (12) 2,138 3,457 (193) (1,233) 476 1,709 283 476	14 246 (1,668) (1,674)
		(1,654) (1,428) (35) - 14 - 36 104
		(1,639) (1,324)
		12 44 - 1 - 75 (250) (85) - - (2,350) (291) (976)
		(364) (3,456)
		801 3,434 775 - 26 - 218 - - -
		1,820 3,434
		(183) (1,346) 363 1,709
		180 363

The cash flow statements are to be read in conjunction with the attached notes to the financial statements.

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ASX Additional Information

1 Reporting entity

Safety Medical Products Limited (the "Company") is a company domiciled in Australia. The consolidated financial statements of the Company for the financial year ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the "consolidated entity"). The consolidated entity primarily is involved in the development, manufacture and commercialisation of medical products, printing and distribution of products for the pharmaceutical industry and the provision of industrial control and automation systems, machine vision, robotics and turn-key solutions.

2 Basis of preparation

(a) Statement of Compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (‘AASBs’) adopted by the Australian Accounting Standards Board (‘AASB’) including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 . The consolidated financial report of the consolidated entity also complies with the IRFSs and interpretations adopted by the International Accounting Standards Board.

(b) Basis of measurement

The financial report is prepared on the historical cost basis.

(c) Functional and presentation currency

The financial report is presented in Australian dollars which is the Company’s functional currency and the functional currency of all subsidiaries.

The Company is not of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 due to it having less than $10 million in assets, however, all financial information presented in Australian dollars has been rounded to the nearest thousand dollars unless otherwise stated. This approach has been adopted as it is consistent with the previous years financial report, assets are expected to be greater than $10 million in the next financial year and for the ease of readers of the report.

(d) Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that effect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes:

• Note 6 – business combinations

• Note 17 – utilisation of tax losses

• Note 24 – measurement of share based payments

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ASX Additional Information

3 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in the consolidated financial report and have been applied consistently by all entities in the consolidated entity.

(a) Basis of consolidation

• (i) Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial report from the date that control commences until the date that control ceases.

In the Company’s financial statements, investments in subsidiaries are carried at cost.

(ii) Transactions eliminated on consolidation

Intra-group balances, and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial report.

(b) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Nonmonetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined.

(c) Financial Instruments Share capital

Ordinary shares

Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity, net of any related income tax benefit.

(d) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.

Costs include expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour and any other costs directly attributable to bring the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

(ii) Subsequent costs

The consolidated entity recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the consolidated entity and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.

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ASX Additional Information

3 Significant accounting policies (continued)

• (iii) Depreciation

With the exception of freehold land, depreciation is charged to the income statement using the diminishing value method over the estimated useful lives of each part of an item of property, plant and equipment. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The estimated useful lives in the current and comparative periods are as follows:

• plant and equipment 3 - 13 years • fixtures and fittings 5 - 9 years • motor vehicles 5 years The residual value, the useful life and the depreciation method applied to an asset are reassessed at least annually.

(e) Intangible assets

(i) Goodwill

Goodwill (negative goodwill) arises on the acquisition of subsidiaries, associates or joint ventures.

Goodwill represents the excess of the cost of the acquisition over the consolidated entity’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess is negative (negative goodwill) it is recognised immediately in the income statement. Goodwill is measured at cost less accumulated impairment losses.

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the consolidated entity has sufficient resources to complete development.

The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.

No development costs were capitalised during the year ended 30 June 2007 or 2006.

(iii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(f) Leased assets

Leases in terms of which the consolidated entity assumes substantially all the risks and benefits of ownership are classified as finance leases.

Other leases are operating leases and the leases are not recognised on the consolidated entity’s balance sheet. Lease payments for operating leases are charged as an expense in the period in which they occur.

(g) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity.

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ASX Additional Information

3 Significant accounting policies (continued)

(h) Impairment

(i) Financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flow of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-forsale financial asset is calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in the income statement. Any cumulative losses in respect of an available-for-sale financial asset recognised previously in equity is transferred to the income statement.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the income statement. For available-for-sale financial asset that are equity securities, the reversal is recognised directly in equity.

(ii) Non-financial assets

The carrying amounts of the consolidated entity’s assets, other than inventories (see accounting policy g), and deferred tax assets (see accounting policy n), are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated (see accounting policy h(i)). For goodwill assets that have indefinite lives, recoverable amount is estimated at each reporting date.

An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets or groups. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss had been recognised.

(i) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement when they are due.

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ASX Additional Information

3 Significant accounting policies (continued)

• (ii) Long-term service benefits The consolidated entity’s net obligation in respect of long-term service benefits, other than pension plans, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates, and is discounted using the rates attached to the Commonwealth Government bonds at the balance sheet date which have maturity dates approximating to the terms of the consolidated entity’s obligations.

• (iii) Wages, salaries, annual leave, sick leave and non-monetary benefits Liabilities for employee benefits for wages, salaries, annual leave and sick leave, that are expected to be settled within 12 months of the reporting date, represent present obligations resulting from employees' services provided to reporting date, calculated at undiscounted amounts based on remuneration wage and salary rates that the consolidated entity expects to pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax.

(iv) Share-based payment transactions

The employee and officer share scheme allows Company employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.

(j) Provisions

A provision is recognised in the balance sheet when the consolidated entity has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability.

A provision for restructuring is recognised when the consolidated entity has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating costs are not provided for.

(k) Revenue

• (i) Goods sold and services rendered

Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed by reference to surveys of work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, the costs incurred or to be incurred cannot be measured reliably, there is a risk of return of goods or there is continuing management involvement with the goods.

• (ii) Government grants

Grants that compensate the consolidated entity for expenses incurred are recognised as revenue in the income statement on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the consolidated entity for the cost of an asset are recognised in the income statement as other income on a systematic basis over the useful life of the asset.

(l) Lease payments

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense and spread over the lease term.

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ASX Additional Information

3 Significant accounting policies (continued)

(m) Finance income and expense

Finance income comprises interest income on funds invested. Interest income is recognised in the income statement as it accrues, using the effective interest rate method.

Finance expenses comprise interest expenses on borrowings. Interest expense is recognised in the income statement as it accrues, using the effective interest rate method.

(n) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.

(o) Goods and Services Tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(p) Earnings per share

The consolidated entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding of the effects of all dilutive potential ordinary shares, which comprise share options.

(q) Segment reporting

A segment is a distinguishable component of the consolidated entity that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

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ASX Additional Information

3 Significant accounting policies (continued)

(r) New standard and interpretations not yet adopted

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial adoption. They are available for early adoption at 30 June 2008, but have not been applied in preparing this financial report.

• Revised AASB 3 Business Combinations mandatory for 30 June 2010 Annual Financial Report.

• AASB 8 Operating Segments mandatory for 30 June 2010 Annual Financial Report.

• AASB 101 presentation of Financial Statements mandatory for 30 June 2010 Annual Financial Report.

• AASB 123 Borrowing Costs mandatory for 30 June 2010 Annual Financial Report

• AASB 127 Consolidation and Separate Financial Statements mandatory for 30 June 2010 Annual Financial Report.

• AASB 2008-1 amendment to Australian Accounting Standard - Share-based Payment mandatory for 30 June 2010 Annual Financial Report.

• AI 12 Service Concession Arrangements mandatory for 30 June 2009 Annual Financial Report.

• AI 13 Customer Loyalty Programs mandatory for 30 June 2009 Annual Financial Report.

4

Determination of fair values

A number of the consolidated entity’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based upon the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Property, plant and equipment

The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value of items of plant, equipment, fixtures and fittings is based upon the quoted market prices of similar items.

(ii) Inventory

The fair value of inventory acquired in a business combination is determined based on its estimated selling price in the ordinary course of business less the estimated cost of completion for sale, and a reasonable profit margin based on the effort required to complete and sell the inventory.

(iii) Trade and other receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date.

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ASX Additional Information

5 Segment reporting

Segment information is presented in respect of the consolidated entity’s business segments. Business segments are based on the consolidated entity’s management and internal reporting structure.

Inter-segment pricing is determined on an arm’s length basis.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise incomeearning assets and revenue, and corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.

Business segments

The consolidated entity comprises the following main business segments, based on the Company’s management reporting system:

Safety Medical Products Development, production and commercialisation of a range of medical products, focusing principally on the SecureTouch single use manual retractable safety syringe.

ProControl Systems

The provision of specialist industrial control and automation systems, machine vision, robotics and turn-key solutions for large and small industrial businesses.

Bagot Press A manufacturer and supplier of specialist printing and general consumables to the pharmaceutical industry.

Geographical segments

The consolidated entity operates in only one geographical segment, Australia. As such, information is not presented on the basis of geographical segments.

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ASX Additional Information

5 Segment reporting (continued)

Business segments External revenues Inter-segment revenues Total segment revenue Segment result Unallocated expenses Results from operating activities Net financing revenue / (costs) Impairment Loss Income tax benefit/(expense) Profit for the period Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation	Safety Medical Products 2008 $’000 2007 $’000	ProControl Systems 2008 $’000 2007 $’000	Bagot Press 2008 $’000 2007 $’000	Eliminations 2008 $’000 2007 $’000	Consolidated 2008 $’000 2007 $’000
	24 247 - -	1,516 310 22 62	3,251 544 9 3	- - (31) (65)	4,791 1,101 - -
	24 247	1,538 372	3,260 547	(31) (65)	4,791 1,101
	(1,557) (1,270)	(132) (296)	136 59	- (9)	(1,554) (1,516) - -
	(2,744) -	- -	- -	- -
					(1,554) (1,516) (78) (132) (2,744) -
					47 129
					(4,329) (1,519)
	5,104 7,592 1,237 226	471 336 686 517	2,613 4,774 2,503 4,732	(2,144) (4,367) (2,090) (4,350)	6,044 8,335 -
					6,044 8,335
					2,336 1,125 - -
					2,336 1,125
	291 976	7 83	198 812	(16) (9)	480 1,862
	95 24	16 8	124 19	- -	235 51

18

ASX Additional Information

6 Acquisition of subsidiaries

Business combinations

Baratex Pty Ltd (ProControl Systems)

On 9 February 2007 the Company acquired all of the shares in Baratex Pty Ltd, trading as ProControl Systems, for $1,500,000 through the issue of 1,500,000 shares in the Company. The company provides specialist industrial control and automation systems, machine vision, robotics and turn-key solutions for large and small industrial businesses.

The acquisition had the following effect on the consolidated entity’s assets and liabilities on acquisition date:

In thousands of AUD

Property, plant and equipment Intangible assets Deferred tax assets Inventory Trade and other receivables Cash and cash equivalents Loans and borrowings Current tax liabilities Employee benefits – current Employee benefits – non current Trade and other payables Net identifiable assets and liabilities Goodwill on acquisition Consideration paid, satisfied in shares Cash acquired Net cash outflow	Note	Pre- acquisition carrying amounts Fair value adjustments	Recognised values on **acquisition **
		83 - 30 - 37 - 35 - 395 - (37) - (44) - (68) - (50) - (47) - (286) -	83 30 37 35 395 (37) (44) (68) (50) (47) (286)
		48 -	48 1,452
			1,500 (37)
			(37)

19

ASX Additional Information

6 Acquisition of subsidiaries (continued)

Bagot Press Pty Ltd

On 1 May 2007 the Company acquired all of the shares in Bagot Press Pty Ltd for $6. In addition, the Company loaned Bagot Press Pty Ltd $4,000,000 to acquire the business activities from the previous owners. The $4,000,000 was funded through the issue of 2,500,000 shares in the Company at $0.80 per share and $2,000,000 in cash. The company is a manufacturer and supplier of specialist printing and general consumables to the pharmaceutical industry. In the two months to 30 June 2007 the subsidiary contributed a profit of $42,000.

The acquisition had the following effect on the consolidated entity’s assets and liabilities on acquisition date:

In thousands of AUD

Property, plant and equipment Inventory Trade and other payables Net identifiable assets and liabilities Goodwill on acquisition Consideration paid, satisfied in shares and cash	Note	Pre- acquisition carrying amounts Fair value adjustments	Recognised values on **acquisition **
		810 - 206 - (214) -	810 206 (214)
		802 -	802 3,198
			4,000

Pre-acquisition carrying amounts were determined based upon applicable AASBs immediately before the acquisition. The value of assets and liabilities recognised on acquisition are their estimated fair values (see note 4 for methods used to determine fair values).

The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent of the acquired business’ work force and the synergies expected to be achieved from integrating the two companies into the consolidated entity’s existing businesses.

7 8		Consolidated	Company
	Note	2008 $’000 2007 $’000	2008 $’000 2007 $’000
	Revenue Sales Services Other income Government grants Other income	4,777 855 - - 4,777 855 14 244 24 2 38 246	10 3 - -
			10 3
			14 244 3 -
			17 244

20

ASX Additional Information

9 10 11		Consolidated	Company
	Note	2008 $’000 2007 $’000	2008 $’000 2007 $’000
	Personnel expenses Wages and salaries Commissions paid Other associated personnel expenses Contributions to defined contribution superannuation funds Increase in liability for annual leave Increase in liability for long service leave Financial income and expense Interest Income on bank deposits Dividend income from held-for-trading financial assets Financial income Loss on disposal of held-for-trading financial assets Interest expense on financial liabilities measured at amortised cost Financial expense Auditors’ remuneration Audit services: Audit and review of the financial reports	951 1,011 - 23 144 38 130 119 7 14 28 18 1,260 1,223 12 45 - 1 12 46 - (174) 90 (4) 90 (178) 36 31 36 31	588 515 - - 74 15 56 71 (5) 10 3 6
			716 617
			12 44 - 1
			12 45
			- (174) 37 -
			37 (174)
			36 31
			36 31

21

ASX Additional Information

12		Consolidated	Company
	Note	2008 $ 2007 $	2008 $ 2007 $
		2008 $’000 2007 $’000	2008 $’000 2007 $’000
	Income tax expense Recognised in the income statement Current tax expense Current year expense 31 (118) - (36) 31 (118) - (36) Deferred tax expense Origination and reversal of temporary differences (78) (11) - - Benefit of losses recognised - - - - (78) (11) - Total income tax expense/(benefit) in income statement (47) (129) - (36) Numerical reconciliation between tax expense and pre-tax net profit Profit before tax (4,376) (1,648) (4,326) (1,399) Income tax using the domestic corporation tax rate of 30% (1,313) (494) - (419) Increase/(decrease) in income tax expense due to: Non-allowable capital items 3 1 - 1 Tax losses carried forward 418 418 - 418 Research & Development 68 (54) - (36) S40-880 write-off regarding legal fees on capital raising - - - Entertainment 1 - - - Goodwill Impairment 823 - - - Income tax expense/(benefit) on pre- tax net profit (47) (129) - (36)		- (36)
			- (36) - - - -
			-
			- (36)
			- (419) - 1 - 418 - (36) - - - - - -
			- (36)

22

ASX Additional Information

13 14 15 16	Note	Note	2008 No. 2007 No.	2008 No. 2007 No.
	Earnings per share Weighted average number of shares Ordinary shares on issue at 1 July 22 Effect of shares issued Weighted average number of ordinary shares at 30 June Effect of share options on issue Weighted average number of ordinary shares (diluted) at 30 June Consolidated		70,908,872 54,053,500 24,306,592 3,269,881
			95,215,464 57,323,381 - 34,037,641
			95,215,464 91,361,022
				Company 2008 $’000 2007 $’000 54 7 54 7 - - - - 376 229 376 229 3,290 5,850 3,290 5,850
	Note	2008 $’000 2007 $’000
	Trade and other receivables Current Trade receivables and prepayments Inventories Raw materials and consumables Work in progress Finished goods Financial assets Non-current financial assets Investments in subsidiaries	843 615 843 615 - 72 59 36 623 352 682 460 - - - -

23

ASX Additional Information

17 Tax assets and liabilities

Current tax assets and liabilities

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items:

	Consolidated	Company
Note	2008 $’000 2007 $’000	2008 $’000 2007 $’000
Deductible temporary differences Tax losses	- - 1,390 1,390	- - 1,390
		1,390

The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future tax profits will be available against which the consolidated entity can utilise the benefits therefrom.

Recognised deferred tax assets and liability

Deferred tax assets were recognised for the first time in 2007 and relate only to subsidiaries. No deferred tax liabilities have been recognised. The deferred tax assets of the consolidated entity are attributable to the following items:

Consolidated Employee benefits Plant and equipment Other Net tax assets	Assets 2008 $’000 2007 $’000 72 41 5 3 4 4 81 48

Movement in temporary differences during the year

		Consolidated	Consolidated
2008	Balance 1 July 07	Recognised in Income	Recognised in Equity	Balance 30 June 08
	$’000	$’000	$’000	$’000
Employee benefits	41	72	-	41
Plant and equipment	3	5	-	3
Other	4	4	-	4
Net deferred tax assets	48	81	-	81

24

ASX Additional Information

17 Tax assets and liabilities (continued)

2007 Employee benefits Plant and equipment Other Net deferred tax assets	Balance 1 July 06 Recognised in Income Recognised in Equity Balance 30 June 07 $’000 $’000 $’000 $’000 - 41 - 41 - 3 - 3 - 4 - 4
	- 48 - 48

18 Property, plant and equipment

	Consolidated	Company Plant and equipment Fixtures and fittings Total
$’000 Note	Plant and equipment Fixtures and fittings Total
Cost Balance at 1 July 2006 Acquisitions through business combinations Other acquisitions Balance at 30 June 2007 Balance at 1 July 2007 Other acquisitions Disposals Balance at 30 June 2008 Depreciation and impairment losses Balance at 1 July 2006 Depreciation charge for the year Balance at 30 June 2007 Balance at 1 July 2007 Depreciation charge for the year Balance at 30 June 2008 Carrying amounts At 1 July 2006 At 30 June 2007 At 1 July 2007 At 30 June 2008	163 - 163 83 - 83 1,762 17 1,779 2,008 17 2,025 2,008 17 2,025 420 72 492 - - - 2,428 89 2,517 8 - 8 49 2 51 57 2 59 57 2 59 234 5 239 291 7 298 155 - 155 1,951 15 1,966 1,951 15 1,966 2,137 82 2,219	163 - 163 - - - 976 - 976
		1,139 - 1,139
		1,139 - 1,139 272 19 291 - - -
		1,411 19 1,430
		8 - 8 24 - 24
		32 - 32
		32 - 32 94 1 95
		126 1 127
		155 - 155
		1,107 - 1,107
		1,107 - 1,107
		1,285 18 1,303

25

ASX Additional Information

18 Property, plant and equipment (continued)

$’000 19 Intangible assets Cost Balance at 1 July 2006 Acquisitions through business combination Balance at 30 June 2007 Balance at 1 July 2007 Impairment Acquisitions through business combination Balance at 30 June 2008 Carrying amounts At 1 July 2006 At 30 June 2007 At 1 July 2007 At 30 June 2008		Consolidated	Company
	$’000	Goodwill Patents & trademark s Total	Goodwill Patents & trademarks Total
		4,680 - 4,680 4,680 - 4,680 4,680 - 4,680 4,680 - 4,680 (2,644) - (2,644) - - - 2,036 - 2,036 - - - 4,680 - 4,680 4,680 - 4,680 2,036 - 2,036	- - - - - -
			- - -
			- - - - - -
			- - -
			- - -
			- - -
			- - -
			- - -

Intangible assets are recognised as a result of the acquisition of Baratex Pty Ltd (trading as ProControl Systems) and Bagot Press Pty Ltd. Impairment losses have been recognised.

Impairment testing for cash-generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the consolidated entity’s operating divisions which represent the lowest level within which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill allocated to each unit are as follows:

	Consolidated	Company
Note	2008 $’000 2007 $’000	2008 $’000 2007 $’000
ProControl Systems Bagot Press	1,182 1,482 854 3,198 2,036 4,680	- - - -
		- -

Impairment testing for ProControl Systems was based on fair value less costs to sell resulting in a $300,000 impairment loss. Impairment testing for Bagot Press was based on ‘value in use’ discounted at 13% resulting in a $2,344,497.91 impairment loss.

20 Trade and other payables Trade payables and accrued expenses

539 884 539 884	100 159
	100 159

26

ASX Additional Information

Consolidated Company

21	Note	2008 $’000 2007 $’000	2008 $’000 2007 $’000
	Loans and borrowings Current Convertible Notes Loans - Other Hire purchase agreements Non-current Loans – Other Hire purchase agreements Total loans and borrowings Convertible Notes Proceeds from issue of convertible notes Transaction costs Net proceeds Classified as equity Accreted interest Carrying amount of liability at 30 June	775 - 73 - 62 21 910 21 260 - 176 14 436 14 775 - - - 775 - - - - - 775 -	775 - - - 42 -
			817 - - - 176 -
			176 -
			775 - - -
			775 - - - - -
			775 -

On the 4[th] June 2008 7,750 convertible notes were issued for $775,000. The notes issued were approved at a general meeting on the 18 April 2008. The notes were issued at a cost of $100 per note and will mature one year from the issue date. The notes issued were 3,000 and 2,000 to the directors Mr John Riemelmoser and Mr John Darley respectively.

The notes are convertible into 3,100,000 ordinary shares on 4 June 2009 at the option of the holder which is at a rate of 400 shares for every one note. Unconverted notes become repayable on demand.

Interest accrues daily and is based on the 90 days bank bill swap reference rate plus a margin of 500 basis points per annum at the 30 June 2008 that rate was 7.8 % (2007: nil%).

Financing facilities The consolidated entity has access to the following lines of credit: Total facilities available: Credit card facility 33 33 Convertible notes 775 - Hire purchase agreements 239 35 Bank overdraft 40 40 1,087 108 Facilities utilised at balance date: Credit card facility 24 8 Convertible notes 775 Hire purchase agreements 239 35 Bank overdraft - 48 91 Facilities not utilised at balance date: Credit card facility 9 25 Bank overdraft 40 (8) 49 17	10 10 775 - 218 - - -
	1,003 10
	3 8 775 218 - - -
	8 8
	7 2 - -
	7 2

The credit card facility utilised at balance date for both 2008 and 2007 were included within trade payables.

27

ASX Additional Information

Note 22 Share capital Issued and paid-up capital 74,060,072 (2007: 70,908,872) ordinary shares fully paid Ordinary shares Balance at the beginning of year Shares issued: 26 September 2007 – 6,244 shares issued at $0.20 following the exercise of options 25 October 2007 – 1,948,833 shares issued at $0.28 pursuant to non-renounceable rights issue 29 October 2007 – 4757,143 shares issued at $0.28 pursuant to non-renounceable rights issue placement of shortfall 9 November 2007 – 475,000 shares issued at $0.28 pursuant to non-renounceable rights issue placement of shortfall 29 November 2007 – 117,000 shares issued at $0.28 pursuant to non-renounceable rights issue placement of shortfall 18 December 2007 – 147,000 shares issued at $0.28 pursuant to non-renounceable rights issue placement of shortfall 16 February 2007 – 1,500,000 shares issued at $1.00 as consideration for purchase of Baratex Pty Ltd 27 February 2007 – 1,360,500 shares issued at $0.20 following the exercise of options 28 April 2007 – 1,692,496 shares issued at $0.745 pursuant to the Share Purchase Plan 1 May 2007 – 2,500,000 shares issued at $0.80 as consideration for the purchase of Bagot Press Pty Ltd 3 May 2007 – 9,802,376 shares issued at $0.20 following the exercise of options Costs incurred in issuing shares Balance at end of year	Company 2008 $’000 2007 $’000 10,703 9,821
	9,821 2,887 1 546 - 128 - 133 - 33 - 41 - - 1,500 - 272 - 1,261 - 2,000 - 1,960 (51) (59)
	10,652 9,821

Terms and conditions

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings.

In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds of liquidation.

No dividends were paid or proposed during the current or prior financial years.

23		Consolidated	Company
	Note	2008 $’000 2007 $’000	2008 $’000 2007 $’000
	Reserves Equity compensation reserve	768 742 768 742	768 742
			768 742

28

ASX Additional Information

24 a)			Consolidated	Company
		Note	2008 $’000 2007 $’000	2008 $’000 2007 $’000
	Employee benefits Current Salaries and wages accrued Superannuation accrued Other Payroll Liabilities Liability for long service leave Liability for annual leave Non-current Liability for long service leave Total employee benefits Movement in employee benefits In thousands of AUD Consolidated Balance at 1 July 2006 Acquired in business combination Provisions made during the period Balance at 30 June 2007 Balance at 1 July 2007 Acquired in business combination Provisions made during the period Balance at 30 June 2008 Company Balance at 1 July 2006 Provisions made during the period Balance at 30 June 2007 Balance at 1 July 2007 Provisions made during the period Balance at 30 June 2008	78 15 73 41 84 - 25 - 113 86 373 142 78 64 78 206 Salaries and wages accrued Super accrued Liability for annual leave		58 - 39 30 6 - 1 - 31 31
				135 61 9 6
				9 67

29

ASX Additional Information

24 Employee benefits (continued)

• c) Share based payments

• i) Share option schemes The Company has previously issued options to provide incentives and to assist in attracting and retention of key employees. No options were issued during the year ended 30 June 2008 or 30 June 2007.

Options were issued to key management personnel during the year ended 30 June 2008 as a result of the bonus option scheme implemented by the Company. These options were issued to key management personnel on the same basis as options issued to all other shareholders and not as a result of their employment with the Company. As such, the issue has not been treated as a share based payment.

Unissued ordinary shares of the Company under option, that have been issued to key management personnel in connection with their employment with the Company are:

Outstanding at the beginning of the year Granted Exercised Outstanding at 30 June Exercisable at 30 June	2008 2007 Number of options Weighted average exercise price $ Number of options Weighted average exercise price $ 2,500,000 0.20 3,500,000 0.20 - - - - - 0.20 (1,000,000) 0.20
	2,500,000 0.20 2,500,000 0.20
	2,500,000 0.20 2,500,000 0.20

The market value of shares under these options at 30 June 2008 was $0.55 (2007: $0.55).

The expiry date of the options detailed above is 31 December 2008.

The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted, based on the Black-Scholes option-pricing model. The model uses the expected volatility based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information.

All share options vest at grant date and were granted for nil consideration.

Employee expenses

The value of options issued to key management personnel during the year ended 30 June 2008 was treated as a transaction cost as part of the initial public offering of the Company, and as such has been recorded directly in equity.

30

ASX Additional Information

25 Financial instruments

Exposure to credit, interest rate and currency risks arises in the normal course of the Company’s and the consolidated entity’s business.

(a) Foreign currency risk

The consolidated entity is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the AUD. The currencies giving rise to this risk is primarily U.S. Dollars. Given that the consolidated entity is currently developing the business activities that give rise to these risks, the risks involved are currently minimal and as such no hedging arrangements are currently in place.

(b) Credit risk exposures

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The consolidated entity does not require collateral in respect of financial assets.

At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.

• (c) Net fair values of financial assets and liabilities

Valuation approach

The methods used in determining fair values of financial instruments are disclosed in note 4.

The carrying amounts and net fair values of financial assets and liabilities as at the reporting date are as follows:

Financial assets Cash assets Receivables Financial liabilities Payables Loans and borrowings	2008 Carrying amount $’000 Net fair value $’000 283 283 836 836 524 524 1,346 1,346	2007 Carrying amount $’000 Net fair value $’000
		476 476 615 615 884 884 35 35

31

ASX Additional Information

25 Financial Instruments (continued)

(d) Interest rate risk

The consolidated entity’s exposure to interest rate risk and the effective interest rate for classes of financial assets and financial liabilities is set out below:

2008 Financial assets Cash assets Trade and other Receivables Financial liabilities Trade and other payables Loans and borrowings 2007 Financial assets Cash assets Trade and other Receivables Financial liabilities Trade and other payables Loans and borrowings	Note Effective interest rate	Floating interest rate $’000 1 year or less $’000 1 to 5 years $’000 more than 5 years $’000 Non- Interest Bearing $’000 Total $’000
	29 5% 14 - 20 - 21 10.4% 29 5% 14 - 20 - 21 8.2%	283 - - - - 283 - - - - 836 836
		283 - - - 836 283
		- - - - 524 524 - 910 436 - - 1,346
		- 910 436 - 524 1,870
		476 - - - - 476 - - - - 615 615
		476 - - - 615 1,091
		- - - - 884 884 - 21 14 - - 35
		- 21 14 - 884 919

32

ASX Additional Information

	Consolidated Company
	Note 2008 $’000 2007 $’000 2008 $’000 20067$’ 000
Operating Leases Non-cancellable operating lease expense commitments Future operating lease commitments not provided for in the financial statements and payable: With one year One year or later and no later than five years
	151 174 24 57 561 554 12 37
	712 728 36 94

26 Operating Leases

The consolidated entity leases property and equipment under operating leases.

The leases provide the consolidated entity with a right of renewal at which time all terms are renegotiated. Lease payments comprise a base amount plus an incremental contingent rental. Contingent rentals are based on operating criteria.

27 Capital and other commitments

Capital and other commitments
Capital expenditure commitments Plant and equipment Contracted but not provided for and payable: With one year One year or later and no later than five years	58 110 - - - - - -
	58 110 - -

As at 30 June 2006, the consolidated entity was committed under the Alliance Agreement with Exelint International Co to a capital contribution of US$500,000 in respect of capital works and tooling. This expenditure was undertaken during the year ended 30 June 2007. As at 30 June 2007 the consolidated entity had made commitments to purchase capital equipment within Bagot Press Pty Ltd.

28 Consolidated entities

Particulars in relation to consolidated entities Parent entity Safety Medical Products Limited Controlled Entities Baratex Pty Ltd Bagot Press Pty Ltd	Ordinary Share Consolidated Entity Interest	Ordinary Share Consolidated Entity Interest
	2008 % 100% 100%	2007 %
		100% 100%

As detailed in Note 6, Baratex Pty Ltd, operating as ProControl Systems, was acquired on 9 February 2007 and Bagot Press Pty Ltd was acquired on 1 May 2007.

Baratex Pty Ltd and Bagot Press Pty Ltd are both incorporated in Australia.

33

ASX Additional Information

29 30	Note	2008 $’000 2007 $’000 2008 $’000 2007 $’000
	Cash and cash equivalents Bank balances 283 524 180 363 Bank overdrafts - (48) - - 283 476 180 363 Reconciliation of cash flows from operating activities Cash flows from operating activities Profit for the period (1,554) (1,519) (1,557) (1,363) Adjustments for: Depreciation 18 239 51 95 24 Loss on disposal of available for sale financial assets - 174 - 174 Income tax expense 12 (56) (129) - (36) Interest Paid 81 - 37 - Interest Income 10 - (46) (12) (45) Operating profit before changes in working capital and provisions (1,818) (1,469) (1,437) (1,246) Change in assets and liabilities (Increase)/decrease in inventories (222) (382) (209) (187) (Increase)/decrease in trade and other receivables 218 (226) (47) 21 (Increase)/decrease in other current assets 64 - 36 - Increase/(decrease) in trade and other payables (355) 417 (59) (33) Increase/(decrease) in provisions for employee benefits 241 48 77 17 (56) (143) (202) (182) Income tax (paid)/refunded 91 65 - 104 Net cash from operating activities (1,850) (1,547) (1,639) (1,324)
		(1,818) (1,469) (1,437) (1,246) (222) (382) (209) (187) 218 (226) (47) 21 64 - 36 - (355) 417 (59) (33) 241 48 77 17
		(56) (143) (202) (182) 91 65 - 104
		(1,850) (1,547) (1,639) (1,324)

34

ASX Additional Information

31 Related parties

The following were key management personnel of the consolidated entity during the entire reporting period, unless otherwise indicated.

Non-executive directors Executives Dr Joseph Nicholas

Mr Bruce Hocking (Company Secretary) Mr Robert Doley (General Manager ProControl Systems – commenced 9 February 2007) Mr Trevor Sharpe (General Manager Bagot Press – commenced 1 May 2007)

Executive directors Mr John Darley (Chairman)

Mr John Riemelmoser (Managing Director and CEO)

Key management personnel compensation

The key management personnel compensation included in ‘personnel expenses’ (note 9) are as follows:

Short-term employee benefits Post-employment benefits Share-based payments	Consolidated Company 2008 $ 2007 $ 2008 $ 2007 $
	616,097 795,000 494,787 717,000 159,605 69,000 81,661 62,000 - - - -
	775,702 864,000 576,448 779,000

Individual directors and executives compensation disclosures

Information regarding individual directors and executives’ compensation and some equity instruments disclosures as permitted by the Corporations Regulations 2M.3.03 and 2M.6.04 is provided in the Remuneration Report section of the Directors’ report on pages 10 to 16.

Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the consolidated entity since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year end.

Other key management personnel transactions

A number of key management personnel, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities.

A number of these entities transacted with the Company or its subsidiaries in the reporting period. The terms and conditions of the transactions with management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-director related entities on an arm’s length basis.

The aggregate amounts recognised during the year relating to key management personnel and their related parties were as follows:

35

ASX Additional Information

31 Related parties (continued)

Note Key management personnel Transaction Mr Anthony Mitchell (November 2007 – February 2008) Consultancy	Consolidated Company 2008 $ 2007 $ 2008 $ 2007 $
	30,645 - 30,645 -

i) Amounts paid to Mr Anthony Mitchell during the year for Consultancy work performed. No amount remain outstanding.

Directors Loan

During the year the following loans were made by directors to the company:

Mr J Riemelmoser Mr J Darley Directors loans (Note 21)	Consolidated Company 2008 $ 2007 $ 2008 $ 2007 $
	200,000 - 200,000 - 300,000 - 300,000 -
	500,000 - 500,000 -

36

ASX Additional Information

31 Related parties (continued)

Options over equity instruments

The movement during the reporting period in the number of options over ordinary shares in Safety Medical Products Limited held, directly, indirectly or beneficially, by each key management personnel, including their related parties, is as follows:

								Vested and
							Held at	exercisable
	Held at	Granted as	Other net				30 June	at 30 June
	**1July 2007 **	**remuneration **	changes	1)	Exercised	Lapsed	2008	2008
Directors
Mr John Darley and related parties	1,305,068	-		-	-	-	1,305,068	1,305,068
Mr John
Riemelmoser and	12,546,947	-		-	-	-	12,546,947	12,546,947
related parties
Dr Joseph Nicholas	1,325,000	-		-	-	-	1,325,000	1,325,000
Executives
Mr B Hocking	1,173,750	-		-	-	-	1,173,750	1,173,750
Mr Robert Doley and related parties	1,225,000	-		-	-	-	1,225,000	1,225,000
Mr Trevor Sharpe	-	-	18,000		-	-	18,000	18,000
								Vested and
							Held at	exercisable
	Held at	Granted as	Other net				30 June	at 30 June
	1July 2006	remuneration	changes	(2)	Exercised	Lapsed	**2007 **	**2007 **
Directors
Mr John Darley and related parties	1,030,000	-	305,068		(30,000)	-	1,305,068	1,305,068
Mr John
Riemelmoser and	6,115,000	-	6,536,947		(105,000)	-	12,546,947	12,546,947
related parties
Dr Joseph Nicholas	1,025,000	-	300,000		-	-	1,325,000	1,325,000
Mr Marcus Boland
and related parties (ceased 27 June 2007)(1)	4,197,500	-	4,337,706		(200,000)	-	8,335,206	8,335,206
		-			-
Executives		-			-
Mr B Hocking	1,500,000	-	673,750		(1,000,000)	-	1,173,750	1,173,750
Mr Robert Doley and related parties	-	-	1,475,000		(250,000)	-	1,225,000	1,225,000
Mr Trevor Sharpe	-	-		-	-	-	-	-

Options vested by key management personnel were not exercisable at 30 June 2007 or 2008.

• 1) Options issued under an employee share entitlement which occurred on 27 November 2007. Options are exercisable at $0.50 per option, before 31 December 2010. Unexercisable will lapse if the participant resigns their employment with the Company or any of its subsidiaries.

• 2) Options issued under a bonus issue which occurred on 26 April 2007. All shareholders were issued one free option for every two shares held.

37

ASX Additional Information

31 Related parties (continued)

Movement in shares

The movement during the reporting period in the number of ordinary shares of Safety Medical Products Limited held, directly, indirectly or beneficially, by each key management personnel, including their related parties is as follows:

			Received on		Held at
	Held at	Granted as	exercise of	Other net	30 June
	**1July 2007 **	remuneration	options	changes(1)	2008
Directors
Mr John Darley and related parties	610,133	-	-	-	610,133
Mr John Riemelmoser and related parties	13,073,892	-	-	-	13,073,892
Dr Joseph Nicholas	600,000	-	-	-	600,000
Executives
Mr B Hocking	1,347,500	-	-	-	1,347,500
Mr Robert Doley and related parties	2,450,000	-	-	-	2,450,000
Mr Trevor Sharpe	-	-	-	-	-
			Received on		Held at
	Held at	Granted as	exercise of	Other net	30 June
	1July 2006	remuneration	options	changes(1)	2007
Directors
Mr John Darley and related parties	560,000	-	30,000	20,133	610,133
Mr John Riemelmoser and related parties	12,155,470	-	105,000	813,422	13,073,892
Dr Joseph Nicholas	550,000	-	-	50,000	600,000
Mr Marcus Boland and related
parties (ceased 27 June 2007) (2)	8,285,000	-	200,000	(151,500)	8,333,500
Executives
Mr B Hocking	512,500	-	1,000,000	(165,000)	1,347,500
Mr Robert Doley and related parties	-	-	250,000	2,200,000	2,450,000
Mr Trevor Sharpe	-	-	-	-	-

• 1) Mr R Doley received 1,500,000 shares in the Company as consideration for the sale of Baratex Pty Ltd, trading as ProControl Systems, to the Company.

38

ASX Additional Information

31 Related parties (continued)

Movement in convertible notes

The movement during the reporting period in the number of convertible notes of Safety Medical Products Limited held, directly, indirectly or beneficially, by each key management personnel, including their related parties is as follows:

				Received on		Held at
	Held at		Granted as	exercise of	Other net	30 June
	**1July 2007 **		remuneration	options	changes(1)	2008
Directors
Mr John Darley and related parties		-	-	-	2,000	2,000
Mr John Riemelmoser and related parties		-	-	-	3,000	3,000
Dr Joseph Nicholas		-	-	-	-	-
Executives
Mr B Hocking		-	-	-	-	-
Mr Robert Doley and related
parties		-	-	-	-	-
Mr Trevor Sharpe		-	-	-	-	-

(1) During the year convertible notes were issued at a face value of $100 per note with a moving interest rate of 500 basis Points above the 90-Day Bill Rate and can be converted into ordinary shares at a rate of 400 per share, an effective price of $0.25c per share.

Subsidiaries

Loans were made by the Company to wholly owned subsidiaries for working capital and capital purchases during last financial year. The loans outstanding between the Company and its subsidiaries have no fixed date of repayment and are non-interest bearing. As at 30 June 2008 the loan has been impaired to 1.82 million due to devaluation of the business operations in Bagot Press.

Other related parties

Key management persons related parties

For details of these transactions refer to key management personnel related disclosures.

32 Dividends

No dividends were paid or proposed in the current or prior financial years.

33 Events subsequent to reporting date

There has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Company and the consolidated entity, the results of those operations, or the state of affairs of the Company and the consolidated entity in future financial years.

39