MACH7 TECHNOLOGIES LIMITED - Annual Report 2011

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Safety Medical Products Limited and its controlled entities Directors’ report For the year ended 30 June 2011

The Directors present their report together with the financial report of Safety Medical Products Limited (the Company), and in relation to the comparative period of the consolidated entity (the Group) being the Company and its controlled entities, for the year ended 30 June 2011 and the auditor’s report thereon.

Contents of Directors’ report	Contents of Directors’ report	Page
1.	Directors	3
2.	Directors’ Meetings	4
3.	Corporate Governance Statement	4
4.	Remuneration report	6
4.1	Principles of compensation	6
4.2	Analysis of bonuses included in remuneration	7
4.3	Options over equity instruments granted as compensation	7
4.4	Directors’ and executive officers’ remuneration	8
5.	Principal activities and review of operations	10
6.	Operating and financial review	10
7.	Dividends	10
8.	Events subsequent to reporting date	10
9.	Likely developments	10
10.	Directors’ interests	10
11.	Indemnification of officers	11
12.	Lead auditor’s independence declaration	11
13.	Proceedings on behalf of the Company	11
14.	Auditor and Non-Audit Fees	11

Safety Medical Products Limited and its controlled entities Directors’ report For the year ended 30 June 2011

1. Directors

The directors of the Group during or since the end of the financial year are:

Name and qualifications Experience and special responsibilities

Peter Christie Director and Chairman appointed 6 October 2010. Chairman Mr Christie graduated from Curtin University with a Bachelor of Business Aged 48 in 1983 and is a qualified Accountant and Tax Agent. He has 17 year experience and has developed extensive hospitality and property interests. Simon Lill Director appointed 6 October 2010. Director Mr Lill has a BSc (Pharmacol.) and a Masters of Business Administration, Aged 48 both from The University of Western Australia. He has a background of over 25 years of stockbroking, capital raising, management, business development and analysis for a range of small and start-up companies, both in the manufacturing and resources industries.

Stephen Hewitt-Dutton Director and Company Secretary appointed 6 October 2010. Director and Company Mr. Hewitt-Dutton has over 20 years of experience in accounting, Secretary company secretarial and corporate finance matters. He holds a Bachelor Aged 41 of Business from Curtin University and an affiliate of the Institute of Chartered Accountants.

John Darley Director and Executive Chairman appointed 2005, resigned 6 October Chairman 2010. Non-Executive Director Mr Darley is the former Valuer-General of South Australia and Chief aged 73 Executive of Lands SA. He is currently the Chairman of the Burnside Retirement Services Inc. and the Land Tax Reform Association of South Australia. He is also a member of the Legislative Council.

John Riemelmoser Managing Director and Chief Executive Officer appointed 2001, resigned Managing Director and 6 October 2010. Chief Executive Officer Mr Riemelmoser was previously the director of a large dairy products aged 46 distribution business in South Australia prior to the sale of the business in 2005. Mr Riemelmoser was the founder of Safety Medical Products Limited and was responsible for the development of the core intellectual property on which the Company is based.

Joseph Nicholas MB BS Director appointed 2005, resigned 6 October 2010. MAICD Dr Nicholas is a general practitioner with a practice in Fairfield Heights, Independent Non-Executive Sydney. Dr Nicholas is the Chairman of Australian Medical Co-operative Director Limited. aged 53

Company Secretary

Stephen Hewitt-Dutton was appointed as Company Secretary on 6 October 2010.

Mrs Victoria Marie Allinson was appointed on the 30 January 2009 and resigned on 24 October 2010.

Directorships of other listed companies

Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are as follows:

Name	Company	Period of directorship
Peter Christie	Carnavale Resources Limited	28 April 2006 – current
	Triangle Energy Limited	2 July 2008 – 20 November 2009
	Narhex Life Sciences Limited	13 January 2011–current
Simon Lill	Natural Fuel Limited	18 May 2010 – current
	Narhex Life Sciences Limited	13 January 2011–current

Safety Medical Products Limited and its controlled entities Directors’ report For the year ended 30 June 2011

2. Directors’ meetings

The number of directors’ meetings and the number attended by each of the directors of the Company during the financial year are:

			Audit Committee	Audit Committee	Remuneration	Remuneration
	Board	Meetings	Meetings		Committee	Meetings
Director	No.		No.		No.
	Attended	No. Held	Attended	No. Held	Attended	No. Held
Mr P Christie	4	5	-	-	-	-
Mr S Lill	5	5	-	-	-	-
Mr S Hewitt Dutton	5	5	-	-	-	-
Mr J Darley	-	-	-	-	-	-
Mr J Riemelmoser	-	-	-	-	-	-
Dr J Nicholas	-	-	-	-	-	-

3. Corporate Governance Statement

The Company has adopted comprehensive systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company’s needs. To the extent they are applicable, the company has adopted the Eight Essential Corporate Governance Principles and Best Practice Recommendations (“Recommendations”) as published by ASX Corporate Governance Council.

The Company’s Corporate Governance policy is available on the Company’s website. As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance structures will be given further consideration.

Principle 1 – Lay solid foundations for management and oversight

The Board and management have agreed on their respective roles and responsibilities and the functions reserved to the Board and management. The Board has established and adopted a Board Charter for this purpose. The Board has also established a Nomination and Remuneration Committee Charter which, among other functions, guides the Board in its evaluation of the performance of senior executives.

Principle 2 – Structure the Board to add value

The Board ultimately takes responsibility for corporate governance, and will be accountable to the Shareholders for the performance of the Company. The functions and responsibilities of the Board are set out in the Company’s Constitution and the Corporations Act.

The Board does not currently have a majority of independent directors. It is comprised of one independent director and two non-independent directors. The existing structure is considered appropriate given the small scale of the Company’s enterprise and the associated economic restrictions this places on the Company. The existing structure is aimed at maximising the financial position of the Company by keeping its operating costs to a minimum.

No separate nomination committee has been formed. However, the Company has adopted a Nomination and Remuneration Committee Charter. The role of the nomination committee is carried out by the full Board in accordance with the Nomination and Remuneration Committee Charter. The Board considers that at this stage, no efficiencies or other benefits would be gained by establishing a separate committee.

Safety Medical Products Limited and its controlled entities Directors’ report For the year ended 30 June 2011

3. Corporate Governance Statement (continued)

Principle 3 – Promote ethical and responsible decision making

All Directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Company. The Board has established a Code of Conduct to guide the Directors, managers, contractors, employees and officers of the Company. A Share Trading Policy has also been established.

Principle 4 – Safeguard integrity in financial reporting

The Directors require the Chief Financial Officer and Chief Executive Officer and external company auditors to state in writing to the Board that the Company’s financial condition and operational results and are in accordance with relevant accounting standards.

A separate audit committee has not been formed. However, the Company has adopted an Audit Committee Charter. The role of the audit committee is carried out by the full Board in accordance with the Audit Committee Charter. The Board considers that given its size, no efficiencies or other benefits would be gained by establishing a separate audit committee.

Principle 5 – Make timely and balanced disclosure

The Directors are committed to keeping the market fully informed of material developments to ensure compliance with the Listing Rules and the Corporations Act. The Directors have established a written policy and procedure to ensure compliance with the disclosure requirements of the Listing Rules.

Principle 6 – Respect the rights of Shareholders

The Directors have established a communications strategy to promote effective communication with Shareholders and encourage effective participation at general meetings. As well as ensuring timely and appropriate access to information for all investors via announcements to the ASX, the Company will ensure that all relevant documents are released on the Company’s website.

Principle 7 – Recognise and manage risk

The Directors have established a Risk Management Policy regarding the oversight and management of material business risks.

Principle 8 – Remunerate fairly and responsibly

A separate remuneration committee has not been formed. However, the Company has adopted a Nomination and Remuneration Committee Charter. The role of the Remuneration Committee is carried out by the full Board in accordance with the Nomination and Remuneration Committee charter. The Board considers at this stage, no efficiencies or other benefits would be gained by establishing a separate Committee.

Other information

Further information relating to the Company’s corporate governance practices and policies has been made publicly available on the Company’s web site at www.safetymed.com.au.

Safety Medical Products Limited and its controlled entities Directors’ report For the year ended 30 June 2011

4. Remuneration report – audited

Remuneration is referred to as compensation throughout this report.

4.1 Principles of compensation

This report outlines the remuneration arrangements in place for directors of Safety medical Products Limited in accordance with the requirements of the Corporation Act 2001 and its Regulations. For the purpose of this report, Key Management Personnel (KMP) of the Company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Group, and includes the executives in the Company receiving the highest remuneration.

Details of Key Management Personnel

Mr. Peter Christie Chairman Mr. Simon Lill Director

Mr. Stephen Hewitt-Dutton Director and Company Secretary

Details of Former Key Management Personnel

(contained within remuneration tables)

Mr. John Darley Chairman, resigned 6 October 2010. Mr. John Riemelmoser Managing Director and Chief Executive Officer, resigned 6 October 2010. Dr. Joseph Nicholas Non-Executive Director, resigned 6 October 2010. Mrs Victoria Allinson Company Secretary, resigned on 24 October 2010 Mr R Doley General Manager – ProControl, until 30 April 2010

Remuneration Policy

The Board is responsible for determining and reviewing compensation arrangements for the Directors. The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. The Company does not link the nature and amount of the emoluments of such officers to the Company’s financial or operational performance. The expected outcome of this remuneration structure is to retain and motivate Directors.

As part of its Corporate Governance Policies and Procedures, the Board has adopted a formal Remuneration Committee Charter. Due to the current size of the Company and number of directors, the Board has elected not to create a separate Remuneration Committee but has instead decided to undertake the function of the Committee as a full Board under the guidance of the formal charter.

The rewards for Directors’ have no set or pre-determined performance conditions or key performance indicators as part of their remuneration due to the current nature of the business operations. The Board determines appropriate levels of performance rewards as and when they consider rewards are warranted. The Company has no policy on executives and directors entering into contracts to hedge their exposure to options or shares granted as part of their remuneration package.

The ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. The latest determination was at the Annual General Meeting held on 25 November 2003 when shareholders approved an aggregate remuneration of not more than $300,000 per year.

The table below shows the performance of the Group as measured by loss per share since 2007:

	2011	2010	2009	2008	2007
Net profit/(loss) after tax	$1,367,566	($4,488,342)	($3,874,198)	($4,418,046)	($1,519,000)
Basic EPS	0.7¢	(4.9¢)	(4.2¢)	(6.1¢)	(2.6¢)
Share price at year end	$0.02	$0.04	$0.04	$0.09	$0.55
Dividends paid	Nil	Nil	Nil	Nil	Nil

Safety Medical Products Limited and its controlled entities Directors’ report For the year ended 30 June 2011

4. Remuneration report – audited

Details of Remuneration

Details of the nature and amount of each element of the emolument of each Director and Executive of the Company and the Group, including the five highest paid as required by the Corporations Act 2001, for the financial year are as follows:

Key management personnel and other executives

The overall level of key management personnel’s compensation takes into account the performance of the consolidated entity over a number of years and includes both financial and non-financial measures of performance. In the period since the Company listed on ASX it has been in the development and evaluation phase of its operations, as such the directors consider that comparing compensation directly with profitability is not warranted during this stage.

Loans to Directors and Executives

There were no loans to directors and executives during the financial year ending 30 June 2011.

4.2 Analysis of bonuses included in remuneration

There were no short term cash bonuses paid during the reporting period or the prior reporting period.

4.3 Options over equity instruments granted as compensation

There were no options over ordinary shares in the Company granted as compensation to key management personnel during the reporting period or the prior reporting period. No options were granted since the end of the financial year.

For the year ended 30 June 2010

Directors’ report (Subject to Deed of Company Arrangement)

4. Remuneration report – audited (continued) 4.4 Directors’ and executive officers’ remuneration

Details of the nature and amount of each major element of the remuneration for the year ended 30 June 2011 (and the previous period) of each director of the Company and each of the five named Company executives receiving the highest remuneration and other key management personnel are:

2011 Directors	Short-term		Post employment Superannuation benefits Share-based payments Options Shares $ $ $	Share-based payments	Total Proportion of remuneration performance related $ %	Value of options and shares as proportion of remuneration %
	Salary & fees STI Cash bonus $ $	Total $		Shares $
Non-executive directors
Mr P Christie (Chairman)	12,500 -	-	- -	-	12,500 -	-
Mr S Lill	10,000 -	-	- -	-	10,000 -	-
Mr S Hewitt-Dutton (Company Secretary)	10,000 -	-	- -	-	10,000 -	-
Dr J Nicholas(1) Mr J Darley (Chairman) (1) Executive directors Mr J Riemelmoser (CEO/MD) (1)	- -	-	- -	-	- -	-
	- -	-	- -	-	- -	-

	- -	-	- -	-	- -	-
Total compensation: key management personnel 2011	32,500 -		- -		32,500 -	-
		-		-
(1)To resignation date 6 October 2010 2010 Directors
Non-executive directors Dr J Nicholas Mr J Darley (Chairman) Executive directors Mr J Riemelmoser (CEO/MD) Executive directors Mrs V Allinson (Company Secretary) Mr R Doley (GM–ProControl) until 30 April 2010
	5,000 -	5,000	(7,000) -	-	(2,000) -	-
	(25,500) -	(25,500)	36,000 -	-	10,500 -	-

	116,545 -	116,545	13,004 -	-	129,549 -	-

	61,344 -	61,344	- -	-	61,344 -	-
	210,902 -	210,902	36,243 -	-	247,145 -	-
Total compensation: key management personnel 2010	368,291		78,247		446,538 -	-
		368,291

No compensation was paid in 2010 or 2011 in respect to the following classes: Non-Monetary; Other Short-term employee benefits; Pension or other post-employment or long-term benefits; termination benefits.

This is the end of the audited remuneration report.

Safety Medical Products Limited and its controlled entities Directors’ report For the year ended 30 June 2011

5. Principal activities and review of operations

During the period the Group successfully finalised its Administration and completed its recapitalisation and reinstatement to trading on the ASX.

On 15 April 2010 the Directors appointed Rob Kirman of McGrath Nicol Administrator of the Company and its subsidiaries. As at the date of this report the Administrators had resigned, control of the Company was now with the Directors and Safety Medical Products Limited has been reinstated to official quotation on the ASX.

At a meeting of the Group’s creditors on 23 July 2010, the creditors of each entity approved:
the execution of a Deed of Company Arrangement (“DOCA”) proposed by Trident Capital Pty Ltd and the Company;
that Pureste Pty Ltd be placed into liquidation as it remained insolvent; and
that Baratex Pty Ltd be placed into liquidation as it remained insolvent.

The DOCA assists the Administrator to raise funds for the benefit of the creditors by causing SafetyMed to enter into a Reconstruction Deed with Trident Capital, a party experienced in such reconstructions.

On 12 August 2010, as part of the Deed of Company Arrangement the remaining convertible note holders were issued 2,800,000 shares, at a rate of 400 shares for every one note, in accordance with the convertible notes issue terms.

A notice of meeting to shareholders was sent to all shareholders on 7 October 2010 and a general meeting held on 8 November 2010. At the general meeting the shareholders approved:

The consolidation of existing share and options in the Company on a 1 for 5 basis.
The capital of the Company be reduced by applying a proportion of accumulated losses against share capital which is considered permanently lost.
The issue of up to 150,000,000 new shares at a price of not less than $0.005 per share to raise not less than $750,000 to Trident or its nominees as the Proponent Issue.
The issue of up to 30,000,000 new shares at a price of not less than $0.005 per share to directors and/or their associates under the Proponent Issue.
The issue of between 170,000,000 to 220,000,000 new shares at a price of not less than $0.01 per share under a Prospectus.
The issue of new shares to directors and/or their associates under the Prospectus issue are on the same terms and condition as those offered under the Prospectus.

On 8 November 2010 all of the above resolutions were passed on a show of hands. The record date for the Consolidation of Capital is 16 November 2010 and the shareholder statements were despatched on 23 November 2010

On 23 November, following completion of the Proponent Issue, the Company made a payment of $679,197 to the Creditor’s Trust to effectuate the DOCA with the Administrators, thereby allowing them to resign as Administrators of the Company.

On 25 November 2010 the Company lodged a prospectus with the ASIC to raise up to $2,200,000 through the issue of up to 220,000,000 fully paid ordinary shares at $0.01 per share. On 23 December 2010 the Company allotted 173,250,000 shares to applicants who had submitted applications totalling $1,732,500.

On 17 January the Company allotted 46,750,000 shares to applicants, taking total applications received under the prospectus capital raising to the maximum subscription under the prospectus of $2,200,000. The Company’s shares were reinstated to official quotation on the ASX on 25 January 2011.

Safety Medical Products Limited and its controlled entities Directors’ report For the year ended 30 June 2011

5. Principal activities and review of operations (continued)

The Company continues to own assets associated with the SecureTouch syringe, such as the intellectual property as protected through various patents, in regions and countries including Europe, the United States of America, Australian and New Zealand.

The Company commenced a Pre-Feasibility Study in March 2011 which includes a major study into the global and Australasian market for the SecureTouch syringe and similar products. The study will consider market demands and opportunities, alternative manufacturing designs learning from certain limitations in the initial equipment, and capital and operating costs associated thereof.

In March 2011, the Company negotiated and finalised an option agreement to acquire key tenements in the Three Rivers Area of north Western Australia from Brutus Constructions Pty Ltd. The tenement EL 52/2605 is granted and tenement EL 52/2656 is under application and pending grant.

Discontinued activities

At the creditors meeting on 23 July 2010, the creditors voted to place the Company’s subsidiaries Baratex Pty Ltd and Pureste Pty Ltd into liquidation.

The above matters represent the significant changes in the state of affairs of the Group. No other significant changes in the state of affairs of the Group have occurred.

6. Operating and financial review

The Statement of Comprehensive Income shows a net profit attributable to members of $1,367,566 compared with a loss of ($3,781,263) for the previous period.

The Statement of Financial Position shows an increase in net assets from a deficiency of ($4,436,566) to net assets of $1,831,001, due to the aforementioned DOCA and recapitalisation.

Refer to table in Note 4 of the Directors’ report for shareholder returns

7. Dividends

No dividends have been paid or declared by the Company to members since the end of the previous financial year.

8. Events subsequent to reporting date

The Option Agreement to acquire key tenements in the Three Rivers Area of north Western Australia from Brutus Constructions Pty Ltd, was exercisable in writing on or before 31 July 2011. Subsequent to year end, the option was extended for a further 13 months for consideration of $50,000.

9. Likely developments

Other than disclosed elsewhere in this report, likely development of the operations of the Company and the expected results of those operations have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Group.

10. Directors’ interest

The relevant interest of each director in the shares and options over such instruments issued by the Company as notified by the directors to the ASX in accordance with section 205G(1) of the Corporations Act 2001 and the ASX Listing Rules, at the date of this report is as follows:

Safety Medical Products Limited and its controlled entities Directors’ report For the year ended 30 June 2011

		Ordinary shares	Options over ordinary	Convertible Notes
			shares	over ordinary shares
Mr	Peter Christie	5,500,000	-	-
Mr	Stephen Hewitt-Dutton	2,000,000	-	-
Mr	Simon Lill	3,000,000	-	-
Dr	Joseph Nicholas_(resigned)_	688,864(1)	344,342(1)(2)	-
Mr	John Darley_(resigned)_	1,804,479(1)	335,573(1)(2)	-
Mr	J Riemelmoser_(resigned)_	12,335,233(1)	5,400,950(1)(2)	-

(1) At date of resignation, 6 October 2010

(2) All outstanding options expired on 31 December 2010.

11. Indemnification of officers

The Company has agreed subject to and so far as may be permitted by the Corporations Act 2001 to indemnify each past, current and future director and officers against all liabilities that may arise from their position as directors and officers of the Company or any wholly-owned subsidiary of the Company. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses. No indemnification has been paid with respect to the Company’s auditors.

12. Lead auditor’s independence declaration

The lead auditor’s independence declaration is set out on page 51 and forms part of the directors’ report for the financial year ended 30 June 2011.

13. Proceedings on behalf of the Company

As at the date of this report, there are no leave applications or proceedings brought on behalf of the Company under section 237 of the Corporations Act 2001 .

14. Auditor and Non-Audit Services

Bentleys SA Partnership was appointed as external auditor for the Company at the 2006 Annual General Meeting.

In accordance with the Company's policy, the lead external audit partner must rotate after a maximum of five years. David Francis of Bentleys SA Partnership tendered his resignation on 10 June 2011. Bentleys Audit & corporate (WA) Pty Ltd has been appointed by The Directors. Their appointment will be put to the members for ratification at the Annual General Meeting.

Details of the amounts paid to the auditor of the Company, Bentleys, and its related practices for audit and non-audit services provided during the year are set out in Note 9 of the Notes to the financial statements.

Dated at Perth this 30[th] day of September 2011.

Signed in accordance with a resolution of the directors:

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Simon Lill Director

Safety Medical Products Limited and its controlled entities Financial Statements For the year ended 30 June 2011

Contents of the Financial Statements	Contents of the Financial Statements	Page
	Consolidated statement of comprehensive income statement	13
	Consolidated statement of changes in equity	14
	Consolidated statement of financial position	15
	Consolidated statement of cash flows	16
NOTES TO THE FINANCIAL STATEMENTS
Note 1	Reporting entity	17
Note 2	Basis of preparation	17
Note 3	Significant accounting policies	18
Note 4	Determination of fair values	28
Note 5	Segment reporting	29
Note 6	Revenue	31
Note 7	Other income	31
Note 8	Financial income and expense	31
Note 9	Auditors’ remuneration	31
Note 10	Income tax expense	32
Note 11	Earnings per share	33
Note 12	Trade and other receivables	34
Note 13	Inventories	34
Note 14	Non current assets held for sale and discontinued operations	34
Note 15	Deferred Exploration Expenditure	34
Note 16	Property, plant and equipment	35
Note 17	Trade and other payables	35
Note 18	Loans and borrowings	36
Note 19	Share capital	36
Note 20	Reserves	37
Note 21	Employee benefits	37
Note 22	Controlled entities	38
Note 23	Cash and cash equivalents	39
Note 24	Reconciliation of cash flows from operating activities	40
Note 25	Discontinued operations	41
Note 26	Dividends	43
Note 27	Events subsequent to reporting date	43
Note 28	Financial risk management	43
Note 29	Related parties	45
Note 30	Deed of company administration	48
Note 31	Personnel expenses	48
Note 32	Contingent Liabilities	48
	Directors’ declaration	49
	Independent auditor’s report to the members of Safety Medical Products Limited	50
	Lead auditor’s independence declaration	52
	Additional ASX information	53
	Offices and officers	55

Safety Medical Products Limited and its controlled entities Consolidated Statement of Comprehensive Income For the year ended 30 June 2011

Note	2011 $ 2010 $
Revenue 6 Cost of sales Gross profit Other income 7 Business development, marketing & intellectual property expenses Accounting and audit fees Administrators fees Directors’ and Company Secretarial fees Legal fees Administrative expenses Results from operating activities Financial income 8 Financial expense 8 Impairment Loss Profit/(loss) before tax Income tax (expense)/benefit 10 Profit/(loss) after tax from continuing operations Profit/(loss) from discontinued operations 25 Profit/(loss) for the year Other comprehensive income Total comprehensive loss for the year Attributable to: Equity holders of parent Non-controlling interest Earnings per share From continuing and discontinued operations: Basic earnings per share (cents) 11 From continuing operations: Basic earnings per share (cents) 11 From discontinued operations: Basic earnings per share (cents) 11	15,766 55,735 (5,755) (43,548)
	10,011 12,187 820,135 - (37,723) (38,414) (60,660) (108,525) (58,158) (177,740) (56,500) (200,694) (59,267) (5,983) (99,579) (314,052)
	458,259 (833,221) 28,746 - (1,851) (145,757) (132,142) (2,028,409)
	353,012 (3,007,387) - -
	353,012 (3,007,387) 1,014,554 (1,480,955)
	1,367,566 (4,488,342) - -
	1,367,566 (4,488,342)
	1,367,566 (3,781,263) - (707,079)
	1,367,566 (4,488,342)
	0.7 (4.9) 0.2 (3.9) 0.5 (1.0)

The statement of comprehensive income should be read in conjunction with the notes to the financial statements.

Safety Medical Products Limited and its controlled entities Consolidated Statement of Changes in Equity For the financial year ended 30 June 2011

2011 Note	Issued Capital Accumulated losses $ $	Equity compensation reserve Non- controlling Interest Total equity $ $ $
Balance at 1 July 2010 10,954,673 (14,712,738) Profit for the year - 1,367,566 Other Comprehensive Income - - Total comprehensive income for the year - 1,367,566 Transactions with owners, in their capacity as owners, and other transfer Conversion of convertible notes under DOCA 18 700,000 - Reduction of capital as approved at the general meeting 19 (11,654,673) 11,654,673 Reversal of expired options - 741,871 Shares Issued 19 3,130,000 - Transaction costs (350,372) - Derecognition of non- controlling interest upon disposal of Pureste 25 - - Balance at 30 June 2011 2,779,628 (948,628) Amounts are stated net of tax 2010	10,954,673 (14,712,738) - 1,367,566 - -	741,871 (1,420,372) (4,436,566) - - 1,367,566 - - -
	- 1,367,566	- - 1,367,566
		- - 700,000 - - - (741,871) - - - - 3,130,000 - - (350,372) - 1,420,372 1,420,372
	2,779,628 (948,628)	- - 1,831,000

Balance at 1 July 2009 10,815,657 (10,931,475) Loss for the year - (3,781,263) Other Comprehensive Income - - Total comprehensive income for the year - (3,781,263) Transactions with owners, in their capacity as owners, and other transfer Shares Issued 19 143,000 - Transaction costs (3,984) - Closing balance at 30 June 2010 10,954,673 (14,712,738)	10,815,657 (10,931,475) - (3,781,263) - -	741,871 (713,293) (87,240) - - (3,781,263) - - -
	- (3,781,263)	- (707,079) (4,488,342)

	143,000 - (3,984) -	- - 143,000 - - (3,984)
	10,954,673 (14,712,738)	741,871 (1,420,372) (4,436,566)

Amounts are stated net of tax

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

Safety Medical Products Limited and its controlled entities Consolidated Statement of Financial Position As at 30 June 2011

Consolidated Statement of Financial Position As at 30 June 2011
Note	2011 $ 2010 $
Assets Cash and cash equivalents 23 Trade and other receivables 12 Inventories 13 Non-current assets held for sale and discontinued operations 14 Total current assets Non-current assets Deferred acquisition cost 15 Property, plant and equipment 16 Total non-current assets Total assets 5 Liabilities Trade and other payables 17 Loans and borrowings 18 Employee benefits 21 Total current liabilities Total liabilities 5 Net assets / (deficiency) 5 Equity Issued capital 19 Reserves 20 Accumulated losses Equity attributable to equity holders of the company Non-controlling interest Total equity	1,546,875 589,315 41,013 106,307 - 53,909 - 17,063
	1,587,888 766,594
	280,000 - - 66,025
	280,000 66,025
	1,867,888 832,619
	36,888 1,061,241 - 3,525,940 - 682,004
	36,888 5,269,185
	36,888 5,269,185
	1,831,000 (4,436,566)
	2,779,628 10,954,673 - 741,871 (948,628) (14,712,738)
	1,831,000 (3,016,194) - (1,420,372)
	1,831,000 (4,436,566)

The statement of financial position should be read in conjunction with the notes to the financial statements.

Safety Medical Products Limited and its controlled entities Consolidated Statement of Cash Flows For the ear ended 30 June 2011 y

Note	2011 $ 2010 $
Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Interest paid Net cash used in operating activities 24 Cash flows from investing activities Interest received Acquisition of exploration assets Acquisition of subsidiary, net of cash acquired Proceeds from the disposal of subsidiary Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Net cash from investing activities Cash flows from financing activities Proceeds from issue of share capital 19 Capital raising costs paid Payments in relation to Deed of Company Arrangement 30 (Repayment)/Proceeds from issue of convertible notes Proceeds from borrowings Repayment of borrowings Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 July Overdraft extinguished by Deed of Company Arrangement 25 Cash and cash equivalents at 30 June	18,159 2,343,113 (593,461) (2,962,064)
	(575,302) (618,951) (1,851) (309,166)
	(577,153) (928,117)
	28,746 2,457 (100,000) - - - 1,300,000 - - 66,025 22,034
	(5,229) 1,324,491
	2,950,000 139,017 (350,372) - (973,025) - - (50,000) - 1,090,000 1,343 (1,066,105)
	1,627,946 112,912
	1,045,564 509,286 66,009 (443,277) 435,302 -
	1,546,875 66,009

The statement of cash flows should be read in conjunction with the notes to the financial statements.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

1 Reporting entity

Safety Medical Products Limited (the "Company") is a company domiciled in Australia. The financial statements of the Company for the financial year ended 30 June 2011 relates to Safety Medical Products Limited as a single entity following the disposal of all subsidiaries during the year (refer Notes 22 and 25). The financial statements for the comparative period are consolidated financial statements and comprise the Company and its subsidiaries (together referred to as the "consolidated entity"). The Company is involved in the research and development of medical syringe technology as well as mineral exploration.

2 Basis of preparation

(a) Limitation on preparation – Comparative Information

On 15 April 2010 the Directors of Safety Medical Products Limited (“the Company” or “SafetyMed”) at that time appointed McGrath Nicol as Administrators of the Company and its subsidiary undertakings, Baratex Pty Ltd and Pureste Pty Ltd. The current Company Directors were appointed on 6 October 2010 and were not Directors prior to that date, nor were they parties involved with the Group.

On 13 August 2010 the Company entered into a Deed of Company Arrangement and Reconstruction Deed which provides for existing debts as at the time of appointment of the Administrators to be extinguished and facilitates the Company being recapitalised and reinstated to quotation on the Australian Securities Exchange (ASX).

At a creditors’ meeting on 23 July 2010 the creditors voted to place the Company’s subsidiaries Baratex Pty Ltd and Pureste Pty Ltd into liquidation.

The operations of the Company were controlled by the Administrator up until the date of effectuation of the DOCA being 24 November 2010. Every reasonable effort has been made by the Directors to obtain all financial information for the period from 1 July 2010 to 25 November 2010 of the Company and its controlled entities. However, there may be information that the Directors have not been able to obtain, the impact of which may or may not be material on the financial statements.

(b) 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 IFRSs and interpretations adopted by the International Accounting Standards Board.

The financial report was authorised for issue by the directors on 30[th] September 2011.

(c) Basis of measurement

The financial report is prepared on the historical cost basis.

(d) 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.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

2 Basis of preparation (continued)

(e) Critical accounting judgements, estimates and assumptions

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:

Environmental Issues

Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the directors understanding thereof. At the current stage of the company’s development and its current environmental impact the directors believe such treatment is reasonable and appropriate.

Taxation

Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the best estimates of directors. These estimates take into account both the financial performance and position of the Group as they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents that directors’ best estimate, pending an assessment by the Australian Taxation Office.

Deconsolidation

During the year the Company placed the subsidiaries, Baratex and Pureste into liquidation. At the date the liquidator was appointed, being 23 July 2010, the Company handed control of the subsidiaries to the liquidator. The Directors adjudged this to be the most appropriate date to apply deconsolidation. Refer also Note 25 – Discontinued Operations.

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, less any impairment losses.

(ii) Transactions eliminated on consolidation

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

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

3 Significant accounting policies (continued)

(b) 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. Non-monetary 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

Recognition and Initial Measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention.

Financial instruments are initially measured at fair value plus transaction costs where the instrument is not classified as at fair value through profit and loss. Transactions costs related to instruments classified as at fair value through profit and loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits, associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

Classification and subsequent measurement

Finance instruments are subsequently measured at fair value, amortised cost using the effective interest rate method, or cost.

Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method.

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss.

The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of Accounting Standards specifically applicable to financial instruments.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

3 Significant accounting policies (continued)

(c) Financial Instruments (Continued)

(i) Financial assets at fair value through profit or loss

Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a Group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

(ii) Loans and receivables

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

Loans and receivables are included in current assets, where they are expected to mature within 12 months after the end of the reporting period.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost.

Held-to-maturity investments are included in non-current assets where they are expected to mature within 12 months after the end of the reporting period. All other investments are classified as current assets.

(iv) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

They are subsequently measured at fair value with changes in such fair value (ie gains or losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss.

Available-for-sale financial assets are included in non-current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as current assets.

(v) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

Derecognition

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

3 Significant accounting policies (continued)

(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.

(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.

(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.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

3 Significant accounting policies (continued)

(f) Leases

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 are not recognised on the Group’s balance sheet. 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.

(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.

(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-for-sale 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 are 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.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

3 Significant accounting policies (continued)

(h) Impairment (continued)

(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 m), 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. 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.

(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

Prior to being placed in Administration, the Company operated an employee and officer share scheme which allowed Company employees to acquire shares of the Company. The fair value of options granted was 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 was 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 was 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.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

3 Significant accounting policies (continued)

(j) Provisions

A provision is recognised in the statement of financial position 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.

(k) Revenue and other income

(i) Goods sold and services rendered

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. When the inflow of consideration is deferred, it is treated as the provision of financing and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue.

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 and the cessation of all involvement in those goods. Interest revenue, refer note 3(l)

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.

(l) Finance income and expense

Finance income comprises interest revenue on funds invested. Interest revenue 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. For the purposes of the statement of cash flows, interest earned is recognised in investing activities and interest paid is recognised in operating activities.

(m) 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, nor 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.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

3 Significant accounting policies (continued)

(n) 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.

(o) 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.

(p)

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.

(q) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are reported within short-term borrowings in current liabilities in the statement of financial position.

(r) Exploration and Development Expenditure

Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable area of interest. These costs are only capitalised to the extent that they are expected to be recovered through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area of interest.

Costs of site restoration are provided over the life of the project from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with local laws and regulations and clauses of the permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

During the year, SafetyMed paid consideration to acquire tenements. Subsequent to year end, an extension of 13 months was granted for the consideration. As such, it has been classified as deferred acquisition cost.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

3 Significant accounting policies (continued)

(s) Comparatives

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Where the Group has retrospectively applied an accounting policy, made a retrospective restatement of items in the financial statements or reclassified items in its financial statements, an additional statement of financial position as at the beginning of the earliest comparative period will be disclosed.

Refer also, Note 2(a) Limitation on preparation.

(t) Issued 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.

(u) New standard and interpretations

In the current year, the Company have adopted all of the new and revised Standards and Interpretations issued by the Accounting Standards Board (“AASB”) that are relevant to their operations and effective for the current annual reporting period. The adoption of these new and revised Standards and Interpretations have not resulted in any significant change to the Company’s accounting policies.

The following new and revised Standards and Interpretations have been adopted in the current period and have affected the amounts reported in these financial statements. Details of other Standards and Interpretations adopted in these financial statements but that have had no effect on the amounts reported are set out below.

AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013).

This Standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. The Group has not yet determined any potential impact on the financial statements.

The key changes made to accounting requirements include:

simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
simplifying the requirements for embedded derivatives;
removing the tainting rules associated with held-to-maturity assets;
removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;
allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument;
requiring financial assets to be reclassified where there is a change in an entity’s business model as they are initially classified based on: (a) the objective of the entity’s business model for managing the financial assets; and (b) the characteristics of the contractual cash flows; and
requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity’s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052] (applicable for annual reporting periods commencing on or after 1 July 2013).

AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements for those entities preparing general purpose financial statements:

Tier 1: Australian Accounting Standards; and
Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.

Tier 2 of the framework comprises the recognition, measurement and presentation requirements of Tier 1, but contains significantly fewer disclosure requirements.

The following entities are required to apply Tier 1 reporting requirements (ie full IFRS):

for-profit private sector entities that have public accountability; and
the Australian Government and state, territory and local governments.

Since the Group is a for-profit private sector entity that has public accountability, it does not qualify for the reduced disclosure requirements for Tier 2 entities.

AASB 2010–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as well as adding specific “RDR” disclosures.

AASB 2009–12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard makes a number of editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB. The Standard also amends AASB 8 to require entities to exercise judgment in assessing whether a government and entities known to be under the control of that government are considered a single customer for the purposes of certain operating segment disclosures. The amendments are not expected to impact the Group.

AASB 2010–4: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101 & AASB 134 and Interpretation 13] (applicable for annual reporting periods commencing on or after 1 January 2011).

This Standard details numerous non-urgent but necessary changes to Accounting Standards arising from the IASB’s annual improvements project. Key changes include:

clarifying the application of AASB 108 prior to an entity’s first Australian-Accounting-Standards financial statements;
adding an explicit statement to AASB 7 that qualitative disclosures should be made in the context of the quantitative disclosures to better enable users to evaluate an entity’s exposure to risks arising from financial instruments;
amending AASB 101 to the effect that disaggregation of changes in each component of equity arising from transactions recognised in other comprehensive income is required to be presented, but is permitted to be presented in the statement of changes in equity or in the notes;
adding a number of examples to the list of events or transactions that require disclosure under AASB 134; and
making sundry editorial amendments to various Standards and Interpretations.

This Standard is not expected to impact the Group.

–

AASB 2010–5: Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042] (applicable for annual reporting periods beginning on or after 1 January 2011).

This Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB. However, these editorial amendments have no major impact on the requirements of the respective amended pronouncements.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

AASB 2010–6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7] (applicable for annual reporting periods beginning on or after 1 July 2011).

This Standard adds and amends disclosure requirements about transfers of financial assets, especially those in respect of the nature of the financial assets involved and the risks associated with them. Accordingly, this Standard makes amendments to AASB 1: First-time Adoption of Australian Accounting Standards, and AASB 7: Financial Instruments: Disclosures, establishing additional disclosure requirements in relation to transfers of financial assets.

This Standard is not expected to impact the Group.

AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applies to periods beginning on or after 1 January 2013).

This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance of AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.

As noted above, the Group has not yet determined any potential impact on the financial statements from adopting AASB 9.

AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to periods beginning on or after 1 January 2012).
This Standard makes amendments to AASB 112: Income Taxes.

The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model under AASB 140: Investment Property.

Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

The amendments brought in by this Standard also incorporate Interpretation 121 into AASB 112.

The amendments are not expected to impact the Group.

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.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

5 Segment reporting

Identification of reportable segments

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.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

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 income-earning 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.

Types of products and services by segment

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

Exploration and Evaluation and assessment of mineral mining tenements in the Three Evaluation Rivers area of western Australia.

Discontinued operations:

Bagot Press Pty Ltd (Bagot)

A manufacturer and supplier of specialist printing and general consumables to the pharmaceutical industry. Bagot sold its business and changed its name to ‘ACN 100 073 121 Pty Ltd’ in July 2009. ACN 100 073 121 Pty Ltd was deregistered in October 2010.

Baratex Pty Ltd The provision of specialist industrial control and automation systems, (ProControl) machine vision, robotics and turn-key solutions for large and small industrial businesses. Baratex was place into liquidation in July 2010.

Geographical segments

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

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

5 Segment reporting (continued)

			SafetyMed Exploration and Evaluation Eliminations	SafetyMed Exploration and Evaluation Eliminations	Consolidated 2011 $ 2010 $ 15,766 55,735 - - 15,766 55,735 458,259 (833,221) - - 458,259 (833,221) 26,895 (145,757) (132,142) (2,028,409) 1,014,554 - 1,367,566 (3,007,387) - (1,480,955) - - - (1,480,955) 1,367,566 (4,488,342) Consolidated
Business segments			2011 $ 2010 $ 2011 $ 2010 $ 2011 $ 2010 $
External revenues 15,766 55,735 - - - - Inter-segment revenues - - - - - - Total segment revenue 15,766 55,735 - - - - Segment result 458,259 (630,965) - - - (202,256) Unallocated expenses - - - - - - Results from operating activities 458,259 (630,965) - - - (202,256) Net financing revenue /(costs) 26,895 (145,757) - - - - Impairment Loss/Assets written off (1,310,303) (2,088,055) - - 1,178,161 59,646 Gain on deconsolidation of subsidiaries - - - 1,014,554 - Profit/(Loss) for the year from continuing operations (825,149) (2,864,777) - - 2,192,715 (142,610) Loss for the period from discontinued operations before tax (Note 25) Income tax benefit/(expense) from discontinued operation (Note 25) Loss for the period from discontinued operations after tax (Note 25) Profit/(Loss) for the year SafetyMed Exploration and Evaluation ProControl Pureste Eliminations			15,766 55,735 - - - - - - - - - -
			15,766 55,735 - - - -
			458,259 (630,965) - - - (202,256) - - - - - -
			458,259 (630,965) - - - (202,256) 26,895 (145,757) - - - - (1,310,303) (2,088,055) - - 1,178,161 59,646 - - - 1,014,554 -
			(825,149) (2,864,777) - - 2,192,715 (142,610)
Business segments	2011 $ 2010 $	2011 $ 2010 $ 2011 $		2010 $ 2011 $ 2010 $ 2011 $ 2010 $	2011 $ 2010 $
Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation	1,546,875 1,905,997 41,013 -	280,000 - - - - -		163,859 - 79,868 - (1,317,105) 1,826,875 832,619 - - - - - 41,013 -
	1,587,888 1,905,997	280,000 - -		163,859 - 79,868 - (1,317,105) 1,867,888 832,619
	36,888 2,729,477 - -	- - - - - -		936,204 - 2,920,609 - (1,317,105) 36,888 5,269,185 - - - - - - -
	36,888 2,729,477	- - -		936,204 - 2,920,609 - (1,317,105) 36,888 5,269,185
	- -	280,000 - -		- - -
	- 101,579	- - -

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

Note 6 Revenue Sales from continuing operation Sales from discontinued operations 25 Total revenue 7 Other income Gain on settlement of creditors 30 Total other income 8 Financial income and expense Continuing operations Interest revenue on bank deposits Financial income Interest expense on financial liabilities measured at amortised cost Financial expense from continuing operations Discontinued operations Interest revenue on bank deposits Financial income Interest expense on financial liabilities measured at amortised cost Financial expense from discontinued operations 25 9 Auditors’ remuneration Bentleys (SA) Partnership Audit and review of the financial reports Bentleys Audit & Corporate (WA) Pty Ltd Audit and review of the financial reports Taxation services Preparation of investigating accountants report	2011 $ 2010 $
	15,766 55,735 - 1,172,908
	15,766 1,228,643
	820,135 -
	820,135 -
	28,746 -
	28,746 - (1,851) (145,757)
	26,895 (145,757)
	- 79
	- 79 - (161,030)
	- (160,951)
	19,690 23,205 9,090 - 3,800 - 7,500
	40,080 23,205

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

Note 10 Income tax expense (a) Income tax expense Current tax Deferred tax Deferred income tax expense included in income tax expense comprises: - (Increase) in deferred tax assets - Increase in deferred tax liabilities (b) Reconciliation of income tax expense to prima facie tax payable The prima facie tax payable on profit from ordinary activities before income tax is reconciled to the income tax expense as follows: Prima facie tax on operating profit at 30% Add / (Less) Tax effect of: Entertainment Fines & penalties Impairment expense Other adjustments Deferred tax asset not brought to account Income tax attributable to operating loss The applicable weighted average effective tax rates are as follows: Balance of franking account at year end (c) Deferred tax assets Tax Losses Provisions Other Set-off deferred tax liabilities 10(d) Net deferred tax assets Less deferred tax assets not recognised Net tax assets	2011 $ 2010 $ - - - -
	- -
	97,714 - (97,714) -
	- -
	105,904 (1,346,503) 151 393 81 380 (626,417) 702,272 24,539 - 495,743 643,458
	- -
	nil% nil% nil nil 2,327,786 1,661,655 8,632 522,974 - 16,724
	2,336,417 2,201,353 - -
	2,336,417 2,201,353 (2,336,417) (2,201,353)
	- -

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

10 Income tax expense (continued)

10	Income tax exense (continued)
	p			2011			2010
		Note		$			$
(d)	Deferred tax liabilities
Exploration expenditure						-	-
						-	-
Set-off deferred tax assets		10(c)				-	-
Net deferred tax liabilities						-	-
(e)	Tax losses
Unused tax losses for which no deferred tax asset has been recognised				6,983,357			5,538,850
Potential deferred tax assets attributable to tax losses and exploration expenditure				carried	forward have not
been brought to account at 30 June 2011 because the directors do not believe it				is appropriate to regard
realisation of the deferred tax assets as probable at this point in time. These benefits will only						be obtained if:
i.	the company derives future assessable income of a nature and of	an amount sufficient					to enable the
benefit from the deductions for the loss and exploration expenditure to be realised;
ii.	the company continues to comply with conditions for deductibility imposed by law; and
iii.	no changes in tax legislation adversely affect the company in realising the benefit from					the deductions
for the loss and exploration expenditure.
11	Earnings per share
	Reconciliation of earnings to profit or loss:
	Earnings used to calculated basis EPS
	Profit/(loss) attributable to equity holders			1,367,566			(3,781,263)
	Reconciliation of earnings to profit or loss from continuing
	operations:
	Earnings used to calculated basis EPS from continuing operations
	Profit/(loss) from continuing operations attributable to equity holders			353,012			(3,007,387)
	Reconciliation of earnings to profit or loss from discontinued
	operations:
	Profit/(loss) from discontinued operations			1,014,554			(1,480,955)
	Less Profit/(loss) attributable to non-controlling interest in respect to
	discontinued operations				-		(707,079)
	Earnings used to calculated basis EPS from discontinued operations			1,014,554			(773,876)
				No.			No.
	Weighted average number of shares
	Ordinary shares on issue at 1 July	19	16,455,466				76,300,477
	Effect of shares issued		181,730,030				1,130,498
	Weighted average number of ordinary shares at 30 June		198,185,496				77,430,975
	Effect of share options and convertible notes on issue				-		39,992,800
	Weighted average number of ordinary shares (diluted) at 30 June		198,185,496				117,423,775

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

Trade and other receivables *Current* Trade and other receivables Other	Note	2011 $ 2010 $
		36,018 105,128 4,995 1,179
		41,013 106,307

12 Trade and other receivables

13 Inventories

Work in progress Finished goods	- 2,400 - 51,509
	- 53,909

On 6 October 2010 the remaining inventories were auctioned as part of the Deed of Company Arrangement. The inventories at 30 June 2010 are valued at their actual sales value and all unsold stock has been fully impaired.

14 Non current assets held for sale and discontinued operations

Bagot Press operations discontinued on 1 July 2009: Baratex Pty Ltd planned liquidated: -Property, plant and equipment 25 Non current assets held for sale and discontinued operations Deferred acquisition costs Deferred acquisitions costs	- 17,063
	- 17,063
	280,000 -
	280,000 -

15 Deferred acquisition costs

During the year, SafetyMed paid consideration to Brutus Constructions Pty Ltd (“Vendor”) for the Option to acquire Three Rivers west and north tenements. On 12[th] April 2011, $100,000 cash was paid to the Vendor in addition to 10,000,000 ordinary shares at $0.018. Subsequent to year end, an extension of 13 months was granted for the consideration of $50,000.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

Note 16 Property, plant and equipment Cost Balance at 1 July 2009 Disposals Transfer to non-current assets held for sale Balance at 30 June 2010 Balance at 1 July 2010 Disposals Balance at 30 June 2011 Depreciation and impairment losses Balance at 1 July 2009 Depreciation expense Reversal of accumulated depreciation on disposals Impairment expense Transfer to non-current Assets Held for Sale Balance at 30 June 2010 Balance at 1 July 2010 Depreciation expense Reversal of accumulated depreciation on disposals Balance at 30 June 2011 Total carrying amounts At 1 July 2009 At 30 June 2010 At 1 July 2010 At 30 June 2011 17 Trade and other payables Trade payables and accrued expenses	Plant and equipment Fixtures and fittings Total $ $ $	Plant and equipment Fixtures and fittings Total $ $ $
	1,533,369 24,859 1,558,228 (53,272) - (53,272) (32,031) - (32,031)
	1,448,066 24,859 1,472,925
	1,448,066 24,859 1,472,925 (1,448,066) (24,859) (1,472,925)
	- - -
	330,876 4,623 335,499 104,141 10,154 114,295 (24,366) - (24,366) 987,487 8,953 996,440 (14,968) - (14,968)
	1,383,170 23,730 1,406,900
	1,383,170 23,730 1,406,900 - - - (1,383,170) (23,730) (1,406,900)
	- - -
	1,202,493 20,236 1,222,729
	64,896 1,129 66,025
	64,896 1,129 66,025
		- - -
	Note	2011 $ 2010 $
		36,888 1,061,241
		36,888 1,061,241

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

18 Loan and borrowings Current Convertible Notes (a) Bank overdrafts Loans – National Australia Bank Ltd Documentary letters of credit Hire purchase agreements Total loans and borrowings (a) Convertible Notes Carrying amount of liability at 1 July (b) Conversion of convertible notes (b) Net proceeds Repayments Interest reversed as part of DOCA (c) Net accrued interest Carrying amount of liability at 30 June	2011 $ 2010 $ - 700,000 - 523,306 - 1,027,787 - 1,115,203 - 159,644
	- 3,525,940
	700,000 794,330 (700,000) -
	- 794,330 - (50,000) - (74,042) - 29,712
	- 700,000

(b) Former Directors, Mr John Riemelmoser and Mr John Darley held 3,000 and 2,000 notes respectively from 4 June 2008 to 12 August 2010, at such time they were issued 1,200,000 and 800,000 ordinary shares respectively. On 12 August 2010, as part of the DOCA the remaining convertible note holders were issued 2,800,000 shares, at a rate of 400 shares for every one note, in accordance with the convertible notes issue terms.
(c) Interest accrued daily and was based on the 90 days bank bill swap reference rate plus a margin of 500 basis points per annum. At 30 June 2010 that rate was 8.3% (3.3% plus 500 basis points), interest of $29,712 was accrued for part of the prior year. Under the Deed of Company Arrangement (“DOCA”) the directors were not eligible for the interest therefore the accrual at was reversed to $nil during the prior period.

	reversed to $nil during the prior period.
		2011	2010
		$	$
19	Share capital
	Issued and paid-up capital
	396,455,466 (2010: 79,478,245) ordinary shares fully paid, net of capital raising cost	2,779,628	10,954,673
	Ordinary shares	No.	No.
	Balance at the beginning of year	79,478,245	76,300,477
	Shares transactions in year ended 30 June 2011:
	12 Aug 2010: Conversion of convertible note	2,800,000
	8 Nov 2010: Consolidation of securities from general meeting	(65,822,779)
	23 Nov 2010: shares issued at $0.005 as part of recapitalisation of the company	150,000,000
	23 Dec 2010: shares issued at $0.01 as part of the Prospectus raising	173,250,000
	18 Jan 2011: shares issued at $0.01 as part of the Prospectus raising	46,750,000
	12 Apr 2011: shares issued at $0.018 as option to acquire Three Rivers tenement	10,000,000
	Shares transaction in year ended 30 June 2010:
	11 Dec 2009 –shares being issued at $0.045 as part of the Share Purchase Plan		3,177,768
	Balance at end of year	396,455,466	79,478,245

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

19 Share capital (continued)

At the general meeting held on 8 November 2010, the members voted in favour of a reduction of capital whereby the capital of the company was reduced by applying a proportion of accumulated losses against share capital which is considered permanently lost. The amount applied was $11,654,673.

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. Share have no par value.

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.

Share Options Listed attaching share options SFPOA $0.25 expiring 31 Jan 2010 Listed share options SFPOA $1 expiring 31 Dec 2010 Unlisted employee share options $0.50 expiring 31 Dec 2010	2011 No. 2010 No.
	- 1,115,000 - 35,764,300 - 313,500
	- 37,192,800

Capital Management

On 15 April 2010 the Directors of Safety Medical Products Limited at that time appointed McGrath Nicol as Administrators of the Company and its subsidiary undertakings, Baratex Pty Ltd and Pureste Pty Ltd. On 13 August 2010 the Company entered into a Deed of Company Arrangement and Reconstruction Deed (“DOCA”) which provides for existing debts as at the time of appointment of the Administrators to be extinguished and facilitates the Company being recapitalised and reinstated to quotation on the Australian Securities Exchange (ASX).

At a creditors meeting on 23 July 2010 the creditors voted to place the Company’s subsidiaries Baratex Pty Ltd and Pureste Pty Ltd into liquidation.

Safety Medical Products’ working capital, being current assets less current liabilities, has increased from a deficit of ($4,502,591) in 2010 to a surplus of $1,551,000 in 2011, due to the aforementioned DOCA and recapitalisation of the Group. There are no externally imposed capital requirements.

20 Reserves

Equity compensation reserve

Historically, the option reserve records items recognised as expense on valuation of share options issued to directors, executives and advisory board members in connection with the capital raising during the prior years. On the expiry of the employee options the equity compensation reserve was write off against the accumulated losses of the Company.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

Salaries and wages accrued Super accrued Liability for annual leave $ $ $	2011 $ - - - - - - Liability for long service leave Other Payroll Liabilities $ $	2011 $	2010 $
		- - - - -	284,454 61,217 241,878 35,901 58,554
		-	682,004
			Total $
173,631 65,896 101,068 110,823 (4,679) (65,167)	121,414 121,381 (62,860) 120,497		583,390 98,614
284,454 61,217 35,901	58,554 241,878		682,004
284,454 61,217 35,901 (284,454) (61,217) (35,901) - - -	58,554 241,878 (58,554) (241,878) - -		682,004 (682,004) -
- - -	- -		-

(a) Movement in employee benefits

Controlled entities Particulars in relation to consolidated entities Parent entity Safety Medical Products Limited Controlled Entities Baratex Pty Ltd (in liquidation) ACN 100 073 121 (formerly Bagot Press Pty Ltd) Pureste Pty Ltd (in liquidation)	Ordinary Share Entity Interest 2011 % 2010 %
	0%(1) 100% 0%(2) 100% 0%(1) 50%

22 Controlled entities

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

22 Controlled entities (continued)

(1) At a creditors meeting on 23 July 2010 the creditors voted to place the Company’s subsidiaries Baratex Pty Ltd and Pureste Pty Ltd into liquidation. Whilst Safety Medical Products retained ownership of its equity holdings in Baratex and Pureste, control was determined to have been lost at the point Liquidators were engaged. Refer further details below.
(2) ACN 100 073 121 (formerly Bagot Press Pty Ltd) has remained dormant since the sale of its trade and assets on 1 July 2009. Refer further details below.

Baratex Pty Ltd, ACN 100 073 121 and Pureste Pty Ltd were all incorporated in Australia.

Pureste

The 50% interest in Pureste Pty Ltd was acquired on the company’s incorporation date, 9 October 2008. The company was placed into voluntary administration on 15 April 2010 and in July 2010 creditors voted to place the company into liquidation. A notice of Final Meeting Convened was lodged on 26 July 2011.

Baratex Pty Ltd

Baratex Pty Ltd, operating as ProControl Systems, was acquired on 9 February 2007. The company was placed into voluntary administration on 15 April 2010 and in July 2010 creditors voted to place the company into liquidation. A notice of Final Meeting Convened was lodged on 26 July 2011.

ACN 100 073 121

ACN 100 073 121 (formerly Bagot Press Pty Ltd) was acquired on 1 May 2007. On 1 July 2009 ACN 100 073 121’s trade, inventory, fixed assets and intangible assets were sold. ACN 100 073 121 Pty Ltd was deregistered in October 2010.

Note 23 Cash and cash equivalents Bank balances Term Deposit Bank overdrafts	2011 $ 2010 $
	546,875 589,315 1,000,000 - - (523,306)
	1,546,875 66,009

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

24 Cash flow information

24 Cash flow information
(a) Reconciliation of cash flows from operating activities Note Profit / (loss) for the year Non-cash flows in profit: Depreciation Settlement out of net DOCA proceeds Loss on disposal of available for sale financial assets Gain on settlement of creditors 30 Interest Income 8 Impairment Loss continued operations Assets written off Gain on deconsolidation of subsidiary Impairment Loss discontinued operations Operating profit before changes in working capital and provisions Change in assets and liabilities, net of the effects from disposal of businesses: (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables (Increase)/decrease in tax assets and deferred tax assets Increase/(decrease) in trade and other payables Increase/(decrease) in provisions for employee benefits Net cash from operating activities	2011 $ 2010 $ 1,367,566 (4,488,342) - 114,295 (35,105) - - 6,872 (820,135) - (28,746) (2,457) - 846,754 132,142 - (1,014,554) - - 219,190
	(398,832) (3,303,688) 5,754 880,893 (2,874) 1,064,952 - 76,549 (4,558) 432,305 (176,643) (79,128)
	(178,321) 2,375,571
	(577,153) (928,117)

(b) Non-cash Financing and Investing Activities

During the year the Company issued 10,000,000 fully paid ordinary shares as part of the consideration under the option agreement for to acquire tenements in the north of Western Australia.

On 12 August 2010, as part of the DOCA for the remaining convertible note holders were issued 2,800,000 shares, at a rate of 400 shares for every one note, in accordance with the convertible notes issue terms.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

25 Discontinued operations

Pureste

The 50% interest in Pureste Pty Ltd was acquired on the Company’s incorporation date, 9 October 2008. The company was placed into voluntary administration on 15 April 2010 and in July 2010 creditors voted to place the company into liquidation.

ACN 100 073 121

ACN 100 073 121 (formerly Bagot Press Pty Ltd) was acquired on 1 May 2007. On 1 July 2009 ACN 100 073 121’s trade, inventory, fixed assets and intangible assets were sold for $1,300,000. The company has been dormant since 1 July 2009.

Baratex

The results of Pureste, ACN 100 073 121 and Baratex have been disclosed as discontinued operations and the non-current assets being liquidated have been shown as current assets held for sale or discontinued operations in the 2010 financial year.

Note Revenue 6 Cost of sales Gross profit Other income Business development, marketing & intellectual property expenses Administrative expenses Results from operating activities Financial income 8 Financial expense 8 Net Financial expense Impairment Loss on goodwill Intragroup loan written off Impairment on planned liquidation Loss before tax Income tax (expense)/benefit Profit/(loss) from discontinued operations	2010 $
	1,172,908 (1,093,845)
	79,063 - (205,430) (881,140)
	(1,007,507) 79 (161,030)
	(160,951) (30,000) - (282,497)
	(1,480,955) -
	(1,480,955)

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

25 Discontinued operations (continued)

Discontinued operations (continued)
The major classes of assets and liabilities comprising the businesses classified as discontinued at 30 June 2010 are as follows: Book value of assets held for sale Property, plant and equipment Trade and other receivables Inventory Cash and cash equivalents Trade and other payables Loans and borrowings Employee benefits Amounts payable to Safety Medical Products Ltd Net (Liabilities)/Assets Held for Sale and Discontinued Operations Cash flow from discontinued operations Net cash from operating activities Net cash from investing activities Net cash from financing activities Net cash flow	2010 $ 17,063 97,196 48,154 88,004 (657,759) (1,638,509) (301,293) (1,265,843)
	(3,612,987)
	(15,048) 79 32,095
	17,126

Disposal of Pureste Pty Ltd and Baratex Pty Ltd

At a creditors’ meeting on 23 July 2010 the creditors voted to place the Company’s subsidiaries Baratex Pty Ltd and Pureste Pty Ltd into liquidation. The companies and their assets are now under the control of the liquidator and no longer under the control of Safety Medical Products Limited. Accordingly they no longer satisfy the criteria for consolidation into the consolidated entity from that date and have been treated as disposed at that date. There was no activity by the subsidiary companies between 1 July 2010 and the date of disposal.

Book value of assets disposed Current assets: Cash Trade and other receivables Other assets Inventory at 1 July 2010 Total Assets Current Liabilities Trade and other payables Loans and borrowings Employee benefits Total Liabilities Net assets/(deficiency)	Pureste Baratex $ $ - 81,314 33,950 63,246 - 17,063 45,754 2,400
	79,704 164,023 275,551 382,308 1,719,500 - 3,469 297,824
	1,998,520 680,132
	(1,918,816) (516,109)

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

25 Discontinued operations (continued)

Total Net Assets/(Deficiency) Disposed

Pureste Pty Ltd Baratex Pty Ltd Details of Disposal of Subsidiaries Total Net Assets/(Deficiency) Minority interest Net deficiency disposed, net of minority interest Gain on deconsolidation of subsidiaries Details of Cash Movement on Disposal Baratex - Cash at bank Purest – Bank overdraft Adjustment to cash as a result of liquidation of subsidiaries	(1,918,816) (516,109)
	(2,434,925)
	(2,434,925) 1,420,371
	1,014,554
	1,014,554
	81,314 (516,616)
	(435,302)

26 Dividends

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

27 Events subsequent to reporting date

The Option Agreement to acquire key tenements in the Three Rivers Area of north Western Australia from Brutus Constructions Pty Ltd was exercisable in writing on or before 31 July 2011. The option was extended for a further 13 months for the consideration of $50,000.

28 Financial risk management

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 not currently exposed to foreign currency risk. During the prior period, up until the appointment of administrators, the consolidated entity was exposed to foreign currency risk on sales and purchases denominated in a currency other than the AUD. The currencies that gave rise to this risk were primarily Euro Dollars. Given that the consolidated entity was developing the business activities that gave rise to these risks, the risks involved were minimal and as such no hedging arrangements were currently in place.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

(b) Credit risk exposures

The consolidated entity is not currently exposed to credit risk. During the prior period, up until the appointment of administrators, management had a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations were performed on all customers requiring credit over a certain amount. The consolidated entity did 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.

Credit risk related to balances with banks and other financial institutions is managed by the Board in accordance with approved board policy. Such policy requires that surplus funds are only invested with counterparties with a Standard & Poor’s rating of at least AA-. The following table provides information regarding the credit risk relating to cash and money market securities based on Standard & Poor’s counterparty credit ratings.

Note Cash and cash equivalents: – AA rated 23	Consolidated Group 2011 2010 $ $ 1,546,875 589,315
	1,546,875 589,315

(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 consolidated financial assets and liabilities as at the reporting date are as follows:

Financial assets Cash assets Trade and Other Receivables Term deposits Total financial assets Financial liabilities Trade and Other Payables Loans and borrowings Total financial liabilities	2011 2010 Carrying amount $ Net fair value $ Carrying amount $ Net fair value $
	546,875 546,875 589,315 589,315 41,013 41,013 106,307 106,307 1,000,000 1,000,000 - -
	1,587,888 1,587,888 695,622 695,622
	36,888 36,888 1,061,241 1,061,241 - - 3,525,940 3,525,940
	36,888 36,888 4,587,181 4,587,181

(d) Interest rate risk

30 June 2011

Cash Assets are exposed to fluctuations in interest receivable as the terms stipulate that interest accrues daily. At 30 June 2011 that rate was 4.75%. If this was to increase by 100 basis points the effect on net profit and equity would approximately increase by: $5,469. If this was to decrease by 100 basis points the effect on net profit and equity would approximately decrease by $5,469.

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:

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

28 Financial risk management (continued)

Note Effective interest rate 30 June 2011 Financial assets Cash assets 23 4.75% Term deposit 6.0% Trade and other Receivables 12 - Financial liabilities Trade and other payables 17 - 30 June 2010 Financial assets Cash assets 23 5% Trade and other Receivables 12 - Financial liabilities Trade and other payables 17 - Loans and borrowings 18 8.2%	Floating interest rate $ 1 year or less $	1 to 5 years $ More than 5 years $ Non- Interest Bearing $ Total $
	546,875 - - 1,000,000 - -	- - - 546,875 - - - 1,000,000 - - 41,013 41,013
	546,875 1,000,000	- - 41,013 1,587,888
	- -	- - 36,888 36,888
	- -	- - 36,888 36,888
	589,315 - - -	- - - 589,315 - - 106,307 106,307
	589,315 -	- - 106,307 695,622
	- - - 3,525,940	- - 1,061,241 1,061,241 - - - 3,525,940
	- 3,525,940	- - 1,061,241 4,587,181

(e) Liquidity risk

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:

preparing forward-looking cash flow analysis in relation to its operational, investing and financing activities; and
only investing surplus cash with major financial institutions;

The Board will assess the requirements of managing liquidity risk periodically and make amendments to the risk management mechanisms as are appropriate for the Company’s operations.

29 Key management personnel and Related parties

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

Non-executive directors

Mr Peter Christie (Chairman) from 6 October 2010

Mr Simon Lill (Director) from 6 October 2010

Mr Stephen Hewitt-Dutton (Director and Company Secretary) from 6 October 2010

Dr Joseph Nicholas until 6 October 2010

Executive directors

Mr John Darley (Chairman) until 6 October 2010

Mr John Riemelmoser (Managing Director and CEO) until 6 October 2010

Executives

Mrs Victoria Allinson (Company Secretary) from 30 January 2009 until 24 October 2010

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

29 Key management personnel and Related parties (continued)

Note Key management personnel compensation The key management personnel compensation are as follows: Short-term employee benefits Post-employment benefits Discontinued operations Short-term employee benefits Post-employment benefits	2011 $ 2010 $
	32,500 (54,611) - 42,004
	- (12,607)
	- 361,558 - 36,243
	- 397,801

No compensation was paid in respect to share-based payments, other long-term benefit, or termination benefits

At the 30 June 2011 executive remuneration payable amounted to:

Mr Simon Lill $10,000 (2010: $nil)
Mr Stephen Hewitt-Dutton $10,000 (2010: $nil)
Mr Peter Christie $12,500 (2010: $nil)
Mr J Darley $nil (2010: $20,500);
Mr J Riemelmoser $nil (2010: $13,713);
Dr J Nicholas $nil (2010: $18,000):
Mrs V Allinson $nil (2010: 22,817);

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 in Section 4.

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:

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

29 Key management personnel and Related parties (continued)

29 Key management personnel and Related parties (continued)
Key management personnel Transaction Discontinued operations Mr John Darley S.O.S. (Speeding Over Sticking) Pty Ltd (“SOS”) - ProControl sales –potential bad debt	2011 $ 2010 $
	- - (14,300)

Directors’ loans payable

At 30 June 2011, the following loans in the form of convertible notes were payable to directors of the company:

Note Mr J Darley – 2,000 convertible notes(1) Mr J Riemelmoser – 3,000 convertible notes(1) Directors loans	2011 $ 2010 $
	- 200,000 - 300,000
	- 500,000

(1) On 12 August 2010, as part of the DOCA the remaining convertible note holders were issued 2,800,000 shares, at a rate of 400 shares for every one note, in accordance with the convertible notes issue terms.

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:

parties is as follows:
			Received on
	Held at	Granted as	exercise of	Other net	Held at
	1 July 2010	remuneration	options	changes	30 June 2011
Directors
Mr Simon Lill (1)	-	-	-	3,000,000	3,000,000
Mr Stephen Hewitt-Dutton (1)	-	-	-	2,000,000	2,000,000
Mr Peter Christie (1)	-	-	-	5,500,000	5,500,000
Mr John Darley and related parties	1,004,479	-	-	800,000	1,804,479
Mr John Riemelmoser and related parties	11,135,233	-	-	1,200,000	12,335,233
Dr Joseph Nicholas	671,000	-	-	17,864	688,864
Executives
Mrs V Allinson	-	-	-	-	-
Mr Robert Doley and related parties	2,500,000	-	-	(2,500,000)	-

(1) Issue of ordinary shares under the Prospectus dated 2 November 2010 as approved by members at the general meeting held 8 November 2010.

Safety Medical Products Limited Notes to the consolidated financial statements 30 June 2011 Annual Financial Report

29 Key management personnel and Related parties (continued)

29 Key management personnel and Related parties (continued)	29 Key management personnel and Related parties (continued)
Held at 1 July 2009 Granted as remuneration Received on exercise of options Other net changes		Held at 30 June 2010
Directors Mr Simon Lill - - Mr Stephen Hewitt-Dutton - - Mr Peter Christie - - Mr John Darley and related parties 671,146 - Mr John Riemelmoser and related parties 10,801,900 - Dr Joseph Nicholas 671,000 - Executives Mrs V Allinson until 24 October 2010 - - Mr Robert Doley and related parties 2,500,000 - Mr Trevor Sharpe - -	- - - - - - - 333,333 - 333,333 - - - - - - - -	- - - 1,004,479 11,135,233 671,000 - 2,500,000 -
30 Deed of Company Arrangement Assets utilised by administrator Liabilities extinguished by DOCA Net liabilities extinguished by DOCA Amounts paid in relation to DOCA Gain on settlement of creditors under DOCA 31 Personnel expenses Note Wages and salaries Other associated personnel expenses Contributions to defined contribution superannuation funds Increase in liability for annual leave Increase in liability for long service leave Personnel expenses from continuing operations Personnel expenses from discontinued operations	2011 $ 32,500 - - - -	2011 $ 10,379 (1,838,539)
		(1,828,160) 973,025
		820,135
		2010 $ 139,578 23,500 54,385 (64,788) 4,074
	32,500	156,749
	-	765,653

32 Contingent Liabilities

There are no contingent liabilities as at the date of this report.

Safety Medical Products Limited 30 June 2011 Annual Financial Report

Directors Declaration

The directors of Safety Medical Products Limited (the Company) are declare that:

1) the financial statements and notes thereto are in accordance with the Corporations Act 2001, including:
a) giving a true and fair view of the financial position of the Company and the consolidated entity as at 30 June 2011 and of their performance, as represented by the results of their operations and cash flows, for the financial year ended on that date; and
b) complying with Accounting Standards in Australia; and
2) the financial report and notes thereto also complies with International Financial Reporting Standards as disclosed in note 2(b);
3) c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The Chief Executive Officer and Chief Financial Officer have each declared that:

1) the financial records of the company for the financial year have been properly maintained in accordance with s286 of the Corporations Act 2001;
2) the financial statement and notes for the financial year comply with Accounting Standards; and
3) the financial statement and notes for the year give a true and fair view;

Dated at Perth this 30[th] day of September 2011

This declaration is signed in accordance with a resolution of the directors pursuant to s295(5) of the Corporations Act 2001.

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Simon Lill Director

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We have audited the accompanying financial report of Safety Medical Products Limited (“the Company”) and Controlled Entities (“the Consolidated Entity”), which comprises the consolidated statement of financial position as at 30 June 2011, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the Company and the Consolidated Entity, comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

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The directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standards AASB 101: Presentation of Financial Statements , that the financial statements comply with International Financial Reporting Standards .

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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 judgment, 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 qualified audit opinion.

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In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001 .

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As noted in Note 2(a) to the financial statements, on 13 August 2010 the Company appointed an Administrator. The Administrator’s appointment was to Safety Medical Products Limited and the subsidiaries at that time. The current Directors were appointed on 6 October 2010 and were not Directors prior to that date, nor were they parties involved with the Consolidated Entity.

Every effort has been made by the Directors to ascertain the true position of the Safety Medical Products Limited (Subject to Deed of Company Arrangement) and its Controlled Entity as at 30 June 2010. However, there may be information that the Directors have not been able to obtain, the impact of which may or may not have been material on the accounts as at that date.

As a consequence of the above matters, in the annual report of Safety Medical Products Limited, as at 30 June 2010, Bentleys offered a disclaimer of opinion. Based upon these circumstances, we are therefore unable to obtain sufficient appropriate audit evidence regarding the comparative information relating to the 30 June 2011 financial statements and consequently, we were unable to determine whether any adjustments to these amounts were necessary.

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In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph:

a. The financial report of Safety Medical Products Limited is in accordance with the Corporations Act 2001 , including:
i. giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001 ;
b. The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

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We have audited the Remuneration Report included in directors’ report of the year ended 30 June 2011. 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.

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In our opinion, the Remuneration Report of Safety Medical Products Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001 .

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BENTLEYS Chartered Accountants

RICHARD JOUGHIN CA Director

DATED at PERTH this 30[th] day of September 2011

To The Board of Directors

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This declaration is made in connection with our audit of the financial report of Safety Medical Products Limited and Controlled Entities for the year ended 30 June 2011 and in accordance with the provisions of the Corporations Act 2001 .

We declare that, to the best of our knowledge and belief, there have been:

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no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;

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no contraventions of the Code of Professional Conduct of the Institute of Chartered Accountants in Australia in relation to the audit.

Yours faithfully

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BENTLEYS Chartered Accountants

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RICHARD JOUGHIN CA Director

DATED at PERTH this 30[th] day of September 2011

Safety Medical Products Limited 30 June 2011 Annual Financial Report ASX Additional Information

Shareholder Information

Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below. The information is as at 23 September 2011.

Shareholdings as at 23 September 2011

Substantial shareholders

There are no substantial shareholders.

Distribution of security holders

Category	Number of Holders
1 – 1,000	362
1,001 – 5,000	553
5,001 – 10,000	198
10,001 – 100,000	233
100,001 and over	242
	1,588

Unmarketable parcels

The number of shareholders holding less than a marketable parcel is 1,298. There is only one class of share and all ordinary shareholders have equal voting rights.

On-market buyback

There is no current on-market buy-back

Securities subject to escrow

The Company has no securities that are subject to escrow.

Safety Medical Products Limited 30 June 2011 Annual Financial Report ASX Additional Information

Twenty largest shareholders – Ordinary Shares

Twenty largest shareholders – Ordinary Shares
	Number of	Percentage
	ordinary	of capital
Name	shares held	held
LIVALE PTY LTD	17,600,000	4.44
BANSKIN PTY LTD	17,000,000	4.29
MR PAUL GREGORY BROWN & MRS JESSICA ORIWIA BROWN <BROWN SUPER FUND
A/C>	12,000,000	3.03
FOSTER WEST SECURITIES PTY LTD	10,000,000	2.52
MILWAL PTY LTD	10,000,000	2.52
CODE CAPITAL PTY LTD	10,000,000	2.52
BRUTUS CONSTRUCTIONS PTY LTD	9,000,000	2.27
IML HOLDINGS PTY LTD	8,000,000	2.02
PRAHA NOMINEES PTY LTD	7,000,000	1.77
HOLDREY PTY LTD	6,000,000	1.51
MR SIMON MONTGOMERY	5,000,000	1.26
MR DUNCAN GRAHAM MACKINTOSH	5,000,000	1.26
MRS JESSICA ORIWIA BROWN	5,000,000	1.26
TRIDENT CAPITAL PTY LTD	5,000,000	1.26
MAGAURITE PTY LTD	5,000,000	1.26
MR HOWARD DAMIAN HOLMES	5,000,000	1.26
GREENWEST PTY LTD	5,000,000	1.26
MR SIMON EDWARD WRIGHT	4,650,211	1.17
CAPEWIND NOMINEES PTY LTD	4,500,000	1.14
GOLDEN WELL (WA) PTY LTD	4,471,112	1.13
TOTAL	155,221,323	39.15

Offices and officers

Company Secretary

Mr Stephen Hewitt-Dutton

Principal registered office

Safety Medical Products Limited

c/o Trident Management Services Pty Ltd

Level 24 44 ST George’s Terrace Perth, WA 6000

Principal place of business

Safety Medical Products Limited Level 24 44 ST George’s Terrace Perth, WA 6000

Location of Share Registry

Registries Limited Level 7, 207 Kent Street Sydney NSW 2000 Telephone: (02) 9290 9600

Stock Exchange

The Company is listed on the Australian Securities Exchange. The Home Exchange is Adelaide.

Other Information

Safety Medical Products Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.

AI assistant

MACH7 TECHNOLOGIES LIMITED — Annual Report 2011

65285_rns_2011-09-29_166cf70c-9d09-4667-9c0a-f0277c5d58ee.pdf

1. Directors

Name and qualifications Experience and special responsibilities

Company Secretary

Directorships of other listed companies

2. Directors’ meetings

3. Corporate Governance Statement

Principle 1 – Lay solid foundations for management and oversight

Principle 2 – Structure the Board to add value

3. Corporate Governance Statement (continued)

Principle 4 – Safeguard integrity in financial reporting

Principle 5 – Make timely and balanced disclosure

Principle 6 – Respect the rights of Shareholders

Principle 8 – Remunerate fairly and responsibly

Other information

4. Remuneration report – audited

4.1 Principles of compensation

Details of Key Management Personnel

Details of Former Key Management Personnel

(contained within remuneration tables)

Remuneration Policy

4. Remuneration report – audited

Details of Remuneration

Key management personnel and other executives

Loans to Directors and Executives

4.2 Analysis of bonuses included in remuneration

4.3 Options over equity instruments granted as compensation

Directors’ report (Subject to Deed of Company Arrangement)

4. Remuneration report – audited (continued) 4.4 Directors’ and executive officers’ remuneration

This is the end of the audited remuneration report.

5. Principal activities and review of operations

5. Principal activities and review of operations (continued)

Discontinued activities

6. Operating and financial review

7. Dividends

8. Events subsequent to reporting date

9. Likely developments

10. Directors’ interest

11. Indemnification of officers

12. Lead auditor’s independence declaration

13. Proceedings on behalf of the Company

14. Auditor and Non-Audit Services

Safety Medical Products Limited and its controlled entities Consolidated Statement of Comprehensive Income For the year ended 30 June 2011

Safety Medical Products Limited and its controlled entities Consolidated Statement of Changes in Equity For the financial year ended 30 June 2011

1 Reporting entity

2 Basis of preparation

(a) Limitation on preparation – Comparative Information

(b) Statement of Compliance

(c) Basis of measurement

(d) Functional and presentation currency

2 Basis of preparation (continued)

(e) Critical accounting judgements, estimates and assumptions

Environmental Issues

Taxation

Deconsolidation

3 Significant accounting policies

(a) Basis of consolidation

(ii) Transactions eliminated on consolidation

3 Significant accounting policies (continued)

(b) Foreign currency transactions

(c) Financial Instruments

Recognition and Initial Measurement

Derecognition

Classification and subsequent measurement

3 Significant accounting policies (continued)

(c) Financial Instruments (Continued)

Derecognition

3 Significant accounting policies (continued)

(d) Property, plant and equipment

(i) Recognition and measurement

(ii) Subsequent costs

(iii) Depreciation

(e) Intangible assets

(i) Goodwill

(ii) Research and development

(iii) Subsequent expenditure

3 Significant accounting policies (continued)

(f) Leases

MACH7 TECHNOLOGIES LIMITED Annual Report 2011