MACH7 TECHNOLOGIES LIMITED — Annual Report 2011

Aug 30, 2011

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

Results for announcement to market

		2011	2010
Key	Information	$000	$000	% Change
2.1	Revenue from ordinary activities	44	55	(20%)
2.2	Profit after tax from ordinary activities attributable	1,368	(4,488)	(130%)
	to members
2.3	Profit attributable to members	1,368	(4,488)	(130%)

2.4 Dividends paid and proposed - NIL

Page 1 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

Consolidated Statement of Comprehensive Income For the year ended 30 June 2011

	30 June 2011 $ 30 June 2010 $
Revenue Cost of sales Gross profit Other income 3 Business development, marketing & intellectual property expenses Administrative expenses Results from operating activities Financial income Financial expense Net Financial expense Assets written off Gain on deconsolidation of subsidiaries 13 Impairment Loss Loss before tax Income tax (expense)/benefit Loss after tax from continuing operations Profit/(loss) from discontinued operations 4 Profit for the year Other comprehensive income Total comprehensive loss for the year Attributable to: Equity holders of parent Minority Interest Earnings per share for profit attributable to the ordinary equity holders of the company from continuing operations: Basic earnings per share (cents)	15,766 55,735 (5,755) (43,548)
	10,011 12,187 814,133 - (37,723) (38,414) (328,162) (806,994)
	458,259 (833,221) 28,746 - (1,851) (145,757)
	26,895 (145,757) (132,142) - 1,014,554 - - (2,028,409)
	1,367,566 (3,007,387) - -
	1,367,566 (3,007,387) - (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)

Page 2 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

Consolidated Statement of Financial Position

As at 30 June 2011

Consolidated Statement of Financial Position As at 30 June 2011
	30 June 2011 $ 30 June 2010 $
Assets Cash and cash equivalents 15 Trade and other receivables Inventories 5 Non-current assets held for sale and discontinued operations 6 Current tax assets Total current assets Non-current assets Deferred exploration expenditure Net deferred tax assets 7 Property, plant and equipment 14 Intangible assets Total non-current assets Total assets Liabilities Trade and other payables 8 Loans and borrowings 9 Employee benefits 10 Total current liabilities Total liabilities Net (liabilities)/assets Equity Issued capital 11 Reserves Accumulated losses Equity attributable to equity holders of the company Equity attributable to minority interest Total equity	1,546,875 589,315 4,995 106,307 - 53,909 - 17,063 - -
	1,551,870 766,594
	280,000 - - - - 66,025 - -
	280,000 66,025
	1,831,870 832,619
	870 1,061,241 - 3,525,940 - 682,004
	870 5,269,185
	870 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)

Page 3 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

Consolidated Statement of Cash Flows For the year ended 30 June 2011

	30 June 2011 30 June 2010
Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Interest paid Other receipts Income taxes (paid) / received Net cash from operating activities 12 Cash flows from investing activities Interest received Exploration expenditure 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 Capital raising costs paid Payments in relation to Deed of Company Arrangement (Repayment)/Proceeds from issue of convertible notes Proceeds from borrowings Repayment of borrowings Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 July Proceeds on sale of subsidiary net of cash and overdraft Cash and cash equivalents at 30 June 15	18,159 2,343,113 (593,459) (2,962,064)
	(575,300) (618,951) (1,851) (309,166) - - - -
	(577,151) (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
	1,045,565 509,286 66,009 (443,277) 435,302 -
	1,546,876 66,009

Page 4 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

Consolidated Statement of Changes in Equity For the financial year ended 30 June 2011

2011	Issued Capital Accumulated losses Equity compensa- tion reserve Minority Interest Total equity $ $ $ $ $
Opening balance at 1 July 2010 Conversion of convertible notes under DOCA Reduction of capital as approved at the general meeting Reversal of expired options Total comprehensive income for the period Shares Issued 11 Transaction costs Discontinued operations Closing balance at 30 June 2011	10,954,673 (14,712,738) 741,871 (1,420,372) (4,436,566) 700,000 - - - 700,000 (11,654,673) 11,654,673 - - - - 741,871 (741,871) - - - 1,367,566 - - 1,367,567 3,130,000 - - - 3,130,000 (350,372) - - - (350,372) - - - 1,420,372 1,420,372
	2,779,628 (948,628) - - 1,831,000

Amounts are stated net of tax

2010	Issued Capital Accumulated losses Equity compensa- tion reserve Minority Interest Total equity $ $ $ $ $
Opening balance at 1 July 2009 Total recognised income & expense for the period Shares Issued Transaction costs Closing balance at 30 June 2010	10,815,657 (10,931,475) 741,871 (713,293) (87,240) ~~-~~ (3,781,263) - (707,079) (4,488,342) 143,000 - - - 143,000 (3,984) - - - (3,984)
	10,954,673 (14,712,738) 741,871 (1,420,372) (4,436,566)

Amounts are stated net of tax

Page 5 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

1 Reporting entity

Safety Medical Products Limited (the "Company") is a company domiciled in Australia. The consolidated financial statements of the Company for the financial year ended 30 June 2011 comprise the Company and its subsidiaries (together referred to as the "consolidated entity"). The consolidated entity primarily is involved in the development, of medical products.

2 Basis of preparation

(a) Limitation on preparation

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 not Directors at the time of the appointment of the administrator, nor were they parties involved with the Group at that time.

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

Every reasonable effort has been made by the Directors to ascertain the true position of the Company and its controlled entities in relation to the financial performance and position 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 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.

(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.

Other income Continuing operations Creditors settlement Other income Other income from continuing operation	30 June 2011 $ 30 June 2010 $
	820,135 - (6,002) -
	814,133 -

3 Other income

Page 6 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

4 Discontinued operations Revenue Cost of sales Gross profit Other income Business development, marketing & intellectual property expenses Administrative expenses Results from operating activities Financial income Financial expense 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 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 Intangibles – goodwill (prior to impairment) 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	30 June 2011 $ 30 June 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)
	- 17,063 - 97,196 - 48,154 - - - 88,004 - (657,759) - (1,638,509) - (301,293) - (1,265,843)
	- (3,612,987)

Page 7 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

4 Discontinued operations (continued) Cashflow from discontinued operations Net cash from operating activities Net cash from investing activities Net cash from financing activities Net cashflow 5 Inventories Raw materials and consumables Work in progress Finished goods	30 June 2011 $ 30 June 2010 $
	- (15,048) - 79 - 32,095
	- 17,126
	- - - 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 were valued at their actual sales value and all unsold stock was fully impaired.

6 Non current assets held for sale and discontinued operations

Bagot Press operations discontinued on 1 July 2009: -Intangible –goodwill -Property, plant and equipment Baratex Pty Ltd planned liquidated: -Property, plant and equipment Non current assets held for sale and discontinued operations 7 Income tax expense Recognised in the income statement Continuing operations Current tax expense Current year expense Deferred tax expense Origination and reversal of temporary differences Benefit of losses recognised Total income tax expense/ (benefit) in income statement from continued operations	- - - - - 17,063
	- 17,063
	- -
	- - - - - -
	- -
	- -

Page 8 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

7 Income tax expense (continued) Numerical reconciliation between tax expense and pre-tax net profit Profit/(loss) before tax from continuing operations Income tax using the domestic corporation tax rate of 30% Increase/(decrease) in income tax expense due to: Non-allowable capital items Tax losses carried forward Goodwill Impairment Entertainment Temporary differences not recognised as own asset/liability -deductible temporary differences Income tax expense/(benefit) on pre-tax net profit 8 Trade and other payables Trade payables and accrued expenses 9 Loan and borrowings Current Convertible Notes Bank overdrafts Loans – National Australia Bank Ltd Documentary letters of credit Insurance funding loan Hire purchase agreements Non-current Convertible Notes Loans – National Australia Bank Ltd Hire purchase agreements Total loans and borrowings	30 June 2011 $ 30 June 2010 $
	1,367,566 (3,007,387)
	410,270 (902,216) - - (420,772) 844,016 - 58,200 502 - - - 10,000
	- -
	870 1,061,241
	870 1,061,241
	- 700,000 - 523,306 - 1,027,789 - 1,115,203 - - - 159,644
	- 3,525,940
	- - - - - -
	- -
	- 3,525,940

Page 9 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

		30 June 2011	30 June 2010
9	Loan and borrowings (continued)	$	$
	Convertible Notes
	Carrying amount of liability at 1 July	700,000	794,330
	Conversion of convertible notes	(700,000)	-
	Transaction costs	-	-
	Net proceeds	-	794,330
	Repayments	-	(50,000)
	Interest reversed as part of DOCA	-	(94,042)
	Net accrued interest	-	29,712
	Carrying amount of liability at 30 June	-	700,000
	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.
	Interest accrued daily and is 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.
	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.
10	Employee benefits
	Current
	Salaries and wages accrued	-	284,454
	Superannuation accrued	-	61,217
	Other Payroll Liabilities	-	241,878
	Liability for long service leave	-	35,901
	Liability for annual leave	-	58,554
		-	682,004
	Non-current
	Liability for long service leave	-	-
	Total employee benefits	-	682,004

Page 10 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

10 Employee benefits (continued) (a) Movement in employee benefits

Movement in employee benefits
Consolidated Balance at 1 July 2009 Provisions made during the period Balance at 30 June 2010 Balance at 1 July 2010 Amounts extinguished by DOCA Provisions made during the period Balance at 30 June 2011	Salaries and wages accrued Super accrued Liability for annual leave $ $ $	Liability for long service leave Other Payroll Liabilities $ $	Total $
	173,631 65,896 101,068	121,414 121,381	583,390
	110,823 (4,679) (65,167)	(62,860) 120,497	98,614
	284,454 61,217 35,901 284,454 61,217 35,901 (284,454) (61,217) (35,901) - - -	58,554 241,878 58,554 241,878 (58,554) (241,878) - -	682,004 682,004 (682,004) -
	- - -	- -	-

11 Share capital Issued and paid-up capital 396,455,466 (2010: 79,478,245 – pre 1 for 5 consolidation ) ordinary shares fully paid Ordinary shares Balance at the beginning of year Reduction of capital from general meeting 8 November 2010 Shares issued in year ended 30 June 2011: 23 November 2010 – 150,000,000 shares being issued at $0.005 as part of the recapitalisation of the company 23 December 2010 – 173,250,000 shares being issued at $0.01 as part of the Prospectus raising 18 January 2011 – 46,750,000 shares being issued at $0.01 as part of the Prospectus raising 15 April 2011 – 10,000,000 shares being issued at $0.018 as option fee to acquire Three Rivers tenement Shares issued in year ended 30 June 2010: 11 December 2009 – 3,177,768 shares being issued at $0.045 as part of the Share Purchase Plan Costs incurred in issuing shares Balance at end of year	30 June 2011 $ 30 June 2010 $
	14,084,763 10,954,673
	10,954,763 10,815,657 (10,954,763) - 750,000 - 1,732,500 - 467,500 - 180,000 - - 143,000 (350,372) (3,984)
	2,779,628 10,954,673

Page 11 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

11 Share capital (continued)

Terms and conditions

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

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

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

Capital Management

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. 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.

There are no externally imposed capital requirements.

Share Options Listed share options SFPOA $1 expiring 31 Dec 2010 Unlisted employee share options $0.50 expiring 31 Dec 2010 12 Reconciliation of cash flows from operating activities (a) Cash flows from operating activities Profit / (loss) for the year Adjustments for: Depreciation Loss on disposal of available for sale financial assets Deed of Company Arrangement Interest Income 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	30 June 2011 $ 30 June 2010 $ - 35,764,300 - 313,500
	- 36,077,800
	1,367,566 (4,488,342) - 114,295 - 6,872 (855,240) - (28,746) (2,457) - 846,754 132,142 - (1,014,554) - - 219,190
	(398,831) (3,303,688)

Page 12 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

12 Reconciliation of cash flows from operating activities (continued) 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	30 June 2011 $ 30 June 2010 $
	5,755 880,893 (2,874) 1,064,952 - 76,549 (4,558) 432,305 (176,643) (79,128)
	(178,320) 2,375,571
	(577,151) (928,117)

13 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 have been under the control of the liquidator since that time and no longer under the control of Safety Medical Products Limited. Accordingly they no longer satisfiedy 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) 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	Pureste $ - 33,950 - 45,754	Baratex $ 81,314 63,246 17,063 2,400
	79,704 275,551 1,719,500 3,469	164,023 382,308 - 297,824
	1,998,520	680,132
	(1,918,816)	(516,109)
		(1,918,816) (516,109)
		(2,434,925) (2,434,925) 1,420,371
		1,014,554
		1,014,554

Page 13 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

14 Property, plant and equipment Cost Balance at 1 July 2009 Disposals Non-current assets held for sale and discontinued operations 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 charge for the year Depreciation on disposals for the year Impaired Non current Assets Held for Sale and Discontinued Operations Balance at 30 June 2010 Balance at 1 July 2010 Depreciation charge for the year Depreciation on disposals for the year Impaired Non current Assets Held for Sale and Discontinued Operations Balance at 30 June 2011 Total carrying amounts At 1 July 2009 At 30 June 2010 At 1 July 2010 At 30 June 2011	Plant and equipment Fixtures and fittings $ $	Total $
	1,533,369 24,859 (53,272) - (32,031) -	1,558,228 (53,272) (32,031)
	1,448,066 24,859	1,472,925
	1,448,066 24,859 (1,448,066) (24,859)	1,472,925 (1,472,925)
	- -	-
	330,876 4,623 104,141 10,154 (24,366) - 987,487 8,953	335,499 114,295 (24,366) 996,440
	(14,968) -	(14,968)
	1,383,170 23,730	1,406,900
	1,383,170 23,730 - - (1,383,170) (23,730) - - - -	1,406,900 - (1,406,900) - -
	- -	-
	1,202,493 20,236	1,222,729
	64,896 1,129	66,025
	64,896 1,129	66,025
	- -	-

Page 14 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

15 Cash and cash equivalents Bank balances Bank overdrafts	30 June 2011 $ 30 June 2010 $
	1,546,875 589,315 - (523,306)
	1,546,875 66,009

16 Dividend details - NIL

17 Dividend reinvestment plan - NIL

18	Net	tangible assets per share	2011 $/share	2010 $/share
Net	tangible	assets per share	$0.0046	$0.0104

19 Control gained or lost over entities in the year

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. ACN 100 073 131 (formerly Bagot Press Pty Ltd) has remained dormant since the sale of its trade and assets on 1 July 2009. Baratex Pty Ltd, ACN 100 073 131 and Pureste Pty Ltd are 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.

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.

20	Investment in associates and joint ventures	2011	2010
Material investments in associates and joint ventures are as follows:
Baratex	Pty Ltd	-	100%
Pureste	Pty Ltd	-	50%

As disclosed in the financial report, the consolidated entity has recognised an aggregated share of net profit from the associates and joint ventures listed above amounting to $NIL (2010: $(1,480 955)).

Page 15 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

21 Other significant information - NIL

22 Foreign entities - NIL

23 Operating segment

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

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

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

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

Discontinued operations: Bagot Press Pty Ltd A manufacturer and supplier of specialist printing and general consumables to the (Bagot) pharmaceutical industry. Bagot sold its business and changed its name to ‘ACN 100 073 131 Pty Ltd’ in July 2009. Baratex Pty Ltd The provision of specialist industrial control and automation systems, machine (ProControl) vision, robotics and turn-key solutions for large and small industrial businesses.

Geographical segments

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

Page 16 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

23 Segment reporting (continued)

Segment reporting (continued)
	SafetyMed Eliminations	Consolidated
Business segments	2011 $ 2010 $ 2011 $ 2010 $	2011 $ 2010 $
External revenues Inter-segment revenues Total segment revenue Segment result Unallocated expenses Results from operating activities Net financing revenue /(costs) Impairment Loss/Assets written off Gain on deconsolidation of subsidiaries Profit/(Loss) for the period from continuing operations Loss for the period from discontinued operations before tax Income tax benefit/(expense) from discontinued operation Loss for the period from discontinued operations after tax Profit/(Loss) for the year	15,766 55,735 - - - - - -	15,766 55,735 - -
	15,766 55,735 - -	15,766 55,735
	(458,259) (630,965) - (202,256) - - - -	(458,259) (833,221) - -
	(458,259) (630,965) - (202,256) 26,895 (145,757) - - (1,310,303) (2,088,055) 1,178,161 59,646 - 1,014,554 -	(458,259) (833,221) 26,895 (145,757) (132,142) (2,028,409) 1,014,554 -
	(825,148) (2,864,777) 2,192,715 (142,640)	1,367,567 (3,007,387)
		- (1,480,955) - -
		- (1,480,955)
		1,367,567 (4,488,342)

Page 17 of 18

Safety Medical Limited Listed Public Limited ABN 26 007 817 192 and Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2011

24 Commentary on the results for the year

The Income Statement shows a net profit attributable to members of $1,367,566 compared with $(4,488,342) for the previous year.

During the period the Company 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 the Company 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.

A notice of meeting 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 was 16 November 2010 and the shareholder statements were despatched on 23 November 2010

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.

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. The Company raised the maximum subscription under the prospectus of $2,200,000. The Company was reinstated to quotation on the ASX on 25 January 2011

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, Africa, 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.

25 Status of audit

The 30 June 2011 financial report and accompanying notes for Safety Medical Products Limited is in the process of being audited.

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