MACH7 TECHNOLOGIES LIMITED — Interim / Quarterly Report 2011

Feb 27, 2011

RULE 4.2A

APPENDIX 4D

Half-year Report for the period ending 31 December 2010

1. Name of entity

SAFETY MEDICAL PRODUCTS LIMITED

ABN		Reporting Period		Previous Corresponding Period
		Half year ended		Half year ended
		31 December		31 December
26 007 817 192		2010		2009
2. Results for Announcement to the Market
Financial Results				\$A
Revenues from ordinary activities (item 2.1)	Down	65 %	to	15,766
Profit/(Loss) from ordinary activities after tax attributable to members (item 2.2)	Up	150 %	to	1,533,124
Net (loss) for the period attributable to members (item 2.3)	Up	150 %	to	1,533,124
Final and interim dividends (item 2.4)		It is not proposed that either a final or interim dividend be paid .
Record date for determining entitlements to the dividend (item 2.5)	N/A
Brief explanation of any of the figures reported above (item 2.6):	The profit for the period includes gains from effectuation of the Deed of Company Arrangement and also on the deconsolidation of subsidiary companies placed into liquidation. Refer attached Interim Financial Report for additional details.

3. NTA Backing

	Current Period	Previous Corresponding Period
Net tangible assets per ordinary share (Item 3)	0.45 cents	(3.81) cents

4. Control gained over entities

Details of entities over which control has been gained or lost (item 4)	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 subsidiaries have been deconsolidated as at that date.
5. Dividends paid and payable
Details of dividends or distribution payments (item 5)	No dividends or distributions are payable.
6. Dividend reinvestment plans
Details of dividend or distribution reinvestment plans	There is no dividend reinvestment program in
(item6)	operation for Safety Medical Products Limited

7. Details of associates

	Safety Medical Products Limited does not have
Details of associates and joint venture entities (item 7)	any investments in associate entities or joint
	venture interests.

8. Foreign entities

Foreign entities to disclose which accounting standards	N/A
are used in compiling the report (item 8)

9. Review Opinion

Details of any audit dispute or qualification (item 9)

The review opinion is qualified as follows:

Basis of Qualified Opinion

The directors have qualified their declaration for the limitation on preparation of the financial report that is set out in Note 2 to the financial statements.

Qualified Opinion

The opinion is qualified as to the possible effects of the limitation on preparation on the financial report.

Copy of Note 2 to the Financial Report

Limitation on preparation

On 15 April 2010 the Directors of Safety Medical Products Limited ("the Company" or "SafetyMed") at that time appointed McGrathNicol as Administrators of the Company and its subsidiary undertakings.

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 subsidiaries have been deconsolidated as at that date.

The operations of the Company were controlled by the Administrator up until the date of effectuation of the DOCA being 25 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.

SAFETY MEDICAL PRODUCTS LIMITED

ABN 26 007 817 192

HALF YEAR FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

Safety Medical Products Limited

Contents

Page

• 3 Directors' report
• 6 Consolidated statement of comprehensive income
• 7 Consolidated statement of changes in equity
• 8 Consolidated statement of financial position
• 9 Consolidated statement of cash flows
• 10 Condensed notes to the consolidated financial statements
• 18 Directors' declaration
• 19 Independent review report
• 22 Lead auditor's independence declaration
• 23 Corporate directory

Safety Medical Products Limited Directors' Report For the six months ended 31 December 2010

The directors present their report together with the consolidated financial report for the six months ended 31 December 2010 and the review report thereon.

These Financial Statements cover the period from 1 July 2010 to 31 December 2010. On 15 April 2010 the Directors of Safety Medical Products Limited ("the Company" or "SafetyMed") at that time appointed McGrathNicol as Administrators of the Company and its subsidiary undertakings. On 13 August 2010 the Company entered into a Deed of Company Arrangement (DOCA) and Reconstruction Deed which provided 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). The DOCA was effectuated on 25 November 2010 and control of the Company reverted to the Directors. The recapitalisation was completed and the Company successfully reinstated to quotation on the ASX on 17 January 2011.

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.

The Statement of Comprehensive Income report results including the write-off of several amounts as a result of the effectuation of the Deed of Company Arrangement. The performance for the 6 months is not representative of the anticipated performance of Safety Medical Products Limited and Controlled Entities ("the Group") following completion of the recapitalisation and should not be used as the basis for any decision about the Group or its prospects.

Officeholders

The directors of the Company at any time during or since the end of the interim period are:

Name Period of directorship

Non-executive

Peter Christie (Chairman) Simon Lill Stephen Hewitt-Dutton John Darley (Chairman) Joseph Nicholas MB BS MAICD

Executive

Director, appointed 6 October 2010 Director, appointed 6 October 2010 Director, appointed 6 October 2010

Director and Chairman, resigned 6 October 2010 Director, resigned 6 October 2010

John Riemelmoser Managing Director and Chief Executive Officer resigned 6 October 2010

Review of operations

Overview

The Consolidated Statement of Comprehensive Income shows a consolidated net profit attributable to members of \$1,533,125 compared with \$(2,541,203) for the previous corresponding period. The current period result includes gains on settlement of creditors under the DOCA of \$812,218 and a gain on deconsolidation of Pureste Pty Ltd and Baratex Pty Ltd of \$1,014,554. The loss for the previous corresponding period includes \$1,534,448 of impairment losses.

Review of principal business activities

During the period the Company did not operate other than to further the Administration process and commence the recapitalisation.

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.

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.

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 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.

Safety Medical Products Limited Directors' Report For the six months ended 31 December 2010

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. The capital raising and reinstatements to quotation on the ASX were completed after period end..

Events subsequent to reporting date

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. On 25 January 2011 the Company's shares were reinstated to official quotation on the ASX.

Lead auditor's independence declaration

The lead auditor's independence declaration is set out on page 22 and forms part of the directors' report for the six months ended 31 December 2010.

Dated at Perth this 28th February 2011

Signed in accordance with a resolution of the directors:

Simon Lill Director

Safety Medical Products Limited Statement of Comprehensive Income For the half year ended 31 December 2010

		31 Dec 2010	31 Dec 2009
	Note	\$	\$
Continuing operations
Revenue		15,766	44,537
Cost of sales		(5,755)	(34,425)
Gross profit		10,011	10,112
Other income		806,216	150,065
Business development, marketing and intellectual property expenses		(2,683)	(5,577)
Administrative expenses		(162,610)	(483,564)
Results from operating activities		650,934	(328,964)
Impairment of non-current assets			- (1,224,117)
Impairment of current assets			- (310,331)
Assets written-off		(132,142)	-
Gain on deconsolidation of subsidiaries	8	1,014,554	-
Financial income		1,279	337
Financial expense		(1,501)	(85,852)
Profit/(Loss) before tax		1,533,124	(1,948,927)
Income tax (expense)/benefit	9		- -
Profit/(loss) from discontinued operations	15		- (1,127,860)
Profit/(Loss) for the half year attributable to equity holders		1,533,124	(3,076,787)
Other comprehensive income			- -
Total comprehensive income for the half year		1,533,124	(3,076,787)
Attributable to:
Equity holders of the parent		1,533,124	(2,541,203)
Minority Interest (discontinued operations)			- (535,584)
		1,533,124	(3,076,787)
Earnings per share for profit attributable to the ordinary equity holders of the company:
Basic earnings per share (cents)		2.79	(3.32)
Diluted earnings per share (cents)		2.79	(3.32)

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

Safety Medical Products Limited Statement of Changes in Equity For the half year ended 31 December 2010

2009	Note	Issued Capital \$	Accumulated losses \$	Equity compensation reserve \$	Minority Interest \$	Total equity \$
Opening balance at 1 July 2009		10,815,657	(10,931,475)	741,871	(713,293)	(87,240)
Total comprehensive income for the period		-	(2,541,203)		- (535,584)	(3,076,787)
Shares Issued		143,000		-	-	- 143,000
Transaction costs		(3,984)		-	-	- (3,984)
Closing balance at 31 December 2009		10,954,673	(13,472,678)	741,871	(1,248,877)	(3,025,011)

Amounts are stated net of tax

2010	Note	Issued Capital \$	Accumulated losses \$	Equity compensation reserve \$	Minority Interest \$	Total equity \$
Opening balance at 1 July 2010		10,954,673	(14,712,738)	741,871	(1,420,372)	(4,436,566)
Conversion of convertible notes under DOCA	18	700,000		-	-	- 700,000
Reduction of capital as approved at the general meeting		(11,654,673)	11,654,673			-
Total comprehensive income for the period		-	1,533,124		-	- 1,533,124
Shares issued under the Proponent Issue		750,000		-	-	- 750,000
Shares issued under the Prospectus		1,732,500		-	-	- 1,732,500
Transaction costs		(161,892)		-	-	- (161,892)
Changes owing to deconsolidation of subsidiaries					1,420,372	1,420,372
Closing balance at 31 December 2010		2,320,608	(1,524,941)	741,871		- 1,537,538

Amounts are stated net of tax

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

Safety Medical Products Limited Statement of Financial Position As at 31 December 2010

	Note	31 Dec 2010 \$	30 Jun 2010 \$
Assets
Current assets
Cash and cash equivalents		1,827,973	589,315
Trade and other receivables		4,995	106,307
Inventories	10		- 53,909
Non-current assets held for sale and discontinued operations	11		- 17,063
Current tax assets	9		- -
Total current assets		1,832,968	766,594
Non-current assets
Net deferred tax assets	9		- -
Property, plant and equipment	12		- 66,025
Total non-current assets		-	66,025
Total assets		1,832,968	832,619
Liabilities
Current liabilities
Trade and other payables		295,429	1,061,241
Loans and borrowings	13		- 3,525,940
Employee benefits			- 682,004
Total current liabilities		295,429	5,269,185
Total liabilities			5,269,185
Net assets/(liabilities)		1,537,538	(4,436,566)
Equity
Issued capital		2,320,608	10,954,673
Reserves		741,871	741,871
Accumulated losses		(1,524,941)	(14,712,738)
Parent equity interest		1,537,538	(3,016,194)
Minority interest			(1,420,372)
Total Equity		1,537,538	(4,436,566)

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

Safety Medical Products Limited Statement of cash flows

		For the half year ended 31 December 2010
--	--	------------------------------------------

	Note	31 Dec 2010 \$	31 Dec 2009 \$
Cash flows from operating activities
Cash receipts from customers		18,159	1,680,226
Cash paid to suppliers and employees		(259,882)	(2,332,755)
Cash generated from operations		(241,723)	(653,529)
Interest paid		(1,501)	(82,795)
Net cash from operating activities		(243,224)	(735,324)
Cash flows from investing activities
Interest received		1,279	2,378
Proceeds from sale of property, plant and equipment	13	66,025	20,034
Disposal of business	13		- 1,300,000
Net cash from investing activities		67,304	1,322,412
Cash flows from financing activities
Proceeds from issue of share capital		2,637,500	139,017
Payments made under DOCA		(973,025)	-
Capital raising costs paid		(161,892)	-
Proceeds from borrowings	14		- 1,090,000
Repayment of borrowings	15		- (1,173,601)
Net cash from financing activities		1,502,582	55,416
Net increase in cash and cash equivalents		1,326,662	642,504
Cash and cash equivalents at 1 July		501,311	(443,277)
Cash and cash equivalents at 31 December		1,827,973	199,227

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

1 Reporting entity

Safety Medical Products Limited (the "Company") is a company domiciled in Australia. The consolidated interim financial report of the Company as at and for the six months ended 31 December 2010 comprises the Company and its subsidiaries (together referred to as the "Consolidated Entity" or "Group").

The consolidated annual financial report of the consolidated entity as at and for the year ended 30 June 2010 is available upon request from the Company's registered office c/o Trident Management Services Pty Ltd, Level 24, 44 ST George's Terrace, Perth WA 6000.

2 Limitation on preparation

On 15 April 2010 the Directors of Safety Medical Products Limited ("the Company" or "SafetyMed") at that time appointed McGrathNicol as Administrators of the Company and its subsidiary undertakings.

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 subsidiaries have been deconsolidated as at that date.

The operations of the Company were controlled by the Administrator up until the date of effectuation of the DOCA being 25 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.

3 Going concern

The accompanying financial statements have been prepared on a going concern basis.

There has been no other matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Company and the consolidated entity, the results of those operations, or the state of affairs of the Company and the consolidated entity in future financial years.

4 Statement of Compliance

The consolidated interim financial report is a general purpose financial report which has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

The interim financial report does not include all of the information required for a full annual financial report, and should be read in conjunction with the annual financial report for the year ended 30 June 2010.

The interim financial report was approved by the Board of Directors on 28th February 2011.

5 Significant accounting policies

The accounting policies applied by the consolidated entity in the consolidated interim financial report are the same as those applied by the consolidated entity in its consolidated financial report as at and for the year ended 30 June 2010.

6 Estimates

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

In preparing this consolidated interim financial report, the significant judgements made by management in applying the consolidated entities accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report as at and for the year ended 30 June 2010.

7 Operating segment

The Company has adopted AASB 8 Operating Segments which requires operating segments to be identified on the basis of internal reports about components of the company that are reviewed by the chief operating decision maker (deemed to be the Board of Directors) in order to allocate resources to the segment and assess its performance. The chief operating decision maker of the Company reviews internal reports prepared as financial statements and strategic decisions of the company are determined upon analysis of these internal reports. During the period, the company operated predominantly in one business and geographical segment being the medical devices sector in Australia. Accordingly, under the 'management approach' outlined only one operating segment has been identified and no further disclosure is required in the notes to the financial statements

Business segments

During the comparative period, the consolidated entity comprises the following main business segments, based on the Company's management reporting system:

Safety Medical Products (SafetyMed)	Development, production and commercialisation of a range of medical products, focusing principally on the SecureTouch™ single use manual retractable safety syringe.
Discontinued operations
ACN 100 073 131 Pty Ltd (formerly Bagot Press Pty Ltd) (Bagot)	Dormant; previously operated as a manufacturer and supplier of specialist printing and general consumables to the pharmaceutical industry.
Baratex Pty Ltd (ProControl)	The provision of specialist industrial control and automation systems, machine vision, robotics and turn key solutions for large and small industrial businesses.
Pureste Pty Ltd (Pureste)	The promotion and distribution of feminine hygiene products.

8 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.

	Pureste	Baratex
Book value of assets disposed	\$	\$
Current assets:
Cash	-	81,314
Trade and other receivables	33,950	63,246
Other assets	-	17,063
Inventory at 1 July 2010	45,754	2,400
Total Assets	79.704	164,023
Current Liabilities
Trade and other payables	275,551	382,308
Loans and borrowings	1,719,500	-
Employee benefits	3,469	297,824
Total Liabilities	1,998,520	680,132
Net assets/(deficiency)	(1,918,816)	(516,109)
Total Net Assets/(Deficiency) Disposed
Pureste Pty ltd		(1,918,816)
Baratex Pty Ltd		(516,109)
		(2,434,925)
Details of Disposal of Subsidiaries
Total Net Assets/(Deficiency)		(2,434,925)
Minority interest		1,420,371
Net deficiency disposed, net of minority interest		1,014,554
Gain on deconsolidation of subsidiaries		1,014,554

9 Income tax expense

The consolidated entity reported tax expense of \$nil for the six months ended 31 December 2010 (for the year ended 30 June 2010: \$nil; for the six months ended 31 December 2009: \$nil tax benefit), as a result of reporting a profit before tax of \$1,533.125. The tax expense reported for the period was attributable to continuing operations of the parent.

10 Inventory

SafetyMed inventory

On 13 August 2010 the Company entered into a Deed of Company Arrangement and Reconstruction Deed which provided 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). As part of the arrangement the inventory has been sold during the period. The inventory was valued at net realisable value of \$73,478 at 30 June 2010.

Other inventory

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. As part of the liquidation process all inventory relating to these subsidiaries has been sold or scrapped during the period. The inventory was valued at net realisable value of \$25,837 at 30 June 2010 (refer to note 12 for further details).

11 Non-current assets held for sale and discontinued operations

	31 Dec 2010 \$	30 Jun 2010 \$
Intangible -goodwill	-	-
Inventory, property, plant and equipment	-	17,603
Non-current assets held for sale and discontinued operations	-	17,603

12 Property, plant and equipment

Acquisition and disposal

During the six months ended 31 December 2010 the Company acquired no assets and disposed of assets with a cost of \$1,384,208 for proceeds of \$66,025. The balance of property plant and equipment had been impaired in prior periods such that the book value of the assets sold was \$69,250.

During the six months ended 31 December 2009 the consolidated entity acquired no assets and disposed of assets with a cost of \$26,906 for proceeds of \$20,034. In addition, on 1 July 2009 A.C.N 100 073 121 Pty Ltd (previously Bagot Press Pty Ltd) sold its' trade, inventory, property, plant and equipment for \$1,300,000 (refer to note 16 for further details).

SafetyMed property, plant and equipment

On 13 August 2010 the Company entered into a Deed of Company Arrangement and Reconstruction Deed which provided 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). As part of the arrangement certain property, plant and equipment was sold during the period. The property, plant and equipment had been impaired by \$1,011,411 at 31 December 2009.

Other property, plant and equipment

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. As part of the liquidation process all property, plant and equipment relating to these subsidiaries has been sold or scrapped during the period. The assets concerned were already adequately depreciated therefore no impairment was required at 31 December 2009.

Capital commitments

As at 31 December 2010 and 31 December 2009 there are no capital commitments.

13 Loans and borrowings

The following loans and borrowings (non-current and current) were issued and repaid during the six months ended 31 December 2009:

		Interest rate		Face	Carrying	Year of
	Currency	Nominal	Effective	value	amount	Maturity
				\$	\$
Balance at 1 July 2009					3,681,066
Bank overdraft movement					(248,384)
New issues
Loan1	AUD	8.88%	8.88%	-	-	2010
Documentary letter of credit2		-	-	(774,751)	(774,751)
Trade finance loan2	AUD	9.99%	9.99%	1,090,000	1,090,000	2010
Repayments
Equipment loan3 Equipment loan4	AUD	9.99%	-	(48,304)	(48,304)	-
Equipment loan5	AUD AUD	8.54% 8.99%	- -	(260,054) (22,459)	(260,054) (22,459)	- -
Insurance funding loan	AUD	8.21%	-	16,971	16,971	-
Convertible Notes	AUD	9.05%	-	(50,000)	(50,000)	-
Balance at 31 December 2009					3,384,085
Balance at 1 July 2010					3,525,940
Bank overdraft movements					(6,690)
Amounts extinguished by the
Deed of Company
Arrangement
Convertible Notes – Converted				(700,000)	(700,000)
Bank overdrafts	AUD	8.88%	-	(516,616)	(516,616)
Loans – National Australia Bank Ltd	AUD	9.99%	-	(1,027,787)	(1,027,787)	-
Documentary letters of credit	AUD	8.54%	-	(1,115,203)	(1,115,203)	-
Hire purchase agreements	AUD	8.21%	-	(159,644)	(159,644)	-
Balance at 31 December 2010					-

14 Share based payments

There have been no options granted as compensation during the six month to 31 December 2010 or 31 December 2009.

15 Discontinued operations

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 the 1 July 2009 the trade, inventory, property plant and equipment of A.C.N 100 073 121 Pty Ltd (formerly Bagot Press Pty Ltd) were sold for cash consideration of \$1,300,000. The results have been disclosed as discontinued operations and the assets being sold have been shown as current assets held for sale or discontinued operations.

The results have been disclosed as discontinued operations and the non-current assets being discontinued have been shown as current assets held for sale or discontinued operations.

	31 Dec 2010 \$	31 Dec 2009 \$
Revenue		- 831,703
Cost of sales		- (662,676)
Gross profit	-	169,027
Other income		- 6,096
Business development, marketing & intellectual property expenses	-	(201,125)
Administrative expenses	-	(536,392)
Results from operating activities	-	(562,394)
Impairment of non-current assets		- (76,549)
Impairment of current assets		- (395,627)
Financial income		- 2,041
Financial expense		- (95,331)
Loss before tax	-	-
Income tax (expense)/benefit		- -
Profit/ (loss) from discontinued operations		- (1,127,860)

15 Discontinued operations (continued)

The major classes of assets and liabilities comprising the businesses classified as held for sale at 31 December 2009 are as follows:

	31 Dec 2009 \$
Book value of assets held for sale
Cash	1,014
Trade debtors and other debtors	241,299
Property, plant and equipment at 31 December 2008	25,837
Inventory at 31 December 2008	58,598
Intangibles –goodwill (prior to impairment)	-
Book value of liabilities held for sale
Bank overdraft	(409,344)
Trade creditors and other creditors	(405,998)
Trade finance loan	(1,090,000)
Intercompany loan –SafetyMed	(1,335,535)
Net Assets Held for Sale and Discontinued Operations	(2,914,129)

16 Related parties

Transactions with key management personnel

In the six months ended 31 December 2009 key management personnel received compensation in the form of short-term employee benefits and post-employment benefits.

Compensation

Key management personnel received compensation in the form of short-term employee benefits, post-employment benefits and share-based payments.

At 31 December 2010 and 30 June 2010 the directors held the following convertible notes. During the period the convertible notes were converted to shares in accordance with the terms of the DOCA.

Director	Number held at 31 Dec 2010	Number held at 30 Jun 2010
Mr John Darley and related parties	-	2,000
Mr John Riemelmoser and related parties	-	3,000
	-	5,000

16 Related parties (continued)

On 4 June 2008 7,750 convertible notes were issued for \$775,000. The notes issued were approved at a general meeting on the 18 April 2008. The notes were issued at a cost of \$100 per note and are due to mature on 31 July 2010.

On 4 June 2009 SafetyMed announced that 7,000 noteholders had agreed to extend the maturity date to 31 July 2010. In June 2009 250 notes, \$25,000 being \$100 per note were repaid in full. In July 2009 a further 500 notes, \$50,000 being \$100 per note was repaid in full.

Directors, Mr John Darley and Mr John Riemelmoser held 2,000 and 3,000 notes respectively since 4 June 2008 until conversion on 12 August 2010. On 12 August 2010 the 5,000 convertible notes were converted into 2,000,000 ordinary shares at a rate of 400 shares for every one note held.

Interest was calculated on a daily basis 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 9.3%. There were no convertible notes outstanding at 31 December 2010.

Interest payable on the convertible notes during the six months ended 31 December 2009 was \$8,489 and \$12,734 (half year ended 31 December 2008: \$12,006 and \$18,090; year ended 30 June 2009: \$20,837 and \$30,525) to Mr John Darley and Mr John Riemelmoser respectively.

Non-key management personnel disclosures

Subsidiaries

Loans were made by the Company to wholly owned subsidiaries for working capital and capital purchases. The loans outstanding between the Company and its subsidiaries had no fixed date of repayment and were non-interest bearing. At 31 December 2010, such loans to subsidiaries totalled \$nil (31 December 2009: \$1,582,472). During the period, intercompany balances totalling \$1,311,646 were written off (30 June 2009: \$245,937 relating to Bagot Presswas written off).

17 Contingent liabilities

As at 31 December 2010, the consolidated entity is not aware of any other contingent assets or liabilities that should be disclosed in accordance with AASB 137.

18 Events subsequent to reporting date

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. On 25 January 2011 the Company's shares were reinstated to official quotation on the ASX.

Safety Medical Products Limited 31 December 2010 interim financial statements Directors declaration

Except for the effect if any of the limitations on the preparation of the financial report discussed in note 2, the Directors of the Company declare that:

• a) the financial statements and notes set out on pages 6 to 17, are in accordance with the Corporations Act 2001, including:
• (i) giving a true and fair view of the financial position of the Company and the consolidated entity as at 31 December 2010 and of its performance for the six month period ended on that date; and
• (ii) complying with Accounting Standards AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and
• b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Dated at Perth this 28th day of February 2011.

This declaration is signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001:

Simon Lill Director

Bentleys (SA) Partnership ABN 99 292 743 838

64 Greenhill Road Wawille SA 5034

PO Box 903 Unley SA 5061

T+61883731266 F +61 8 8373 0228

admin@adel.bentleys.com.au www.bentleys.com.au

INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF SAFETY MEDICAL PRODUCTS LIMITED AND ITS CONTROLLED ENTITY

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Safety Medical Products Limited, which comprises the statement of financial position as at 31 December 2010, and the statement of comprehensive income, statement of changes in equity and the cash flow statement for the half-year ended on that date, other selected explanatory notes and the directors' declaration for the Safety Medical Products Limited Group (the consolidated entity). The consolidated entity comprises both Safety Medical Products Limited (the company) and the entities it controlled during that half-year.

Directors' Responsibility for the Half Year Financial Report

The company's directors are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor's Responsibility

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

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

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our review was not designed to provide assurance on internal controls.

Chartered Accountants

A member of Bentleys, an association of independent accounting firms in Australia The member firms of the Bentleys association are affiliated only and not in partnership.

Our review did not involve an analysis of the prudence of business decisions made by directors or management.

Independence

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

Basis for Qualified Opinion

The directors have qualified their declaration for the limitation on preparation of the financial report that is set out in Note 2 to the financial statements.

Qualified Opinion

Based on our review, which is not an audit, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, we have not become aware of any matter that makes us believe that the half-year financial report of Safety Medical Products Limited is not in accordance with the Corporations Act 2001, including:

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

BENTLEYS (SA) Partnership

DJ FRANCIS Partner

Dated at Adelaide this 28^th day of February, 2011.

Bentleys (SA) Partnership ABN 99 292 743 838

64 Greenhill Road Wayville SA 5034

PO Box 903 Unley SA 5061

T+61883731266 F+61 8 8373 0228

admin@adel.bentleys.com.au www.bentleys.com.au

AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

TO THE DIRECTORS OF

SAFETY MEDICAL PRODUCTS LIMITED AND CONTROLLED ENTITIES

I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2010 there have been:

• I. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review, and
• II. no contraventions of any applicable code of professional conduct in relation to the review.

BENTLEYS (SA) Partnership

D J FRANCIS PARTNER

Dated at Adelaide this 28^th day of February, 2011.

Liability limited by a scheme approved under Professional Standards Legislation.

Safety Medical Products Limited and its controlled entities Corporate Directory

Offices and officers

Directors

Peter Christie Simon Lill Stephen Hewitt-Dutton

Company Secretary

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 (currently suspended from quotation). The Home Exchange is Adelaide.

Other Information

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