RAIDEN RESOURCES LIMITED — Annual Report 2004

Aug 30, 2004

Rules 4.3A

Appendix 4E

Preliminary final report

Name of entity

68 009 161 522

$\ddot{\phantom{a}}$

.
MEDICAL MONITORS LIMITED
ABN or equivalent company	Preliminary	financial year ended ('current period')
reference	final $(tick)$
- 68.009.161.522.		30 JUNE 2004

$\vert \mathbf{v} \vert$

30 JUNE 2004

For announcement to the market

		SA'000
Revenues from ordinary activities	down	51%	ŧθ	449.
Profit (loss) from ordinary activities after tax attributable to members	up	36%	ŧο	(4, 141)
Profit (loss) from extraordinary items after tax attributable to members)	gain (loss)
Net profit (loss) for the period attributable to members	up	36%	tο	(4,141)
Dividends (distributions)	Amount per security			Franked amount per security
Final dividend		Nil é.		Nil $\rlap{/}$
Previous corresponding period		Nil $\phi$		Nil $\epsilon$
*Record date for determining entitlements to the dividend (in the case of a trust, distribution)		N/A

There are no dividend reinvestment plans in operation. No dividends have been declared or paid during the current or previous financial year.

Consolidated statement of financial performance

Revenue and expenses from ordinary activities	Current period -	Previous corresponding
	\$A'000	period - \$A'000
Revenue from sales or services	328	591
Revenue from sale of mining interests	5	236
Interest revenue	12	6
Other revenue:
Government Grants	104	88
Total revenues from ordinary activities	449	921
Details of relevant expenses:
Cost of sales	(91)	(419)
Cost of mining interests sold	(5)	(236)
Corporate / office	(437)	(324)
Staff cost	(726)	(501)
FX Gain	43
Communication		(90)
Audit/Legal Fees	(238)	(174)
Consulting Fees	(742)	(351)
Marketing	(418)	(317)
Other expenses	(221)	(85)
Depreciation and amortisation	(1,404)	(1,316)
Total expenses from ordinary activities	(4,239)	(3, 813)
Borrowing costs	(351)	(160)
Share of net profits (losses) of associates and joint
venture entities
Profit (loss) from ordinary activities before tax	(4, 141)	(3,052)
Income tax on ordinary activities
Profit (loss) from ordinary activities after tax	(4, 141)	(3,052)

Profit (loss) from extraordinary items after tax	$\bullet$
Net profit (loss) Net profit (loss) attributable to outside $+$ equity interests	(4, 141) $\bullet$	(3,052)
Net profit (loss) for the period attributable to members	(4,141	(3.05

There have been no non-owner transaction changes in equity during the current or previous financial year

Earnings per security (EPS)	Current period	Previous corresponding period
Basic EPS	$(2.0)$ cents	$(1.8)$ cents
Diluted EPS	$(2.0)$ cents	$(1.8)$ cents

Management Commentary and Operational Review of FY 2003 -2004

The Company's long term strategy to achieve recognition as an international provider of trans-telephonic diagnostic monitoring products ad services has been progressed considerably over the year. The successful contracting for blood pressure monitoring in a specialist research programme at the prestigious Johns Hopkins University, in Baltimore, USA, and the Telesalute blood pressure monitoring programme in Bergamo, Italy, (with a fully functional Italian version system) has further consolidated the commercial opportunity for sales revenues in the international markets.

Equally significant, has been the recently announced Memorandum of Understanding in relation to an international license and distribution agreement for the Company's ECG and BPfone® blood pressure monitoring products and services with a US based investment group. As noted in the terms of the business and license agreement, Medical Monitors will retain a significant shareholding in a new entity, as well as receive royalty fees based on revenues generated from the monitoring services and device sales, and an agreed upon profit margin on all manufactured devices. No additional funding requirement from MDM would be needed for this business.

Medical Monitors' technologies and business model are considered superior to the current market offerings, and the new service entity will be well placed to take a substantial share of this lucrative market in the U.S.A. particularly for cardiac monitoring services. To achieve this, a highly experienced management and sales team has been assembled that boasts a combined total of more than 70 years experience in bringing premium medical technologies to market as well as an aggressive sales force that has grown similar companies to USD \$55 million in annual sales.

The Company's unique transtelephonic (telephone transfer) technologies, which allow doctors to remotely monitor the cardiovascular health of their patients, have already been granted United States Food and Drug Administration (FDA) notification to enable marketing and sales.

Significant features of the new business venture include:

• Establishment of a premier cardiac monitoring service in the USA second half 2004 $\circ$
• Agreed minimum initial purchase of monitoring devices for US\$690,000- see Subsequent Events $\circ$
• Funding of existing USA and UK (Medical Monitors) facilities $\circ$
• Ongoing revenue, with royalty stream, to Medical Monitors for manufacture and technology support $\circ$

Revenues and Expenses

Revenue from ordinary activities was down when compared to the previous year. However, the Directors expect that events in FY2004/2005 will demonstrate the Company's ability to generate revenue in the long term. As announced to the market, a number of large projects in blood pressure monitoring, with top tier pharmaceutical companies in the UK and USA, and the ECG monitoring business, are expected to be undertaken in the near term and provide for ongoing and significant sales revenue in FY 2004/2005.

Whilst operating expenses have been reduced in the wholly owned US subsidiary, Wellness Monitoring, Inc., other expenses have risen with the need to fund the initial set up and infrastructure costs for the UK facility in Leicester. The additional costs of staff and other relevant consultants in the overseas markets has also impacted on the financial performance. A number of these costs have been incurred in relevant R&D expenditure, and will be eligible to be partly recouped through the R&D Tax offset scheme. The Australian government's export marketing grant benefit may also be applied against these costs.

As previously noted, the Company has successfully contracted for clinical trials with a number of leading universities and hospitals, in Australia and in the USA, using the BPfone^® for blood pressure management and data collection. As part of the process, Medical Monitors expects to convert these opportunities into sales, particularly through major sponsorship arrangements with top-tier international pharmaceutical companies hat have a vested interest in this market segment.

Sale of mining tenements

The remaining mining tenements have been sold with final settlement processed in November 2003.

Shareholder and Private Placement Activities

The successful completion of a Shareholder Share Placement Scheme, and necessary Private Placement offers as highlighted at the AGM in November, 2003, have provided the Company with funding of more than \$3.0 million for additional working capital and for marketing and sales support. The funds were received with the strong support from both existing shareholders and from new investors, and have been used in the promotion of a successful international roll out of product and services across a number of markets.

In April, 2004, the Company implemented Clause 26 of Medical Monitors' Constitution – the sale of less than "Marketable Parcels of Shares" in the Company – and reduced its shareholder cost base with more than 1,000 shareholders being taken off the register.

Importantly, all of these transactions have consolidated the Company's shareholder register, as well as provide ongoing support for the business opportunities that have been created by the Company's unique products and services in Australia and overseas

The Directors have every confidence in the continuing success for Medical Monitors.

Profit (loss) from ordinary activities attributable to members

	Current period - \$A'000	Previous corresponding period -
		SA'000
Profit (loss) from ordinary activities after tax	(4,141)	(3,052)
Less (plus) outside $+$ equity interests	$\mathbf{w}$
Profit (loss) from ordinary activities after	(4, 141)	(3,052)
tax, attributable to members

Material interests held in other entities

There are no material interests held in entities which are not controlled entities.

Medical Monitors Limited has a 50% interest in Care Medical Limited, a company incorporated in the UK.

See additional note on Contingent Liabilities regarding the dispute with Primary Care Group, the other joint venture party to Care Medical.

Consolidated retained profits

	Current period -	Previous corresponding
	SA'000	$period - $A'000$
Retained profits (accumulated losses) at the	(23, 410)	(20, 358)
beginning of the financial period
Net profit (loss) attributable to members	(4,141)	(3,052)
Net transfers from (to) reserves
Net effect of changes in accounting policies	$\bullet$
Dividends and other equity distributions paid
or payable
Retained profits (accumulated losses) at end	(27, 551)	(23, 410)
of financial period

Consolidated statement of financial position	At end of current	As shown in previous
	period \$A'000	corresponding period
		SA'000
Current assets
Cash assets	342	89
Receivables	187	151
Other financial assets
Inventories	391	438
Tax assets	w
Other (provide details if material)	434	417
Total current assets	1,354	1,095

,

Consolidated statement of financial position	At end of current	As shown in previous
	period \$A'000	corresponding period
		\$A'000
Non-current assets
Receivables
Investments (equity accounted)
Other investments
Inventories
Mining Interests		5
Other property, plant and equipment (net)	328	469
Intangibles (net)	5,901	7,366
Deferred tax assets
Other	153	154
Total non-current assets	6,382	7,994
Total assets	7,736	9,089
Current liabilities
Payables	643	1,138
Interest bearing liabilities	969	987
Tax liabilities
Provisions exc. tax liabilities	49	24
Other
Total current liabilities	1,661	2,149

$\overline{\phantom{a}}$

ï

Non-current liabilities	At end of current period \$A'000	As shown in previous corresponding period SA'000
Payables	w
Interest bearing liabilities	559	771
Tax liabilities	w
Provisions exc. tax liabilities	w
Other	w

Consolidated statement of financial position	At end of current	As shown in previous
	period \$A'000	corresponding period
		\$A'000
Total non-current liabilities	559	771
Total Liabilities	2,220	2,920
Net Assets	5,516	6,169
Equity
Capital/contributed equity	32,574	29,086
Reserves	493	493
Retained profits (accumulated losses)	(27, 551)	(23, 410)
Equity attributable to members of the parent entity	5,516	6,169
Outside + equity interests in controlled entities
Total equity	5,516	6,169
Preference capital	NIL	NIL

Consolidated statement of cash flows

	Current period \$A'000	Previous corresponding period $-$ \$A'000
Cash flows related to operating activities
Cash receipts in the course of operations	317	625
Cash payments in the course of operations	(2,799)	(2,457)
Dividends received from associates
Other dividends received
Interest received	12	6
Borrowing costs paid	(351)	(93)
Income taxes paid
Other (provide details if material)	$\ddot{}$
Net operating cash flows	(2,821)	(1,919

	Current period	Previous
	\$A'000	corresponding period $-$ \$A'000
Cash flows related to investing activities
Payment for purchases of property, plant and	(102)	(141)
equipment
Proceeds from sale of mining interests	5	236
Payment for Security Deposits		(154)
Proceeds from Government Grants	372	407
Loans (from) / to other entities Loans repaid to other entities		(412) 72
Other-R&D		(296)
Net investing cash flows	275	(288)
Cash flows related to financing activities
Proceeds from issues of securities (shares,	3,396	869
options, etc.)
Proceeds from borrowings		1,111
Repayment of borrowings	(597)	(144)
Dividends paid
Other (provide details if material)		272
Net financing cash flows	2,799	2,108
Net increase (decrease) in cash held	253	(99)
Cash at beginning of period	89	188
(see Reconciliation of cash)
Exchange rate adjustments
Cash at end of period (see Reconciliation of cash)	342	89

Non-cash financing and investing activities

$\overline{\text{N/A}}$

Reconciliation of eash

Reconciliation of cash at the end of the period (as	Current period \$A'000	Previous
shown in the consolidated statement of cash flows) to		corresponding
the related items in the accounts is as follows.		period - \$A'000
Cash on hand and at bank	342	89
Deposits at call	$\boldsymbol{\ast}$
Bank overdraft
Other (provide details)	$\ddot{}$
Total cash at end of period	342	89

Earnings per security (EPS)

Details of basic and diluted EPS reported separately in accordance with paragraph 9 and 18 of $\overline{a}$ AASB 1027: Earnings Per Share has been calculated using a weighted average of 204,650,305 fully paid ordinary shares over 365 days to 30 June 2004.

NTA backing	Current period	Previous corresponding period
Net tangible asset backing per ordinary security	$(0.9)$ cents	$(0.7)$ cents

Control gained over entities having material effect

Name of entity (or group of entities)

$N/A$

Loss of control of entities having material effect

Name of entity (or group of entities)

$N/A$

Details of aggregate share of profits (losses) of associates and joint venture entities

Medical Monitors Limited has a 50% interest in Care Medical Limited, a company incorporated in the UK. The carrying value of the investment in Care Medical Limited at 30 June, 2004 is \$nil (30 June, 2003: Snil). There is a note regarding a contingent liability related to a dispute with former Directors of Care Medical and unaudited accounts presented to the company by the JV partner Primary Care Group, plc.

Additional notes to Appendix 4E

$\mathbf{I}$ Basis of accounts preparation

a) Basis of preparation of the preliminary report

The preliminary final report has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Urgent Issues Group Consensus Views. It has been prepared on the basis of historical costs and except where stated, does not take into account changing money values or current valuations of non-current assets.

These accounting policies have been consistently applied by each entity in the economic entity and. except where there is a change in accounting policy, are consistent with those applied in the 30 June 2003 Annual Financial Report.

This preliminary final report does not include full note disclosures of the type normally included in an annual financial report.

b) Going concern

The financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The consolidated entity incurred an operating loss of \$4.141 million during the year ended 30 June 2004, which included depreciation and amortisation charges of \$1.403 million, and had a deficiency of net current assets of \$0.307 million.

The Directors nevertheless believe that it is appropriate to prepare the financial statements on a going concern basis for the following reasons:

• The Company has recently announced that it has entered into a Memorandum of Understanding to establish an international licensing and distribution agreement with a US based investment group. This agreement is expected to be signed in September 2004. The terms of the proposed agreement include a minimum initial purchase of monitoring dvices of US\$690,000. A deposit on the initial supply of BPfone® and ECG recorders of US\$207,000 has been received since year end.
• The Directors are confident that further sales to major pharmaceutical companies and university / research clinics will be achieved as contemplated in the business plan.
• The Company believes it has sufficient working capital arrangements in place to be able to achieve the objectives as contemplated in the business plan.

The consolidated entity's ability to generate positive net cash flow in the twelve months from the date of this report, as contemplated in the business plan, is dependent on a number of factors but primarily on its ability to execute the licensing and distribution agreement in the US, to successfully develop UK and European markets, and the continued supply of monitoring devices from the manufacturer on a timely basis.

If the Company is unable to successfully develop the business as contemplated in the business plan, alternative strategies may be employed to either raise additional capital or debt funding, or reduce expenditure through a scale back of the international marketing initiatives.

In the event that the Company does not meet its planned revenue and cashflow targets, or successfully adopts alternative strategies in the period to October 2005, the Company may not be able to realise its assets, including intangible assets, and extinguish its liabilities in the normal course of business at the amounts stated in the financial report. Accordingly, the going concern basis used in the preparation of the financial report would not be appropriate.

$\overline{2}$ Contingent Liability

The Directors of Medical Monitors are in dispute with the Directors of a UK based company, Primary Care Group plc (PCG), which has a 50% joint venture interest in Care Medical Limited (UK). The Directors of Medical Monitors are in receipt of unaudited accounts, from the accountant acting for PCG, which allegedly present Medical Monitors with a share of the joint venture losses of GBP 55,000. These losses have arisen from the recharge of costs by PCG to the joint venture, and are being disputed by the Directors of Medical Monitors. The Directors of Medical Monitors have taken appropriate legal and accounting advice, and are of the opinion that the matter will be resolved favourably in due course with no significant further cost to the Company.

Subsequent Events 3

License and Distribution Agreement

Following the recent announcement of an international license and distribution agreement, Medical Monitors has received an initial payment of US\$207,000 in July 2004. This is a first tranche of payment from an agreed total of US\$690,000 (AU\$ 970,000) to be received by September 30, 2004, and represent sale and purchase of existing inventory of 3,000 BPfone units and 5,000 new ECG recorders (providing an increase in sales from ordinary activities of 54% from the previous year).

International Financial Reporting Standards

The Company will be required to prepare financial statements using Australian Standards that comply with International Financial Reporting Standards (IFRS), beginning with the half year ending 31 December 2005.

The Board of Directors has obtained professional advice in relation to the significant differences between Australian Accounting Standards and International Financial Reporting Standards (IFRS) affecting the company and is monitoring the IFRS reporting implications of proposed transactions. Based on advice received, no significant changes to systems or policies are expected, except as noted below.

Significant differences between Australian Accounting Standards and IFRS

This financial report has been prepared in accordance with Australian Accounting Standards and other financial reporting requirements (Australian GAAP). The differences between Australian GAAP and IFRS identified to date as potentially having a significant effect on the Consolidated Entity's financial performance and financial position are summarised below.

The summary should not be taken as an exhaustive list of all the differences between Australian GAAP and IFRS. No attempt has been made to identify all disclosures, presentation or classification differences that would affect the manner in which transactions or events are presented.

The consolidated entity has not quantified the effects of the differences discussed below. Accordingly, there can be no assurances that the consolidated financial performance and financial position as disclosed in this financial report would not be significantly different if determined in accordance with IFRS.

Regulatory bodies that promulgate Australian GAAP and IFRS have significant ongoing projects that could affect the differences between Australian GAAP and IFRS described below and the impact of these differences relative to the consolidated entity's financial reports in the future. The potential impacts on the consolidated entity's financial performance and financial position of the adoption of IFRS, including system upgrades and other implementation costs which may be incurred, have not been quantified as at the transition date of 1 July 2004 due to the short timeframe between finalisation of the IFRS standards and the date of preparing this report. The impact on future years will depend on the particular circumstances prevailing in those years.

Research and development costs

The Consolidated Entity currently expenses all development expenditures as incurred through the statement of financial performance except to the extent that its recovery is assured beyond reasonable doubt, in which case it is capitalised. IFRS requires that development costs be capitalised to the statement of financial position to the extent they meet certain recognition criteria including the ability to demonstrate the technical feasibility of developing an asset so that it will be available for use or sale and whether the development costs will generate probable economic benefits.

The company is still completing its assessment of development costs incurred in the period to 1 July 2004 to determine whether their costs meet the criteria for deferral under IFRS. Depending on the outcome of this assessment, an initial adjustment may be made to retained profits at 1 July 2004 to the extent that previously expensed development costs are capitalised, or alternatively, previously capitalised costs are expensed. After the transitional adjustment, development costs that satisfy the criteria for deferral will be capitalised to the statement of financial position and amortised to net profit over the period that the benefits are expected to be realised.

Options and share based payments

Equity based compensation in the form of shares and options will be recognised as an expense in the period during which the employee provides related services. The consolidated entity does not currently recognise an expense for options issued to employees, unless the options were issued in consideration for past services performed. On adoption of IFRS the consolidated entity will recognise an expense for options and will amortise the expense over the relevant vesting period

Goodwill

Goodwill will be tested for impairment annually with decrements in carrying value recognised in the statement of financial performance. Goodwill will no longer be amortised, resulting in a change in accounting policy as goodwill is currently amortised over a period not exceeding 5 years.

Income tax

The Consolidated Entity currently applies the "income statement" approach to account for income tax. Under IFRS, a "balance sheet" approach will be adopted, whereby deferred tax balances are recognised in the statement of financial position when there is a difference between the carrying value of an asset or liability and its tax cost base. The impact on the statement of financial position and earnings is not expected to be material.

Asset Impairment

Under AASB 136, the recoverable amount of Property. Plant and Equipment and Intangibles is determined as the higher of fair value less cost to sell and value in use. This will result in a change in the group's current accounting policy which determines the recoverable amount of an asset on the basis of undiscounted cash flow. Under the new policy it is likely that impairment of assets will be recognised sooner and that the amount of write downs will be greater. Reliable estimation of the future financial effects of this change in accounting policy is impracticable because the conditions under which impairment will be assessed are not yet known.

Business Combinations

Under the IFRS transition rules prescribed by AASB 1, the company can elect to restate previous business combinations in accordance with AASB 3 Business Combinations. Application of AASB 3 could result in changes to the value of Goodwill and Intangibles recognised on the statement of financial position, potentially reducing the level of future amortisation charges. The Company is currently assessing the potential impacts of restating its previous business combinations. As at the date of this report, no determination has been made on whether the elections in AASB 3 will be adopted.

4 Segment Reporting

Primary Segment Reporting: Business Segment	Consolidated
Segment Revenue:	2004	2003
	\$	\$
Medical Monitoring and Diagnostic Services	327,716	679,370
Mining Exploration	5,000	236,075
Total Segment Revenue	332,716	915,445
Unallocated Revenue	115,904	5,803
Total Revenue (There are no inter-segment revenues)	448,620	921,248
Segment Result:
Medical Monitoring Diagnostic Services Mining Exploration	(4, 141, 127)	(3,042,203) (10,000)
Segment result Unallocated corporate expenses	(4, 141, 127)	(3,052,203)
Loss from ordinary activities before income tax	(4, 141, 127)	(3,052,203)
Income tax benefit
Net loss	(4, 141, 127)	(3,052,203)
Depreciation and amortisation of fixed assets-- Medical Monitoring and Diagnostic Services	206,192	156,760
Depreciation and amortisation of fixed assets-Mining Exploration
Amortisation of intangibles-Medical Monitoring and Diagnostic Services	1,197,506	1,158,699

Segment Assets:	2004	2003
Medical Monitoring Diagnostic Services	7,736,236	9,084,013
Mining Exploration		5,000
Total Assets	7,736,236	9,089,013
Segment Liabilities:
Medical Monitoring Diagnostic Services	2,219,945	2,919,708
Mining Exploration
Unallocated corporate liabilities
Total Liabilities	2,219,945	2,919,708
Secondary Segment Reporting:- Geographical
Segment Revenue:
Australia	349,230	724,905
Italy	16,395	18,181
USA	82,995
UK		178,162
Total Revenue	448,620	921,248
Segmented Assets by Location of Assets
Australia	7,701,063	9,075,586

USA	24.938	13,427
UK	10,235
Total Assets	7.736,236	9,089,013

Annual meeting

The annual meeting of Medical Monitors Limited will be held as follows:

Place	Sydney
Date	November, 2004
Time	10:00 AM
Approximate date the + annual report will be available	30 September, 2004

Compliance statement

• This report has been prepared in accordance with AASB Standards, other AASB $\mathbf{1}$ authoritative pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX.
• $\overline{2}$ This report, and the accounts upon which the report is based (if separate), use the same accounting policies.
• $\overline{3}$ This report does give a true and fair view of the matters disclosed.
• $\overline{4}$ This report is based on accounts which are in the process of being audited.
• $\ddot{5}$ The entity has a formally constituted audit committee.

Sign here:

Print name:

Director Dr Allan Shell

31 August 2004 Date: