AI assistant
RAIDEN RESOURCES LIMITED Annual Report 2006
65675_rns_2006-09-28_8d652973-8ed8-4339-b368-bc5aefaad39a.pdf
Annual Report
Open in viewerOpens in your device viewer
MEDICAL MONITORS LIMITED
ACN 009 161 522
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2006
MEDICAL MONITORS LIMITED ACN 009 161 522 FINANCIAL REPORT
30 JUNE 2006
CONTENTS
| Managing Director's Report | 2 |
|---|---|
| Corporate Governance Statement | 4 |
| Directors' Report | 6 |
| Independence Declaration | 13 |
| Income Statement | 14 |
| Balance Sheet | 15. |
| Statement of Changes in Equity | 16 |
| Statement of Cash Flows | 17 |
| Notes To the Financial Statements | 18 |
| Directors' Declaration | 46 |
| Independent Auditor's Report | 47 |
| Additional Information for Publicly Listed Companies | 49 |
CORPORATE DETAILS
| Directors: | Dr Allan Shell (Chairman & Managing Director)Mr Neville BuchMr John GennerMr Boris PatkinMr Harry Platt |
|---|---|
| Company Secretary: | Richard Hyman |
| Registered Office: | Suite 407 Office TowerWestfield Eastgardens152 Bunnerong RoadEASTGARDENS NSW 2036 |
| Administration Office: | Suite 407 Office TowerWestfield Eastgardens152 Bunnerong RoadEASTGARDENS NSW 2036 |
| Share Registry: | Computershare Investor Services Pty LimitedLevel 2, 45 St Georges TerracePERTH WA 6000 |
| Auditors: | Sneddon McKeownLevel 2175 Scott StreetNEWCASTLE NSW 2300 |
Overview
The Directors have been seeking out new and exciting business opportunities that will provide for long term growth in the local, and in the international markets, to increase shareholder value. In that regard, the Company has entered into an exclusive 'option to purchase' agreement over health and lifestyle villages for the over 50s, as developed by Resort Lifestyle Developments, a subsidiary of Parkway Developments Australia (PDA).
While the Company has achieved considerable revenue benefits (up by $1.3 million, or 153% when compared to 2005) from its established trans-telephonic diagnostic monitoring products and services, this new investment strategy will provide significant tangible asset and rental income. The income will increase annually by CPI, and will have commercial market review adjustments every three (3) years. The first property purchased will be the Brisbane River Terraces, a fully developed health and lifestyle village situated on the .Brishane River
The Company intends to complete the purchase of a minimum of two additional village properties by the end of 2006, supported by approved Bank finance and private placement funding. PDA itself will accept an agreed Medical Monitors, $of$ percentage of equity in as part the final purchase price.
In addition, shareholders should benefit over the long term from the imminent listing of the Company's international distributor. Primedical International Holdings (PMH), on the USA's NASDAQ OTC, The PMH wholly owned subsidiary, iCardia Healthcare Corporation of Chicago, has been very successful with Medical Monitors' newly designed and developed ECG monitor (the suPER $\bar{w}$ ) in the US market – with significant business milestones already reached, and the resultant sales revenue for Medical Monitors.
As recently announced, the Company has signed a deed of sale for the transfer of relevant Intellectual Property, to PMH, that will be subject to shareholder approval at the forthcoming General Meeting of Shareholders. The final consideration for this sale, will further consolidate an equity position of an approximate 30% stake in the newly formed PMH. Once listed, PMH intends to raise additional capital that will be used to fund the expansion of the international business.
As part of the new business strategy, the Company has been actively seeking to licence off its Australian monitoring service to a third party, in order to reduce infrastructure costs, and at the same time be able to expand the service through the development of new medical monitoring products for the market. This will be particularly important for the growing population of over 50's "baby boomers", where one in three people are considered to have a cardiovascular condition requiring long term management. This group will also be a new channel to market for the service through the acquired over 50's health and lifestyle villages.
In the past, the Company has been a successful applicant to available government grants for new product R&D. Ultimately these same new monitoring packages should find similar support as they make their way into the international markets through PMH - and provide for additional revenue opportunity to the Company.
Private Placement, Share Capital Reconstruction and Small Shareholder Buy-back
During the year, the Company successfully raised funds through private placement for additional working capital and to support the successful international roll out of product and services across a number of markets. The raising of funds was achieved with the strong support of both existing and new sophisticated private investors.
Importantly, the Share Capital reconstruction and Small Shareholder Buy-back program were well supported by shareholders, and confirmed their support for the Company's current and future anticipated activities. The Company has now markedly reduced its shareholder cost base, and has some 1200 shareholders on the (Computershare) Register.
Finally, we thank all of the shareholders for their continued and very solid support, and the Company's employees for their significant input during the year. We believe that the future will continue to consolidate the opportunities that have been created and provide for substantial revenues and sustainable profits.
Dr Allan Shell Managing Director
MEDICAL MONITORS LIMITED ACN 009 161 522 CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2006
The Board is responsible for the corporate governance of the consolidated entity. It monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.
At the date of this report, an Audit Committee has been established and is responsible to the Board of Directors. There being only five Directors of the Company, all other matters are dealt with by the Board of Directors.
The Board of Directors usually holds six scheduled meetings each year, plus strategy meetings and any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise.
The following formalises the main corporate governance practices established to ensure the Board is well equipped to discharge its responsibilities:
Composition of the Board
The composition of the Board shall be determined in accordance with the following principles and quidelines:
- The Board shall comprise at least 3 Directors, increasing where additional expertise is considered desirable in certain areas:
- The Board shall not comprise a majority of executive Directors; and
- Directors shall bring characteristics, which allow a mix of qualifications, skills and experience.
While there is no formal review process in place, in order to ensure that the Board continues to discharge its responsibilities in an appropriate manner, the performance of all Directors is informally reviewed by the Chairman. Directors whose performance is unsatisfactory may be asked to retire.
The Board's Performance and Communication to Shareholders
The Board of Directors aims to ensure that the shareholders, on behalf of whom they act, are informed of all information necessary to assess the performance of all Directors. Information is communicated to the shareholders through:
- Annual Report which is distributed to all shareholders, and posted on the ASX site www.asx.com.au.
- The Half-vearly Reports is posted on the ASX site www.asx.com.au
- The Annual General Meeting and other meetings called to obtain approval for Board action as appropriate
- The Company's compliance with ASX continuous disclosure requirements; and
- All public announcements and associated documents are made available on the Company website, at www.medmon.com.au
Internal Control Framework
The Board acknowledges that it is responsible for the overall internal control framework but recognises that no cost effective internal control system will preclude all errors and irregularities. The Board believes the current cost control framework to be suitable for the Company's current operations. There is no Internal Audit function as the cost would significantly outweigh the benefits.
The Role of Shareholders
The Board of Directors aims to ensure that the shareholders are informed of all major developments affecting the consolidated entity's state of affairs:
- Proposed major changes in the consolidated entity which may impact on share ownership rights are submitted to a vote of shareholders.
- Notices of all meetings of shareholders are made available to shareholders.
MEDICAL MONITORS LIMITED ACN 009 161 522 CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2006
The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the consolidated entity's strategy and goals. Important issues are presented to the shareholders as single resolutions.
The shareholders are requested to vote on the appointment and aggregate remuneration of directors, the granting of options and shares and changes to the Constitution. Copies of the Constitution are available to any shareholder who requests it.
The External Auditor is to attend the Annual General Meeting and is available to answer shareholder questions about the conduct of the audit and the preparation and content of the Auditor's report.
Conflict of interest
In accordance with the Corporations Act 2001 and the company's constitution, the directors must keep the Board advised on an ongoing basis of any interests that could potentially conflict with those of the company. Details of director related entity transactions with the Company and the consolidated entity are set out in Note 13.
Directors dealings in Company shares
The Constitution permits Directors to acquire shares in the Company. Company policy prohibits directors from dealing in Company shares or exercising options whilst in possession of price sensitive information.
Independent Professional Advice
Each Director will have the right to seek independent professional advice at the Company's expense. However, prior approval by the Chairman will be required, which will not be unreasonably withheld.
Audit Committee
The role of the Audit Committee is documented in a Charter which is approved by the Board of Directors. The role of the Committee is to advise on the establishment and maintenance of a framework of internal control and appropriate ethical standards for management of the consolidated entity.
The external auditors were invited to Audit Committee meetings, and the committee met two times during the vear.
The responsibilities of the Audit Committee include:
- Reviewing the financial report and other financial information distributed externally
- Reviewing external audit reports to ensure that where major deficiencies or breakdowns in controls or procedures have been identified, prompt and remedial action is taken by management
- Review the nomination and performance of the auditor.
Members of the Audit Committee for 2006 are Neville Buch, John Genner. The attendance record of the Audit Committee is disclosed in the Directors' Report.
Business Risk Management
The Board will monitor and receive advice on areas of operational and financial risk, and consider strategies for appropriate risk management arrangements.
Specific areas which were initially identified and which will be regularly considered by at Board Meetings include foreign currency fluctuations, performance of activities, human resources, the environment and continuous disclosure obligations.
Ethical Standards
The Board's policy is for the Directors and management to conduct themselves with the highest ethical standards. All Directors and employees will be expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the consolidated entity.
Your Directors present their report on the Company and its controlled entities for the year ended 30 June 2006
Directors
The names of Directors in office at any time during or since the end of the year are:
Dr Allan Shell (Chairman & Managing Director) Mr Neville Buch Mr John Genner Mr Boris Patkin Mr Harry Platt
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
Company Secretary
The following person held the position of Company secretary at the end of the financial year:
Richard Hyman (B.Comm) was appointed as company secretary as of December 2004. He has a wide experience in management and administration in small to medium sized companies.
Principal Activities
The principal activity of the consolidated entity is the provision of diagnostic medical services.
Medical Monitors has designed, and is marketing worldwide, a number of unique products and services for monitoring of blood pressure and heart conditions. It is the only provider of an Australia-wide home based, transtelephonic, cardiac monitoring service.
Operating Results
Over the year, the Company has continued to develop business opportunities in Australia and overseas. This culminated in a significant increase in revenue from ordinary activities of 153%, when compared to the corresponding period in the previous year.
This was due mainly to the growth of the monitoring business in the USA, with the related increase in sales revenue stream to the Company of $1,319,660.
The improved loss position (down 53%) was associated with the increased revenue and the overall general cost reduction in operation. Additional R&D write downs were not incurred, as in the past.
In addition, the Company has entered a new phase of investment with the option to purchase over 50's health and lifestyle villages around Australia. Once purchased, these will provide an additional source of income, as well as a new channel to market the monitoring service and products.
Dividends Paid or Recommended
No dividends have been paid by the Company during the financial year ended 30 June 2006 (2005: nil), nor have the Directors recommended that any dividend be paid.
Likely Developments and Expected Results
As previously announced, the distribution and licensing arrangement with Primedical International, and through iCardia Healthcare Corporation, for ECG monitoring in the USA has been very successful. In particular, the newly designed and developed ECG monitor (the suPER ™) for the US market has been very well received –with significant business milestones already reached by iCardia. As well, the BPfone® blood pressure monitoring devices being used in specialist research programmes, in the USA and the UK, has further consolidated the commercial opportunity for ongoing sales revenues in the international markets.
More recently, the Company has provided information to the ASX regarding the impending listing of Primedical International on the NASDAQ OTC, as Primedical International Holdings (PMH). Medical Monitors will hold an initial 30% equity position in the new company and the listing will provide for a significant asset to the Company. PMH will be well placed for access to additional funding to grow the international business, with the resultant investor benefit to Medical Monitors shareholders over the long term.
Future Developments, Prospects and Business Strategies
The Company has recently entered into an exciting new phase of business opportunity, with its involvement in the 'over 50s' health and resort lifestyle village communities. The recent purchase of the Brisbane River Terraces project (BRT), as developed and completed by Resort Lifestyle Developments (RLD) of Queensland. is the first in this new investment strategy. The Company will purchase more completed villages over this year. which will provide for a solid long term and secure income to the Company.
As recently announced, the Company has signed a 'first right of refusal to purchase' option for future completed developments with the principals of RLD, a wholly-owned subsidiary of Parkway Developments Australia (PDA). The PDA group has more than 20 years experience in the building development and marketing of commercial property, particularly for the low to medium density 'high quality' end of the residential sector for the over 50's.
The strategy to invest in income producing and completed over 50's villages, will provide for ongoing annual rental income to the Company, coupled with the existing revenue stream from the Company's monitoring products and services - particularly for manufactured monitoring devices delivered to the iCardia Healthcare Corporation, the USA-based monitoring service owned by the overseas distributor Primedical International.
Primedical International will further enhance the Company's investment strategy, through its imminent listing on the NASDAQ OTC as Primedical International Holdings (PMH). PMH will become the major distributor of MDM's monitoring technology to the UK, USA and European markets and MDM will maintain approximately a 30% initial equity stake in PMH.
Significantly, the Company's investment in the over 50's villages in Australia will provide direct access to an existing client base to develop new medical monitoring packages targeting the growing baby boomer population, and through PMH will have a direct channel to the international market. It is considered that one in three people in the over 50's population will have a cardiovascular problem requiring long term management.
Review of Operations
Growth of Business
Over the year, the Company had a significant increase in sales by 153%, equating to $1,319,660. This was particularly related to the growth in the USA monitoring business. The Directors believe that the coming vear will provide for sustainable strong commercial growth, with continuing significant sales expected from its overseas operations.
A Share Capital reconstruction, and a completed Small Shareholder buy-back program further reduced regulatory and stock exchange expenses, contributed to an improvement in the Company's net losses (down by 53%).
The imminent listing of Medical Monitors' international distributor, Primedical International, on the NASDAQ OTC supports the Company's focus on becoming a significant provider of home based cardiac monitoring services in the overseas markets, particularly to the pharmaceutical industry and to healthcare providers.
Research and Development
Research and Development activities have continued during the year, both in relation to the development of new products and further enhancements to the Company's existing products and services, to deliver leading edge, low cost based monitoring products. This has been a critical factor in successfully penetrating highly lucrative overseas markets and the success of sales of the suPER ECG monitors in the USA. Commonwealth Government tax credit support again offset some of the eligible R&D expenses.
Sale of Assets
There were no sales of Company assets during the year.
Financial Position
As noted, the Company's ability to generate positive net cash flow in the twelve months from the date of this report is contingent upon the ability to finalise the proposed Primedical International transaction, and the continued supply of monitoring devices from the manufacturer on a timely basis.
Importantly, the Company has announced that it has taken up its first 'option to purchase' a health and lifestyle village for the over 50s in Queensland, and the purchase of its first property which will provide a tangible asset and initial rental income of $525,000 per year. The rental income increases annually by CPI, as well as market review adjustments every 3 years. Further, an exclusive option has been signed with the principals of Parkway Developments Australia, to acquire additional villages.
The Company intends to complete a minimum of 2 additional purchases by the end of 2006, thereby increasing the net revenue by a further $500,000 per annum and increasing its asset base. In addition, shareholders have supported the Company by approving the issue of 25 million additional shares (up to November 30, 2006) to provide for future private placements to the sophisticated investor community.
The Directors therefore believe that the company has sufficient working capital arrangements in place to be able to achieve its objectives as contemplated in the Company's business plan
Significant Changes
For significant changes refer Note 28 Subsequent Events.
Information on Directors
The names and details of Directors holding office at any time during or since the end of the year are:
| Dr Allan Shell | Dr Shell has over 25 years experience in clinical medicine as a medicalpractitioner in private practice, and in private and public hospital systemsin Australia and the UK. He also has significant experience in telemedicine | |||||
|---|---|---|---|---|---|---|
| Managing Director &Chief Medical OfficerDirector since 18 June 2001 | and related technology products for the healthcare sector. | |||||
| Chairman since Feb 2004Age 56 | Dr Shell is a member of the Royal Australian College of MedicalAdministrators and a member of the Australian Institute of CompanyDirectors. He is also a Director and Board member of the Wolper Hospital,in Sydney. | |||||
| Dr Shell is responsible for the day-to-day activities of the Company andoperation of the monitoring service, and is acting Chairman of the Board. | ||||||
| Mr Harry Platt | Mr Platt has more than 20 years experience in the development andmanagement of technology projects and has a background in biomedical | |||||
| Operations DirectorDirector since 18 June 2001Age 51 | technology consulting. He has consulted to several major medicalcompanies in the area of cardiac technology and has conducted, andpublished, research in cardiac electrophysiology and monitoring. | |||||
| Mr Platt is responsible for management and product development. Inaddition, he provides ongoing advice on the technical direction of theCompany. | ||||||
| Mr John Genner | Mr Genner has a background in finance and accounting. Forapproximately 9 years he was the chief executive of a national mortgage | |||||
| Non-Executive DirectorDirector since 18 June 2001Age 66 | insurance company. For approximately 19 years he has operated as aprivate investor and company director. | |||||
| Mr Genner is Managing Director of the ASX listed BQT Solutions Limited. | ||||||
| Mr Boris Patkin | Mr Patkin has a background in financial management and marketing. He | |||||
| Non-Executive DirectorDirector since 16 Feb 2004Age 55 | has worked in senior management for a large multinational in Australia,and has been involved in corporate and financial restructuring andinternational trade. | |||||
| Mr Patkin holds directorships in two other public companies, and is activein promoting good investor relations for the Company. | ||||||
| Mr Neville Buch | Mr Buch has a background in global marketing, strategy and major | |||||
| Non-Executive DirectorDirector since 16 Feb 2004Age 42 | account sales. He has had significant experience in the USA, Europe andAsia, as an executive of a major US-based medical, electronic andsecurity conglomerate. | |||||
| Mr Buch has taken on a number of Directorships with un-listed Australiantechnology companies in an advisory role and is currently Chairman ofArtist and Entertainment Group Ltd. He is the Chairman of MedicalMonitors' Audit Committee |
Remuneration Report
The remuneration structure for Directors, secretaries and senior managers is based on the following factors:
- length of service $\bullet$
- experience of the individual concerned $\bullet$
- the overall performance of the market in which the Company is in $\bullet$
- the overall performance of the Company $\bullet$
Details of the nature and amount of each element of the remuneration of each Director and each of the remunerated officers:
a) Non-executive Directors Remuneration
| Post EmploymentPrimary BenefitsEquity | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2006 - Name | Salary,Fees8.Commissions Contributions Bonus | Super-annuation | Cash | Non-CashBenefits | Superannuation | Shares | Options | Other | Total |
| U GennerN Buch | $\overline{\phantom{a}}$ | $\overline{\phantom{m}}$$\overline{\phantom{m}}$ | $\overline{\phantom{m}}$ | 18,00018,000 | $\cdot$ | $\blacksquare$$\blacksquare$ | 18,00018,000 | ||
| TOTAL | $\blacksquare$ | $\blacksquare$ | $\overline{\phantom{a}}$ | 36,000 | $\blacksquare$ | 36,000 | |||
| 2005 - NameDr J GoldbergU GennerB PatkinN Buch | 16,000112,087 | $\blacksquare$$\overline{\phantom{m}}$$\blacksquare$$\overline{r}$ | $\blacksquare$$\blacksquare$$\blacksquare$ | 18,0009,000 | $\blacksquare$$\blacksquare$$\blacksquare$$\blacksquare$ | 16,00018,000112,0879,000 | |||
| TOTAL | 128,087 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 27,000 | $\blacksquare$ | 155,087 |
b) Executive Directors Remuneration
| Post | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Primary Benefits | Employment | Equity | |||||||
| 2006 - Name | Salary,Fees& | Super-annuation Commissions Contributions | Cash | Non-Cash | Bonus Benefits Superannuation | Shares | Options | Other | Total |
| Dr A Shell | 170,400 | $\blacksquare$ | $\blacksquare$ | - | $\cdot$ | $\mathbf{r}$ | 170,400 | ||
| $H$ Platt | 165,660 | ÷ | $\blacksquare$ | ÷ | $\mathbf{r}$ | $\sim$ | 165,660 | ||
| B Patkin | 116,555 | $\overline{a}$ | $\blacksquare$ | $\overline{\phantom{a}}$ | 116,555 | ||||
| TOTAL | 452,615 | $\blacksquare$ | $\blacksquare$ | $\overline{r}$ | $\overline{r}$ | $\overline{\phantom{a}}$ | 452,615 | ||
| 2005 - Name | |||||||||
| Dr A Shell | 176,500 | $\blacksquare$ | $\blacksquare$ | $\mathbf{r}$ | 176,500 | ||||
| $H$ Platt | 140,560 | $\blacksquare$ | ÷ | $\mathbf{r}$ | $\overline{\phantom{m}}$ | 140,560 | |||
| TOTAL | 317,060 | $\blacksquare$ | $\blacksquare$ | $\mathbf{r}$ | $\overline{a}$ | $\cdot$ | 317,060 |
Remuneration Report (Continued)
Directors' Share and Option Holdings as of the date of this report
| 2006 | 2005 | |||
|---|---|---|---|---|
| Shares* | Options** | Shares* | Options** | |
| J Genner | 1,425,186 | $\blacksquare$ | 6,675,926 | $\overline{\phantom{a}}$ |
| H Platt | 3,581,196 | $\blacksquare$ | 17.905.979 | $\mathbf{r}$ |
| Dr A Shell | 3,904,957 | $\blacksquare$ | 19,323,836 | $\blacksquare$ |
| N Buch | 131.800 | $\mathbf{m}$ | 209.000 | $\mathbf{m}$ |
| B Patkin | 1,291,786 | $\blacksquare$ | 1,550,000 | $\blacksquare$ |
* During February 2006, the entity consolidated it share capital on a 5 for 1 basis.
** All options expired on 30 June 2005
Note:
$\overline{1}$ ) Dr A Shell has increased his holding in Shares indirectly, through a shareholding in a private Australian company, Moside Pty Ltd., and in Arana Superannuation Fund, in which he is a beneficiary. The Shares have been purchased 'on market' during the year. The total of Shares also includes those held by Kaitek International Pty Ltd, of which he is a Director and a beneficiary
ii) Mr H Platt's total of Shares also include those held by Morgan Tomas & Maxwell Pty Ltd, of which he is a Director and a beneficiary
iii) Mr Patkin has purchased Shares in the Company 'on market' during the year.
Meetinas of Directors
During the year, meetings of Directors (including committees) were held. Attendances were:
| Director | Directors' Meetings | Audit Committee Meetings | |||
|---|---|---|---|---|---|
| No. Eligible toAttend | No. Attended | No. Attended | |||
| N Buch | |||||
| J Genner | |||||
| B Patkin | |||||
| H Platt | |||||
| Dr A Shell |
Matter Subsequent to the End of the Financial Year
For matters subsequent to the end of the financial year refer Note 28 Subsequent Events.
Indemnifying Officers or Auditor
As stated in the Constitution of the Company, "except as may be prohibited by the Corporations Law, every Officer, auditor or agent of the Company shall be indemnified out of the property of the Company, against liability incurred by him in his capacity as Officer or auditor or agent of the Company".
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit Services
The board of directors, in accordance with advice from the audit committee, is satisfied that nil non-audit services were performed by the auditors during the year.
Interest in Contract
Messrs. Platt and Shell have a direct interest in Health Care Link Pty Ltd, a private Australian company, that is occasionally contracted to carry out R&D tasks for Medical Monitors. The terms of payment are of a reasonable competitive and commercial basis.
Environmental Issues
The Company is no longer involved in exploration or in the mining of tenements within Australia. The Directors are not aware of any significant breach, or pending legal action, in the period covered by this report.
Auditor's Independence Declaration
The Board of Directors of Medical Monitors Limited can confirm the independence of Sneddon McKeown in its capacity as the Company's auditor.
The auditor's independence declaration for the year ended 30 June 2005 has been received and can be found on page 13 of the financial report.
Signed in accordance with a resolution of the Board of Directors.
Dr Allan Shell Managing Director
29 September 2006
AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF MEDICAL MONITORS LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2006 there have been:
- $(i)$ no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
- $(ii)$ no contraventions of any applicable code of professional conduct in relation to the audit
SNEDDON McKEOWN
min ا د.
MJ MAYBURY Partner
22 September 2006 175 Scott Street, Newcastle NSW 2300
13 Chartered Accountants 13 Chartered Accountants200 2300 2300 2310 phone: 02 4907 7222 fax: 02 4929 6759
Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation.
INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2006
| Consolidated | The Company | |||
|---|---|---|---|---|
| 2006 | 2005 | 2006 | 2005 | |
| Note | $ | $ | $ | $ |
| Revenue from sale of goods | 762,528 | 253,956 | 762,528 | 232,400 |
| Revenue from rendering of services | 135,214 | 157,055 | 2,000 | 38,288 |
| Other revenues from ordinary activities | 421,918 | 109,832 | 421,916 | 85,817 |
| 3Total revenue from ordinary activities | 1,319,660 | 520,843 | 1,186,444 | 356,505 |
| Borrowing costs | 140,918 | 132,530 | 133,589 | 104,042 |
| Changes in inventories of finished goods | 379,206 | 131,623 | 369,556 | 72,710 |
| Consulting expenses | 1,016,515 | 1,082,086 | 968,781 | 1,031,504 |
| Corporate Expenses | 277,212 | 482,652 | 275,398 | 425,328 |
| Depreciation and amortisation | 146,113 | 197,066 | 70,493 | 116,177 |
| Foreign currency loss | 20,173 | 4,364 | 20,173 | 4,368 |
| International Marketing expenses | 77,878 | 244,348 | 77,878 | 244,348 |
| Other expenses from ordinary activities | 296,284 | 325,694 | 290,552 | 265,641 |
| Provision for writedown in prepayments | 319,887 | 319,887 | ||
| Provisions for writedown of intangibles | 253,224 | 231,407 | ||
| Provisions for writedown of investment | 5,170,754 | |||
| Provisions for writedown of inventory | 254,144 | 131,442 | 254,144 | 131,442 |
| Provisions for writedown of receivables from other entities | 131,119 | 2,425,305 | ||
| Provisions for writedown of research and development | 176,011 | 176,011 | ||
| Rent expenses | 73,400 | 112,780 | 73,400 | 72,372 |
| Staff expenses | 453,928 | 648,831 | 453,928 | 522,624 |
| Loss from ordinary activities before income tax expense4 | (1,816,111) | (3,852,814) | (1,801,448) | (10, 957, 414) |
| Income tax benefit relating to ordinary activities | ||||
| (1,816,111) | (3,852,814) | (1,801,448) | (10, 957, 414) | |
| Non-owner transaction changes in equity | ||||
| Total changes in equity | (1,816,111) | (3,852,814) | (1,801,448) | (10, 957, 414) |
| Earnings Per Share (cents per share)25Basic EPSDiluted EPS - not materially different to basic EPS | (3.0) | (7.7) |
The accompanying notes form part of these financial statements.
BALANCE SHEET AS AT 30 JUNE 2006
| Consolidated | The Company | ||||
|---|---|---|---|---|---|
| 2006 | 2005 | 2006 | 2005 | ||
| Note | $ | $ | $ | $ | |
| CURRENT ASSETS | |||||
| Cash assets | 6 | 78,399 | 216,432 | 75,351 | 198,549 |
| Receivables | 7 | 1,209,129 | 579,332 | 1,459,123 | 575,283 |
| Inventories | 8 | 19,246 | 232,886 | 19,246 | 232,886 |
| Other current assets | 9 | 26,376 | 171,323 | 26,376 | 171,323 |
| TOTAL CURRENT ASSETS | 1,333,150 | 1,199,973 | 1,580,096 | 1,178,041 | |
| NON-CURRENT ASSETS | |||||
| Property, plant & equipment | 10 | 375,507 | 219,751 | 76,373 | 144,132 |
| Intangibles | 11 | 5,204,587 | 5,204,587 | ||
| Other financial assets | 12 | 2,830 | 2,830 | 2,639,093 | 2,639,093 |
| TOTAL NON-CURRENT ASSETS | 5,582,924 | 5,427,168 | 2,715,466 | 2,783,225 | |
| TOTAL ASSETS | 6,916,074 | 6,627,141 | 4,295,562 | 3,961,266 | |
| CURRENT LIABILITIES | |||||
| Payables | 14 | 1,312,871 | 1,096,458 | 1,312,429 | 1,085,561 |
| Interest bearing liabilities | 15 | 482,227 | 698,132 | 27,297 | 95,703 |
| Provisions | 16 | 62,598 | 75,571 | 62,598 | 75,874 |
| Other financial liabilities | 17 | 140,000 | 127,451 | ||
| TOTAL CURRENT LIABILITIES | 1,857,696 | 1,870,161 | 1,542,324 | 1,384,589 | |
| NON-CURRENT LIABILITIES | |||||
| Interest Bearing Liabilities | 15 | 2,038,925 | 906,918 | 1,898,925 | 906,418 |
| TOTAL NON-CURRENT LIABILITIES | 2,038,925 | 906,918 | 1,898,925 | 906,418 | |
| TOTAL LIABILITIES | 3,896,621 | 2,777,079 | 3,441,249 | 2,291,007 | |
| NET ASSETS | 3,019,453 | 3,850,062 | 854,313 | 1,670,259 | |
| EQUITY | |||||
| Contributed Equity | 18 | 35,746,633 | 34,761,131 | 35,746,633 | 34,761,131 |
| Reserves | 493,152 | 493,152 | 393,153 | 393,153 | |
| Accumulated losses | (33, 220, 332) | (31, 404, 221) | (35, 285, 473) | (33, 484, 025) | |
| TOTAL EQUITY | 3,019,453 | 3,850,062 | 854,313 | 1,670,259 |
The accompanying notes form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2006
| ShareCapital$ | Reserves$ | AccumulatedLosses$ | Total$ | |
|---|---|---|---|---|
| Consolidated: | ||||
| BALANCE AT 1 JULY 2004 | 32,574,548 | 493,152 | (27, 551, 407) | 5,516,293 |
| Contributions of equity net of transaction costs | 2,186,583 | 2,186,583 | ||
| Profit attributable to members of the parent entity | (3,852,814) | (3,852,814) | ||
| BALANCE AT 30 JUNE 2005 | 34,761,131 | 493,152 | (31, 404, 221) | 3,850,062 |
| Contributions of equity net of transaction costs | 985,502 | 985,502 | ||
| Profit attributable to members of the parent entity | (1,816,111) | (1,816,111) | ||
| BALANCE AT 30 JUNE 2006 | 35,746,633 | 493,152 | (33, 220, 332) | 3,019,453 |
| The Company: | ||||
| BALANCE AT 1 JULY 2004 | 32,574,548 | 393,153 | (22, 526, 611) | 10,441,090 |
| Contributions of equity net of transaction costs | 2,186,583 | 2,186,583 | ||
| Profit attributable to members of the parent entity | (10, 957, 414) | (10, 957, 414) | ||
| BALANCE AT 30 JUNE 2005 | 34,761,131 | 393,153 | (33, 484, 025) | 1,670,259 |
| Contributions of equity net of transaction costs | 985,502 | 985,502 | ||
| Profit attributable to members of the parent entity | (1,801,448) | (1,801,448) | ||
| BALANCE AT 30 JUNE 2006 | 35,746,633 | 393,153 | (35, 285, 473) | 854,313 |
The accompanying notes form part of these financial statements.
STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2006
| Consolidated | The Company | ||||
|---|---|---|---|---|---|
| 2006 | 2005 | 2006 | 2005 | ||
| Note | $ | $ | $ | S | |
| Cash Flows from Operating Activities | |||||
| Cash payments in the course of operations | (2,418,504) | (3, 144, 013) | (2,330,100) | (2,406,663) | |
| Cash receipts in the course of operations | 819,894 | 553,009 | 419,316 | (147, 296) | |
| Interest received | 1,759 | 29,856 | 1,757 | 6,344 | |
| Interest Paid | (140, 918) | (132, 530) | (133, 589) | (104, 042) | |
| Net Cash Used in Operating Activities | 22(b) | (1,737,769) | (2,693,678) | (2,042,616) | (2,651,656) |
| Cash Flows from Investing Activities | |||||
| Payments for plant and equipment | (301, 868) | (112, 967) | (2,734) | (92, 845) | |
| Proceeds from plant and equipment sold | 24,335 | ||||
| Research & Development Grant | 267,099 | 267,099 | |||
| Refund of security deposits | 150,308 | 150,000 | |||
| Net Cash provided by Investing Activities | (301, 868) | 328,775 | (2, 734) | 324,254 | |
| Cash Flows from Financing Activities | |||||
| Proceeds from share issue net of transaction costs | 985,502 | 2,186,583 | 985,502 | 2,186,583 | |
| Borrowings - secured | (27, 838) | (21,668) | |||
| Borrowings - unsecured | 1,161,790 | 153,832 | 1,022,290 | 186,650 | |
| Loans to controlled entities | 12,549 | (157, 694) | |||
| Repayment of Borrowings | (217, 850) | (79, 212) | (98, 189) | (5,237) | |
| Net Cash Provided by Financing Activities | 1,901,604 | 2,239,535 | 1,922,152 | 2,210,302 | |
| Net Increase (Decrease) in Cash Held | (138, 033) | (125, 368) | (123, 198) | (117, 100) | |
| Cash at the Beginning of the Financial Year | 216,432 | 341,800 | 198,549 | 315,649 | |
| Cash at the End of the Financial Year | 22(a) | 78,399 | 216,432 | 75,351 | 198,549 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2006
$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial report covers the economic entity of Medical Monitors Limited and controlled entities, and Medical Monitors Limited as an individual parent entity. Medical Monitors Limited is a listed public company, incorporated and domiciled in Australia.
The financial report of Medical Monitors Limited and controlled entities, and Medical Monitors Limited as an individual parent entity comply with all Australian equivalents to International Financial Reporting Standards (AIFRS) in their entirety.
The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
$(a)$ Basis of preparation
First-time Adoption of Australian Equivalents to International Financial Reporting Standards
Medical Monitors Limited and controlled entities, and Medical Monitors Limited as an individual parent entity have prepared financial statements in accordance with the Australian equivalents to International Financial Reporting Standards (AIFRS) from 1 July 2005.
In accordance with the requirements of AASB 1: First-time Adoption of Australian Equivalents to International Financial Reporting Standards, adjustments to the parent entity and consolidated entity accounts resulting from the introduction of AIFRS have been applied retrospectively to 2005 comparative figures excluding cases where optional exemptions available under AASB 1 have been applied. These consolidated accounts are the first financial statements of Medical Monitors Limited to be prepared in accordance with Australian equivalents to IFRS.
The accounting policies set out below have been consistently applied to all vears presented.
Reconciliations of the transition from previous Australian GAAP to AIFRS have been included in Note 2 to this report.
Reporting Basis and Conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
$1.$ STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 approximately $1.82 million during the year ended 30 June 2006, which was 53% less than for 2005, and included a depreciation and amortisation charge of $146K.
The Directors nevertheless believe that it is appropriate to prepare the financial statements on a Going Concern basis for the following reasons:
- As recently announced, the company has signed a deed of sale for the transfer of relevant Intellectual Property to Global Immune Technologies Incorporated (to be renamed Primedical International Incorporated), which is a listed NASDAQ OTC company. This sale is subject to shareholder approval at a forthcoming General Meeting of Shareholders. The final consideration for this sale will further consolidate an equity position of an approximate 30% stake in the newly formed Primedical International Incorporated, Primedical itself proposes to raise additional capital in the form of equity and debt that will be used to fund the expansion of the international business.
- The company is also seeking to licence its Australian monitoring service and has been in discussion with an established diagnostic company, for the exclusive Australian distribution of the company's medical monitoring technology. The company anticipates it will receive a licensing fee of approximately $500,000, and a royalty of 5% of sales, for the distribution of its technology and services to GP's and specialist's clinics.
- The Company has announced that it has taken up its first "option to purchase" a health and lifestyle village for the over 50's in Queensland. This provides a tangible asset and rental income of $525,000 per year. The rental income increases annually by CPI, as well as market review adjustments every 3 years. Further, an exclusive option has been signed, to acquire additional villages. The Company intends to complete a minimum of 2 additional purchases by the end of 2006, thereby increasing the net revenue by a further $500,000 per annum and increasing its asset base.
- As previously announced, the company intends to convert approximately 80% of its debts to equity. This is subject to shareholders approval.
- The company believes that it has sufficient working capital facilities available to enable it to meet its debts as an when they fall due. A 'line of credit' facility ($1,000,000) was established by the company with Director Dr A. Shell. As at 30 June 2006 the draw down on this facility was nil.
The consolidated entity's ability to generate positive net cash flow in the twelve months from the date of this report is dependent on a number of factors which include its ability to finalise the proposed Primedical transaction, and the continued supply of monitoring devices from the manufacturer on a timely basis.
The directors believe that the company has sufficient working capital arrangements in place to be able to achieve its objectives as contemplated in its business plan.
If the Company is unable to successfully develop the business as contemplated in the business plan, alternative strategies may be employed to secure alternate distribution arrangements, 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, 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.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
$\ddot{\mathbf{1}}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles of consolidation $(b)$
Controlled entities
The financial statements of controlled entities are included from the date control commences until the date control ceases. Outside interests in the equity and results of the entities that are controlled by the Company are shown as a separate item in the consolidated financial statements. Unrealised gains and losses and interentity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.
Associated entities
Associates are those entities, other than partnerships, over which the consolidated entity exercises significant influence and which are not intended for sale in the near future
In the consolidated financial statements, investments in associates are accounted for using the equity accounting principles. Investments in the associates are carried at the lower of the equity accounted amount and recoverable amount. The consolidated entity's equity accounted share of the associates' net profit or loss is recognised in the consolidated statement of financial performance from the date significant influence commences until the date significant influence ceases. Other movements in reserves are recognised directly in consolidated reserves.
Revenue Recognition $(c)$
Revenues are recognised at fair value of the consideration received net of the amounts of goods and services tax.
Revenue from rendering of services
Revenue from rendering of monitoring and diagnostic services is recognised in proportion to the stage of completion of the contract when the stage of the contract can be reliably measured.
Sale of Goods
Revenue from the sale of goods (net of returns, discounts and allowances) is recognised when the consolidated entity has passed control of the goods or other assets to the customer.
Interest Revenue
Interest revenue is recognised as it accrues.
Sale of Non-Current Assets
The gross proceeds of non-current asset sales are included as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed.
The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
$\ddot{\mathbf{1}}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$(d)$ Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax ("GST"), except where the amount of GST incurred is not recoverable from the Australian Taxation Office ("ATO"). In these circumstances GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.
Items are included in the Statement of Cash Flows are disclosed on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
$(e)$ Foreign Currency
Functional and presentation currency
The functional currency of each of the group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the vear-end exchange rate. Nonmonetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined
Exchange differences arising on the translation of monetary items are recognised in the income statement. except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.
Group companies
The financial results and position of foreign operations whose functional currency is different from the group's presentation currency are translated as follows:
- assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
- income and expenses are translated at average exchange rates for the period; and
- retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
$\ddot{\mathbf{1}}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$(f)$ Income tax
The charge for current income tax expense is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
Acquisitions of assets $(g)$
All assets acquired including property, plant and equipment and intangibles other than goodwill are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition. When equity instruments are issued as consideration, their market price at the date of acquisition is used as fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity subject to the extent off proceeds received, otherwise expensed
Where settlement of any part of cash consideration is deferred, the amounts payable are recorded at their preset value, discounted at the rate applicable to the company if a similar borrowing were obtained from an independent financier under comparable terms and conditions.
The costs of assets constructed or internally generated by the consolidated entity, other than goodwill, include the cost of materials and direct labour. Directly attributable overheads, and other incidental cost, are also capitalised to the asset.
Expenditure including that on internally generated assets is only recognised as an asset when the entity controls future economic benefits as a result of the costs incurred, it is probable that those future economic benefits will eventuate, and the costs can be measured reliably. Costs attributable to feasibility and alternative approach assessments are expensed as incurred.
Research and development costs
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.
Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$(a)$ Acquisitions of assets (continued)
Subsequent additional costs
Costs incurred on assets subsequent to initial recognition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the consolidated entity in future years. Costs that do not meet the criteria for capitalisation are expensed as incurred.
$(h)$ Receivables
Trade receivables and other receivables are recorded at amounts due less any provision for doubtful debts. The ability to recover amounts owed to the company are regularly assessed and specific provisions are made if required.
$(i)$ Inventories
Inventories are carried at the lower of cost and net realisable value. Cost includes direct materials, direct labour, other direct viable costs and allocated production overheads necessary to bring inventories to their present location and condition, based on normal operating capacity of the production facilities.
Net realisable value
Net realisable value is determined in the basis of each inventory line's normal selling pattern. Expenses of marketing, selling and distribution to customers are estimated and are deducted to establish net realisable value.
$(i)$ Investments in associates
Investments in associate companies are recognised in the financial statements by applying the equity method of accounting. The equity method of accounting recognised group's share of post-acquisition reserves of its associates.
Leased assets $(k)$
Leases under which the company or its controlled entity assume substantiality all the risks and benefits of ownership are classified as finance leases. Other leases are classified as operating leases.
Finance leases
Finance leases are capitalised. A lease asset and a lease liability equal to the present value of the minimum lease payments are recorded at the inception of the lease.
Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed. Contingent rentals are expensed as incurred.
Operating leases
Payments made under operating leases are expensed on a straight line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$(1)$ Intangibles
Goodwill
Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold,
Patents and trademarks
Patents and trademarks are recognised at cost of acquisition. Patents and trademarks have a finite life and are carried at cost less any accumulated amortisation and any impairment losses. Patents and trademarks are amortised over their useful life ranging from 15 to 20 years.
Research and development
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.
Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.
$(m)$ Property plant and equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.
Property
Freehold land and buildings are shown at their fair value (being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction), based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.
Plant and equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the economic entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$(m)$ Property plant and equipment (continued)
Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation reserve in equity. Decreases that offset previous increases of the same asset are charged against fair value reserves directly in equity; all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement and depreciation based on the asset's original cost is transferred from the revaluation reserve to retained earnings.
Depreciation and amortisation $(n)$
Useful Lives
The depreciation and amortisation rates used for each class of each class of non-current asset in the current and prior year are as follows:
Property, plant and equipment 13-40%
$(0)$ Impairment of Assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Pavables $(a)$
Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and/or services.
Employee Entitlements $(q)$
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.
Provisions made in respect of wages and salaries, annual leave, and other employee entitlements expected to be settled within 12 months, are measured at their nominal values.
Provisions made in respect of other employee entitlements which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by employees up to the reporting date.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$(r)$ Provisions
A provision is recognised when a legal or constructive obligation exists as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability, except where noted below.
$(s)$ Capital Raising Costs
Costs incurred in relation to the proposed and foreseeable issue of share capital are capitalised as a current asset pending the issue of the shares to which they relate. On issue of these shares the balance of the capitalised share issue costs are recognised in contributed equity.
$(t)$ Employee share and option plans
Where shares or options are issued to employees as remuneration for past services, the difference between fair value of the shares or options issued and the consideration received, if any, from the employee is expensed. The fair value of these shares or options issued is recorded as contributed equity.
Other share or options issued to employees are recorded in contributed equity at the fair value of consideration received if anv.
Transaction costs associated with issuing shares and options are recognised in equity subject to the extent of the proceeds received, otherwise expensed. Other administrative costs are expensed.
$(u)$ Financial Instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.
Financial assets at fair value through profit and loss
A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management and within the reguirements of AASB 139: Recognition and Measurement of Financial Instruments. Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.
Held-to-maturity investments
These investments have fixed maturities, and it is the group's intention to hold these investments to maturity. Any held-to-maturity investments held by the group are stated at amortised cost using the effective interest rate method.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
$\mathbf{1}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$(u)$ Financial instruments (continued)
Available-for-sale financial assets
Available-for-sale financial assets include any financial assets not included in the above categories. Availablefor-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.
Impairment
At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.
$(v)$ Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
(a) Critical accounting estimates and assumptions
The entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Estimated impairment of intangible assets
The Group tests annually whether intangible assets have suffered any impairment, in accordance with the accounting policy stated in Note 1 (o). No impairment has been recognised in respect of intangible assets for the year ended 30 June 2006.
| PreviousGAAP$ | Economic EntityAdjustmentson introductionof AIFRS$ | AIFRS$ | |
|---|---|---|---|
| 2 FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTSTO INTERNATIONAL FINANCIAL REPORTING STANDARDS(AIFRS) | |||
| Reconciliation of Equity at 1 July 2004 | |||
| CURRENT ASSETS | |||
| Cash assets | 341,800 | 341,800 | |
| Receivables | 187,407 | 187,407 | |
| Inventories | 390,557 | 390,557 | |
| Other current assets | 434,240 | 434,240 | |
| TOTAL CURRENT ASSETS | 1,354,004 | 1,354,004 | |
| NON-CURRENT ASSETS | |||
| Property, plant & equipment | 328,181 | 328,181 | |
| Intangibles | 5,204,591 | 5,204,591 | |
| Capitalised research and development | 696,334 | 696,334 | |
| Other financial assets | 153,138 | 153,138 | |
| TOTAL NON-CURRENT ASSETS | 6,382,244 | 6,382,244 | |
| TOTAL ASSETS | 7,736,248 | 7,736,248 | |
| CURRENT LIABILITIES | |||
| Payables | 1,010,156 | 1,010,156 | |
| Interest bearing liabilities | 448,425 | 448,425 | |
| Provisions | 49,005 | 49,005 | |
| TOTAL CURRENT LIABILITIES | 1,507,586 | 1,507,586 | |
| NON-CURRENT LIABILITIESInterest bearing liabilities | 712,369 | 712,369 | |
| TOTAL NON-CURRENT LIABILITIES | 712,369 | 712,369 | |
| TOTAL LIABILITIES | 2,219,955 | 2,219,955 | |
| NET ASSETS | 5,516,293 | 5,516,293 | |
| EQUITY | |||
| Contributed Equity | 32,574,548 | 32,574,548 | |
| Reserves | 493,152 | 493,152 | |
| Accumulated losses | (27, 551, 407) | (27, 551, 407) | |
| TOTAL EQUITY | 5,516,293 | 5,516,293 | |
| PreviousGAAP$ | Economic EntityAdjustmentson introductionof AIFRS$ | AIFRS$ | ||
|---|---|---|---|---|
| 2 | FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTSTO INTERNATIONAL FINANCIAL REPORTING STANDARDS(AIFRS) (cont'd) | |||
| Reconciliation of Equity at 30 June 2005 | ||||
| CURRENT ASSETSCash assets | 216,432 | 216,432 | ||
| Receivables | 579,332 | 579,332 | ||
| Inventories | 232,886 | 232,886 | ||
| Other current assets | 171,323 | 171,323 | ||
| TOTAL CURRENT ASSETS | 1,199,973 | 1,199,973 | ||
| NON-CURRENT ASSETS | ||||
| Property, plant & equipment | 219,751 | 219,751 | ||
| Intangibles | 4,084,695 | 1,119,892 | 5,204,587 | |
| Other financial assets | 2,830 | 2,830 | ||
| TOTAL NON-CURRENT ASSETS | 4,307,276 | 1,119,892 | 5,427,168 | |
| TOTAL ASSETS | 5,507,249 | 1,119,892 | 6,627,141 | |
| CURRENT LIABILITIES | ||||
| Payables | 1,096,458 | 1,096,458 | ||
| Interest bearing liabilities | 698,132 | 698,132 | ||
| Provisions | 75,571 | 75,571 | ||
| TOTAL CURRENT LIABILITIES | 1,870,161 | 1,870,161 | ||
| NON-CURRENT LIABILITIES | ||||
| Interest bearing liabilities | 906,918 | $\overline{\phantom{a}}$ | 906,918 | |
| TOTAL NON-CURRENT LIABILITIES | 906,918 | 906,918 | ||
| TOTAL LIABILITIES | 2,777,079 | $\blacksquare$ | 2,777,079 | |
| NET ASSETS | 2,730,170 | 3,850,062 | ||
| EQUITY | ||||
| Contributed Equity | 34,761,131 | 34,761,131 | ||
| Reserves | 493,152 | 493,152 | ||
| Accumulated losses | (32,524,113) | 1,119,892 | (31, 404, 221) | |
| TOTAL EQUITY | 2,730,170 | 1,119,892 | 3,850,062 |
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
| PreviousGAAP$ | Economic EntityAdjustmentson introductionof AIFRS$ | AIFRS$ | ||
|---|---|---|---|---|
| 2 | FIRST-TIME ADOPTION OF AUSTRALIAN EQUIVALENTSTO INTERNATIONAL FINANCIAL REPORTING STANDARDS(AIFRS) (cont'd) | |||
| Reconciliation of Profit or Loss for 2005 | ||||
| Revenue from ordinary activities | 520,843 | 520,843 | ||
| Changes in inventories of finished goods | (263,065) | (263,065) | ||
| Corporate Expenses | (482, 652) | (482, 652) | ||
| Staff expenses | (648, 831) | (648, 831) | ||
| Consulting expenses | (1,082,086) | (1,082,086) | ||
| Rent expenses | (112,780) | (112,780) | ||
| Borrowing costs | (132, 530) | (132, 530) | ||
| Depreciation and amortisation | (1,492,969) | 1,119,892 | (373, 077) | |
| Foreign currency loss | (4, 364) | (4, 364) | ||
| Other expenses from ordinary activities | (325, 694) | (325, 694) | ||
| Provisions for writedown of intangibles | (253, 224) | (253, 224) | ||
| Provisions for writedown of receivables from other entities | (131, 119) | (131, 119) | ||
| Provision for writedown in prepayments | (319, 887) | (319, 887) | ||
| International Marketing expenses | (244, 348) | (244, 348) | ||
| Loss from ordinary activities before income tax expense | (4,972,706) | 1,119,892 | (3,852,814) | |
| Income tax expense | ||||
| Net loss attributable to members of the parent entity | (4,972,706) | 1,119,892 | (3,852,814) |
Notes to the reconciliations of equity and profit and loss at 1 July 2004, 31 December 2004 and 30 June 2005
(a) Under AASB 3, intangibles are no longer amortised but subject to annual impairment testing. Goodwill amounting to $526,932 previously amortised in the 2005 full financial year has been reversed in the income statement for the year ended 30 June 2005. Amortisation on Intellectual Property amounting to $592,960 previously amortised in the 2005 full financial year has been reversed in the income statement for the year ended 30 June 2005. Total amortisation for the year ended 30 June 2005 is $1,119,892.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)FOR THE YEAR ENDED 30 JUNE 2006
| Consolidated | The Company | ||||
|---|---|---|---|---|---|
| 2006$ | 2005$ | 2006$ | 2005$ | ||
| 3 REVENUE FROM ORDINARY ACTIVITIES | |||||
| Operating Activities: | |||||
| - Revenue from the sale of goods | 762,528 | 253,956 | 762,528 | 232,400 | |
| - Rendering of service revenue from ordinary | |||||
| activities | 135,214 | 157,055 | 2,000 | 38,288 | |
| 897,742 | 411,011 | 764,528 | 270,688 | ||
| Other revenue: | |||||
| - Interest received (other parties) | 1,759 | 29,856 | 1,757 | 6,344 | |
| - Sundry Income | 79,976 | 79,473 | |||
| - Government grant | 420,159 | 420,159 | |||
| 421,918 | 109,832 | 421,916 | 85,817 | ||
| Total Revenue from ordinary activities | 1,319,660 | 520,843 | 1,186,444 | 356,505 |
4 LOSS FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE
Loss from ordinary activities before income tax expense has been determined after:
| Cost of inventory sold | 379,206 | 131,623 | 369,556 | 72,710 |
|---|---|---|---|---|
| Provisions for writedown of inventory | 254,144 | 131,442 | 254,144 | 131,442 |
| Provisions for writedown of investment | 5,170,754 | |||
| Provisions for writedown of intangibles | 253,224 | 231,407 | ||
| Provisions for writedown of receivables from other | ||||
| entities | 131,119 | 2,425,305 | ||
| Provisions for writedown of capitalised research and | ||||
| development | 176,011 | 176,011 | ||
| Provision for writedown in prepayments | 319,887 | 319,887 | ||
| Depreciation of non-current assets: | ||||
| - Plant and office equipment | 69,654 | 60,224 | 17,623 | 13,410 |
| 69,654 | 60,224 | 17,623 | 13,410 | |
| Amortisation of non-current assets: | ||||
| - Leased equipment | 76,458 | 136,842 | 52,870 | 102,767 |
| 76,458 | 136,842 | 52,870 | 102,767 | |
| Total depreciation and amortisation | 146,112 | 197,066 | 70,493 | 116,177 |
| Borrowing costs | ||||
| - Interest and finance charges (other persons) | 140,918 | 132,530 | 133,589 | 104,042 |
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
| Consolidated | The Company | |||
|---|---|---|---|---|
| 2006$ | 2005$ | 2006$ | 2005$ | |
| LOSS FROM ORDINARY ACTIVITIES BEFORE4INCOME TAX EXPENSE (Continued) | ||||
| Legal feesNet foreign exchange loss/(gain)Write down in research and developmentBad and doubtful debts (trade debtors) | 45,85220,173 | 54,2774,368253,2241,517 | 45,85220,173 | 51,7484,368231,4071,517 |
| INCOME TAX5. | ||||
| (a) The prima facie income tax benefit on loss fromordinary activities before income taxis reconciled to the income tax as follows: | ||||
| Operating loss from ordinary activities | (1,816,111) | (4,972,706) | (1,801,448) | (10, 957, 414) |
| Prima facie tax benefit on loss from ordinaryactivities before income tax at 30% (2005: 30%) | (544, 833) | (1,491,812) | (540, 434) | (3,287,224) |
| Increase/(decrease) in income tax due to:Tax effect of: | ||||
| - Allowable research and development costs- Non-deductible amortisation of goodwill- Non-deductible provisions | (175,000)158,08039,335 | (175,000)2,278,817 | ||
| - Timing differences and tax losses not recognisedas future income tax benefits | 544,833 | 1,469,397 | 540,434 | 1,183,407 |
| Income tax expense or benefit attributable to lossfrom ordinary activities | ||||
| (b) No future income tax benefitshave been recognised. | ||||
| The directors estimate that the potentialfuture income tax benefit at 30 June2006 in respect of tax losses not brought | ||||
| to account is: | 5,092,447 | 4,547,614 | 3,271,577 | 2,731,143 |
This future income tax benefit will only be obtained if:
(a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised:
(b) the conditions for deductibility imposed by tax legislation continue to be complied with; and
(c) no changes in tax legislation adversely affect the economic entity in realising the benefit.
| Consolidated | The Company | |||
|---|---|---|---|---|
| 2006$ | 2005$ | 2006$ | 2005$ | |
| 6 CASH ASSETS | ||||
| Cash at bank and on hand | 78,399 | 216,432 | 75,351 | 198,549 |
| 7 RECEIVABLES | ||||
| Trade DebtorsOtherReceivables from other entitiesProvision for doubtful debts | 481,75434,177693,198 | 245,57060,033404,848(131, 119) | 481,75433,330944,039 | 244,55057,454404,398(131, 119) |
| 1,209,129 | 579,332 | 1,459,123 | 575,283 | |
| 8 INVENTORIES | ||||
| Direct materials - at costFinished goods - at costProvision for Obsolesce | 207,857158,783(347, 394) | 210,359115,777(93, 250) | 207,857158,783(347, 394) | 210,359115,777(93, 250) |
| 19,246 | 232,886 | 19,246 | 232,886 | |
| 9 OTHER CURRENT ASSETS | ||||
| Prepayments | 26,376 | 171,323 | 26,376 | 171,323 |
| 26,376 | 171,323 | 26,376 | 171,323 | |
| 10 PROPERTY, PLANT AND EQUIPMENT | ||||
| Land and Buildings - at cost | 299,134 | |||
| Plant & equipment - at costLess: Accumulated depreciation | 283,630(275, 349)8,281 | 286,249(237,780)48,469 | 52,517(44, 236)8,281 | 52,517(35, 958)16,559 |
| Office Equipment - at costLess: Accumulated depreciation | 56,318(25, 778)30,540 | 73,705(16, 433)57,272 | 49,173(18, 633)30,540 | 46,439(9,288)37,151 |
| Leased EquipmentLess: Accumulated amortisation | 470,394(432, 842)37,552 | 470,394(356, 384)114,010 | 333,742(296, 190)37,552 | 333,742(243, 320)90,422 |
| 375,507 | 219,751 | 76,373 | 144,132 |
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
10 PROPERTY, PLANT & EQUIPMENT (Continued)
(a) Movements in Carrying Amounts
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year are set out below:
| Land andBuildings$ | Plant andEquipment$ | OfficeFurnitureS | Leased Plantand EquipmentS | Total$ | |
|---|---|---|---|---|---|
| Consolidated: | |||||
| Balance at the beginning of the yearAdditionsDisposals | 299,134 | 48,469 | 57,2722,734 | 114,010 | 219,751301,868 |
| Depreciation Expense | (40, 188) | (29, 466) | (76, 458) | (146, 112) | |
| Carrying amount at the end of the year | 299,134 | 8,281 | 30,540 | 37,552 | 375,507 |
| The Company: | |||||
| Balance at the beginning of the yearAdditions | 16,559 | 37,1512,734 | 90,422 | 144,1322,734 | |
| DisposalsDepreciation Expense | (8,278) | (9, 345) | (52, 870) | (70, 493) | |
| Carrying amount at the end of the year | 8,281 | 30,540 | 37,552 | 76,373 |
| Consolidated | The Company | ||||
|---|---|---|---|---|---|
| 2006$ | 2005$ | 2006$ | 2005$ | ||
| 11 INTANGIBLES | |||||
| Intellectual propertyLess: provision for amortisation | 5,929,600(1,778,880) | 5,929,600(1,778,880) | |||
| 4,150,720 | 4,150,720 | ||||
| Goodwill on consolidationLess: provision for amortisation | 2,634,662(1,580,795) | 2,634,662(1,580,795) | |||
| 1,053,867 | 1,053,867 | ||||
| 5,204,587 | 5,204,587 | ||||
| 12 OTHER FINANCIAL ASSETS | |||||
| Investment in controlled entities at costLess: Provision for write down in investments | 7,809,845(5, 170, 754)2,639,091 | 7,809,845(5, 170, 754)2,639,091 | |||
| Unsecured loans to controlled entities | 2,294,186(2, 294, 186) | 2,294,186(2, 294, 186) | |||
| Security deposits | 2,830 | 2,830 | 2 | 2 | |
| 2,830 | 2,830 | 2,639,093 | 2,639,093 |
| Consolidated | The Company | |||
|---|---|---|---|---|
| 2006 | 2005 | 2006 | 2005 | |
| $ | $ | $ | $ | |
| 13 CONTROLLED ENTITIES | ||||
| Country | ||||
| of Origin | % Owned | % Owned | ||
| Incorporation | 2006 | 2005 | ||
| Parent Entity: | ||||
| Medical Monitors Limited | Aust | |||
| Subsidiaries of Medical Monitors Limited: | ||||
| Snowy Plains Pty Ltd | Aust | 100 | 100 | |
| Kalgoorlie Tailings Project Pty Ltd | Aust | 100 | 100 | |
| Heart Monitors Pty Ltd | Aust | 100 | 100 | |
| Wellness Monitoring Inc. | USA | 100 | 100 | |
| Medical Monitors (UK) Limited | UK | 100 | 100 | |
| E-Medicine Services Limited | UK | 100 | 100 | |
| Associates of Medical Monitors Limited: | ||||
| Medpri Limited | UK | 38 | 42 | |
| Care Medical Limited | UK | 50 | 50 | |
| Consolidated | The Company | |||
| 2006 | 2005 | 2006 | 2005 | |
| $ | $ | $ | $ | |
| 14 PAYABLES | ||||
| Trade creditors and accruals | 1,272,871 | 1,012,138 | 1,272,429 | 1,001,241 |
| Unearned Income | 40,000 | 84,320 | 40,000 | 84,320 |
| 1,312,871 | 1,096,458 | 1,312,429 | 1,085,561 |
| Consolidated | The Company | |||
|---|---|---|---|---|
| 2006$ | 2005$ | 2006$ | 2005$ | |
| 15 INTEREST BEARING LIABILITIES | ||||
| CURRENT | ||||
| Lease liability | 47,231 | 121,552 | 27,297 | 95,703 |
| Loans - secured | 27,838 | |||
| Government R&D start loan - unsecured (note 1(u)) | 434,996 | 548,742 | ||
| 482,227 | 698,132 | 27,297 | 95,703 | |
| NON-CURRENT | ||||
| Lease liability | 14,276 | 44,059 | 14,276 | 44,059 |
| Unsecured borrowing | 2,024,649 | 862,859 | 1,884,649 | 862,359 |
| 2,038,925 | 906,918 | 1,898,925 | 906,418 | |
| 2,521,152 | 1,605,050 | 1,926,222 | 1,002,121 | |
| 16 PROVISIONS | ||||
| CURRENT | ||||
| Employee entitlements | 62,598 | 75,571 | 62,598 | 75,874 |
| Number of employees at year end | 6 | 8 | 6 | 8 |
| 17 OTHER FINANCIAL LIABILITIES | ||||
| Unsecured loans from related entities | 140,000 | 127,451 | ||
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
| Consolidated | The Company | |||
|---|---|---|---|---|
| 2006$ | 2005$ | 2006s. | 2005Ŝ | |
| 18 CONTRIBUTED EQUITY | ||||
| Issued Capital | ||||
| Balance at beginning of year | 34,761,131 | 32,574,548 | 34,761,131 | 32,574,548 |
| Movements:- | ||||
| 7,600,955 fully paid out shares issued at $0.05 each | 380,048 | 380,048 | ||
| 24,500,000 fully paid out shares issued at $0.04 each | 980,000 | 980,000 | ||
| 25,415,450 fully paid out shares issued at $0.04 each | 1,015,750 | 1,015,750 | ||
| 3,003,420 shares bought back at $0.06 each | (189, 215) | (189, 215) | ||
| 1,300,000 fully paid out shares issued at $0.04 each | 52,000 | 52,000 | ||
| 6,250,000 fully paid out shares issued at $0.04 each | 250,000 | 250,000 | ||
| 87,550 fully paid out shares issued at $0.09 each | 3,502 | 3,502 | ||
| 3,400,000 fully paid out shares issued at $0.20 each | 680,000 | 680,000 | ||
| Balance at year end | 35,746,633 | 34,761,131 | 35,746,633 | 34,761,131 |
| No. | No. | No. | No. | |
| At the beginning of reporting year | 294, 155, 974 | 239,642,989 | 294,155,974 | 239,642,989 |
| 7,600,955 fully paid out shares issued at $0.05 each | 7,600,955 | 7,600,955 | ||
| 24,500,000 fully paid out shares issued at $0.04 each | 24,500,000 | 24,500,000 | ||
| 25,415,450 fully paid out shares issued at $0.04 each | 25,415,450 | 25,415,450 | ||
| 3,003,420 shares bought back at $0.06 each | (3,003,420) | (3,003,420) | ||
| 1,300,000 fully paid out shares issued at $0.04 each | 1,300,000 | 1,300,000 | ||
| 6,250,000 fully paid out shares issued at $0.04 each | 6,250,000 | 6,250,000 | ||
| 87,550 fully paid out shares issued at $0.09 each | 87,550 | 87,550 | ||
| Share consolidation (5 for 1 basis) | (241, 434, 568) | (241, 434, 568) | ||
| 3,400,000 fully paid out shares issued at $0.20 each | 3,400,000 | 3,400,000 | ||
| 63 758 956 | 204 155 974 | 63 758 956 | 204 155 074 |
Rights attaching to ordinary shares
Members are entitled to notice of, and to attend and vote at general meetings.
Subject to any shares that may in the future be issued with special or preferential rights, (currently there are none) every member present in person or by proxy, attorney or representative has one vote on a show of hands, and on a poll, one vote for each share.
Subject to any shares that may in the future be issued with special or preferential rights (currently there are none), the surplus assets of the Company after winding-up will be divided amount the members in proportion to the number of shares held by them, irrespective of the amounts paid or credited as paid on the shares.
However, a liquidator in a winding up may, with the sanction of a special resolution of members, divide among the members the whole or any part of the property of the Company and determine how the division is to be carried out as between the members or different classes of members.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
| Consolidated | The Company | |||
|---|---|---|---|---|
| 2006$ | 2005$ | 2006$ | 2005$ | |
| 19 CAPITAL AND LEASING COMMITMENTS | ||||
| (a) Finance leasing and hire purchase commitments | ||||
| Payable- not longer than 1 year- longer than 1 year but not longer than 5 years | 49,45915,024 | 125,60948,057 | 28,72615,024 | 99,70646,864 |
| Minimum lease payments | 64,483 | 173,666 | 43,750 | 146,570 |
| Less: future finance charges | (2,976) | (8,055) | (2, 177) | (6,808) |
| Total lease liability | 61,507 | 165,611 | 41,573 | 139,762 |
20 RELATED PARTY TRANSACTIONS
-
During the financial year the company received invoices of $165,660 for consultancy services in the normal course of business by Morgan Tomas Maxwell Pty Ltd. a company associated with Mr. H. Platt
-
During the financial year the company received invoices of $171,400 for consultancy services in the normal course of business by Kaitek International Pty Ltd, a company associated with Dr. A. M. Shell.
-
Dr.A.M.Shell has established a $1,000,000 line of credit facility for the company.
-
During the financial year the company received invoices of $104,940 for consultancy services in the normal course of business by Patkin Investments Pty Ltd, a company associated with Mr. B. Patkin.
-
Mr. H.Platt & Dr. A.M.Shell have a direct interest in Healthcare Link Pty Ltd that is occasionally contracted to provide R & D tasks for the company.
-
During the financial year $776,500 was loaned to the company by Dr.A.M.Shell.
21 AUDITORS REMUNERATION
Audit Services: Auditors of the Company Sneddon McKeown (2005: KPMG Australia)
Audit and review of the financial reports 85,000 85.000 115,000 115,000
| Consolidated | The Company | ||||
|---|---|---|---|---|---|
| 2006$ | 2005$ | 2006$ | 2005$ | ||
| 22 CASH FLOW INFORMATION | |||||
| (a) Reconciliation of Cash | |||||
| Cash at bank and on hand | 78,399 | 216,432 | 75,351 | 198,549 | |
| 78,399 | 216,432 | 75,351 | 198,549 | ||
| (b) Reconciliation of loss from Operations after incometax to net cash used by ordinary activities. | |||||
| Loss from ordinary activities | |||||
| after income tax | (1,816,111) | (3,852,814) | (1,801,448) | (10, 957, 414) | |
| Non-cash flows in profit fromordinary activities | |||||
| Amortisation/Depreciation of fixed assetsProvision for writeoff of capitalised research & | 146,112 | 197,066 | 70,493 | 116,177 | |
| development | 176,011 | 176,011 | |||
| Amounts set aside to provisions | (131, 119) | 131,119 | (131, 119) | 131,119 | |
| Provision for writeoff of intangibles | 253,224 | 231,407 | |||
| Provision for writeoff of investments | 7,464,940 | ||||
| Changes in assets and liabilities duringthe financial year: | |||||
| (Increase)/decrease in trade and other receivables | (498, 678) | (523, 044) | (752, 721) | (663, 592) | |
| (Increase)/decrease in prepayments | 144,947 | 262,917 | 144,947 | 262,917 | |
| (Increase)/decrease in inventories | 213,640 | 157,671 | 213,640 | 119,478 | |
| Increase/(decrease) in unearned income | (44, 320) | 57,516 | (44, 320) | 57,516 | |
| Increase/(decrease) in trade creditors | 260,733 | 420,090 | 271,188 | 382,916 | |
| Increase/(decrease) in provision for employee benefits | (12, 973) | 26,566 | (13, 276) | 26,869 | |
| Net cash flows from operating activities | (1,737,769) | (2,693,678) | (2,042,616) | (2,651,656) |
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
| Consolidated | ||
|---|---|---|
| 2006 | 2005 | |
| S | S |
23 EMPLOYEE BENEFITS
The company contributes to a defined contribution Superannuation fund and makes contributions on behalf of employees at the rate of 9%.
24 SEGMENT REPORTING
25
The company operates in one industry but in various geographical segments being Australia, United Kingdom, Italy and United States. Segment revenue below is by location of customers.
| Segment Revenue: | ||
|---|---|---|
| - Australia | 1,319,660 | 498,774 |
| - United States of America | 22,069 | |
| Total Revenue | 1,319,660 | 520,843 |
| Segment Results: | ||
| - Australia | (1,804,572) | (3,537,527) |
| - United Kingdom | (2,989) | (194, 569) |
| - United States of America | (8,550) | (120, 718) |
| Net Loss | (1,816,111) | (3,852,814) |
| Segment Assets: | ||
| - Australia | 6,912,130 | 6,605,799 |
| - United Kingdom | 1,116 | 10,580 |
| - United States of America | 2,828 | 10,762 |
| Total Assets | 6,916,074 | 6,627,141 |
| Segment Liabilities: | ||
| - Australia | 3,896,621 | 2,771,217 |
| - United Kingdom- United States of America | 9184,944 | |
| Total Liabilities | 3,896,621 | 2,777,079 |
| EARNINGS PER SHARE (EPS) | ||
| Basic earnings per share (cents per share) | (3.0) | (7.7) |
| Weighted average number of ordinary shares outstanding during theused in the calculation of basic EPS | 60,077,182 | 49,751,086 |
During February 2006, the entity consolidated it share capital on a 5 for 1 basis. To enable comparability, the comparative information for weighted average number of shares has been restated on this basis.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
| Consolidated | ||||
|---|---|---|---|---|
| 2006 | 2005 | |||
| 26 NET TANGIBLE ASSET BACKING | S | |||
| Net tangible asset backing per ordinary security (cents per share) | (3.43) | (2.30) |
27 CONTINGENT ASSETS AND LIABILITIES
There were no contingent assets or contingent liabilities at the balance date.
28 SUBSEQUENT EVENTS
Private Placement
The Company received a further $120,000 to complete the Private Placement, as announced to the ASX in May 2006. This resulted in a further allotment of shares, post 30 June, bringing the total of fully paid ordinary shares on issue to 64,358,956.
Brisbane Rivers Terrace
As previously announced, the Company is currently in the process of purchasing an over 50's retirement village, Brisbane Rivers Terrace. On 22 August 2006, contracts for a $4.4 million loan facility was signed to fund the purchase of the investment property. The Directors intents to purchase the investment property with a mixture of capital and loan finance.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
29 FINANCIAL INSTRUMENTS
(a) Derivative Financial Instruments
The economic entity currently has no derivative financial instruments.
(b) Interest Rate Risk
The economic entity's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates, and the effective weighted average interest rates on classes of financial liabilities, is as follows:
| Weighted | Fixed Interest Rate | ||||||
|---|---|---|---|---|---|---|---|
| AverageEffective | VariableInterest | MaturingWithin | 1 to $5$ | More than | NonInterest | ||
| Interest | Rate | 1 Year | Years | 5 Years | Bearing | Total | |
| Rate | $ | $ | $ | $ | S | $ | |
| 2006 Financial Assets | |||||||
| Cash on hand | 4.5% | 78,399 | 78,399 | ||||
| Receivables | N/A | 1,209,129 | 1,209,129 | ||||
| Prepayments | N/A | 26,376 | 26,376 | ||||
| Total Financial Assets | 78,399 | 1,235,505 | 1,313,904 | ||||
| Creditors | N/A | 1,272,871 | 1,272,871 | ||||
| Lease Liability | 7.95% | 47,231 | 14,276 | $\blacksquare$ | 61,507 | ||
| Borrowing- unsecured | N/A | $\blacksquare$ | 2,024,649 | 2,024,649 | |||
| Government R & D | |||||||
| Start Loan | 3% | 434,996 | 434,996 | ||||
| Employee Entitlements | N/A | 62,598 | 62,598 | ||||
| Total Financial Liabilities | 434,996 | 47,231 | 14,276 | 3,360,118 | 3,856,621 |
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
29 FINANCIAL INSTRUMENTS (Continued)
Comparative information for the year ended 30 June 2005:
| Weighted | Fixed Interest Rate | ||||||
|---|---|---|---|---|---|---|---|
| Average | Floating | Maturing | Non | ||||
| Effective | Interest | Within | 1 to 5 | More than | Interest | ||
| Interest | Rate | 1 Year | Years | 5 Years | Bearing | Total | |
| Rate | $ | $ | $ | $ | $ | $ | |
| Cash on hand | 4.5% | 216,432 | 216,432 | ||||
| Receivables | N/A | 579,332 | 579,332 | ||||
| Prepayments | N/A | 171,323 | 171,323 | ||||
| Total Financial Assets | 216,432 | 750,655 | 967,087 | ||||
| Unearned Income | N/A | 84,320 | 84,320 | ||||
| Creditors | N/A | $\overline{\phantom{a}}$ | 1,012,138 | 1,012,138 | |||
| Lease Liability | 7.95% | 121,552 | 44,059 | $\blacksquare$ | 165,611 | ||
| Borrowing-unsecured | N/A | 862,859 | 862,859 | ||||
| Government R & D | |||||||
| Start Loan | 3% | 548,742 | 548,742 | ||||
| Secured Loans | 7.95% | 27,838 | 27,838 | ||||
| Employee Entitlements | N/A | 75,571 | 75,571 | ||||
| Total Financial Liabilities | 548,742 | 121,552 | 71,897 | 2,034,888 | 2,777,079 |
(c) Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for doubtful debts, as disclosed in the balance sheet and notes to the financial statements.
The consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the consolidated entity.
The maximum exposure to credit risk, excluding the value of any collateral or other security at the balance date, to recognised financial assets is the carrying amount, net of any provisions for doubtful debts, as disclosed in the balance sheet and notes to the financial statements.
The consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by it.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2006
29 FINANCIAL INSTRUMENTS (Continued)
(d) Net Fair Values
Methods and assumptions used in determining net fair value:
For assets and other liabilities, the net fair value approximates their carrying values. No financial assets and financial liabilities are readily traded on organised markets in standardised form, other than listed investments. The consolidated entity has no financial assets where the carrying amount exceeds net fair values at balance date.
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the balance sheet and in the notes to and forming part of the financial statements.
(e) Financing Arrangements
In June 2006, a 'line of credit' facility ($1,000,000) was established by the company with Director Dr. A. Shell. At the date of this report, the draw down on this facility was nil. The facility expires on 30 June 2007 but may be renewed subject to the mutual consent of the parties.
FOR THE YEAR ENDED 30 JUNE 2006
DIRECTORS' DECLARATION
In the opinion of the Directors of Medical Monitors Limited ("the Company"):
- $(a)$ the financial statements and notes, set out on pages 14 to 45, are in accordance with the Corporations Act 2001, including:
- (i). giving a true and fair view of the financial position of the Company and Consolidated Entity as at 30 June, 2005, and of their performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and
- (ii). complying with Accounting Standards and the Corporations Regulations 2001: and
- the directors have been given the declaration required by Section 295A of the Corporations Act 2001 from $(b)$ the Chief Executive Officer and the Chief Financial Officer wherein the Chief Executive Officer and Chief Finance Officer have each declared that:
- (i). the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;
- (ii). the financial statements and notes for the financial year comply with the Accounting Standards; and
- (iii). the financial statements and notes for the financial year give a true and fair view.
- there are reasonable grounds to believe that the Company will be able to pay its debts as and when they $(c)$ become due and pavable.
Signed in accordance with a resolution of the Directors.
Dr Allan Shell Managing Director
29 September 2006
INDEPENDENT AUDIT REPORT FOR THE YEAR ENDED 30 JUNE, 2006
TO THE MEMBERS OF MEDICAL MONITORS LIMITED
SCOPE
We have audited the financial report of Medical Monitors Limited and controlled entities for the financial year ended 30 June, 2006 as set out on pages 14 to 46.
The financial report includes the consolidated financial statements of the consolidated entity comprising the company and the entities it controlled at year end or from time to time during the financial year. The company's directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the company.
Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements in Australia and statutory requirements so as to present a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and performance as represented by the results of their operations and their cash flows.
The audit opinion expressed in this report has been formed on the above basis.
INDEPENDENCE
In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.
In accordance with ASIC Class Order 05/83, we declare to the best of our knowledge and belief that the auditor's independence declaration set out on page 13 of the financial report has not changed as at the date of providing our audit opinion.
AUDIT OPINION
In our opinion, the financial report of Medical Monitors Limited is in accordance with:
- (a) the Corporations Act 2001, including;
- giving a true and fair view of the company's and consolidated entity's financial position as at 30 $(i)$ June, 2006 and of their performance for the year ended on that date; and
- $(ii)$ complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
- (b) other mandatory professional reporting requirements in Australia.
47 Chartered Accountants 2nd floor, hunter mall chambers 175 scott street newcastle nsw 2300. phone: 02 4907 7222 fox: 02 4929 6759
Chartered Accountants Echility limited by a scheme approved under-Professional Standards Legislation.
INHERENT UNCERTAINTY REGARDING CONTINUATION AS A GOING CONCERN
Without qualification to the opinion expressed above, attention is drawn to the following matter. As a result of matter described by the Directors in Note 1(b), there is inherent uncertainty surrounding the ability of the consolidated entity to continue as a going concern and therefore realise the asset and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.
Should the consolidated entity be unable to achieve the matters referred to in Note 1(b), the consolidated entity may not be able to realise the full value of its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.
SNEDDON McKEOWN
M J MAYBURY Partner
29 September 2006 175 Scott Street, Newcastle NSW 2300
48 Chartered Accountants 2nd floor, hunter mall chumbers 175 scatt street newcostle nsw 2300. phone: 02 4907 7222 fax: 02 4929 6759
Chartered Accountants Liability Emited by a scheme upproved under Professional Standards Legislation.
MEDICAL MONITORS LIMITED ACN 009 161 522 ADDITIONAL INFORMATION REQUIRED FOR LISTED COMPANIES
FOR THE YEAR ENDED 30 JUNE 2006
This information has been collated from the Company's registry at Computershare Investor Services, Perth, and is included in accordance with the listing requirements of the Australian Stock Exchange Limited (the ASX).
$\ddot{\mathbf{1}}$ . SHAREHOLDING AS AT 31 AUGUST 2006
Distribution of Shareholders $(a)$
| Size Of Holding | Number Of Holders | Shares Held |
|---|---|---|
| $1 - 1.000$ | 87 | 49.906 |
| $1,001 - 5,000$ | 378 | 1,360,617 |
| $5,001 - 10,000$ | 252 | 1,967,339 |
| $10,001 - 100,000$ | 406 | 13,241,478 |
| $100,001 - 9,999,999,999$ | 92 | 49,059,616 |
| 1.215 | 65,858,956 |
There were 181 shareholders who held less than a marketable parcel.
$(b)$ Twenty largest shareholders
| Shareholder | Number ofOrdinary FullyPaid Shares Held | % Interest |
|---|---|---|
| Dirdot Pty Ltd | 4,685,427 | 7.11 |
| Chriswall Holdings Pty Ltd | 3,494,453 | 5.30 |
| Harry Louis Platt | 2,576,239 | 3.91 |
| AND Technology Pty Ltd | 2,027,046 | 3.08 |
| Allan Michael Shell | 2,000,000 | 3.04 |
| Hillridge Pty Ltd | 1,815,132 | 2.76 |
| Drawgrove Pty Ltd | 1,514,108 | 2.30 |
| Gritin Industries Pty Ltd | 1,500,000 | 2.28 |
| Nouse Pty Ltd | 1,425,186 | 2.16 |
| Eugene Miglas | 1,259,034 | 1.91 |
| Wabana Holdings Pty Ltd | 1,160,000 | 1.76 |
| Kaitek International Pty Ltd | 1,044,957 | 1.59 |
| Vapofo Pty Ltd | 1,010,000 | 1.53 |
| Morgan Tomas Maxwell Pty Ltd | 1,004,957 | 1.53 |
| Benjamin Harkham | 1,000,000 | 1.52 |
| David Likht | 1,000,000 | 1.52 |
| Boomerang capitol Pty Ltd | 900,000 | 1.37 |
| Arana Super Fund | 860,000 | 1.31 |
| Mr Max Glatter | 800,000 | 1.21 |
| Mentoran Pty Ltd | 800,000 | 1.21 |
| 31,876,539 | 48.40 |
MEDICAL MONITORS LIMITED ACN 009 161 522 ADDITIONAL INFORMATION REQUIRED FOR LISTED COMPANIES
FOR THE YEAR ENDED 30 JUNE 2006
$\overline{2}$ . OPTIONHOLDINGS AS AT 31 AUGUST 2006
All options expired on 30 June 2005.
$\overline{3}$ . VOTING RIGHTS
- At meetings of members each member entitled to vote can vote in person by proxy or attorney or, in $(a)$ the case of a member which is a body corporate, by a representative duly authorised.
- On a show of hands every member entitled to vote can be present in person or by proxy or attorney $(b)$ or a representative duly authorised shall have one (1) vote for each fully paid share of which he is a holder.
- On a poll every member entitled to vote and be present in person or by proxy or attorney or $(c)$ representative duly authorised shall have one (1) vote for each fully paid share of which he is a holder.
AUDIT COMMITTEE 4.
At the reporting date, an audit committee of the Board of Directors exists and comprises two non-executive directors.
$5.$ RETIREMENT BENEFITS
The Company and its subsidiaries have no contingent liability for termination benefits under service agreements with Directors and persons who take part in the management of the Company as at balance date.
SECURITIES SUBJECT TO ESCROW 6.
As at the report date, there were no issued securities subject to escrow.