VOLT RESOURCES LIMITED — Annual Report 2007

Aug 30, 2007

RITRACT LIMITED

ABN 33 097 483 068

APPENDIX 4E

PRELIMINARY FINAL REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007

RITRACT LIMITED

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Appendix 4E

Preliminary final report

Name of entity

Ritract Limited

ABN or equivalent company reference

ABN 28 106 353 253

Preliminary Financial year ended (‘current period’) final (tick) �

30 JUNE 2007

2. Results for announcement to the market

2.1 Revenues from continuing operations 2.2 Loss after tax attributable to members 2.3 Loss for the period attributable to members	Down 69.3% to 23,624 Down 46.7% to (3,223,747) Down 46.7% to (3,223,747)
2.4 Dividends (distributions)	Amount per security	Franked amount per security
Final dividend The company is not proposing any dividends be paid	Nil	Nil
Previous corresponding period	Nil	Nil
2.5 Record date for determining entitlements to the dividend	N/A

RITRACT LIMITED

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2.6

Commentary on Results for the Year

The net loss of the consolidated entity for the financial year after tax and outside equity interests was $3,223,747, (2006 net loss $6,051,818). The loss reflects the ongoing commercialisation of the Ritract Syringe. To ensure that the company had no additional liability in relation to Needlesleeve the Needlesleeve technology was handed back to the previous owners during the year.

In June 2007 the Company was notified by the interested parties who were evaluating its safety syringe technology that neither company intends to take up a license to manufacture and distribute Ritract’s auto retractable syringe product. Reasons cited included the size of the capital investment required for manufacturing scale up and the current market environment for retractable syringes in key international markets.

As a result of these developments the company suspended trading of Ritract shares whilst a restructure of the company was implemented. The operations of the company have now been reduced significantly and the company has one employee, Tom Davenport, Chief Executive Officer.

Discussions with companies regarding the licensing of Ritract’s safety syringe and its pre-fill safety device is ongoing. The trading halt on Ritract shares will stay in place until the company has a determined position in relation to its future.

3.0

RITRACT LIMITED

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CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Note Revenues from continuing operations 4 Employee benefits expense Consulting and professional services Rent Research and development, other Amortisation of intellectual property and patents Statutory and compliance Marketing expenses Travel Director’s fees Depreciation Impairment of assets Impairment of goodwill Impairment of loan to controlled entity Impairment of investment in controlled entity Impairment of investment in Needlesleeve Other expenses from ordinary activities Loss from ordinary activities before income tax Income tax benefit/(expense) relating to ordinary activities 6 Loss from ordinary activities after income tax Net loss attributable to members of the parent entity Basic loss per share (cents per share) 22 Diluted loss per share (cents per share) 22	2007 $ 2006 $ 23,624 76,828
	(949,035) (1,031,012) (526,847) (548,915) (144,484) (114,616) (333,667) (1,169,486) (186,164) (533,972) (89,071) (157,061) (11,662) (103,923) (123,320) (190,058) (152,600) (125,600) (76,431) (34,601) (100,000) - (618,000) - - - - - - (1,645,539) (252,142) (473,863)
	(3,539,799) (6,051,818) 316,052 -
	(3,223,747) (6,051,818)
	(3,223,747) (6,051,818)
	(3.1) (7.3) (3.1) (7.3)

The above consolidated income statement should be read in conjunction with the accompanying notes.

RITRACT LIMITED

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4.0

CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007

AS AT 30 JUNE 2007
Note Current Assets Cash assets 7 Receivables 8 Other 9 Total Current Assets Non-Current Assets Property, plant and equipment 10 Intangible assets 11 Total Non-Current Assets Total Assets Current Liabilities Payables 12 Total Current Liabilities Total Liabilities Net Assets Equity Parent entity interest Contributed equity 13 Option reserve 14 Accumulated losses 14 Total Parent entity interest Total Equity	Consolidated 2007 $ 2006 $ 48,537 415,695 1,920 10,445 61,046 35,653
	111,503 461,793
	143,433 279,842 2,034,614 2,838,778
	2,178,047 3,118,620
	2,289,550 3,580,413
	460,462 516,617
	460,462 516,617
	460,462 516,617
	1,829,088 3,063,796
	16,103,484 14,114,445 385,269 385,269 (14,659,665) (11,435,918)
	1,829,088 3,063,796
	1,829,088 3,063,796

The above balance sheet should be read in conjunction with the accompanying notes.

RITRACT LIMITED

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5.0

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2007

Note Total equity at the beginning of the year Minority interest acquired Loss for the year Transactions with equity holders in their positions as equity holders: Contributions of equity, net of transaction costs Total equity at the end of the year Total recognised income and expense for the year is attributable to: Members of the parent entity	Consolidated 2007 $ 2006 $ 3,063,796 7,144,889
	- 148,878 (3,223,747) (6,051,818)
	(3,223,747) (5,902,940)
	1,989,039 1,821,847
	1,829,088 3,063,796
	(3,223,747) (6,051,818)

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

RITRACT LIMITED

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6.0

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 JUNE 2007

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Income tax credit Interest received Net cash used in operating activities 15 Cash flows from investing activities Cash paid on acquisition of controlled entity Payments for plant and equipment Payments for intellectual property Loan to controlled entity Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Net cash provided by financing activities Net decreases in cash held Cash at the beginning of the financial year Cash at the end of the financial year 7	Consolidated 2007 $ 2006 $ Inflows/(Outflows) 11,196 - (2,659,178) (3,683,428)
	(2,647,982) (3,683,428) 316,052 - 15,755 76,828
	(2,316,175) (3,606,600)
	- (25,000) (40,022) (283,662) - (100,000) - -
	(40,022) (408,662)
	1,989,039 1,318,916
	1,989,039 1,318,916
	(367,158) (2,696,346) 415,695 3,112,041
	48,537 415,695

The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

RITRACT LIMITED

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Notes to the accounts – items 3-6 above

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: Statement of significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for Ritract Limited as an individual entity and the consolidated entity consisting of Ritract Limited and its subsidiary.

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRS), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Compliance with IFRS

Australian Accounting Standards include AIFRS. Compliance with AIFRS ensures that the consolidated financial statements and notes of Ritract Limited comply with International Financial Reporting Standards (IFRS). The parent entity financial statements and notes also comply with IFRS.

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property.

Critical accounting estimates

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

Going concern

The consolidated entity incurred a loss before amortisation of intellectual property and patents, and impairment of intangible assets of $3,223,747 for the year ended 30 June 2007 and has available cash at balance date of $48,537. The financial report has been prepared on a going concern basis due to the following reasons:

• The company has an expectation of receiving additional funds from Research and Development Tax Offsets.

• The company has ongoing financial support being provided by the directors.

• The company is continuing to pursue potential licensing opportunities for its technology.

The consolidated entity is dependent on the signing of a Licensing agreement with a suitable global company(s), and further capital raisings as required sufficient to enable it to increase its cash reserves to fund its operations in the future. To the extent that the consolidated entity is not successful in these initiatives there is uncertainty that the consolidated entity will continue as a going concern. The financial report does not include any adjustments relating to the recoverability and classification of asset amounts or to the amounts and classification of liabilities that might be necessary should the entity not continue as a going concern.

(b) Principles of consolidation

Subsidiary

The consolidated financial statements incorporate the assets and liabilities of the subsidiary of Ritract Limited (''company'' or ''parent entity'') as at 30 June 2007 and the results of the subsidiary for the year then ended. Ritract Limited and its subsidiary together are referred to in this financial report as the Group or the consolidated entity.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: Statement of significant accounting policies

Principles of consolidation (continued)

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(h)).

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in subsidiaries are accounted for at cost in the individual financial statements of Ritract Limited.

(c) Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Ritract Limited’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

• all resulting exchange differences are recognised as a separate component of equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

RITRACT LIMITED

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: Statement of significant accounting policies (Continued)

(e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid.

All revenue is stated net of the amount of goods and services tax (GST).

(f) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

(g) Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

RITRACT LIMITED

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: Statement of significant accounting policies (Continued)

(h) Business combinations

The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

(i) Impairment of assets

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

(j) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(k) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement no more than 30 days from the date of recognition.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

RITRACT LIMITED

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: Statement of significant accounting policies (Continued)

(l) Investments and other financial assets

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.

(i) Loans and receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet.

(ii) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as available-for-sale are recognised in equity in the available-for-sale investments revaluation reserve. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.

The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

RITRACT LIMITED

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: Statement of significant accounting policies (Continued)

(m) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

(n) Property, plant and equipment

Plant and equipment is depreciated over its useful life using the straight line method. The expected useful life for office furniture and production equipment is 5 years.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(i)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(o) Intangible assets

(i) Patents

Patents have a finite useful life and are carried at cost less accumulated amortisation and impaired losses. Amortisation is calculated using the straight line method to allocate the cost of patents over their estimated useful lives, which vary from 15 to 20 years.

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense when it is incurred.

Expenditure on development activities, being the application of research findings or other knowledge to a plan or design for the production of new or substantially improved products or services before the start of commercial production or use, is capitalised if the product or service is technically and commercially feasible and adequate resources are available to complete development. Other development expenditure is recognised in the income statement as an expense when it is incurred.

(iii) Intangible assets – other intangibles

Costs incurred in acquiring intellectual property are capitalised and amortised on a straight line basis over the period of the expected benefit. Intellectual property held at the reporting date is amortised over its estimated useful life of 10 years, using the straight line method.

(p) Trade and other creditors

These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(q) Employee benefits

(i) Wages and salaries and annual leave

Liabilities for wages and salaries and annual leave expected to be settled within 12 months of the reporting date are recognised in other creditors in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

RITRACT LIMITED

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: Statement of significant accounting policies (Continued)

(q) Employee benefits (Continued)

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iii) Retirement benefit obligations

All employees of the Group are entitled to benefits on retirement, disability or death from the Group’s superannuation plan. The Group has a defined contribution plan. The defined contribution section receives fixed contributions from Group companies and the Group’s legal or constructive obligation is limited to these contributions.

Contributions to the defined contribution fund are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(iv) Share-based payments

Share-based compensation benefits are provided to employees via the Ritract Limited Employee Option Plan and an employee share scheme.

Shares options granted before 7 November 2002 and/or vested before 1 January 2005

No expense is recognised in respect of these options. The shares are recognised when the options are exercised and the proceeds received allocated to share capital.

Shares options granted after 7 November 2002 and vested after 1 January 2005

The fair value of options granted under the Ritract Limited Employee Option Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The fair value of the options granted excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate.

The market value of shares issued to employees for no cash consideration under the employee share scheme is recognised as an employee benefits expense with a corresponding increase in equity when the employees become entitled to the shares.

(v) Profit-sharing and bonus plans

The Group recognises a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the profit attributable to the company’s shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(r) Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: Statement of significant accounting policies (Continued)

• (s) Earnings Per Share

• (i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit/loss attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Note 2. Financial risk management

The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as mitigating foreign exchange, interest rate and credit risks, and investing excess liquidity.

(a) Market risk

Foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency.

The group has outsourced the manufacturing of its product to a company in China and will sell its product worldwide. Given the low value of transactions designated in foreign currency to date the company has not hedged these transactions. However, the company will adopt appropriate risk management techniques as the value of these transactions increases.

(b) Credit risk exposures

The Group has no significant concentration of credit risk.

(c) Interest rate risk exposures

The Consolidated entity’s exposure to interest rate risk is small given that it has no debt and has limited funds on deposit.

Note 3: Critical accounting estimates and judgements

Critical accounting estimates and assumptions

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.

Estimated impairment of intangible assets and other non-current assets

The Group tests annually whether intangibles have suffered any impairment, in accordance with the accounting policy stated in note 1(i). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations.

NOTE 4: Revenue Revenue from continuing operations Sale of product Other revenue — Interest received Total Revenue from continuing operations	Consolidated 2007 $ 2006 $ 7,869 - 15,755 76,828
	23,624 76,828

RITRACT LIMITED

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 5: Expenses from ordinary activities Loss before income tax has been determined after charging as expenses: Depreciation of non-current assets Impairment of non-current assets Amortisation of intellectual property and patents Impairment of intellectual property Impairment of investment in Needlesleeve Insurance Rental expense on operating leases Superannuation NOTE 6: Income tax benefit The prima facie tax on loss before income tax is reconciled to the income tax benefit as follows: Loss before income tax Prima facie tax payable on loss before income tax at 30% Tax effect of amounts which are not deductible (taxable) in calculating taxable income: - Amortisation of intellectual property and patents - Impairment of Intellectual property - Impairment of non-current assets - Impairment of investment in Needlesleeve - Other non deductible items Benefit of income tax losses not brought to account Research and development tax offsets received Income tax benefit attributable to loss	Consolidated 2007 $ 2006 $ 76,431 34,601 100,000 - 186,164 533,972 618,000 - - 1,645,539 56,612 81,796 144,484 114,616 63,970 84,183
	(3,223,747) (6,051,818)
	(967,124) (1,815,545) 55,849 160,192 185,400 - 30,000 - - 493,662 1,231 997 694,644 1,160,694 316,052 -
	316,052 -

[

RITRACT LIMITED

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 7: Current assets -cash assets

NOTE 7: Current assets -cash assets Cash at bank and on hand Deposits at call NOTE 8: Current assets – receivables Current Other debtors	Consolidated 2007 $ 2006 $ 48,537 1,058 - 414,637
	48,537 415,695
	1,920 10,445

NOTE 9: Current assets - other

Prepayments Advances	45,846 29,347 15,200 6,306
	61,046 35,653

NOTE 10: Property, plant and equipment

At 1 July 2006 Cost Accumulated depreciation Net book amount Carrying amount at 1 July 2005 Additions Disposals Depreciation expense (note 5) Carrying amount at 30 June 2006 Carrying amount at 1 July 2006 Additions Impairment write down Depreciation expense (note 5) Carrying amount at 30 June 2007 At 30 June 2007 Cost Accumulated depreciation and impairment Net book amount	Parent and Consolidated Entity Fixtures & Equipment $ Production equipment $ Total $ 71,400 249,427 320,827 (23,561) (17,424) (40,985)
	47,839 232,003 279,842
	30,780 - 30,780 34,236 249,427 283,663 - - - (17,177) (17,424) (34,601)
	47,839 232,003 279,842
	Fixtures & Equipment $ Production equipment $ Total $ 47,839 232,003 279,842 10,195 29,827 40,022 - (100,000) (100,000) (21,438) (54,993) (76,431)
	36,596 106,837 143,433
	81,595 279,254 360,849 (44,999) (172,417) (217,416)
	36,596 106,837 143,433

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 11: Intangible assets Intellectual Property – at cost Accumulated amortisation Impairment of investment in Needlesleeve Patents – at cost Accumulated amortisation Total NOTE 12: Payables Current Trade creditors Sundry creditors and accruals	Consolidated 2007 $ 2006 $ 5,679,612 5,679,612 (2,026,176) (1,226,176) (1,645,539) (1,645,539)
	2,007,897 2,807,897
	41,637 41,637 (14,920) (10,756)
	26,717 30,881
	2,034,614 2,838,778
	204,069 302,021 256,353214,596
	460,422 516,617

Ritract Limited Appendix 4E Preliminary final report

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 13: Contributed equity

(a) Issued and paid up capital Issued and paid up capital Ordinary shares Performance shares Movements during the period Ordinary shares Balance at the beginning of the financial year Shares issued: 26,176,365 ordinary shares Costs of issue Balance at end of financial year Performance shares Balance at the beginning of the financial year Conversion of Class B performance shares Balance at end of financial year Total	2007 2006 Number $ Number 117,823,307 16,102,968 91,646,942 11,300,000 516 11,300,000 129,123,307 16,103,484 102.946.942 Number of shares Issue price 91,646,942 26,176,365 8 cents	2006 Number 91,646,942 11,300,000	$ 14,113,929 516
		102.946.942	14,114,445
			$ 14,113,929
			2,094,109 (105,070)
	117,823,307 11,300,000 -		16,102,968
			516
	11,300,000 -		516
	**129,123,307 **		**16,103,484 **

Ritract Limited Appendix 4E Preliminary final report

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

Contributed equity (Continued)

(b) Share Options

Options over ordinary shares issued during the year and outstanding at balance date:

59,703,145 Listed Options Expiring 31 December 2006 (ASX Code: RTLO)

On 19 April 2004, 59,703,145 options were issued over ordinary shares, exercisable any time prior to their expiry date being 31 December 2006. These options were issued at an issue price of 0.5 cents each and total proceeds of $298,680 are included in the Option Reserve in note 15 (a). The options were issued on the basis of one option for every one share held as at 19 March 2004. The exercise price of the options is $0.75 cents per Share. If a shareholder exercised an Option on or before 30 September 2004 they received (for free) one new Option for each Option exercised. The terms of the new Option provide for an exercise price of 75 cents and an expiry date of 31 December 2006.

The options lapsed on 31 December 2006.

No shares were issued during the year ended 30 June 2007 as a result of the exercise of options (2006 – 3,650,000).

From the end of the reporting period to the date of this report no options have been converted into fully paid ordinary shares.

(c) Terms and conditions of ordinary shares

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.

At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

(d) Terms and conditions of Performance Shares

Class A Performance Shares

The First Performance milestone was achieved on 20 July 2004 and consequently all the Class A Performance Shares have been converted to ordinary shares.

Class B Performance Shares

The Second Performance milestone was achieved on 18 May 2005 and consequently all the Class B Performance Shares have been converted to ordinary shares.

Class C Performance Shares

The material terms of the Class C Performance Shares are as follows:

(a) the Class C Performance Shares are a separate class of shares that will be convertible into Shares. They do not carry any voting rights in the Company;

(b) each Class C Performance Share will convert into one (1) Share upon the Company entering into a licence agreement in relation to the Glenord Technology with a value of at least $1.5 million (Third Performance Milestone). For the avoidance of doubt, the $1.5 million valuation trigger for achievement of the Third Performance Milestone shall mean:

(i) a licensing transaction that has a lump sum royalty payment for a minimum of $1.5 million;

(ii) an initial order from a single purchaser with a lump sum value of a minimum of $1.5 million;

(iii) a licensing transaction with a minimum purchase or royalty requirement in its first year of $1.5 million

or greater; or

(iv) aggregate royalty receipts in the prior 12 months of a minimum of $1.5 million;

(c) if the Third Performance Milestone has not been achieved within 5 years from the date the Company lists on

ASX, each 100,000 Class C Performance Shares will convert into one (1) Share (with any fractional entitlements

being rounded up to the nearest whole fully paid share); and

(d) the Class C Performance Shares are not transferable

Ritract Limited Appendix 4E Preliminary final report

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 14: Reserves and accumulated losses (a) Reserves Option reserve (b) Accumulated losses Accumulated losses at the beginning of the financial year Net loss attributable to the members of Ritract Limited Accumulated losses at the end of the financial year	Consolidated 2007 $ 2006 $ 385,269 385,269
	(11,435,918) (5,384,100) (3,223,747) (6,051,818)
	(14,659,665) (11,435,918)

The options reserve includes proceeds of $298,680 received from the issue of options noted at note 14 (b), together with an amount of $86,589 representing the value of options issued to Directors during the year ended 30 June 2005.

NOTE 15: Reconciliation of loss after Income tax with net cash outflow from operating activities

from operating activities Loss after income tax Non-cash flows in loss from ordinary activities: Depreciation Impairment of non-current assets Impairment of intellectual property Amortisation of intellectual property and patents Other non cash items: Write down of investment in Needlesleeve Changes in operating assets and liabilities: (Increase)/decrease in receivables (Increase)/decrease in other current assets Increase/(decrease) in creditors and borrowings Net cash used in operating activities

Consolidated 2007 $ 2006 $ (3,223,747) (6,051,818) 76,431 34,601 100,000 618,000 - 186,164 533,972 - 1,645,539 - 28,554 (16,868) 4,765 (56,155) 197,787

(2,316,175) (3,606,600)

Ritract Limited Appendix 4E Preliminary final report

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 16: Segment reporting

Business and Geographical Segments

The sole activity of the company is that of commercialisation of a range of specialised syringes to meet the growing worldwide demand for safe, single use, automatically disabling and retractable syringes. The company through its acquisition of compatible medical device technology and intellectual property is also developing and marketing innovative patented products and technologies, and as such represents only one reportable business and geographical segment.

NOTE 17: Events subsequent to reporting date

There are no other matters or circumstances have arisen since the end of the financial year which significantly affected or may significant affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial years.

Note 18 Remuneration of auditors

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms: Assurance services Audit services Fees paid to HLB Mann Judd Australian firm: Audit and review of financial reports and other audit work under the Corporations Act 2001 Total remuneration for audit services Taxation services Fees paid to HLB Mann Judd Australian firm: Tax compliance services, including review of company income tax returns Total remuneration for taxation services	Consolidated 2007 $ 2006 $ 35,448 48,000
	35,448 48,000
	9,702 6,817
	9,702 6,817

Ritract Limited Appendix 4E Preliminary final report

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

Note 19 Related party transactions

Transactions with related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Transactions with related parties:

Specified Directors’ and Specified Executives’ Remuneration

Details of specified directors’ and specified executives’ remuneration are disclosed on pages 12 to 14 of the directors report.

Transactions with Specified Directors

Mr Fitzgerald is a principal of HealthTec Growth Partners Pty Ltd which provided corporate advisory services and financial management services to the consolidated entity, during the year ended 30 June 2007, on normal commercial terms amounting to $83,180. As at 30 June 2007 there were no amounts outstanding to HealthTec Growth Partners.

Transaction with Controlled Entities

At balance date the company had provided interest free loans to Glenord Pty Ltd totalling $2,923,034 with no fixed repayment date.

NOTE 20: Earnings per share Reconciliation of earnings used in calculating earnings per share Net loss Earnings used in the calculation of basic and dilutive earnings per share Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic and dilutive earnings per share Classification of securities	Consolidated 2007 $ 2006 $ (3,223,747) (6,051,818)
	(3,223,747) (6,051,818)
	Number Number
	104,914,415 82,751,793

Diluted earnings per share will not be any different to basic earnings per share, as it is not considered that the options on issue as disclosed in Note 14 will have a dilutive effect on EPS (as the company incurred a loss for the year).

NOTE 21: Investments in controlled entities

Name of entity	Country of incorporation	Class of shares	Class of shares		Equity holding
Glenord Pty Ltd	Australia	Ordinary			100%
NOTE 22: Commitments for expenditure
Operating leases			Consolidated		Parent
			2007	2006	2007	2006
			$	$	$	$
Commitments for minimum lease payments in relation to
non-cancellable operating leases for office premises are
payable as follows:
Within one year			28,400	-	28,400	-
Total commitments not recognised in the financial statements			28,400	-	28,400	-

Ritract Limited Appendix 4E Preliminary final report

7. Dividends (in the case of a trust, distributions)

Date the dividend (distribution) is payable

N/A +Record date to determine entitlements to the dividend N/A (distribution) (ie, on the basis of proper instruments of transfer received by 5.00 pm if[+] securities are not[+] CHESS approved, or security holding balances established by 5.00 pm or such later time permitted by SCH Business Rules if[+] securities are +CHESS approved) If it is a final dividend, has it been declared? (Preliminary final report only) N/A

Amount per security

	Amount per security	Franked amount per security at % tax	Amount per security of foreign source dividend
Final dividend: Current year Previous year	Nil Nil	Nil Nil	Nil Nil
Interim dividend: Current year Previous year	Nil Nil	Nil Nil	Nil Nil

8. Details of dividend or distribution reinvestment plans in operation

N/A

9. NTA backing

9. NTA backing
	Current period	Previous corresponding Period
Net tangible asset backing per ordinary security	0.002 cents	0.25 cents

10. Control gained over entities having material effect

Name of entity (or group of entities)

N/A Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) since the date in the current period on which control N/A was acquired Date from which such loss has been calculated N/A Profit (loss) from ordinary activities and extraordinary items N/A

Profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period

Ritract Limited Appendix 4E Preliminary final report

Loss of control of entities having material effect

Name of entity (or group of entities) Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the current period to the date of loss of control Date to which the profit (loss) has been calculated Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) while controlled during the whole of the previous corresponding period Contribution to consolidated profit (loss) from ordinary activities and extraordinary items from sale of interest leading to loss of control	N/A
	N/A
	N/A
	N/A
	N/A

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

Name of entity	Percentage of ownership interestheld at end ofperiod	Percentage of ownership interestheld at end ofperiod	Contribution to net profit (loss)	Contribution to net profit (loss)
Equity accounted associates and joint venture entities	Current period	Previous corresponding period	Current period $	Previous corresponding period - $A’000
	N/A		N/A
Total
Other material interests
Total	N/A		N/A

12. Any other significant information needed by an investor to make an informed assessment of the entity’s financial performance and financial position.

See Commentary on Results for the Year.

13. Foreign entities set of accounting standards used in compiling the report (IAS)

N/A

Ritract Limited Appendix 4E Preliminary final report

14.1 Earnings per security (EPS)	Current period	Previous corresponding period
Basic EPS (cents per share) Diluted EPS (cents per share)	(3.1) (3.1)	(7.3) (7.3)
The following reflects the profit or loss and share data used in the calculations of basic and diluted earnings per share: Earnings used in calculation of basic and diluted earnings per share Number of ordinary shares Weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share	2007 $ (3,223,747)	2006 $ (6,051,818)
	104,914,415	82,751,793

14.2 Returns to shareholders (Including distributions and buy backs)

Ordinary securities_(each class separately) Preference securities(each class separately) Other equity instruments(each class separately)_ Total	Current period $A'000	Previous corresponding Period $A'000
	- - -	- - -
	-	-

There were no dividend or distribution plans in operation during the period.

14.3 Significant features of operating performance

See commentary on results for the year.

14.4 Trends in performance

See commentary on results for the year.

14.5 Factors which have affected the results during the reporting period or which are likely to affect results in the future, including those where the effect could not be quantified.

See commentary on results for the year.

Ritract Limited Appendix 4E Preliminary final report

14.6 This report is based on accounts to which one of the following applies.

� The accounts have been � The accounts have been subject audited. to review. ⌧ The accounts are in the process � The accounts have not yet been of being audited or subject to audited or reviewed. review.

15. If the accounts have not yet been audited or subject to review and are likely to be subject to dispute or qualification, a description of the likely dispute or qualification.

N/A

16. If the accounts have not been audited or subject to review and are subject to dispute or qualification, a description of the dispute or qualification.

N/A

Signed

==> picture [127 x 75] intentionally omitted <==

Guy Robertson CFO & Company Secretary

Date: 31 August 2007