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SAFETY MEDICAL PRODUCTS LIMITED ABN

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					SAFETY MEDICAL PRODUCTS LIMITED

       ABN 26 007 817 192




            2009
        ANNUAL REPORT
                               CHAIRMAN’S REPORT
During a period of very difficult market conditions, the Company, Safety Medical Products Limited
(‘SafetyMed’) and its controlled entities have identified new opportunities through the introduction of
Australia’s first sterilised feminine hygiene range (“Pureste”); and in September 2009 the Company
announced an exciting global opportunity for SafetyMed to complete its goal of producing and making
available for market its full range of Safety Syringes as well as the added benefit of being a partner in
the production and sales of a full range of standard syringes and other high volume medical products
on a global scale.

The Company has signed a letter of intent with Dispomedicor Zrt, under which, a joint venture entity
(“JVE”) will be established in Hungary; SafetyMed will retain its Intellectual Property; Australian
Production will move offshore; and its Salisbury Facility will be used as a sales, storage and
distribution centre for the JVE’s new medical product range and the Pureste sterilised feminine
hygiene products.

The Company has also implemented several changes and cost saving measures during the past
twelve months including the relocation of Baratex Pty Ltd (trading as ProControl Systems) to the
SafetyMed facility at Salisbury Plain; the sale of subsidiary Bagot Press Pty Ltd’s business for
$1.3million; and the launch into the retail market of Australia’s first range of sterilised Tampons, Pads
and Liners under the Pureste brand.

The company’s core technology, the Securetouch Retractable Syringe has continued to be used in the
National Diabetes Services Scheme (NDSS) being the only safety device participating, as well as
being integrated for use by the Royal District Nursing Service (RDNS) throughout Victoria.

SafetyMed advises that sales for the SafetyMed group including Bagot Press Pty Ltd, for the year
ended 30 June 2009 increased to $5.8million up by 22% from the $4.77million achieved in the prior
corresponding period.

The group’s loss of $3.8 million is down 12% on the $4.4million loss for the previous year and includes
$1.4million of intangible asset impairment (from the discontinued Bagot Press business (as a result of
the sale) and the continued group operations) and $0.8million of marketing expenditure for the new
range of sterilised feminine hygiene products recently launched.

The loss attributable to equity holders is $3.16million down by 28% on the $4.4million loss for the
previous year.

Management firmly believes that the current and new opportunities; the cost saving measures; as well
as the expected turnaround in global market conditions over the next twelve months will provide the
necessary platform for the SafetyMed group to consolidate a positive position in the market.




John Darley
Chairman
Dated this 27th day of September 2009




                                                   2
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


The directors present their report together with the financial report of Safety Medical Products Limited
(the Company) and of the consolidated entity, being the Company and its controlled entities, for the
year ended 30 June 2009 and the auditor’s report thereon.

Contents of Directors’ report                                                                  Page
1.       Directors                                                                                  4
2.       Directors’ Meetings                                                                        4
3.       Corporate Governance Statement                                                             5
4.          Remuneration report                                                                    14
4.1            Principles of compensation                                                          14
4.2            Directors’ and executive officers’ remuneration (Company and Consolidated)          17
4.3            Analysis of bonuses included in remuneration                                        18
4.4            Equity instruments                                                                  18
4.4.1             Options over equity instruments granted as compensation                          18
4.4.2             Modification of terms of equity-settled share-based payment transactions         18
4.4.3             Exercise of options granted as compensation                                      18
4.4.4             Analysis of options over equity instruments granted as compensation              18
4.4.5             Analysis of movements in options                                                 18
5.       Principal activities and review of operations                                             19
6.       Operating and financial review                                                            19
7.       Dividends                                                                                 22
8.       Events subsequent to reporting date                                                       22
9.       Likely developments                                                                       23
10.      Directors’ interests                                                                      23
11.      Indemnification of officers                                                               23
12.      Lead auditor’s independence declaration                                                   23
13.      Proceedings on behalf of the Company                                                      24
14.      Auditor                                                                                   24




                                                   3
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009




1.      Directors
The directors of the Company during or since the end of the financial year are:
Name and qualifications                   Experience and special responsibilities

John Darley                               Director and Executive Chairman since 2005.
Chairman                                  Mr Darley is the former Valuer-General of South Australia
Non-Executive Director                    and Chief Executive of Lands SA. He is currently the
aged 72                                   Chairman of the Burnside Retirement Services Inc. and
                                          the Land Tax Reform Association of South Australia. He
                                          is also a member of the Legislative Council.

John Riemelmoser                          Managing Director and Chief Executive Officer since 2001
Managing Director and Chief               Mr Riemelmoser was previously the director of a large
Executive Officer                         dairy products distribution business in South Australia
Executive Director                        prior to the sale of the business in 2005. Mr Riemelmoser
aged 45                                   was the founder of Safety Medical Products Limited and
                                          was responsible for the development of the core
                                          intellectual property on which the Company is based.

Joseph Nicholas MB BS MAICD               Director since 2005.
Independent Non-Executive Director        Dr Nicholas is a general practitioner with a practice in
aged 52                                   Fairfield Heights, Sydney. Dr Nicholas is the Chairman of
                                          Australian Medical Co-operative Limited.

Company Secretary
The Company Secretary, Mrs Victoria Marie Allinson was appointed on the 30 January 2009. Mrs
Allinson is a fellow of the Association of Chartered Certified Accountants and an affiliate of the
Chartered Secretaries of Australia. She has extensive commercial and public practice experience
including being Chief Accountant for a number of ASX listed companies and as an Audit Manager
for Deloitte Touch Tohmatsu. Mrs Allinson has previously been Company Secretary of numerous
companies including ASX listed: Centrex Metals Limited, Adelaide Energy Limited and Island Sky
Australia Ltd.

The previous Company Secretary, Ms Pia Bentick-Owens resigned on the 30 January 2009. Ms
Bentick-Owens replaced Mr Bruce Hocking as Company Secretary on 30 November 2008.



2.      Directors’ meetings
The number of directors’ meetings and the number attended by each of the directors of the Company
during the financial year are:

                                                                           Remuneration
                                                  Audit Committee           Committee
                          Board Meetings             Meetings                Meetings
Director                    No.                     No.                     No.
                         Attended    No. Held    Attended    No. Held    Attended   No. Held
Mr J Darley                12           12             6        6            2          2
Mr J Riemelmoser           12           12             -        -            -          -
Dr J Nicolas               12           12             6        6            2          2




                                                   4
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


3.      Corporate Governance Statement
This statement outlines the main corporate governance practices in place throughout the financial
year. Unless otherwise stated, the Company complies with all of the Australian Securities Exchange
(“ASX”) Corporate Governance Principles and Recommendations as published by the ASX Corporate
Governance Council. The ASX Corporate Governance Council released a second Edition of the
Corporate Governance Principles and Recommendation.


Principle 1 – Lay solid foundations for management and oversight
The Board has the responsibility of protecting the rights and interests of shareholders and
enhancement of long-term shareholder value.

To fulfil this role, the Board is responsible for:
 the corporate governance of the Company;
 oversight of the Company including its controls and accountability systems;
 the overall strategic direction and leadership of the Company;
 approving and monitoring the implementation by management of the Company’s objectives and
    strategies;
 appointing the Managing Director, setting objectives for the Managing Director and reviewing
    performance against those objective, ensuring appropriate polices and procedures are in place for
    recruitment, training, remuneration and succession planning;
 ensuring appropriate resources are available to management,
 reviewing the Company’s performance against its stated objectives by receiving regular
    management reports on the Company’s business situation, opportunities and risks;
 approval and monitoring financial and other report, including liaison with auditor;
 reviewing and ratifying systems of risk management and internal compliance and control, codes of
    conduct, and legal compliance; and
 ensuring the Company complies with the law and confirms to the highest standard of financial and
    ethical behaviour.

The Board has delegated responsibility for operation and administration of the Company to the Managing
Director and executive management. Responsibilities are delineated by formal authority delegations.

The Remuneration Committee has been delegated a number of responsibilities, including the
evaluation of senior executives performance.

The Board have documented the respective roles and responsibilities of Board and Management in a
Board of Directors Charter.

A Director’s Deed of Appointment (“Deed”) and Remuneration Agreement are signed by each director.
These documents set out the director’s rights and obligations.




                                                  5
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


3.      Corporate Governance Statement (continued)

Principle 2 – Structure the board to add value
The Board is ultimately responsibility for corporate governance. The Board is accountable to the
shareholders for the performance of the company. The Company’s constitution, charters, policies and
the Corporations Act set out the function and responsibilities of the Board, these include:
 the Board should comprise directors with a broad range of expertise;
 directors are initially appointed by the Board and are then subject to election by shareholders at
    the following Annual General Meeting (“AGM”);
 while directors are not appointed for a fixed term, under the Company’s Constitution and the ASX
    Listing Rules, at least one third of the directors (excluding the Managing Director) must retire by
    rotation each year and submit themselves for re-election by shareholders;
 the Chairman reviews the performance of all directors each year;
 the tenure for executive directors is linked to their holding of executive office;
 each director has the right of access to all relevant Company information and to the Company’s
    executives;
 each director, subject to prior consultation with the Chairman, may seek independent professional
    advice from a suitably qualified adviser at the Company’s expense. The director must consult with
    an advisor suitably qualified in the relevant field, and obtain the Chairman’s approval of the fee
    payable for the advice before proceeding with the consultation. A copy of the advice received by
    the director is made available to all other members of the Board;
 the board is responsible for the overall strategic direction and leadership of the Company;
 approving and monitoring the implementation by management of the Company’s objectives and
    strategies;
 approving and monitoring the progress of major capital expenditure, capital management and
    acquisitions and divestitures;
 ensuring appropriate resources are available to management;
 reviewing the Company’s performance against its stated objectives by receiving regular
    management reports on the Company’s business situation, opportunities and risks;
 approval and monitoring financial and other report, including Budgets;
 reviewing and ratifying systems of risk management and internal compliance and control, codes of
    conduct, and legal and statutory compliance;
 the Board has established a framework for the management of the Company including a system of
    internal control, a business risk management process and the establishment of appropriate ethical
    standards;
 to assist in the execution of its responsibilities, the Board has established a Remuneration
    Committee and an Audit Committee. These committees commenced operating from the
    beginning of 2008 and the names of the Committee members and their attendance at meetings of
    the committee are detailed in the directors report;
 the full Board currently holds 10 scheduled meetings each calendar 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 agenda for meetings is prepared the Company Secretary in conjunction with the Chairman and
    Managing Director. Submissions are circulated in advance. Executives are regularly involved in
    Board discussions and directors have other opportunities, including visits to operations, for contact
    with a wider group of employees; and
 the Board conducts an annual review of its processes to ensure that it is able to carry out its
    functions in the most effective manner.




                                                   6
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


3.      Corporate Governance Statement (continued)

Principle 2 – Structure the board to add value (continued)
Director education
The Company has a formal process to educate new directors about the nature of the business, current
issues, the corporate strategy and the expectations of the Company concerning performance of
directors. Directors also have the opportunity to visit Company facilities and meet with management to gain
a better understanding of business operations. Directors are given access to continuing education
opportunities to update and enhance their skills and knowledge.

Composition of the Board
The names and particular of the directors in office at the date of this Statement are set out in the
Directors’ Report on page 4 of this report.

The Board currently comprises of one executive director, one independent non-executive director and
one non-executive director. The ASX Corporate Governance Principles and Recommendations
include that the majority of Board members should be independent and the Chairman should be an
independent non-executive. The non-executive Chairman is not independent and the majority of Board
are not independent directors. Given the Board and Company size there are no immediate plans to
appoint an independent Chairman or further independent directors.

An independent director is a director who is not a member of management (a non-executive director)
and who:
   is not a substantial shareholder of the Company or an officer of, or otherwise associated, directly
    or indirectly, with a substantial shareholder of the Company;
   has not within the past three years been employed in an executive capacity by the Company;
   is not, and has not within the past three years been a principal of a professional adviser to the
    Company;
   is not a significant supplier or customer of the Company or an officer of or otherwise associated,
    directly or indirectly, with a significant supplier or customer;
   has no significant contractual relationship with the Company other than as a director of the
    Company; and
   is free from any interest and any business or other relationship which could, or could reasonably
    be perceived to, materially interfere with the director’s ability to act in the best interests of the
    Company.

The independence of non-executive directors is reviewed annually, or as their relevant circumstances
change.

Nomination, Appointment and Retirement of Directors
The full Board is responsible for succession planning, identification and appointment of new Board
members. Given the size of the Company, it is the view of the Board that a separate Nomination
Committee is not required as the matters normally considered by a nomination committee can be
efficiently dealt with by the full Board.

The composition of the Board is reviewed on a regular basis to ensure that it has the appropriate expertise
and range of skills.

If a vacancy occurs or if it is considered that the Board would benefit from the services of an additional
director with particular skills, the Board (if necessary, with the assistance of an external consultant)
would select a panel of candidates with the appropriate expertise and experience.

The Board would then appoint the most suitable candidate. The Company’s Constitution requires that
directors appointed by the Board submit themselves for election at the first meeting of shareholders
following their appointment.



                                                    7
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


3.       Corporate Governance Statement (continued)

Principle 2 – Structure the board to add value (continued)

The Board is responsible for the selection, appointment and succession planning process of the
Company’s Managing Director and Chief Executive Officer. The Chairman reviews the performance of
all directors each year.


Principle 3 – Promote ethical and responsible decision-making

The Company recognises the need for directors, managers and employees to observe the highest
standards of behaviour and business ethics when engaging in corporate activity. The requirement
to comply with these ethical standards is communicated to all employees.

The Company has established a code of conduct that details:
    the practices necessary to maintain confidence in the Company’s integrity;
    the practices necessary to take into account legal obligations and the reasonable expectations
     of stakeholders; and
    the responsibility and accountability for reporting and investigating reports of unethical practices


The code of conduct principles include:

    Compliance with Law and Regulations;

    Conflict of Interest;

    Confidentiality of information/Insider Trading/Share Transaction Policy;

    Privacy – Protection of Information;

    Fair Dealing;

    Protection of Assets and Interests; and

    Compliance with the Code of Conduct.

Conflict of interest
In accordance with the Corporations Act 2001 and the Company’s Constitution, directors must keep
the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the
Company. Where the Board believes that a significant conflict exists, the director concerned does not
receive the relevant Board papers and is not present at the meeting whilst the item is considered.
Details of director-related entity transactions with the Company are set out in Note 35.




                                                     8
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


3.      Corporate Governance Statement (continued)
Principle 3 – Promote ethical and responsible decision-making (continued)
Directors and staff dealing in Company shares
The Company’s Constitution does not preclude directors or staff from acquiring shares in the
Company or disposing of those shares. However, the Board has instituted a Company requirement
that only allows the purchase or disposal of shares by directors, staff or persons living in the same
household as directors or staff under certain circumstances. Under this policy trading in the
Company’s securities is not allowed; within a period of one (1) month prior to the release of the annual
or half yearly report, within a period of one (1) month prior to the issue of a prospectus or if the director
or staff member is in possession of material price sensitive information that has not been disclosed to
the market.

The Company’s policy also prohibits directors or staff who have prior knowledge of any material non-
public information concerning the Company, which is the subject of a public announcement, from
trading in the Company’s securities until adequate time has elapsed for the information to be reflected
in the security price.

In accordance with the provisions of the Corporations Act 2001 and the Listing Rules of the Australian
Securities Exchange (“ASX”), directors must advise the Company of any transactions conducted by
them in securities in the Company.

Related Party Matters
The Directors and senior management will be required to advise the Chairman of any related party
contract or potential conflict. The Chairman must inform the Board and the reporting party will be
required to remove himself/herself from all discussions and decisions involving the matter.


Principle 4 – Safeguard integrity in financial reporting
The Managing Director (Chief Executive Officer) and the Chief Financial Officer declared in writing to
the Board (as required by section 295A of the Corporations Act 2001) that, in their opinion, the
Company’s financial records for the year ended 30 June 2009 have been properly maintained and the
financial statements and notes for the year ended 30 June 2009 give a true and fair view of the
financial position and performance of the Company and its controlled entities and are in accordance
with the accounting standards.

The Managing Director (Chief Executive Officer) and the Chief Financial Officer have also declared, in
writing to the Board that, in their opinion, the Company’s financial reports are founded on a sound
system of risk management and internal compliance and control which implements the policies
adopted by the Board.

Audit Committee
The Board has established an Audit Committee.

The Audit Committee comprises of the two non-executive directors: Dr Joseph Nicholas, who is also
the independent non-executive Chairman, and Mr John Darley. The ASX Corporate Governance
Principles and Recommendations include that the committee should comprise of at least three
members, all of whom should be independent; given the size of the Board and the Company, the
Board do not consider it appropriate to appoint a further committee member nor that all the committee
members be independent.




                                                     9
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


3.      Corporate Governance Statement (continued)

Principle 4 – Safeguard integrity in financial reporting (continued)
The role of the Committee is to advise on the establishment and maintenance of a framework of
internal control and appropriate ethical standards for the management of the Company.

It also gives the Board of Directors additional assurance regarding the quality and reliability of financial
information prepared for use by the Board in determining policies or for inclusion in the financial report.

The external auditor, the Managing Director (Chief Executive Officer) and the Chief Financial Officer
will be invited to Audit Committee meetings at the discretion of the Committee.

The responsibilities of the Audit Committee are set out in the Audit Committee Charter and include:
  reviewing the financial report and other financial information distributed externally;
  monitoring corporate risk assessment processes;
  assessing whether non-audit services provided by the external auditor are consistent with
   maintaining the external auditor’s independence. Each reporting period the external auditor
   provides an independence declaration in relation to the audit or review;
  providing advice to the board in respect of whether the provision of the non-audit services by the
   external auditor is compatible with the general standard of independence of auditors imposed by the
   Corporations Act 2001;
  reviewing external audit reports to ensure that where major deficiencies or breakdowns in controls
   or procedures have been identified, appropriate and prompt remedial action is taken by
   management;
  review the performance of the auditor;
  liaising with the external auditors and ensuring that the annual statutory audit and half-year review
   are conducted in an effective manner;
  monitoring the establishment of appropriate ethical standards; and
  monitoring the quality of the accounting function.

The Audit Committee will review the performance of the external auditor on an annual basis and meet
with them during the year as follows:

Audit planning
  to discuss the external audit plan;
  to discuss any significant issues that may be foreseen;
  to discuss the impact of any proposed changes in accounting policies on the financial statements;
  to review the nature and impact of any changes in accounting policies adopted during the year;
   and
  to review the fees proposed for audit work to be performed.

Prior to announcement of results
   to review the pro forma half-yearly and pro forma preliminary final report prior to lodgement of
    those documents with the ASX; and
   to make the necessary recommendation to the Board for the approval of these documents.

Half-year and annual reporting
   to review the results and findings of the external auditor, the adequacy of accounting and financial
    controls, and to monitor the implementation of any recommendations made; and
   to review the draft financial report and the review report and to make the necessary
    recommendation to the Board for the approval of the financial report.

As required
   to organise, review and report on any special reviews or investigations deemed necessary by the
    Board.


                                                    10
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


3.      Corporate Governance Statement (continued)

Principle 5 – Make timely and balanced disclosure
The Board are committed to keeping the market fully informed of material development to ensure
compliance with ASX Listing Rules and the Corporations Act.

Management is required to bring any matters which may be of a price sensitive nature to the Board’s
immediate attention and possible release. The Board also specifically addresses the issue of price
sensitive information at each of its Board meetings.

The Company’s Continuous Disclosure Policy which includes identifying matters that may have a
material effect on the price or value of the Company’s securities, notifying them to the ASX, posting
them on the Company’s website, and issuing media releases. In summary, the Continuous Disclosure
Policy operates as follows:
 the Managing Director (as Chief Executive Officer) and the Company Secretary are responsible
    for interpreting the Company’s policy and where necessary informing the Board. The Company
    Secretary is responsible for all communications with the ASX;
 the annual report is made available to all shareholders on www.safetymed.com.au (a shareholder
    is entitled to requested to receive a hard copy free of charge). The Annual Report includes
    relevant information about the operations of the Company during the year, changes in the state of
    affairs and details of future developments;
 the half-yearly report contains summarised financial information and a review of the operations of
    the Company during the period. The half-year reviewed financial report is lodged with the
    Australian Securities and Investments Commission and the ASX, and sent to any shareholder who
    requests it;
 proposed major changes in the Company which may impact on share ownership rights are
    submitted to a vote of shareholders;
 all announcements made to the market, and related information (including information provided to
    analysts or the media during briefings), are placed on the Company's website after they are
    released to the ASX;
 the full text of notices of meetings and associated explanatory material are placed on the
    Company's website; and
 the external auditor attends the Annual General Meeting to answer any questions concerning the
    audit and the content of the auditor’s report including any written questions submitted by
    shareholders.

Principle 6 – Respect the rights of shareholders
The Board is committed to providing all shareholders with information using a Continuous Disclosure
Policy and a Shareholder Communications Policy. The Shareholder Communications Policy includes:
 regular communication such as half-year Reports and annual financial reports;
 access to information through the Safety Medical Products website, including financial reports,
    ASX and press releases and stock information;
 detailed information on operational activities is provided in the Annual Report;
 Safety Medical Products Limited encourages shareholder attendance and participation in the
    Annual General Meeting (the Chairman and CEO/Managing Director’s addresses are made
    available on the Safety Medical Products website for those unable to attend); and
 the external audit partner attends the Annual General Meeting and questions regarding conduct of
    the audit and the content of the auditors report may be directed to him/her.

The shareholders are requested to vote on the appointment and aggregate remuneration of directors,
the granting of options and shares to directors and changes to the Company’s Constitution.
Shareholders also vote on a non-binding resolution to adopt the Company's Remuneration Report.
The Remuneration Report is set out in section 4 of the Directors’ Report. Copies of the Company’s
Constitution are available to any shareholder who requests it.

                                                 11
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


3.      Corporate Governance Statement (continued)

Principle 7 – Recognise and manage risk
The Board is committed to the management of risks throughout the Company to protect its employees,
assets, earnings, markets, reputation and the environment. Risk management procedures have been
implemented throughout the Company that aim to identify the sources of risk, quantify the impact of
these sources and control and reduce risk through practical and cost effective control measures.

The Board as a whole is responsible for the oversight of the Company’s risk management and control
framework. To fulfil this responsibility the Board has established a framework designed to ensure that
the Company’s risks are identified and that controls are adequate, in place and functioning effectively.

Risk profile
Major risks arise from such matters as:
 the actions of the industry regulatory bodies;
 competitors;
 the development, commercialisation and protection of the Company’s intellectual property;
 the impact of exchange rate movements on sales and purchases;
 environmental, occupational health and safety; and
 financial reporting.

The Board have established a risk management and oversight policy. Key elements of the Company’s
risk management and oversight policy include:
 the annual business planning process which includes a review of the Company’s strategic
     direction and the development of the annual budget; through this process key business risks are
     identified, analysed and documented and risk management strategies are developed and
     communicated to the Board using a ‘Risk Register’;
 The Risk Register documents the nature of key risks, rank them based upon consequence and
     likelihood and to describe the controls in place to mitigate each risk; the register will be updated on
     an ongoing basis and reviewed by the Board either annually or as significant changes occur;
 the implementation of a system of “Standard Operating Procedures” (SOPs) to manage the
     manufacturing activities of the Company;
 the Company is subject to audits by the industry regulatory body (Therapeutic Goods
     Administrations, “TGA”) to ensure compliance with the standards required to maintain TGA
     certification of its manufacturing processes;
 Occupational Health, Safety and Environmental (OHS&E) standards and systems are monitored to
     ensure high standards of performance and compliance with regulatory requirements;
 procedures to ensure capital expenditure, revenue and expense commitments above a certain
     size obtain prior Board approval;
 properly authorised and executed business transactions;
 control of financial exposures. Further details of the Company’s policies relating to interest rate,
     foreign currency and credit risk management are included in Note 34 to the financial statements;
 ensuring financial reporting is accurate and compliant with the financial reporting regulatory framework;
     and
 the Company’s insurance program is reviewed and updated on an annual basis.

Environmental
The Company’s operations are subject to regulations under both Commonwealth and State
legislation. The Company is committed to achieving its business activities at a level of environmental
performance that meets or exceeds the relevant regulations. The directors are not aware of any
material breaches of environmental regulations during the year.




                                                    12
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


3.      Corporate Governance Statement (continued)

Principle 7 – Recognise and manage risk (continued)

The Directors require the Managing Director and any Chief Financial Officer (or equivalent) to state
in writing to the Board that:
1. the statement given in accordance with Principle 4: Safeguard integrity in financial statements is
    founded on a sound system of risk management and internal compliance and control which
    implements the policies established by the Board; and
2. the Company’s risk management and internal compliance and control system is operating
    efficiently and effectively in all material respects.

Principle 8 – Remunerate fairly and responsibly
The Board provides disclosure of the Company’s Remuneration Committee Charter and Performance
and Remuneration Policy to enable investors understand the costs and benefits of these policies and
also the relationship between performance and remuneration.

Remuneration Committee
The main role of the Remuneration Committee is to review and make recommendations to the Board
on remuneration packages and policies applicable to the Managing Director and Chief Executive
Officer, senior executives and directors themselves. It also plays a role in evaluation of the
performance of the Managing Director and Chief Executive Officer and management succession
planning. Its role also includes responsibility for share option schemes, incentive performance
packages, superannuation entitlements, retirement and termination entitlements, fringe benefits
policies and professional indemnity and liability insurance policies.

The Remuneration Committee is comprised of two directors: Dr Joseph Nicholas, who is also the
independent non-executive Chairman, and Mr John Darley. The Committee was previously chaired by
Mr Bruce Hocking. The ASX Corporate Governance Principles and Recommendations include that
the committee should comprise of at least three members, the majority of whom should be
independent; given the size of the Board and the Company, the Board do not consider it appropriate to
appoint a further committee member nor that the majority of the committee to be independent.

The Managing Director and Chief Executive Officer, Mr J Riemelmoser is invited to Remuneration
Committee meetings as required to discuss senior executives’ performance and remuneration
packages.

The Remuneration Committee will meet as required, or at least once a year.

Quality and integrity of personnel
Formal appraisals are conducted at least annually for all employees. Training and development and
appropriate remuneration and incentives with regular performance reviews create an environment of
cooperation and constructive dialogue with employees and senior management. A formal succession
plan is also in place to ensure competent and knowledgeable employees fill senior positions when
retirements or resignations occur.


Other information
Further information relating to the Company’s corporate governance practices and policies has been
made publicly available on the Company’s web site at www.safetymed.com.au.




                                                  13
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


4.      Remuneration report – audited
4.1     Principles of compensation

Remuneration is referred to as compensation throughout this report.

Key management personnel have authority and responsibility for planning, directing and controlling
the activities of the Company and the consolidated entity, including directors of the Company and
other executives. Key management personnel includes the five most highly remunerated S300A
directors and executives for the Company and the consolidated entity.

Compensation levels are competitively set to attract and retain the most qualified and experienced
directors and senior executives. The Board obtains independent reports when necessary. The Board
reviews the remuneration of directors and senior executives annually.

The compensation structures explained below are designed to attract suitably qualified candidates,
reward the achievement of strategic objectives, and achieve the broader outcome of creation of value
for shareholders. The compensation structures take into account:
    the capability and experience of the key management personnel
    the key management personnel’s ability to control the relevant segment/s’ performance
    the consolidated entity’s performance including:
         the consolidated entity’s earnings
         the growth in share price and delivering constant returns on shareholder wealth
    the amount of incentives within each key management person's compensation.

Compensation packages include a mix of fixed and variable compensation and short- and long-term
performance-based incentives.

In addition to their salaries, the consolidated entity contributes to post-employment defined
contribution superannuation plans on behalf of key management personnel.

Fixed compensation
Fixed compensation consists of base compensation (which is calculated on a total cost basis and
includes any FBT charges related to employee benefits including motor vehicles), as well as employer
contributions to superannuation funds, where applicable.

Compensation levels are reviewed annually by the Board through a process that considers individual,
segment and overall performance of the consolidated entity. In addition external consultants provide
reports to ensure the directors’ and senior executives’ compensation is competitive in the market
place. A senior executive’s compensation is also reviewed on promotion.
Performance-linked compensation
Performance linked compensation includes both short-term and long-term incentives and is designed
to reward key management personnel for meeting or exceeding their financial and personal objectives.
The short-term incentive (STI) is an ‘at risk’ bonus provided in the form of cash, while the long-term
incentive (LTI) is provided as options over ordinary shares of the Company.
Short-term incentive bonus
Each year the Board sets the key performance indicators (KPIs) for the key management personnel.
The KPIs generally include measures relating to the consolidated entity, the relevant segment, and the
individual, and include financial, people, customer, strategy and risk measures. The measures are
chosen as they directly align the individual’s reward to the KPIs of the consolidated entity and to its
strategy and performance.




                                                  14
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


4.       Remuneration report – audited (continued)
4.1      Principles of compensation (continued)

Short-term incentive bonus (continued)
The key performance objectives have both financial and non-financial elements, including; profit, cash
flow, achievement of strategic outcomes, safety, environmental and quality performance, customer
support, product development and staff development. At the end of the financial year the Board
assesses the actual performance of the consolidated entity, the relevant segment and individual
against the KPI’s set at the beginning of the financial year and determines whether it is appropriate to
award a short-term incentive bonus.

The Board approves the cash incentive to be paid to the individuals. The method of assessment was
chosen as it provides the Board with an objective assessment of the individual’s performance.

No short-term incentive bonuses were paid during the years ended 30 June 2009 or 2008.
Long-term incentives
The Company operates the Employee and Officers Share Scheme, under which the Board can issue
either shares or options over ordinary shares of the Company in order to provide long-term incentives
to key management personnel. No such issue was made during the years ended 30 June 2009 or
2008.
Short-term and long-term incentive structure
The Board considers that the above performance-linked compensation structure is generating the
desired outcome.

Consequence of performance on shareholder wealth
In considering the consolidated entity’s performance and benefits for shareholders wealth, the Board
had regard to the following indices in respect of the current financial year and the previous financial
years since the Company listed on ASX.

                                     2009           2008             2007           2006          2005
Net profit/(loss) after tax   $(3,874,198)   $(4,418,046)     $(1,519,000)   $(1,523,000)   $(168,000)
Basic EPS                           (4.2)c          (6.1)c          (2.6)c         (3.6)c         (0.9)c
Share price at year end             $0.04           $0.09           $0.55          $0.21            n/a
Dividends paid                         Nil              Nil            Nil            Nil            Nil

The overall level of key management personnel’s compensation takes into account the performance of
the consolidated entity over a number of years and includes both financial and non-financial measures
of performance. In the period since the Company listed on ASX it has been in the development phase
of its operations, as such the directors consider that comparing compensation directly with profitability
is not warranted during this stage.

Service contracts
The employment conditions of the managing director, Mr. John Riemelmoser, the executive director
and specified executives are formalised in contracts of employment. The Company Secretary is not a
full-time employee of Safety Medical Products Limited, however the Managing Director is.

Mr. Riemelmoser was employed under a fixed three-year contract, which commenced on 1 August
2005 and expired on 1 August 2008. Mr Riemelmoser continues under the current arrangements but
not for a fixed term. The Board has determined that in light of the new group structure that Mr
Riemelmoser employment agreement be amended to reduce his total remuneration, including
superannuation to $260,000 per annum from 1 July 2009, this amendment was signed by Mr
Riemelmoser on 27 September 2009.


                                                   15
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


4.     Remuneration report – audited (continued)

4.1    Principles of compensation (continued)

Non-executive directors
Under the Company’s Constitution, the maximum aggregate compensation available for division
among the non-executive directors is to be determined by the shareholders in a general meeting. The
maximum aggregate is currently fixed at $250,000. This amount (or some part of it) is to be divided
among the non-executive directors as determined by the Board.

Directors’ base fees are presently $30,000 per annum. The Chairman receives a base fee of $60,000
per annum. Directors’ fees cover all main Board activities. Non-executive directors may also be
renumerated for additional services performed at the request of the Board. The Board has determined
that in light of the new group structure that the Chairman’s remuneration agreement be amended to
reduce his fees to $45,000 per annum from 1 July 2009, this amendment was signed by Mr Darley on
27 September 2009.




                                                16
Directors’ report
For the year ended 30 June 2009

4.     Remuneration report – audited (continued)
4.2    Directors’ and executive officers’ remuneration (Company and Consolidated)

Details of the nature and amount of each major element of the remuneration for the year ended 30 June 2009 (and the previous period) of each director of the Company
and each of the five named Company executives receiving the highest remuneration and other key management personnel are:

                                                          Short-term                   Post      Share-based payments                    Proportion of Value of options
                                                                                   employment                                            remuneration   and shares as
                                               Salary &     STI Cash    Total     Superannuation Options                                 performance    proportion of
In AU$                                           fees        bonus                   benefits                 Shares         Total          related     remuneration
Directors                                         $            $          $             $          $(1)(2)       $(1)          $             (%)             (%)
Non-executive directors
Dr J Nicholas                          2009          -             -         -          30,000               -          -    30,000              -                 -
                                       2008          -             -         -          30,000               -          -    30,000              -                 -
Mr J Darley (Chairman)                 2009     60,000             -    60,000               -               -          -    60,000              -                 -
                                       2008     88,204             -    88,204               -               -          -    88,204              -                 -
Executive directors
Mr J Riemelmoser (CEO/MD)              2009    294,201             -   294,201          13,745               -          -   307,946              -                 -
                                       2008    296,600             -   296,600          16,007               -          -   312,607              -                 -
Executives
Mrs V Allinson (Company Secretary)     2009     27,144             -    27,144               -               -          -    27,144              -                 -
appointed 30 January 2009              2008          -             -        -                -               -          -         -              -                 -
Ms P Benedick-Owens (Company           2009      8,000             -     8,000               -               -          -     8,000              -                 -
Secretary) from 30 November 2008                                              -                              -          -
                                       2008           -            -                         -                                       -           -                 -
until 30 January 2009
Mr B Hocking (Company Secretary)       2009          -             -         -          42,346               -          -    42,346              -                 -
until 30 November 2008                 2008     67,346             -    67,346          35,654               -          -   103,000              -                 -
Mr R Doley (GM – ProControl Systems)   2009    136,964             -   136,964          50,145               -          -   187,109              -                 -
                                       2008    101,117             -   101,117          91,321               -          -   192,438              -                 -
Mr T Sharpe (GM – Bagot Press)         2009     60,161             -    60,161          59,619               -          -   119,780              -                 -
resigned June 2009                     2008     77,092             -    77,092          30,218               -          -   107,310              -                 -
Total compensation: key management     2009    586,470                 586,470         195,855               -          -   782,325              -                 -
personnel (consolidated)               2008    630,359                 630,359         203,200               -          -   833,559              -                 -
Total compensation: key management     2009    389,345             -   389,345          86,091               -          -   475,436              -                 -
personnel (company)                    2008    452,150             -   452,150          81,661               -          -   533,811              -




                                                                                  17
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


4.         Remuneration report – audited (continued)
4.2        Directors’ and executive officers’ remuneration (Company and Consolidated)
           (continued)
(1)
      There have been no options and shares issued to directors or executives as part of their remuneration
      since the year ended June 2007.

      The fair value of the options is calculated at the date of grant using a Black-Scholes option pricing
      model. Estimated volatility approximates historic volatility. Each option entitles the holder to purchase
      one ordinary share in the Company
      All options vested immediately upon grant.
(2)
      Refer Notes 25 and 35 in the Notes to the financial statements for details on the unissued ordinary
      shares of the Company under option, option expiry dates and exercise prices and the number of shares
      issued due to the exercise of options during the year.
Details of performance related remuneration
Details of the consolidated entity’s policy in relation to the proportion of remuneration that is performance
related is discussed in section 4.1 above.

4.3        Analysis of bonuses included in remuneration
There were no short term cash bonuses paid during the reporting period or the prior reporting period.

4.4        Equity instruments
All options refer to options over ordinary shares of Safety Medical Products Limited, which are
exercisable on a one-for-one basis.

4.4.1      Options over equity instruments granted as compensation
There were no options over ordinary shares in the Company granted as compensation to key
management personnel during the reporting period or the prior reporting period.

No options were granted in 2009 or since the end of the financial year. The options were provided at no
cost to the recipients.
All options expire on the expiry date. All options vested immediately upon grant.

Further details, including grant dates and exercise dates regarding options granted to executives are in
Note 25 to the financial statements.

4.4.2      Modification of terms of equity-settled share-based payment transactions
No terms of equity-settled share-based payment transactions (including options granted as compensation
to key management personnel) have been altered or modified by the issuing entity during the reporting
period or the prior period.

4.4.3      Exercise of options granted as compensation
During the reporting period, no shares were issued on the exercise of options previously granted as
compensations:

There are no amounts unpaid on the shares issued as a result of the exercise of the options in the
reporting period or the prior period.

4.4.4      Analysis of options over equity instruments granted as compensation
No options were granted as remuneration during the reporting period or the prior period.

4.4.5      Analysis of movements in options
There was no movement in options during the current and prior reporting period.

                                                        18
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


5.      Principal activities and review of operations
The principal activities and operations of the Company during the course of the financial year were:
 the development, manufacture and commercialisation of medical products;
 introduction of Australia’s first range of sterilised feminine hygiene products (tampons, pads and
   liners) under the “Pureste” brand;
 importation and distribution of medical products;
 the provision of industrial control and automation systems, machine vision, robotics and turn-key
   solutions via subsidiary Baratex Pty Ltd (trading as ProControl Systems); and
 printing and distribution of consumable products for the pharmaceutical industry via subsidiary Bagot
   Press Pty Ltd (‘Bagot Press’ business sold 1 July 2009 refer to Note 31).

There were no other significant changes in the nature of the consolidated group’s principal activities
during the financial year.




6. Operating and financial review
The Income Statement shows a net loss attributable to members of $(3,160,205) compared with
$(4,418,000) for the previous period.

Shareholder returns (Year ended 30 June)

                                      2009            2008            2007              2006         2005
Net profit/(loss) after tax   $(3,874,198)    $(4,418,046)    $(1,519,000)       $(1,523,000)   $(168,000)
Basic EPS                            (4.2)c          (6.1)c          (2.6)c            (3.6)c       (0.9)c
Share price at year end              $0.04           $0.09           $0.55             $0.21            n/a
Dividends paid                          Nil             Nil                Nil            Nil           Nil

The total loss for the year includes $751,497 of Pureste Pty Ltd marketing costs and an intangible asset
accounting impairment of $788,000 and $634,218 in respect of Baratex Pty Ltd and Bagot Press Pty Ltd
respectively.

The highlights for the year ended 30 June 2009 are as follows:

    Major new controlled subsidiary in the feminine hygiene sector with the only range of sterilised
     tampons, pads and liners;

    New product range commenced distribution in early 2009 with $7 million sales expected in the first
     year following marketing launch through well over 1,000 major retail outlets;

    $9.5million financing facility secured via National Australia Bank;

    SecureTouch and Pen Needle Aids to be used throughout Royal District Nursing Service (RDNS)
     Victoria as well as continued distribution trough the National Diabetes Services Scheme (NDSS).




                                                      19
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


6.      Operating and financial review (continued)
Investments for the future
The Company invested $404,000 in plant and equipment during the prior year, principally for the
development and construction of equipment to assemble the “SecureTouch” retractable safety syringe,
expansion of the manufacturing facility and the new Multivac Packaging Machine.
Pureste and ProControl are both expected to make contributions to the revenue and profit of the Group in
2009/10 and beyond. Furthermore, new a opportunity was announced on 21 September 2009 to further
develop the core product range of the Company, refer to section 8 below for further details.

Review of financial condition
At 30 June 2009 the consolidated entity held a net overdraft of $443,277 compared with cash reserves of
$283,000 at 30 June 2008. The consolidated group’s cash reserves improved significantly on 1 July 2009
subsequent to the $1.3million cash proceeds on the sale of Bagot Press.
There were no changes in environmental or other legislative requirements during the year that have
significantly impacted the results or operations of the Company.

Significant changes in the state of affairs

The net assets/(liabilities) of the consolidated group have decreased by $3,679,887 from 30 June 2008
to $(87,240) in 2009 (2008: $3,617,000). This decrease has largely resulted from the following factors:
i.     $1,567,266 of operating losses attributable to members;
ii.    $1,150,406 impairment of intangible assets and intragroup loans;
iii.   $338,451 losses from discontinued operations;
iv.    $713,993 of minority interest losses, offset by
v.     $223,000 raised from the issue of 2,230,000 shares as part of the Share Purchase Plan;


The consolidated group’s working capital position improved significantly on 1 July 2009 subsequent to
the $1.3million cash proceeds on the sale of Bagot Press.


The following significant changes in the state of affairs of the parent entity occurred during the financial
year:
i.     $223,000 was raised from the issue of 2,230,000 shares as part of the Share Purchase Plan


Review of principal business activities
A review of the significant developments in the operating units of the consolidated entity are detailed
below.

Safety Medical Products Limited’s review of operations
In the year to 30 June 2009, Safety Medical Products Limited (SafetyMed) reported revenue of
$118,563 and an operating loss of $(2,058,264). In the prior year to 30 June 2008, SafetyMed reported
revenue of $10,085 and an operating loss of $(4,400,455). The increase in revenue is primarily due to
the commencement of RDNS sales as well as a significant uptake of the company’s unique individually
wrapped surgical masks though Bagot Press and other distributors as a result of the Swine Flu
Epidemic. These masks available under the SafetyMed brand are available across Australia through
Pharmacies.




                                                         20
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


6.      Operating and financial review (continued)
Review of principal business activities (continued)

RDNS Victoria
In November 2008 SafetyMed began supplying the RDNS Victoria with SecureTouch™ Retractable
Syringes and the in-house designed Insulin Pen Needle Aid throughout the 22 centres in Victoria.
The products were chosen because of the ability to provide a much greater level of safety for both
employees and patients.

NDSS
The company continues to supply the NDSS with the Securetouch Retractable Syringe as well as
Insulin Pen Needles and standard syringes supplied by Exel in the USA.
To date the Securetouch remains as the only safety syringe accepted into this program and truly
verifies the technology behind the device.

The company plan to actively pursue any overseas interest shown in the Securetouch Retractable
Syringe Technology.


Baratex Pty Ltd (trading as ProControl Systems) review of operations
In the year to 30 June 2009, ProControl Systems reported revenue of $1,309,319 and an operating loss
of $(44,558). In the year to 30 June 2008, ProControl Systems reported revenue of $1,537,599 and an
operating loss of $(85,590). The amount of revenue has decreased as a result of the economic
downturns, however steps have been taken that have reduced fixed costs, this includes the relocation
of the workshop to Safety Medical Products Limited in Salisbury Plain thereby reducing the group’s
administration and occupancy costs. Activity has significantly increased over recent weeks pointing to a
much more positive outlook for the new financial year as the economy begins to recover.

Bagot Press Pty Ltd’s review of discontinued operations
In the year to 30 June 2009, Bagot Press Pty Ltd revenue of $3,682,277 and an operating loss of
$(338,451) that includes an impairment goodwill of $634,218 and of the SafetyMed intercompany loan,
resulting in a write off amounting to $362,406. In the prior year to 30 June 2008, Bagot Press Pty Ltd
revenue of $3,259,989 and an operating profit of $67,999. The business has increased its sales and
marketing activities during the period with an additional sales representative in place in Queensland and
more active key account management. These activities have delivered additional contracts and
increased revenues.

As previously reported, the subsidiary, Bagot Press Pty Ltd sold its trade, fixed and intangible assets on
1 July 2009 for $1.3 million (Note 31). The company changed its name to ‘ACN 100 073 131 Pty Ltd’ in
July 2009.

Pureste Pty Ltd’s review of operations
On 9 October 2008 Safety Medical Products Limited acquired a 50% holding in Pureste Pty Ltd as a
founding shareholder.

In the period since acquisition to 30 June 2009, Pureste Pty Ltd revenue of $713,533 and an operating
loss of $(1,427,986) that includes $751,497 of marketing launch costs

Safety Medical Products Limited has secured funding totalling $9.5 million to allow for the introduction,
nationwide marketing and mass distribution of an exciting fast moving new range of Feminine Hygiene
products into the Australian and New Zealand Retail Health Care Markets under the Pureste brand.

The new range of Feminine Hygiene products was launched nationwide in early 2009 with the
marketing campaign commencing in May 2009.


                                                     21
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


7.      Dividends
No dividends have been paid or declared by the Company to members since the end of the previous
financial year.


8.      Events subsequent to reporting date
(a) New strategic alliance
On 21 September 2009, SafetyMed announced that it had terminated its current strategic alliance with
Exelint International Co. (“Exelint”), to enable SafetyMed to pursue an exciting new global opportunity. To
this end, a letter of intent between SafetyMed and Dispomedicor Zrt has been signed for a joint venture
agreement to establish a new high volume state of the art manufacturing facility in Hungary, Europe. The
highlight and certain key points set out in the 21 September 2009 announcement are:

Highlights
 SafetyMed terminates existing strategic alliance agreement with Exelint to pursue exciting new global
    opportunity.

    SafetyMed signed letter of intent with major Hungarian Medical Products Manufacturer, Dispomedicor
     Zrt (‘Dispomedicor) (www.dispomedicor.hu).

    Estimated €25million (Euro dollars) Joint Venture Entity (JVE) project for production and worldwide
     marketing of safety and conventional medical, expected lead time is twelve months with annual sales
     of €45million (AUD$90miilion) by year five.

    Core products to include a full range of SafetyMed designed SecureTouch Retractable Syringes and
     Dispomedicor designed Safety Needles as well as a full range of conventional needles and syringes
     and other high volume medical devices.

    Significant Hungarian Government involvement expected via grants of 35% of project costs and
     Governmental Bank Finance, if required.

Under the letter of intent, the project is expected to take the form of a new Hungarian based entity (JVE)
in which SafetyMed and Dispomedicor will hold equal share. Equity partners will also be sought to fund
part of the proposed JVE.

The JVE will be the planned freehold owner of a 12,000sqmtr site located in central Debrecen, (Hungary’s
second largest city) upon which the new facility will be built. This site shares a common boundary with
one of Dispomedicor’s existing facilities with easy access to the sterilisation plant.

In exchange for its equity stake, Dispomedicor will transfer some of its existing syringe manufacturing
business to the JVE to take advantage of the latest manufacturing technologies that will be incorporated
in the new facility as well as replacing any products currently outsourced.

Intellectual property (“IP”) for SafetyMed’s and Dispomedicor’s safety devices will also be contributed
under license to the JVE, as part of the parties planned equity contribution.

SafetyMed will also be required to manage the initial JVE strategic setup as the final part of their initial
equity contribution under the letter of intent.

Under the letter of intent, both companies will sell into the JVE at a fair commercial value (that is expected
to be equal to or greater than the current carrying value), any relevant hardware (refer to Note 19 for
further details) and inventory (refer to Note 15 for further details) that will be required for production in the
new facility. This includes SafetyMed’s automated assembly machine as well as an anticipated further
three new machines to be built by SafetyMed’s subsidiary Baratex Pty Ltd (“ProControl”).

                                                       22
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


8.      Events subsequent to reporting date (continued)
(b) Bagot Press
Bagot Press Pty Ltd sold its trade, fixed and intangible assets on 1 July 2009 for $1.3million. Bagot Press
Pty Ltd also changed its name to ‘ACN 100 073 131 Pty Ltd’ in July 2009.

Other than as detailed above, there has not been any matter or circumstance, other than that referred to
in the financial statements or notes thereto, that has arisen since the end of the financial year, that has
significantly affected, or may significantly affect, the operations of the Company and the consolidated
entity, the results of those operations, or the state of affairs of the Company and the consolidated entity in
future financial years.


9.      Likely developments
The group continues its push into new markets with Pureste new retailer Coles commencing in July 2009.
SafetyMed plans to set up joint venture entity with Dispmendicor Zrt in Hungary, refer to section 8 above
for further details.


10.     Directors’ interests
The relevant interest of each director in the shares, debentures, interests in registered schemes and
rights or options over such instruments issued by the Company as notified by the directors to the
ASX in accordance with section 205G(1) of the Corporations Act 2001 and the ASX Listing Rules, at
the date of this report is as follows:

                           Ordinary shares       Options over ordinary        Convertible Notes over
                                                        shares                   ordinary shares
Mr John Darley                       671,146                  335,573                 2,000
Mr John Riemelmoser               13,228,964                6,644,483                 3,000
Dr Joseph Nicholas                   660,000                  330,000                       -

Details of options over ordinary shares are included in the Remuneration report on pages 14 to 18.


11.     Indemnification of officers
Indemnification
The Company has agreed subject to and so far as may be permitted by the Corporations Act 2001 to
indemnify each past, current and future director and officers against all liabilities that may arise from their
position as directors and officers of the Company or any wholly-owned subsidiary of the Company. The
agreement stipulates that the Company will meet the full amount of any such liabilities, including costs
and expenses.



12.     Lead auditor’s independence declaration
The lead auditor’s independence declaration is set out on page 73 and forms part of the directors’ report
for the financial year ended 30 June 2009.




                                                      23
Safety Medical Products Limited
Directors’ report
For the year ended 30 June 2009


13.     Proceedings on behalf of the Company
As at the date of this report, there are no leave applications or proceedings brought on behalf of the
Company under section 237 of the Corporations Act 2001.


14.     Auditor
Bentleys was appointed as external auditor for the Company at the 2006 Annual General Meeting.
In accordance with the Company's policy, the lead external audit partner must rotate after a maximum of
five years.
Details of the amounts paid to the auditor of the Company, Bentleys, and its related practices for audit
and non-audit services provided during the year are set out in Note 11 of the Notes to the financial
statements on page 42.



Dated at Adelaide this 27th day of September 2009.

Signed in accordance with a resolution of the directors:




John Darley                                          John Riemelmoser
Chairman                                             Managing Director




                                                     24
                    Safety Medical Products Limited
                          FINANCIAL REPORT
                      FOR THE YEAR ENDED 30 JUNE 2008
Contents of the Financial Report                                                         Page
        Income statements                                                                 26
        Statements of changes in equity                                                   27
        Balance sheets                                                                    29
        Cash flow statements                                                              30
NOTES TO THE FINANCIAL STATEMENTS
Note 1  Reporting entity                                                                  31
Note 2  Basis of preparation                                                              31
Note 3  Significant accounting policies                                                   32
Note 4  Determination of fair values                                                      39
Note 5  Segment reporting                                                                 39
Note 6  Acquisition of subsidiaries                                                       41
Note 7  Revenue                                                                           41
Note 8  Other income                                                                      41
Note 9  Personnel expenses                                                                42
Note 10 Financial income and expense                                                      42
Note 11 Auditors’ remuneration                                                            42
Note 12 Income tax expense                                                                43
Note 13 Earnings per share                                                                44
Note 14 Trade and other receivables                                                       45
Note 15 Inventories                                                                       45
Note 16 Non current assets held for sale and discontinued operations                      46
Note 17 Financial assets                                                                  46
Note 18 Tax assets and liabilities                                                        46
Note 19 Property, plant and equipment                                                     48
Note 20 Intangible assets                                                                 49
Note 21 Trade and other payables                                                          51
Note 22 Loans and borrowings                                                              52
Note 23 Share capital                                                                     53
Note 24 Reserves                                                                          55
Note 25 Employee benefits                                                                 55
Note 26 Operating Leases                                                                  57
Note 27 Capital and other commitments                                                     57
Note 28 Consolidated entities                                                             58
Note 29 Cash and cash equivalents                                                         58
Note 30 Reconciliation of cash flows from operating activities                            58
Note 31 Discontinued operations                                                           60
Note 32 Dividends                                                                         61
Note 33 Events subsequent to reporting date                                               61
Note 34 Financial instruments                                                             62
Note 35 Related parties                                                                   63
        Directors’ declaration                                                            70
        Independent auditor’s report to the members of Safety Medical Products Limited    71
        Lead auditor’s independence declaration                                           73
        Additional ASX information                                                        74
        Offices and officers                                                              78

                                                 25
Safety Medical Products Limited and its controlled entities
Income statements
For the year ended 30 June 2009
                                                        Consolidated                      Company
                                                     2009           2008             2009           2008
                                       Note            $             $                $              $
Revenue                                  7        2,132,626      1,517,681         118,563          10,085

Cost of sales                                    (2,066,161)    (1,461,001)         (91,181)       (25,926)

Gross profit                                         66,465         56,680           27,382       (15,841)

Other income                             8          189,226          2,220         379,922          17,160

Research & development expenses                             -              -                -              -

Business development, marketing &                 (860,218)      (108,335)         (51,273)      (107,254)
intellectual property expenses
Administrative expenses                         (1,637,576)     (1,613,960)     (1,178,545)     (1,424,614)
Results from operating activities               (2,242,103)     (1,663,395)       (822,514)     (1,530,549)

Financial income                         10             4,029       11,943           37,898         11,943
Financial expense                        10       (211,970)       (52,090)        (147,031)       (37,351)

Net Financial expense                             (207,941)       (40,147)        (109,133)       (25,408)

Impairment Loss                          20     (1,150,406)     (2,844,498)     (1,150,406)     (2,844,498)

Loss before tax                                 (3,600,450)     (4,548,040)     (2,082,053)     (4,400,455)

Income tax (expense)/benefit             12          64,703         61,995           23,789                -

Loss after tax from continuing                  (3,535,747)     (4,486,045)     (2,058,264)     (4,400,455)
operations

Profit/(loss) from discontinued
                                         31       (338,451)         67,999                  -              -
operations

Loss for the year                               (3,874,198)     (4,418,046)     (2,058,264)     (4,400,455)

Attributable to:

Equity holders of parent                        (3,160,205)     (4,418,046)     (2,058,264)     (4,400,455)

Minority Interest                                 (713,993)                -                -              -

                                                (3,874,198)     (4,418,046)     (2,058,264)     (4,400,455)

Earnings per share for profit attributable
to the ordinary equity holders of the
company from continuing operations:

Basic earnings per share (cents)         13             (4.2)          (6.1)

Diluted earnings per share (cents)       13             (4.2)          (6.1)

The income statements are to be read in conjunction with the attached notes to the financial statements.
                                                   26
 Safety Medical Products Limited and its controlled entities
 Statements of changes in equity
 For the financial year ended 30 June 2009

Consolidated                                                        Equity
                                   Issued        Accumulated      compensa-       Minority           Total
2009                     Note      Capital          losses       tion reserve     Interest           equity
                                      $                $               $              $                $
Opening balance at
                                 10,622,046        (7,771,270)        741,871                -       3,592,647
1 July 2008
Acquisition of
subsidiary                                   -               -               -           700              700
undertaking
Total recognised
income & expense for                         -     (3,160,205)               -     (713,993)     (3,874,198)
the period
Shares Issued             23         225,082                 -               -               -        225,082
Transaction costs                     (31,471)               -               -               -         (31,471)
Closing balance at
                                 10,815,657       (10,931,475)        741,871      (713,293)          (87,240)
30 June 2009

Amounts are stated net of tax



                                                                    Equity
                                   Issued        Accumulated      compensa-       Minority           Total
2008                     Note      Capital          losses       tion reserve     Interest           equity
                                      $                $               $              $                $
Opening balance at
                                   9,821,163       (3,353,224)        741,871                -       7,209,810
1 July 2007
Total recognised
income and expense                           -     (4,418,046)               -               -   (4,418,046)
for the period
Shares Issued             23         881,843                 -               -               -        881,843
Transaction costs                   (80,960)                 -               -               -        (80,960)
Closing balance at
                                 10,622,046        (7,771,270)        741,871                -       3,592,647
30 June 2008

Amounts are stated net of tax


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




                                                     27
Safety Medical Products Limited and its controlled entities
Statements of changes in equity
For the financial year ended 30 June 2009

Company                                                                        Equity
                                            Issued        Accumulated       compensation     Total
2009                               Note     Capital          losses           reserve        equity
                                               $                $                $             $

Opening balance at 1 July 2008             10,622,046       (7,596,983)          741,871    3,766,934
Total recognised income and
                                                      -     (2,058,264)                -   (2,058,264)
expense for the period
Shares Issued                       23        225,082                   -              -      225,082
Transaction costs                            (31,471)                   -              -     (31,471)
Closing balance at 30 June 2009            10,815,657       (9,655,247)          741,871    1,902,281

Amounts are stated net of tax


                                                                               Equity
                                            Issued        Accumulated       compensation     Total
2008                               Note     Capital          losses           reserve        equity
                                               $                $                $             $

Opening balance at 1 July 2007             9,821,163        (3,196,428)          741,871    7,366,606
Total recognised income and
                                                      -     (4,400,555)                -   (4,400,555)
expense for the period
Shares Issued                       23       881,843                  -                -      881,843
Transaction costs                            (80,960)                 -                -     (80,960)
Closing balance at 30 June 2008           10,622,046        (7,596,983)          741,871    3,766,934

Amounts are stated net of tax

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




                                                 28
Safety Medical Products Limited and its controlled entities
Balance sheets
As at 30 June 2009
                                                  Consolidated                       Company
                                   Note         2009             2008           2009           2008
                                                  $               $              $              $
Assets
Cash and cash equivalents          29          209,051          282,963         11,284        179,979
Trade and other receivables        14        1,171,259          836,037        888,537         54,278
Inventories                        15          934,802          681,704        336,773        376,319
Non-current assets held for sale
                                    16       1,022,757                  -              -                -
and discontinued operations
Current tax assets                  18                   -              -              -                -
Total current assets                         3,337,869        1,800,704      1,236,594        610,576

Non-current assets
Financial assets                    17               -                -      1,855,950      3,090,006
Net deferred tax assets             18          76,549           76,481              -              -
Property, plant and equipment       19       1,222,729        2,218,925      1,205,887      1,303,333
Intangible assets                   20         194,000        1,835,738              -              -
Total non-current assets                     1,493,278        4,131,144      3,061,837      4,393,339
Total assets                        5        4,831,147        5,931,848      4,298,431      5,003,915

Liabilities
Trade and other payables           21          653,931          542,504        141,542        100,118
Loans and borrowings               22        2,073,683          910,183        340,381        817,010
Employee benefits                  25          489,333          372,677        292,132        135,301
Total current liabilities                    3,216,947        1,825,364        774,055      1,052,429
Non-current liabilities
Loans and borrowings               22        1,607,383          435,606      1,607,383        175,552
Employee benefits                  25           94,057           78,231         14,712          9,000
Total non-current liabilities                1,701,440          513,837      1,622,095        184,552
Total liabilities                   5        4,918,387        2,339,201      2,396,150      1,236,981

Net assets                          5          (87,240)       3,592,647      1,902,281      3,766,934

Equity
Issued capital                     23       10,815,657       10,622,046     10,815,657     10,622,046
Reserves                           24          741,871           741,871        741,871        741,871
Accumulated losses                        (10,931,475)       (7,771,270)    (9,655,247)    (7,596,983)
Equity attributable to equity
holders of the company                         626,053        3,592,647      1,902,281      3,766,934
Equity attributable to minority
interest                                     (713,293)                  -              -                -

Total equity                                   (87,240)       3,592,647      1,902,281      3,766,934


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




                                                    29
Safety Medical Products Limited and its controlled entities
Cash flow statements
For the year ended 30 June 2009
                                                          Consolidated                    Company
                                         Note         2009            2008            2009            2008
                                                      $’000           $’000           $’000           $’000
Cash flows from operating activities
Cash receipts from customers                       6,070,608       5,134,739         268,431          14,487
Cash paid to suppliers and employees             (8,470,243)      (7,000,031)     (1,342,657)     (1,666,378)
Cash generated from operations                   (2,399,635)      (1,865,292)     (1,074,226)     (1,651,891)
Interest paid                                      (212,903)        (89,183)       (138,998)        (37,351)
Other receipts                                                -       13,600                  -       13,600
Income taxes (paid) / received                           41,284       90,917          23,789          36,000
Net cash from operating activities         30    (2,571,254)      (1,849,958)     (1,189,435)     (1,639,642)


Cash flows from investing activities
Interest received                                         9,175       11,943          37,898          11,943
Acquisition of subsidiary, net of cash
                                                           700                -        (700)                  -
acquired
Intercompany & investment of
                                                              -               -    (160,160)        (84,504)
subsidiaries
Acquisition of property, plant and
                                           19       (66,551)       (493,614)          (5,111)      (291,153)
equipment
Proceeds from disposal of property,
                                           19            25,129               -               -               -
plant and equipment
Net cash from investing activities                  (31,547)       (481,671)       (128,073)       (363,714)


Cash flows from financing activities
Proceeds from issue of share capital       23        193,611         800,883         193,611         800,883
(Repayment)/Proceeds from issue of                  (25,000)         775,000        (25,000)         775,000
convertible notes
Proceeds from borrowings                           1,838,550         562,665       1,000,000         266,000
Repayment of borrowings                            (130,600)                  -     (21,932)        (21,542)
Net cash from financing activities                 1,876,561       2,138,548       1,146,679       1,820,341


Net increase/(decrease) in cash and                (726,240)       (193,081)       (170,829)       (183,015)
cash equivalents
Cash and cash equivalents at 1 July                  282,963         476,044         179,979         362,994
Cash and cash equivalents at 30 June       29      (443,277)         282,963           9,150         179,979

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




                                                    30
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

1     Reporting entity
      Safety Medical Products Limited (the "Company") is a company domiciled in Australia. The
      consolidated financial statements of the Company for the financial year ended 30 June 2009
      comprise the Company and its subsidiaries (together referred to as the "consolidated entity"). The
      consolidated entity primarily is involved in the development, manufacture and commercialisation
      of medical products, feminine hygiene products, printing and distribution of products for the
      pharmaceutical industry and the provision of industrial control and automation systems, machine
      vision, robotics and turn-key solutions.

2     Basis of preparation

(a)   Statement of Compliance
      The financial report is a general purpose financial report which has been prepared in accordance
      with Australian Accounting Standards (‘AASBs’) adopted by the Australian Accounting Standards
      Board (‘AASB’) including Australian Accounting Interpretations, other authoritative
      pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
      The consolidated financial report of the consolidated entity also complies with the IRFSs and
      interpretations adopted by the International Accounting Standards Board.

      The financial report was authorised for issue by the directors on 27 September 2009.

(b)   Basis of measurement
      The financial report is prepared on the historical cost basis.

(c)   Functional and presentation currency
      The financial report is presented in Australian dollars which is the Company’s functional currency
      and the functional currency of all subsidiaries.

(d)   Use of estimates and judgements
      The preparation of financial statements requires management to make judgements, estimates
      and assumptions that effect the application of accounting policies and the reported amount of
      assets, liabilities, income and expenses. Actual results may differ from these estimates.

      Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
      accounting estimates are recognised in the period in which the estimates are revised and in any
      future periods affected.

      In particular, information about significant areas of estimation uncertainty and critical judgements
      in applying accounting policies that have the most significant effect on the amount recognised in
      the financial statements are described in the following notes:
           Note 6 – business combinations
           Note 18 – utilisation of tax losses
           Note 25 – measurement of share based payments

(e)   Going Concern
      The consolidated entity has recorded a Loss attributable to equity holders of $3,160,205 and this
      follows a Loss attributable to equity holders of $4,418,046 in the prior year. Whilst the Current
      Assets exceed the Current Liabilities, net assets are negative ($87,240) (prior year positive
      $3,592,647. Notwithstanding this, the directors believe the going concern basis of accounting is
      appropriate due to anticipated growth in sales of the core products of the group, improved
      profitability within the controlled entities and the continued support of the National Australia Bank
      Ltd. However, if forecast sales and profitability are not achieved, the group may be unable to
      continue as a going concern. No adjustments have been made relating to the recoverability and
      classification of recorded asset amounts and classification of liabilities that might be necessary
      should the consolidated entity not continue as a going concern.




                                                      31
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

3      Significant accounting policies
       The accounting policies set out below have been applied consistently to all periods presented in
       the consolidated financial report and have been applied consistently by all entities in the
       consolidated entity.

(a)    Basis of consolidation
(i)    Subsidiaries
       Subsidiaries are entities controlled by the Company. Control exists when the Company has the
       power, directly or indirectly, to govern the financial and operating policies of an entity so as to
       obtain benefits from its activities. In assessing control, potential voting rights that presently are
       exercisable or convertible are taken into account. The financial statements of subsidiaries are
       included in the consolidated financial report from the date that control commences until the date
       that control ceases.

       In the Company’s financial statements, investments in subsidiaries are carried at cost, less any
       impairment losses.

(ii)   Transactions eliminated on consolidation
       Intra-group balances, and any unrealised gains and losses or income and expenses arising from
       intra-group transactions, are eliminated in preparing the consolidated financial report.

(b)    Foreign currency
       Foreign currency transactions
       Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the
       transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet
       date are translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign
       exchange differences arising on translation are recognised in the income statement. Non-
       monetary assets and liabilities that are measured in terms of historical cost in a foreign currency
       are translated using the exchange rate at the date of the transaction. Non-monetary assets and
       liabilities denominated in foreign currencies that are stated at fair value are translated to
       Australian dollars at foreign exchange rates ruling at the dates the fair value was determined.

(c)    Financial Instruments
       Share capital
       Ordinary shares
       Incremental costs directly attributable to issue of ordinary shares and share options are
       recognised as a deduction from equity, net of any related income tax benefit.

       Convertible Notes
       Recognition and Initial Measurement
       Financial instruments, incorporating financial assets and financial liabilities, are recognised when
       the entity becomes a party to the contractual provisions of the instrument. Trade date accounting
       is adopted for financial assets that are delivered within timeframes established by marketplace
       convention.

       Financial instruments are initially measured at fair value plus transaction costs where the
       instrument is not classified as at fair value through profit and loss. Transactions costs related to
       instruments classified as at fair value through profit and loss are expensed to profit or loss
       immediately. Financial instruments are classified and measured as set out below.

       Derecognition
       Financial assets are derecognised where the contractual rights to receipt of cash flows expires or
       the asset is transferred to another party whereby the entity no longer has any significant
       continuing involvement in the risks and benefits, associated with the asset. Financial liabilities are
       derecognised where the related obligations are either discharged, cancelled or expire. The
       difference between the carrying value of the financial liability extinguished or transferred to
       another party and the fair value of consideration paid, including the transfer of non-cash assets or
       liabilities assumed, is recognised in profit or loss.


                                                        32
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

3       Significant accounting policies (continued)

(d)     Property, plant and equipment
(i)     Recognition and measurement
        Items of property, plant and equipment are measured at cost less accumulated depreciation and
        impairment losses.

        Costs include expenditures that are directly attributable to the acquisition of the asset. The cost of
        self-constructed assets includes the cost of materials and direct labour and any other costs
        directly attributable to bring the asset to a working condition for its intended use, and the costs of
        dismantling and removing the items and restoring the site on which they are located. Purchased
        software that is integral to the functionality of the related equipment is capitalised as part of that
        equipment.

        Where parts of an item of property, plant and equipment have different useful lives, they are
        accounted for as separate items of property, plant and equipment.

(ii)    Subsequent costs
        The consolidated entity recognises in the carrying amount of an item of property, plant and
        equipment the cost of replacing part of such an item when that cost is incurred if it is probable that
        the future economic benefits embodied within the item will flow to the consolidated entity and the
        cost of the item can be measured reliably. All other costs are recognised in the income statement
        as an expense as incurred.

(iii)   Depreciation
        With the exception of freehold land, depreciation is charged to the income statement using the
        diminishing value method over the estimated useful lives of each part of an item of property, plant
        and equipment. Leasehold improvements are depreciated over the shorter of either the unexpired
        period of the lease or the estimated useful lives of the improvements.

        The estimated useful lives in the current and comparative periods are as follows:
         plant and equipment               3 - 13 years
         fixtures and fittings             5 - 9 years
         motor vehicles                    5 years
        The residual value, the useful life and the depreciation method applied to an asset are reassessed
        at least annually.

(e)     Intangible assets
(i)     Goodwill
        Goodwill (negative goodwill) arises on the acquisition of subsidiaries, associates or joint ventures.
        Goodwill represents the excess of the cost of the acquisition over the consolidated entity’s
        interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the
        acquiree. When the excess is negative (negative goodwill) it is recognised immediately in the
        income statement. Goodwill is measured at cost less accumulated impairment losses.

(ii)    Research and development
        Expenditure on research activities, undertaken with the prospect of gaining new scientific or
        technical knowledge and understanding, is recognised in the income statement as an expense as
        incurred.
        Expenditure on development activities, whereby research findings are applied to a plan or design
        for the production of new or substantially improved products and processes, is capitalised if the
        product or process is technically and commercially feasible and the consolidated entity has sufficient
        resources to complete development.
        The expenditure capitalised includes the cost of materials, direct labour and an appropriate
        proportion of overheads. Other development expenditure is recognised in the income statement
        as an expense as incurred. Capitalised development expenditure is stated at cost less
        accumulated amortisation and impairment losses.
                                                         33
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

3       Significant accounting policies (continued)

(ii)    Research and development (continued)
        No development costs were capitalised during the year ended 30 June 2009 or 2008.

(iii)   Subsequent expenditure
        Subsequent expenditure is capitalised only when it increases the future economic benefits
        embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(f)     Leased assets
        Leases in terms of which the consolidated entity assumes substantially all the risks and benefits
        of ownership are classified as finance leases.

        Other leases are operating leases and the leases are not recognised on the consolidated entity’s
        balance sheet. Lease payments for operating leases are charged as an expense in the period in
        which they occur.

(g)     Inventories
        Inventories are stated at the lower of cost and net realisable value. Net realisable value is the
        estimated selling price in the ordinary course of business, less the estimated costs of completion
        and selling expenses.

        The cost of inventories is based on the first-in first-out principle and includes expenditure incurred
        in acquiring the inventories and bringing them to their existing location and condition. In the case of
        manufactured inventories and work in progress, cost includes an appropriate share of overheads
        based on normal operating capacity.

(h)     Impairment
(i)     Financial assets
        A financial asset is considered to be impaired if objective evidence indicates that one or more
        events have had a negative effect on the estimated future cash flow of that asset.

        An impairment loss in respect of a financial asset measured at amortised cost is calculated as the
        difference between its carrying amount, and the present value of the estimated future cash flows
        discounted at the original effective interest rate. An impairment loss in respect of an available-for-
        sale financial asset is calculated by reference to its current fair value.

        Individually significant financial assets are tested for impairment on an individual basis. The
        remaining financial assets are assessed collectively in groups that share similar credit risk
        characteristics.

        All impairment losses are recognised in the income statement. Any cumulative losses in respect
        of an available-for-sale financial asset recognised previously in equity is transferred to the income
        statement.

        An impairment loss is reversed if the reversal can be related objectively to an event occurring
        after the impairment loss was recognised. For financial assets measured at amortised cost, the
        reversal is recognised in the income statement. For available-for-sale financial asset that are
        equity securities, the reversal is recognised directly in equity.

(ii)    Non-financial assets
        The carrying amounts of the consolidated entity’s assets, other than inventories (see accounting
        policy g), and deferred tax assets (see accounting policy n), are reviewed at each reporting date
        to determine whether there is any indication of impairment. If any such indication exists, the
        asset's recoverable amount is estimated (see accounting policy h(i)). For goodwill assets that
        have indefinite lives, recoverable amount is estimated at each reporting date.



                                                        34
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

3       Significant accounting policies (continued)

 (ii)   Non-financial assets (continued)
        An impairment loss is recognised whenever the carrying amount of an asset or its cash
        generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable
        asset group that generates cash flows that largely are independent from other assets or groups.
        Impairment losses are recognised in the income statement. Impairment losses recognised in
        respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
        allocated to the cash-generating unit (group of units) and then, to reduce the carrying amount of
        the other assets in the unit (group of units) on a pro rata basis.

        The recoverable amount of an asset or cash-generating unit is the greater of its value in use and
        its fair value less costs to sell. In assessing value in use, the estimated future cash flows are
        discounted to their present value using a pre-tax discount rate that reflects current market
        assessments of the time value of money and the risks specific to the asset. For an asset that
        does not generate largely independent cash inflows, the recoverable amount is determined for the
        cash-generating unit to which the asset belongs.

        An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment
        losses recognised in prior periods are assessed at each reporting date for any indication that the
        loss has decreased or no longer exists. An impairment loss is reversed if there has been a
        change in the estimates used to determine the recoverable amount. An impairment loss is
        reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
        that would have been determined, net of depreciation and amortisation, if no impairment loss had
        been recognised.

(i)     Employee benefits
(i)     Defined contribution plans
        Obligations for contributions to defined contribution pension plans are recognised as an expense
        in the income statement when they are due.

(ii)    Long-term service benefits
        The consolidated entity’s net obligation in respect of long-term service benefits, other than
        pension plans, is the amount of future benefit that employees have earned in return for their
        service in the current and prior periods. The obligation is calculated using expected future
        increases in wage and salary rates including related on-costs and expected settlement dates, and
        is discounted using the rates attached to the Commonwealth Government bonds at the balance
        sheet date which have maturity dates approximating to the terms of the consolidated entity’s
        obligations.

(iii)   Wages, salaries, annual leave, sick leave and non-monetary benefits
        Liabilities for employee benefits for wages, salaries, annual leave and sick leave, that are
        expected to be settled within 12 months of the reporting date, represent present obligations
        resulting from employees' services provided to reporting date, calculated at undiscounted
        amounts based on remuneration wage and salary rates that the consolidated entity expects to
        pay as at reporting date including related on-costs, such as workers compensation insurance and
        payroll tax.

(iv)    Share-based payment transactions
        The employee and officer share scheme allows Company employees to acquire shares of the
        Company. The fair value of options granted is recognised as an employee expense with a
        corresponding increase in equity. The fair value is measured at grant date and spread over the
        period during which the employees become unconditionally entitled to the options. The fair value
        of the options granted is measured using a Black-Scholes option pricing model, taking into
        account the terms and conditions upon which the options were granted. The amount recognised
        as an expense is adjusted to reflect the actual number of share options that vest except where
        forfeiture is only due to share prices not achieving the threshold for vesting.


                                                      35
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

3      Significant accounting policies (continued)

(j)    Provisions
       A provision is recognised in the balance sheet when the consolidated entity has a present legal or
       constructive obligation 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, when appropriate, the risks specific to the liability.

       A provision for restructuring is recognised when the consolidated entity has approved a detailed
       and formal restructuring plan, and the restructuring either has commenced or has been
       announced publicly. Future operating costs are not provided for.

(k)    Revenue
(i)    Goods sold and services rendered
       Revenue from the sale of goods is recognised in the income statement when the significant risks
       and rewards of ownership have been transferred to the buyer. Revenue from services rendered is
       recognised in the income statement in proportion to the stage of completion of the transaction at
       the balance sheet date. The stage of completion is assessed by reference to surveys of work
       performed. No revenue is recognised if there are significant uncertainties regarding recovery of
       the consideration due, the costs incurred or to be incurred cannot be measured reliably, there is a
       risk of return of goods or there is continuing management involvement with the goods.

(ii)   Government grants
       Grants that compensate the consolidated entity for expenses incurred are recognised as revenue
       in the income statement on a systematic basis in the same periods in which the expenses are
       incurred. Grants that compensate the consolidated entity for the cost of an asset are recognised
       in the income statement as other income on a systematic basis over the useful life of the asset.

(l)    Lease payments
       Payments made under operating leases are recognised in the income statement on a straight-line
       basis over the term of the lease. Lease incentives received are recognised in the income
       statement as an integral part of the total lease expense and spread over the lease term.

(m) Finance income and expense
    Finance income comprises interest income on funds invested. Interest income is recognised in
    the income statement as it accrues, using the effective interest rate method. Finance expenses
    comprise interest expenses on borrowings. Interest expense is recognised in the income
    statement as it accrues, using the effective interest rate method

(n)    Income tax
       Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is
       recognised in the income statement except to the extent that it relates to items recognised directly
       in equity, in which case it is recognised in equity.

       Current tax is the expected tax payable on the taxable income for the year, using tax rates
       enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in
       respect of previous years.

       Deferred tax is provided using the balance sheet liability method, providing for temporary
       differences between the carrying amounts of assets and liabilities for financial reporting purposes
       and the amounts used for taxation purposes. The following temporary differences are not
       provided for: initial recognition of goodwill, the initial recognition of assets or liabilities that affect
       neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the
       extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
       provided is based on the expected manner of realisation or settlement of the carrying amount of
       assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.



                                                         36
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

3     Significant accounting policies (continued)
(n)   Income tax (continued)
      A deferred tax asset is recognised only to the extent that it is probable that future taxable profits
      will be available against which the asset can be utilised. Deferred tax assets are reduced to the
      extent that it is no longer probable that the related tax benefit will be realised.

      Additional income taxes that arise from the distribution of dividends are recognised at the same
      time as the liability to pay the related dividend.

(o)   Goods and Services Tax
      Revenue, 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 taxation authority. In
      these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as
      part 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 balance
      sheet.

      Cash flows are included in the statement of cash flows 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.

(p)   Earnings per share
      The consolidated entity presents basic and diluted earnings per share (EPS) data for its ordinary
      shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders
      of the Company by the weighted average number of ordinary shares outstanding during the
      period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary
      shareholders and the weighted average number of ordinary shares outstanding of the effects of
      all dilutive potential ordinary shares, which comprise share options.

(q)   Segment reporting
      A segment is a distinguishable component of the consolidated entity that is engaged either in
      providing products or services (business segment), or in providing products or services within a
      particular economic environment (geographical segment), which is subject to risks and rewards
      that are different from those of other segments.

(r)   New standard and interpretations not yet adopted
      The following standards, amendments to standards and interpretations have been identified as
      those which may impact the entity in the period of initial adoption. They are available for early
      adoption at 30 June 2009, but have not been applied in preparing this financial report.

         Revised AASB 3 Business Combinations mandatory for 30 June 2010 Annual Financial
          Report.
         AASB 8 Operating Segments mandatory for 30 June 2010 Annual Financial Report.
         AASB 101 presentation of Financial Statements mandatory for 30 June 2010 Annual
          Financial Report.
         AASB 123 Borrowing Costs mandatory for 30 June 2010 Annual Financial Report
         AASB 127 Consolidation and Separate Financial Statements mandatory for 30 June 2010
          Annual Financial Report.
         AASB 2008-1 amendment to Australian Accounting Standard -Share-based Payment
          mandatory for 30 June 2010 Annual Financial Report.
         AASB 2008-2 amendment to Australian Accounting Standard -Puttable Financial Instruments
          and Obligations Arising on Liquidation mandatory for 30 June 2010 Annual Financial Report.




                                                     37
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

3     Significant accounting policies (continued)

(s)   New standard and interpretations
      The sale of Bagot Press is a discontinued operation under AASB 5 Non Current Assets Held for
      Sale and Discontinued Operations and the effect on the income statement for the year ending 30
      June 2008 is shown below:

                                                                           Restatement for
                                                                            discontinued     Restated
                                                            Year ended 30    operations     year ended
                                                             June 2008 (1)    (Note 31)    30 June 2008
                                                 Note             $               $              $
      Revenue                                      7             4,777,370      (3,259,689)    1,517,681

      Cost of sales                                             (3,494,077)      2,033,076    (1,461,001)

      Gross profit                                               1,283,293      (1,226,613)       56,680

      Other income                                 8               38,484         (36,264)         2,220

      Research & development expenses                                    -                -             -

      Business development, marketing &                          (131,147)          22,812     (108,335)
      intellectual property expenses
      Administrative expenses                                  (2,718,480)       1,104,520    (1,613,960)
      Results from operating activities                        (1,527,850)       (135,545)    (1,663,395)

      Financial income                            10               11,943                 -       11,943
      Financial expense                           10              (89,183)          37,093      (52,090)

      Net Financial expense                                       (77,240)          37,093      (40,147)

      Impairment Loss                             20           (2,844,498)                -   (2,844,498)

      Loss before tax                                          (4,449,588)        (98,452)    (4,548,040)

      Income tax (expense)/benefit                12               31,542           30,453        61,995

      Profit/(loss) from discontinued                                               67,999        67,999
      operations

      Loss for the year                                        (4,418,046)                -   (4,418,046)


      (1)
            Income statement as per 30 June 2008 audited financial statements




                                                       38
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

4       Determination of fair values

        A number of the consolidated entity’s accounting policies and disclosures require the
        determination of fair value, for both financial and non-financial assets and liabilities. Fair values
        have been determined for measurement and / or disclosure purposes based upon the following
        methods. Where applicable, further information about the assumptions made in determining fair
        values is disclosed in the notes specific to that asset or liability.

(i)     Property, plant and equipment
        The fair value of property, plant and equipment recognised as a result of a business combination
        is based on market values. The market value of items of plant, equipment, fixtures and fittings is
        based upon the quoted market prices of similar items.

(ii)    Inventory
        The fair value of inventory acquired in a business combination is determined based on its
        estimated selling price in the ordinary course of business less the estimated cost of completion for
        sale, and a reasonable profit margin based on the effort required to complete and sell the
        inventory.

(iii)   Trade and other receivables
        The fair value of trade and other receivables is estimated as the present value of future cash
        flows, discounted at the market rate of interest at the reporting date.

5       Segment reporting
        Segment information is presented in respect of the consolidated entity’s business segments.
        Business segments are based on the consolidated entity’s management and internal reporting
        structure.
        Inter-segment pricing is determined on an arm’s length basis.
        Segment results, assets and liabilities include items directly attributable to a segment as well as
        those that can be allocated on a reasonable basis. Unallocated items mainly comprise income-
        earning assets and revenue, and corporate assets and expenses.
        Segment capital expenditure is the total cost incurred during the period to acquire segment assets
        that are expected to be used for more than one period.


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

        Baratex Pty Ltd               The provision of specialist industrial control and automation
        (ProControl)                  systems, machine vision, robotics and turn-key solutions for large
                                      and small industrial businesses.

        Pureste Pty Ltd (Pureste)     The promotion and distribution of the only sterilised feminine
                                      hygiene products in Australia.

        Discontinued operations:
        Bagot Press Pty Ltd      A manufacturer and supplier of specialist printing and general
        (Bagot)                  consumables to the pharmaceutical industry. Bagot sold its business
                                 and changed its name to ‘ACN 100 073 131 Pty Ltd’ in July 2009.

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



                                                       39
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

5 Segment reporting (continued)
                                                    Safety Medical Products   ProControl Systems             Pureste                 Eliminations             Consolidated
                                                       2009         2008       2009        2008       2009             2008         2009      2008          2009        2008
  Business segments                                      $            $          $           $          $                $            $         $             $           $
  External revenues                                     115,329      27,085 1,310,319    1,490,596     706,978                -           -        - 2,132,626 1,517,681
  Inter-segment revenues                                  3,234           -         -       47,003       6,555                -     (9,789) (47,003)           -           -
  Total segment revenue                                 118,563      27,085 1,310,319    1,537,599     713,533                -     (9,789) (47,003) 2,132,626 1,517,681
  Segment result                                      (822,514) (1,530,549) (64,975)     (132,846) (1,349,675)                -     (4,939)        - (2,242,103) (1,663,395)
  Unallocated expenses                                        -           -         -            -           -                -           -        -           -           -
  Results from operating activities                   (822,514) (1,530,549) (64,975)     (132,846) (1,349,675)                -     (4,939)        - (2,242,103) (1,663,395)
  Net financing revenue /(costs)                      (109,133)    (25,408)   (20,497)    (14,739)    (78,311)                -              -        - (207,941)      (40,147)
  Impairment Loss                                   (1,150,406) (2,844,498)          -           -           -                -              -        - (1,150,406) (2,844,498)
  Income tax benefit/(expense)                           23,789           -     40,914      61,995           -                -              -        -      64,703      61,995
  Loss for the period from continuing
  operations                                        (2,058,264) (4,400,455)   (44,558)    (85,590) (1,427,986)                -     (4,939)           - (3,535,747) (4,486,045)
  Loss for the period from discontinued operations before tax (Note 31)                                                                                    (312,812)      98,452
  Income tax benefit/(expense) from discontinued operation (Note 31)                                                                                        (25,639)    (30,453)
  Loss for the period from discontinued operations after tax (Note 31)                                                                                     (338,451)     67,999
  Loss for the period                                                                                                                                  (3,874,198) (4,418,046)


                             Safety Medical Products ProControl Systems           Bagot Press            Pureste                     Eliminations             Consolidated
                                2009         2008      2009      2008          2009        2008      2009        2008             2009         2008         2009       2008
  Business segments               $            $         $         $             $           $         $           $                $            $            $          $
  Segment assets               4,298,431      5,003,915 369,513     466,602 2,088,230 2,613,338      638,980              - (2,564,007) (2,152,007) 4,831,147          5,931,848
  Unallocated assets                   -              -       -           -         -         -            -              -           -           -         -                  -

  Total assets                 4,298,431      5,003,915 369,513     466,602 2,088,230 2,613,338      638,980              - (2,564,007) (2,152,007) 4,831,147          5,931,848

  Segment liabilities          2,396,150      1,236,981 644,283     686,812 2,316,750 2,503,407 2,065,565                 - (2,504,361) (2,087,999) 4,918,387          2,339,201
  Unallocated liabilities              -              -       -           -         -         -         -                 -           -           -         -                  -
  Total liabilities            2,396,150      1,236,981 644,283     686,812 2,316,750 2,503,407 2,065,565                 - (2,504,361) (2,087,999) 4,918,387          2,339,201

  Capital expenditure                 5,111    291,153          -     6,472     61,008    198,369      5,543              -        (5,111)       (2,380)     66,551     493,614

  Depreciation                   102,557        94,820    11,048     16,242   120,595     128,068        375              -          (172)             -    234,403     239,130
                                                                                    40
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

6   Acquisition of subsidiaries

    Pureste Pty Ltd

    On 9 October 2008 the consolidated entity purchased 50% of a newly incorporated subsidiary, Pureste
    Pty Ltd. The incorporation date was 9 October 2008. Pureste Pty Ltd has no assets or liabilities on
    incorporation other than the $1,400 cash payments for equity.

    The consolidated entity purchased 50% of the equity for $700 and has appointed Mr J Riemelmoser as
    the sole director and is thereby deemed to control the entity under AASB 127 Consolidated and
    Separate Financial Statements.

                                                        Consolidated                 Company
                                       Note        2009           2008            2009          2008
                                                    $              $                $             $

7   Revenue

     Sales from continuing operation           2,132,626        1,517,681         118,563       10,085
     Sales from discontinued
                                       31      3,682,277        3,259,689                -             -
     operations
     Sales                                     5,814,903        4,777,370         118,563       10,085
     Services                                          -                -               -            -
     Total revenue                             5,814,903        4,777,370         118,563       10,085


8   Other income

     Continuing operations
     Government grants                                    -              -               -      14,000
     Intragroup costs and
                                                 189,226                 -        379,922              -
     management fees
     Other income                                         -        2,220                 -       3,160
     Other income from continuing
                                                 189,226           2,220          379,922       17,160
     operation
    Discontinued operations
     Government grants                            12,000          14,000                 -             -
     Other income                                  1,564          22,264                 -             -
     Other income from discontinued
                                       31         13,564          36,264                 -             -
     operations




                                                   41
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

                                                        Consolidated               Company
                                         Note      2009            2008         2009         2008
                                                    $               $             $            $

9    Personnel expenses

     Wages and salaries                         2,145,502        2,314,121     431,778     562,054
     Other associated personnel
                                                 131,169           144,184      36,330       74,375
      expenses
     Contributions to defined
     contribution superannuation
     funds                                       291,922           340,730     104,163       56,006
     Increase in liability for annual
                                                 (11,505)           26,628      14,664              -
      leave
     Increase in liability for long
                                                  17,705            39,960       4,769        3,417
      service leave
      Personnel expenses from
                                         31     (827,180)       (1,055,912)            -            -
      discontinued operations
     Personnel expenses from
                                                1,747,613        1,809,711     591,704     695,852
     continuing operations


10    Financial income and expense

     Continuing operations
     Interest income on bank
                                                    4,029           11,943       3,243       11,943
     deposits
     Intragroup interest                                    -             -     34,655              -
     Financial income                               4,029           11,943      37,898       11,943
     Interest expense on financial
     liabilities measured at amortised           (211,970)        (52,090)    (147,031)    (37,351)
     cost
     Financial expense from
                                                 (207,941)        (40,147)    (109,133)    (25,408)
     continuing operations

     Discontinued operations
     Interest income on bank
                                                    5,145                 -            -            -
     deposits
     Intragroup interest                                    -             -            -            -
     Financial income                               5,145                 -            -            -
     Interest expense on financial
     liabilities measured at amortised            (35,274)        (37,093)             -            -
     cost
     Financial expense from
                                         31       (30,129)         (37,093             -            -
     discontinued operations

11 Auditors’ remuneration

     Continuing operations
     Audit services:
     Audit and review of the financial
                                                   43,000           36,000      43,000       36,000
     reports
                                                   43,000           36,000      43,000       36,000


                                                   42
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report


                                                      Consolidated                 Company
                                       Note      2009           2008            2009               2008
                                                  $              $                $                  $

12 Income tax expense

    Recognised in the income statement
    Continuing operations
    Current tax expense
    Current year expense                        (69,931)       (32,251)        (23,789)                   -
                                                (69,931)       (32,251)        (23,789)                   -
    Deferred tax expense
    Origination and reversal of
    temporary differences                          5,228       (29,744)                    -              -
    Benefit of losses recognised                       -              -                    -              -
                                                   5,228       (29,744)                    -              -
    Total income tax expense/
    (benefit) in income statement
    from continued operations                   (64,703)       (61,995)        (23,789)                   -

   Numerical reconciliation between
   tax expense and pre-tax net profit
   Profit/(loss) before tax from
   continuing operations                      (3,600,450)    (4,548,040)   (2,082,053)         (4,400,455)
   Income tax using the domestic
   corporation tax rate of 30%                (1,080,135)    (1,364,412)    (624,616)          (1,320,136)
   Increase/(decrease) in income tax
   expense due to:
       Non-allowable capital items                   595               -          595                   -
       Tax losses carried forward               708,496       1,322,417      278,899            1,170,136
       Research & Development                   (23,789)        (20,000)     (23,789)                   -
       Goodwill Impairment                      345,122                -     345,122              150,000
       Entertainment                                 293               -            -                   -
       Overprovision for prior year             (15,285)               -            -                   -
   Income tax expense/(benefit) on
   pre-tax net profit                           (64,703)       (61,995)      (23,789)                     -

   Discontinued operations
   Current tax expense
   Current year expense                                  -       30,453                -                  -
                                                         -       30,453                -                  -
   Deferred tax expense
   Origination and reversal of
   temporary differences                          25,639               -               -                  -
                                                  25,639               -               -                  -
   Total income tax expense/                                                           -                  -
   (benefit) in income statement
   from discontinued operations        31         25,639         30,453




                                                 43
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

                                                        Consolidated                    Company
                                       Note        2009           2008             2009           2008
                                                    $              $                 $              $

12 Income tax expense (continued)

   Numerical reconciliation between
   tax expense and pre-tax net profit
   Profit/(loss) before tax from
                                       31        (312,812)        98,452
   discontinued operations                                                                -              -
   Income tax using the domestic
   corporation tax rate of 30%                    (93,844)        29,535                  -              -
   Increase/(decrease) in income tax
   expense due to:
       Non-allowable capital items                      -           1,798                 -              -
       Tax losses carried forward                  37,168       (152,280)                 -              -
       Goodwill Impairment                         81,544         150,000                 -              -
       Entertainment                                  771           1,400                 -              -
   Income tax expense/(benefit) on                                                        -              -
                                       31
   pre-tax net profit                              25,639         30,453


                                                                                 2009            2008
                                                                       Note       No.             No.

13 Earnings per share

   Weighted average number of shares
   Ordinary shares on issue at 1 July                            23            74,060,073      70,908,872
   Effect of shares issued                                                      1,366,201       2,092,735
   Weighted average number of ordinary shares at 30 June                       75,426,274      73,001,607
   Effect of share options on issue                                            56,729,921      55,520,086
   Weighted average number of ordinary shares (diluted) at 30 June            132,156,195     128,521,693

    Basic Earnings per share
    The calculation of basic earnings per share at 30 June 2009 was based upon the loss attributable to
    ordinary shareholders of $3,160,205 (2008: $4,418,046) and a weighted average number of ordinary
    shares outstanding during the financial year ended 30 June 2009 of 75,426,274 (2008: 73,001,607).

    Diluted Earnings per share
    The calculation of diluted earnings per share at 30 June 2009 was based upon the loss attributable to
    ordinary shareholders of $3,160,205 (2008: $4,418,046) and a weighted average number of ordinary
    shares outstanding during the financial year ended 30 June 2009 of 132,156,195 (2008: 128,521,693).




                                                   44
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

                                                            Consolidated                    Company
                                                          2009       2008               2009      2008
                                              Note         $           $                  $         $


14 Trade and other receivables

    Current
    Trade receivables and prepayments                  1,171,259      836,037          281,621       54,278
    Related parties trade receivables                           -             -        606,916                 -
                                                       1,171,259       836,037         888,537       54,278


a. Trade receivables past due but not impaired:
   Current trade receivables are non-interest bearing and generally on 30 day terms. As of 30 June 2009,
   consolidated trade receivables of $232,859 ($272,625) were past due but not impaired. These relates to
   independent customers for whom there is no recent history of default. The ageing analysis of these
   trade receivables is as follows:
   Great then 30 days less then 90 days                     175,695       248,248          2,391       1,571
   Greater than 90 days                                      57,162        24,380            831               -
   Total                                                    232,857       272,625          3,222       1,571
   The other balances within trade receivables are not past due and do not contained impaired assets.
   Based on the credit history of these receivables, it is expected that these amounts will be received when
   due.
b. Impaired trade receivables
   As at 30 June 2009, trade receivables of nil (2007: nil) were impaired. During the year $2,556 of debtors
   were written off as the Group determined the individual customers where in an unexpectedly difficult
   economic situation and unable to pay.
c. Other receivables
   Other receivables arise from transaction outside the usual operating activities of the Company and are
   unsecured, interest free and repayable on demand.
   There are no balances that are past due and impaired. It is expected these balances will be received
   when demanded.


15 Inventories

   Raw materials and consumables                          290,884     347,435           93,866      100,597
   Work in progress                                        94,810      58,547                -            -
   Finished goods                                         549,108     275,722          242,907      275,722
                                                          934,802     681,704          336,773      376,319


In August 2009 SafetyMed signed a ‘Letter of Intent’ between SafetyMed and Dispomedicor Zrt for a joint
venture agreement to establish a new high volume state of the art manufacturing facility in Hungary, Europe.
The agreement will include the sale of SafetyMed’s SecureTouch Retractable Syringes inventory to the new
joint venture entity at a fair commercial value (that is expected to be equal to or greater than the current
carrying value). The value of this inventory at the 30 June 2009 is $150,509 and no impairment is required.




                                                     45
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

                                                           Consolidated                     Company
                                                         2009       2008                2009      2008
                                             Note         $           $                   $         $

16 Non current assets held for sale and discontinued operations

   Bagot Press operations discontinued on
   1 July 2009:
   Intangible -goodwill                      20          219,520             -                -              -
   Property, plant and equipment             19          803,237             -
   Non current assets held for sale and
                                                      1,022,757              -                -              -
   discontinued operations

17 Financial assets

   Non-current financial assets
   Loans & Receivables from subsidiaries                       -             -        1,643,244   2,090,000
   Shares in controlled entities                               -             -          212,706   1,000,006
                                                               -             -        1,855,950   3,090,006

    During the year shares in controlled entitles of $700 (2008: $nil) were acquired (refer to note 6 for
    further details) and $788,000 (2008: $500,000) were impaired (refer to note 20 for further details). In
    addition, the Bagot Press Pty Ltd intragroup loan was impaired by $362,406 (2008: $nil) to $1,407,594
    (2008: $1,820,000).

18 Tax assets and liabilities
    Current tax assets and liabilities
    The current tax asset for the consolidated entity of $Nil (2008: $Nil) and for the Company of $Nil
    (2008: $Nil) represent the amount of income taxes recoverable in respect of prior periods and that
    arise from the payment of tax in excess of the amounts due to the relevant tax authority.

    Unrecognised deferred tax assets
    Deferred tax assets have not been recognised in respect of the following items:

                                                          Consolidated                   Company
                                                        2009        2008             2009      2008
                                            Note         $           $                 $         $
    Deductible temporary differences                         -           -                -          -
    Tax losses                                       4,918,155   2,560,000        3,489,663  2,560,000
                                                     4,918,155   2,560,000        3,489,663  2,560,000

    The deductible temporary differences and tax losses do not expire under current tax legislation.
    Deferred tax assets have not been recognised in respect of these items because it is not probable
    under current tax legislation that future tax profits will be available against which the consolidated
    entity can utilise the benefits there from.




                                                    46
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

18 Tax assets and liabilities (continued)

    The unrecognised deferred tax assets relating to tax losses that will be recognised once ‘probable’
    under current tax legislation amounts to $1,046,899 and $438,205 for Safety Medical Products Ltd and
    Pureste Pty Ltd respectively.

    Recognised deferred tax assets and liability
    Deferred tax assets were recognised for the first time in 2007 and relate only to subsidiaries. No
    deferred tax liabilities have been recognised. The deferred tax assets of the consolidated entity are
    attributable to the following items:

                                                                                            Assets
                                                                                     2009            2008
                                                                                       $               $

   Consolidated
   Employee benefits                                                                   66,745          72,000
   Plant and equipment                                                                      -               -
   Other                                                                                9,804           4,481
   Net tax assets                                                                      76,549          76,481


   Movement in temporary differences during the year
                                                                         Consolidated
                                                Balance         Recognised       Recognised in    Balance
                                                1 July 08        in Income          Equity       30 June 09
                                                    $               $                 $               $
   2009
   Employee benefits                                72,000          (5,255)                  -         66,745
   Other                                                4,481           5,323                -            9,804
   Net deferred tax assets                          76,481                68                 -         76,549


   2008
   Employee benefits                                41,000          31,000                   -         72,000
   Plant and equipment                                  3,000       (3,000)                  -                -
   Other                                                4,481                -               -            4,481
   Net deferred tax assets                          48,481          28,000                   -         76,481




                                                   47
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report


                                                  Consolidated                               Company
                                                   Fixtures                                   Fixtures
                                     Plant and                                 Plant and
                                                      and          Total                        and        Total
                              Note   equipment                                 equipment
                                                   fittings                                   fittings
                                        $             $             $              $             $          $
19 Property, plant and equipment

   Cost
   Balance at 1 July 2007            2,006,263      17,048       2,023,311     1,141,215           -     1,141,215
    Other acquisitions                 421,414      72,200         493,614       271,837      19,316       291,153
    Disposals                                -           -               -             -           -             -
   Balance at 30 June 2008           2,427,677      89,248       2,516,925     1,413,052      19,316     1,432,368
   Balance at 1 July 2008            2,427,677      89,248       2,516,925     1,413,052      19,316     1,432,368
    Other acquisitions                   58,908       7,643          66,551        5,111           -         5,111
    Disposals                          (52,923)     (5,850)        (58,773)            -           -             -
    Non current assets held
    for sale and            16       (900,293)     (66,182)      (966,475)               -          -              -
    discontinued operations
   Balance at 30 June 2009           1,533,369      24,859       1,558,228     1,418,163      19,316     1,437,479

   Depreciation and impairment losses
   Balance at 1 July 2007           56,530           2,340          58,870        34,215            -      34,215
    Depreciation charge for
                                   234,130           5,000        239,130         94,220         600       94,820
    the year
   Balance at 30 June 2008         290,660           7,340        298,000        128,435         600      129,035


   Balance at 1 July 2008             290,660        7,340        298,000        128,435         600      129,035
    Depreciation charge for
                                      220,666       13,737        234,403         98,909       3,648      102,557
    the year
    Depreciation on
                                      (28,438)      (5,228)       (33,666)               -          -              -
    disposals for the year
    Non current Assets Held
    for Sale and            16       (152,012)     (11,226)      (163,238)               -          -              -
    Discontinued Operations
   Balance at 30 June 2009            330,876        4,623        335,499        227,344       4,248      231,592

   Total carrying amounts
   At 1 July 2007                    1,949,733      14,708       1,964,441     1,107,000            -    1,107,000
   At 30 June 2008                   2,137,017      81,908       2,218,925     1,284,617      18,716     1,303,333


   At 1 July 2008                    2,137,017      81,908       2,218,925     1,284,617      18,716     1,303,333
   At 30 June 2009                   1,202,493      20,236       1,222,729     1,190,819      15,068     1,205,887

In August 2009, SafetyMed signed a ‘Letter of Intent’ between SafetyMed and Dispomedicor Zrt for a joint venture
agreement to establish a new high volume state of the art manufacturing facility in Hungary, Europe. The
agreement will include the sale of SafetyMed’s SecureTouch Retractable Syringes equipment to the new joint
venture entity at a fair commercial value that is expected to be equal to or greater than the current carrying value
of $1,077,076 at 30 June 2009.
All other SafetyMed property plant equipment is being either used in the Group or is expected to be sold at an
amount equal to or greater than the current carrying value once the joint venture has progressed.

                                                         48
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

                                                    Consolidated                                 Company
                                                     Patents &                                    Patents &
                                     Goodwill                           Total        Goodwill                       Total
                             Note                   trademarks                                   trademarks
                                         $              $                $              $            $               $
20 Intangible assets

    Cost
    Balance at 1 July 2007            4,680,236                  -     4,680,236            -                -              -
     Impairment                     (2,844,498)                  -   (2,844,498)
     Acquisitions through
     business combination                       -                -              -           -                -              -
    Balance at 30 June 2008          1,835,738                   -    1,835,738             -                -              -
    Balance at 1 July 2008       1,835,738                       -     1,835,738            -                -              -
     Impairment                (1,422,218)                           (1,422,218)
     Non current assets
     held for sale and
     discontinued
     operations             16   (219,520)                       -    (219,520)             -                -              -
     Acquisitions through
     business combination                -                       -              -           -                -              -
    Balance at 30 June 2009        194,000                       -      194,000             -                -              -

    Carrying amounts
    At 1 July 2007                   4,680,236                   -    4,680,236             -                -              -
    At 30 June 2008                  1,835,738                   -    1,835,738             -                -              -
    At 1 July 2008                   1,835,738                   -    1,835,738             -                -              -
    At 30 June 2009                    194,000                   -      194,000             -                -              -

     Intangible assets are recognised as a result of the acquisition of Baratex Pty Ltd (trading as ProControl
     Systems) and Bagot Press Pty Ltd. Impairment losses have been recognised.

                                                                       Consolidated                  Company
                                                                     2009        2008             2009     2008
                                                      Note             $          $                $         $

    Impairment loss recognised in the Income Statement
   Impairment of Baratex Pty Ltd’s goodwill             788,000                   500,000                -                  -
   Impairment of Bagot Press Pty ltd             31           -                 2,344,498
   Impairment of investment in shares in         16           -                         -        788,000          500,000
   controlled entities
   Impairment of intragroup loan from controlled 16     362,406                         -        362,406         2,344,498
   entities
                                                      1,150,406                 2,844,498       1,150,406        2,844,498

    Intangible assets are recognised as a result of the acquisition of Baratex Pty Ltd (“ProControl”) and Bagot
    Press Pty Ltd (“Bagot Press”). Impairment losses have been recognised as required.

    Impairment testing for cash-generating units containing goodwill
    Goodwill has an infinite life and therefore is considered for impairment testing on a yearly basis. For the year
    ending 30 June 2009 and 30 June 2008 impairment testing was conducted in relation to the goodwill
    recognised for the acquisition in Bagot Press Pty Ltd and Baratex Pty Ltd (trading as ProControl Systems).




                                                            49
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

20   Intangible assets (continued)

     ProControl Systems
     The impairment testing of ProControl Systems was based upon the value-in-use method which involved
     forecasting cash flows for the next 5 years discounted by 8%. The discount rate is based on the 90
     days bank bill swap reference rate plus a margin of 500 basis points per annum; at 30 June 2009 that
     rate was 8.3% (3.3% plus 500 basis points) (2008: 12.8%). This resulted in goodwill being written down
     by $788,000 (30 June 2008: $500,000) to $194,000. For the purpose of impairment testing, goodwill is
     allocated to the consolidated entity’s operating divisions which represent the lowest level within which
     the goodwill is monitored for internal management purposes. The purchase of ProControl Systems
     included a goodwill value of $1,482,000. The net cash flow for 2009 was below forecasts; this led to
     impairment testing that resulted in an impairment loss. When calculating value-in-use, consideration
     was given to the current economic climate, cost savings in reduction of employment costs, reduction in
     rent and once off relocation costs.

     In the prior year ProContol System’s goodwill was impaired to $982,000 being its expected recoverable
     amount less cost of sales. This amount was expected recoverable amounts if the business was sold.

     Bagot Press
     The impairment was based on the agreed sales price for Bagot Press’s business. The sale of the
     following assets was completed on the 1 July 2009 for a consideration of $1,300,000.

                                                                           Note          $
      Consideration                                                                   1,300,000
      Less: Property, plant and equipment at 30 June 2009                   16        (803,239)

      Less: Inventory at 30 June 2009                                       15         (277,241)
      Intangibles –goodwill at 30 June 2008                                              219,520
      Intangibles –goodwill at 1 July 2008                                             (853,738)
      Impairment of goodwill at 30 June 2009                                31         (634,218)

     In the prior year the impairment testing of Bagot Press was based upon the value-in-use method which
     involved forecasting cash flows for the next 5 years discounted by 13%. This resulted in the goodwill
     being written down by $nil (30 June 2008: $2,344,000) to $853,736. For the purpose of impairment
     testing, goodwill is allocated to the consolidated entity’s operating divisions which represent the lowest
     level within which the goodwill is monitored for internal management purposes. The purchase of Bagot
     Press included a goodwill value of $3,198,000. When calculating value-in-use, consideration was given
     to the current economic climate, cost savings in reduction of employment costs due to new equipment
     plus a growth rate of 4%.

     The aggregate carrying amounts of goodwill allocated to each unit are as follows:


                                                              Consolidated                  Company
                                                            2009        2008             2009      2008
                                               Note           $           $               $          $

     ProControl Systems                                     194,000     982,000                 -             -
     Bagot Press                                            219,520     853,738                 -             -
                                                            413,520   1,835,738                 -             -
     Less current assets held for sale and     16           (219,520)         -                 -             -
     discontinued operations -Bagot Press
     intangible asset
     Non-current intangible asset                           194,000   1,835,738                 -             -



                                                       50
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

                                                              Consolidated               Company
                                                            2009        2008          2009      2008
                                               Note           $           $            $          $


21 Trade and other payables

     Trade payables and accrued
     expenses                                              653,931     542,504        141,542      100,118
                                                           653,931     542,504        141,542      100,118


22   Loans and borrowings

     Current
     Convertible Notes                                   50,000        775,000         50,000      775,000
     Bank overdrafts                           29       652,328                         2,134            -
     Loans – National Australia Bank Ltd                222,222         72,947        222,222            -
     Documentary letters of credit                      774,751              -              -            -
     Insurance funding loan                              20,078              -         20,078            -
     Hire purchase agreements                           354,304         62,236         45,947       42,010
                                                      2,073,683        910,183        340,381      817,010
     Non-current
     Convertible Notes                                  700,000              -        700,000            -
     Loans – National Australia Bank Ltd                777,778        260,054        777,778            -
     Hire purchase agreements                           129,605        175,552        129,605      175,552
                                                      1,607,383        435,606      1,607,383      175,552

     Total loans and borrowings                       3,681,066       1,345,789     1,947,764      992,562

     Convertible Notes
     Carrying amount of liability at 1 July                782,395             -      782,395              -
     Proceeds from issue of convertible
     notes                                                        -    775,000               -     775,000
     Transaction costs                                            -          -               -           -
     Net proceeds                                                 -    775,000               -     775,000
     Repayments                                            (25,000)          -        (25,000)           -
     Classified as equity                                         -          -               -           -
     Net accrued interest                                    36,935      7,395          36,935       7,395
     Carrying amount of liability at 30 June               794,330     782,395        794,330      782,395

     On 4 June 2008 7,750 convertible notes were issued for $775,000. The notes issued were approved at
     a general meeting on the 18 April 2008. The notes were issued at a cost of $100 per note and are due
     to mature on 31 July 2010. On 4 June 2009 SafetyMed announced that 7,000 noteholders had agreed
     to extend the maturity date to 31 July 2010. In June 2009 250 notes, $25,000 being $100 per note were
     repaid in full. In July 2009 a further 500 notes, $50,000 being $100 per note was repaid in full.

     Directors, Mr John Riemelmoser and Mr John Darley hold 3,000 and 2,000 notes respectively since 4
     June 2008.

     At 31 July 2010 the notes are convertible into 3,000,000 (2008: 3,100,000) ordinary shares on 31 July
     2010 at the option of the holder which is at a rate of 400 shares for every one note. Unconverted notes
     become repayable on demand.

     Interest accrues daily and is based on the 90 days bank bill swap reference rate plus a margin of 500
     basis points per annum. At 30 June 2009 that rate was 8.3% (3.3% plus 500 basis points) (2008:
     12.8%).

                                                      51
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report


22   Loans and borrowings (continued)

                                                                Consolidated                Company
                                                             2009        2008            2009       2008
                                                Note           $           $              $          $

     Financing facilities
     The consolidated entity has access to the following lines of credit:

     Total facilities available:
     Credit card facility                                  35,000        33,000           10,000        10,000
     Convertible notes                                    750,000       775,000          750,000       775,000
     Bank Loans                                         1,000,000       333,001        1,000,000             -
     Trade finance facility                             6,000,000             -                -             -
     Documentary letters of credit                      2,000,000             -                -             -
     Insurance funding loan                                20,078             -           20,078             -
     Hire purchase agreements                             483,909       237,788          175,552       217,562
     Bank overdraft                                       500,000        40,000                -             -
                                                       10,788,987     1,418,789        1,955,630     1,002,562
     Facilities utilised at balance date:
     Credit card facility                                  26,318        23,554            1,528         2,914
     Convertible notes                                    750,000       775,000          750,000       775,000
     Bank Loans                                         1,000,000       333,001        1,000,000             -
     Trade finance facility                                     -             -                -             -
     Documentary letters of credit                        774,751             -                -             -
     Insurance funding loan                                20,078             -           20,078             -
     Hire purchase agreements                             483,909       237,788          175,552       217,562
     Bank overdraft                                       500,000             -                -             -
                                                        3,555,056     1,369,343        1,947,158       995,476
     Facilities not utilised at balance date:
     Credit card facility                                   8,682            9,446         8,472           7,086
     Trade finance facility                             6,000,000                -             -               -
     Documentary letters of credit                      1,225,249                -             -               -
     Bank overdraft                                             -           40,000             -               -
                                                        7,233,931           49,446         8,472           7,086

     The credit card facility utilised at balance date for both 2009 and 2008 were included within trade
     payables.

     Safety Medical Product Limited’s Loan
     On 16 December 2008 Safety Medical Products Limited entered into an agreement with National
     Australia Bank Ltd to provide a loan finance facility of $1,000,000. The loan is for a term of one year on
     an interest only repayment basis and this then converts into a principal and interest repayment basis for
     a further three years. Interest accrued daily and is based on the bank rate, at 30 June 2009 that rate
     was 7.8%.

     The loan is secured by a fixed and floating charge over the assets of Safety Medical Products Limited
     and Bagot Press Pty Ltd and Pureste Pty Ltd have also provided a guarantee and indemnity of
     $1,002,000 (includes $2,000 relating to credit card facility that has not been drawn down), supported by
     a fixed and floating charge for the assets of Bagot Press Pty Ltd.

     On 1 July 2009 Bagot Press business was sold for $1,300,000, the National Australia Bank Ltd agreed
     that the security over the disposed Bagot Press assets be replaced with a $500,000 three month term
     deposit. The term deposit will be released on maturity subject to Pureste sales targets being achieved.




                                                        52
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

22   Loans and borrowings (continued)

     Bagot Press Pty Ltd’s equipment loans

     In July 2008 Bagot Press Pty Ltd entered into an agreement with National Australia Bank to provide an
     asset finance facility of $63,800, which has been drawn down in full. The loan is for a term of five years.

     On 16 July 2007 Bagot Press Pty Ltd entered into an agreement with National Australia Bank to provide
     an asset finance facility of $480,000 of which $400,000 has been drawn down. The loan is for a term of
     five years.

     At the 30 June 2009 $308,358 (2008: $72,947) was payable within one year and $nil (2008: $260,054)
     is payable in greater than one year. The loans were repaid in full in July 2009 following the sale of the
     business on 1 July 2009.

     Safety Medical Product Limited’s equipment loan

     On 20 December 2007 Safety Medical Products Limited entered into an agreement with National
     Australia Bank to provide an asset finance facility of $265,817, which has been drawn down entirely.
     The loan is for a term of five years.

     At the 30 June 2009 $45,946 (2008: $42,010) was payable within one year and $129,605 (2008:
     $175,552) is payable in greater than one year.

     Pureste Pty Ltd’s facilities

     On 13 February 2009 Pureste Pty Ltd entered into an agreement with National Australia Bank to
     provide a $500,000 overdraft facility (expires once trade finance facility activated), $2,000,000
     Documentary letter of credit (terms: 90 days) and $2,000 credit card facility. In addition, the facilities
     were increased on 1 June 2009 to include a $6,000,000 trade finance facility. At 31 December 2008
     the company has not used any of the trade finance facility.

     The total facilities of $8,502,000 are secured by a guarantee and indemnity provided by Safety Medical
     Products Limited, Managing Director Mr John Riemelmoser and Pureste Pty Ltd’s minority interest
     shareholders.


                                                                                           Company
                                                                                        2009       2008
                                                                           Note          $          $


23 Share capital
     Issued and paid-up capital
      76,300,477 (2008: 74,060,073) ordinary shares fully paid                       10,815,657     10,622,046

     Ordinary shares
     Balance at the beginning of year                                                10,622,046      9,821,163
     Shares issued in prior year:
       12 January 2009 – 10,403 shares issued at $0.20 following the
       exercise of options                                                                2,081                -
       17 July 2008 – 2,230,000 shares being issued at $0.10 each                                              -
       with 1,1115,00 free attaching options (exercise price $0.25 and
       expiring on 31 January 2010) on the 17 July 2008 as part of
       the Share Purchase Plan                                                          223,000
       5 May 2009 – 1 share issued at $1.00 following the exercise of
       options                                                                                 1               -


                                                       53
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

                                                                                         Company
                                                                                      2009       2008
                                                                         Note          $          $


23 Share capital (continued)

   Shares issued in prior year:
     18 June 2008 – 1 share issued at $1.00 following the exercise
     of options                                                                              -           1
     26 September 2007 – 6,244 shares issued at $0.20 following
     the exercise of options                                                                 -        1,249
     25 October 2007 – 1,948,833 shares issued at $0.28 pursuant
     to non-renounceable rights issue                                                        -     545,673
     29 October 2007 – 457,143 shares issued at $0.28 pursuant to
     non-renounceable rights issue placement of shortfall                                    -     128,000
     9 November 2007 – 475,000 shares issued at $0.28 pursuant
     to non-renounceable rights issue placement of shortfall                                 -     133,000
     29 November 2007 – 117,000 shares issued at $0.28 pursuant
     to non-renounceable rights issue placement of shortfall                                 -      32,760
     18 December 2007 – 147,000 shares issued at $0.28 pursuant
     to non-renounceable rights issue placement of shortfall                                 -      41,160
      Costs incurred in issuing shares                                                (31,471)     (80,960)

   Balance at end of year                                                         10,815,657     10,622,046

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

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

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

    Capital Management
    The management’s objectives when managing capital are to ensure that the group can fund its
    operations and continue as a going concern and to provide shareholders with adequate returns.


    There are no externally imposed capital requirements




                                                     54
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

23 Share capital (continued)


    There have been no changes in the strategy adopted by management to control the capital of the group
    since the prior year, which is to maintain the debt to equity ratio at not more than 100%. The debt-equity
    ratios as at 30 June 2009 and 30 June 2008 are as follows:
                                                                  Consolidated                Company
                                                                2009          2008         2009       2008
                                                    Note          $             $            $           $


    Total loans and borrowings                      22     3,681,066 1,345,789         1,947,764     992,562
    Less: Cash and cash equivalent                  29     (209,051) (282,963)          (11,284)    (179,979)
    Net borrowings                                         3,472,015 1,062,826         1.936.480     812,583
    Total equity                                             (87,240) 3,592,647        1,902,281   3,766,934
    Total capital                                          3,384,775 4,655,473         3,838,761   4,579,517


    Gearing ratio                                             103%         23%             50%          18%


    The increase in the gearing ratio during 2009 is primarily due to the losses incurred during the year; the
    Pureste documentary letters of credit; and the $1,000,000 SafetyMed loan (refer to Note 22 for further
    details).


24 Reserves

   Equity compensation reserve                              741,871      741,871        741,871      741,871
                                                            741,871      741,871        741,871      741,871

    The option reserve records items recognised as expense on valuation of share options issued to
    directors, executives and advisory board members in connection with the capital raising during the year
    ended 30 June 2006.


25 Employee benefits

    Current
    Salaries and wages accrued                              173,631       77,732        173,631      58,598
    Superannuation accrued                                   65,896       72,990         57,899      39,139
    Other Payroll Liabilities                               121,381       83,904         14,600       5,283
    Liability for long service leave                         27,357       25,478              -         943
    Liability for annual leave                              101,068      112,573         46,002      31,338
                                                            489,333      372,677        292,132     135,301
    Non-current
    Liability for long service leave                          94,057      78,231         14,712        9,000

    Total employee benefits                                 583,390      450,908        306,844     144,301




                                                      55
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

25 Employee benefits (continued)

(a) Movement in employee benefits

                                                                                Liability for
                                         Salaries                 Liability         long          Other
                                        and wages    Super       for annual       service        Payroll
                                         accrued    accrued         leave          leave        Liabilities    Total
                                                $           $            $                 $             $             $
     Consolidated
     Balance at 1 July 2007               14,532     41,446        85,945          63,749                 -   205,672
     Provisions made during the
                                          63,200     31,544        26,628          39,960         83,904      245,236
     period
     Balance at 30 June 2008              77,732     72,990      112,573          103,709         83,904      450,908

     Balance at 1 July 2008               77,732     72,990      112,573          103,709         83,904      450,908
     Provisions made(paid) during the
                                          95,899     (7,094)     (11,505)          17,705         37,477      132,482
     period
     Balance at 30 June 2009             173,631     65,896      101,068          121,414       121,381       583,390


     Company
     Balance at 1 July 2007                     -    30,451        31,338            6,526                -    68,315
     Provisions made during the
                                          58,598         8,688              -        3,417         5,283       75,986
     period
     Balance at 30 June 2008              58,598     39,139        31,338            9,943         5,283      144,301

     Balance at 1 July 2008               58,598     39,139        31,338            9,943         5,283      144,301
     Provisions made during the
                                         115,033     18,760        14,664            4,769         9,317      162,543
     period
     Balance at 30 June 2009             173,631     57,899        46,002          14,712         14,600      306,844

(b) Share based payments

i)   Share option schemes
     The Company has previously issued options to provide incentives and to assist in attracting and
     retention of key employees. All options issued under this scheme expired on 31 December 2008.
     Unissued ordinary shares of the Company under option, that have been issued to key management
     personnel in previous years in connection with their employment with the Company are:

                                                     2009                                      2008
                                            Number of    Weighted                     Number of    Weighted
                                             options      average                      options      average
                                                          exercise                                  exercise
                                                           price $                                   price $

     Outstanding at the beginning of
                                              2,500,000              0.20                2,500,000                0.20
     the year
     Lapsed                                 (2,500,000)              0.20                        -                   -
     Granted                                          -                 -                        -                   -
     Exercised                                        -                 -                        -                0.20
     Outstanding at 30 June                           -                 -                2,500,000                0.20
     Exercisable at 30 June                           -                 -                2,500,000                0.20




                                                    56
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

25    Employee benefits (continued)
     The market value of shares under these options at 30 June 2008 was $0.09.

     The fair value of services received in return for share options granted is measured by reference to the
     fair value of share options granted, based on the Black-Scholes option-pricing model. The model uses
     the expected volatility based on the historic volatility (calculated based on the weighted average
     remaining life of the share options), adjusted for any expected changes to future volatility due to publicly
     available information.

     All share options vest at grant date and were granted for nil consideration.

                                                                 Consolidated                  Company
                                                                2009      2008              2009     2008
                                                     Note         $         $                 $        $

26   Operating Leases

     Non-cancellable operating lease
     expense commitments
     Future operating lease commitments not
     provided for in the financial statements and
     payable:
     With one year                                              30,862     150,853          30,862       24,573
     One year or later and no later than five                    4,077     421,428           4,077       12,230
     years
                                                                34,939     572,281          34,939       36,803
     The consolidated entity leases property and equipment under operating leases.
     The leases provide the consolidated entity with a right of renewal at which time all terms are
     renegotiated. Lease payments comprise a base amount plus an incremental contingent rental.
     Contingent rentals are based on operating criteria.

     In the prior year $536,477 of the total operating lease commitment related to Bagot Press, on 1 July
     2009 the business including the lease obligations was sold (refer to note 31 for further details).


                                                                 Consolidated                  Company
                                                                2009      2008              2009     2008
                                                     Note         $         $                 $        $

27   Capital and other commitments

     Capital expenditure commitments
     Plant and equipment
     Contracted but not provided for and
     payable:
     Inventory
     Within one year                                           334,685              -             -            -
     Plant and equipment
     Within one year                                                  -     10,700                -            -
     One year or later and no later than five                         -     68,593                -            -
     years
                                                               334,685      79,293                -            -



                                                       57
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

                                                                                            Ordinary Share
                                                                                          Consolidated Entity
                                                                                                Interest
                                                                                           2009          2008
                                                                                            %             %

28    Consolidated entities

      Particulars in relation to consolidated entities
      Parent entity
      Safety Medical Products Limited
      Controlled Entities
      Baratex Pty Ltd                                                                      100%           100%
      Bagot Press Pty Ltd                                                                  100%           100%
      Pureste Pty Ltd                                                                       50%            -

      As detailed in Note 6, 50% of Pureste Pty Ltd was acquired on the company’s incorporation date, 9
      October 2008. Baratex Pty Ltd, operating as ProControl Systems, was acquired on 9 February 2007
      and Bagot Press Pty Ltd was acquired on 1 May 2007. On 1 July 2009 Bagot Press Pty Ltd’s trade,
      inventory, fixed assets and intangible assets were sold.

      Baratex Pty Ltd, Bagot Press Pty Ltd and Pureste Pty Ltd are all incorporated in Australia.

                                                                   Consolidated               Company
                                                                  2009      2008           2009     2008
                                                         Note      $          $             $         $

29 Cash and cash equivalents
      Bank balances                                               209,051   282,963       11,284        179,979
      Bank overdrafts                                    22     (652,328)         -       (2,134)             -
                                                                (443,277)   282,963         9,150       179,979


30    Reconciliation of cash flows from operating activities
(a)   Cash flows from operating activities
      Profit / (loss) for the period                            (3,874,198) (4,418,046) (2,058,264) (4,400,455)
      Adjustments for:
        Depreciation                                      19      234,403     239,130     102,557        94,820
        Loss on disposal of available for sale
                                                                    8,008             -             -         -
        financial assets
        Interest Income                                   10        (9,175)  (11,943)      (37,898)  (11,943)
        Impairment Loss continued operations              20      788,000 2,844,498       788,000 2,844,498
        Impairment Loss discontinued operations           31      634,218          -             -         -
      Operating profit before changes in                        (2,218,744) (1,346,361) (1,205,605) (1,473,080)
      working capital and provisions




                                                           58
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

                                                                 Consolidated                    Company
                                                                2009      2008                2009      2008
                                                     Note        $          $                   $        $


30    Reconciliation of cash flows from operating activities (continued)

      Change in assets and liabilities, net of the
      effects from disposal of businesses
         (Increase)/decrease in inventories                   (251,448)       (221,704)       39,546         (96,141)
         (Increase)/decrease in trade and other
                                                              (335,220)       (220,839)      (227,344)       (47,278)
         receivables
         (Increase)/decrease in tax assets and
                                                                 2,221         36,719               -        (41,562)
         deferred tax assets
         Increase/(decrease) in trade and other
                                                                99,455       (343,209)        39,425         (57,567)
         payables
         Increase/(decrease) in provisions for
                                                               132,482        245,436        164,543         75,986
         employee benefits
                                                              (352,510)       (503,597)       16,170        (166,562)
      Net cash from operating activities                     (2,571,254) (1,849,958) (1,189,435) (1,639,642)



(b)   Business disposed
      On the 1 July 2009 the trade, inventory,
      property plant and equipment of Bagot Press
      Pty Ltd were sold; these assets have been
      shown as current assets held for sale or
      discontinued operations.
      Book value of assets sold
      Current assets:
      Inventory at 30 June 2009                         15     277,241                   -              -             -
      Non current assets:
      Property, plant and equipment                     16     803,239                   -              -             -
      Intangibles –goodwill                             16     219,520                   -              -             -
      Total assets held for sale                             1,300,000                   -              -             -
      Cash consideration due 1 July 2009                31   (1,300,000)                 -              -             -
      Profit/(loss) in 1 July 2009 disposal                              -               -              -             -
      Net cash inflow on disposal


      Bagot Press Pty Ltd’s business was sold on 1 July 2009 therefore there were no cash inflow in the year
      ended 30 June 2009 (2008: $nil).




                                                        59
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

31   Discontinued operations

     On the 1 July 2009 the trade, inventory, property plant and equipment of Bagot Press Pty Ltd were sold
     for cash consideration of $1,300,000. The results have been disclosed as discontinued operations and
     the assets being sold have been shown as current assets held for sale or discontinued operations.

                                                                                     2009           2008
                                                                        Note          $              $
     Revenue                                                              7       3,682,277      3,259,989

     Cost of sales                                                               (2,462,566)    (2,033,076)

     Gross profit                                                                 1,219,711      1,226,613

     Other income                                                         8          13,564         36,264

     Research & development expenses                                                        -              -

     Business development, marketing & intellectual property                        (11,435)      (22,812)
     expenses
     Administrative expenses                                                     (1,232,711)    (1,104,520)
     Results from operating activities                                              (10,871)       135,545

     Financial income                                                    10           5,145                -
     Financial expense                                                   10         (35,274)      (37,093)

     Net Financial expense                                                          (30,129)      (37,093)

     Impairment Loss on goodwill                                         20       (634,218)                -

     Intragroup loan written off                                         20         362,406                -

     Loss before tax                                                              (312,812)         98,452

     Income tax (expense)/benefit                                        12         (25,639)      (30,453)

     Profit/(loss) from discontinued operations                                   (338,451)         67,999


     The major classes of assets and liabilities comprising the
     businesses classified as held for sale at 30 June 2009 are as
     follows:
     Book value of assets held for sale
     Property, plant and equipment at 30 June 2009                       16         803,239                    -

     Inventory at 30 June 2009                                           15                                    -
                                                                                    277,241
     Intangibles –goodwill (prior to impairment)                         16         219,520                    -
     Inventory and Non current Assets Held for Sale and
                                                                                  1,300,000                    -
     Discontinued Operations




                                                     60
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

31   Discontinued operations (continued)

                                                                                        2009           2008
                                                                           Note          $              $


     Cashflow from discontinued operations
     Net cash from operating activities                                                617,324       2,105,042
     Net cash from investing activities                                              (465,996)       (198,369)
     Net cash from financing activities                                               (24,644)     (1,801,354)
     Net cashflow                                                                      126,684       (105,319)


32   Dividends

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


33 Events subsequent to reporting date

     On 21 September 2009, SafetyMed announced that it had terminated its current strategic alliance with
     Exelint International Co. (“Exelint”), to enable SafetyMed to pursue an exciting new global opportunity.
     To this end, a letter of intent between SafetyMed and Dispomedicor Zrt has been signed for a joint
     venture agreement to establish a new high volume state of the art manufacturing facility in Hungary,
     Europe. The highlight and certain key points set out in the 21 September 2009 announcement are:

     Highlights
      SafetyMed terminates existing strategic alliance agreement with Exelint to pursue exciting new
         global opportunity.

        SafetyMed signs letter of intent with major Hungarian Medical Products Manufacturer,
         Dispomedicor Zrt (‘Dispomedicor) (www.dispomedicor.hu).

        Estimated €25million (Euro dollars) Joint Venture Entity (JVE) Project for production and worldwide
         marketing of safety and conventional medical products.

        Core products to include a full range of SafetyMed designed SecureTouch Retractable Syringes
         and Dispomedicor designed Safety Needles as well as a full range of conventional needles and
         syringes and other high volume medical devices.

        Significant Hungarian Government involvement expected via grants and Governmental Bank
         Finance, if required.

     Bagot Press Pty Ltd sold its trade, fixed and intangible assets on 1 July 2009 for $1,300,000, of which
     $500,000 will be held in a three month term deposit under the requirements of National Australia Bank
     Limited facility. Bagot Press Pty Ltd also changed its name to ‘ACN 100 073 131 Pty Ltd’ in July 2009.

     In July 2009, 500 convertible notes, $50,000 being $100 per note were repaid in full.

     There has not been no other matter or circumstance, other than that referred to in the financial
     statements or notes thereto, that has arisen since the end of the financial year, that has significantly
     affected, or may significantly affect, the operations of the Company and the consolidated entity, the
     results of those operations, or the state of affairs of the Company and the consolidated entity in future
     financial years.


                                                      61
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report


34   Financial instruments

     Exposure to credit, interest rate and currency risks arises in the normal course of the Company’s and
     the consolidated entity’s business.

(a) Foreign currency risk
    The consolidated entity is exposed to foreign currency risk on sales and purchases that are
    denominated in a currency other than the AUD. The currencies giving rise to this risk is primarily Euro
    Dollars. Given that the consolidated entity is currently developing the business activities that give rise
    to these risks, the risks involved are currently minimal and as such no hedging arrangements are
    currently in place.
(b) Credit risk exposures
    Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing
    basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The
    consolidated entity does not require collateral in respect of financial assets.

    At the balance sheet date there were no significant concentrations of credit risk. The maximum
    exposure to credit risk is represented by the carrying amount of each financial asset in the balance
    sheet.
(c) Net fair values of financial assets and liabilities
    Valuation approach
    The methods used in determining fair values of financial instruments are disclosed in note 4.
     The carrying amounts and net fair values of consolidated financial assets and liabilities as at the
     reporting date are as follows:

                                                         Consolidated                      Company
                                                     Carrying    Net fair             Carrying   Net fair
                                                     amount       value               amount      value
                                                        $           $                    $          $

     Financial assets
     Cash assets                                         209,051     209,051             11,284      11,284
     Receivables                                       1,171,259   1,171,259            888,537     888,537
     Financial liabilities
     Payables                                            653,931     653,931            141,542     141,542
     Loans and borrowings                              3,681,066   3,681,066          1,947,764 1,947,764
(d) Interest rate risk
     Convertible notes are exposed to fluctuations in interest payable as the terms stipulate that interest
     accrues daily and is based on the 90 days bank bill swap reference rate plus a margin of 500 basis
     points per annum. At 30 June 2009 that rate was 8.3% (2008:12.8 %). If this was to increase by 100
     basis points the effect on net profit and equity would approximately reduce by $7,000 (2008: $7,000). If
     this was to decrease by 100 basis points the effect on net profit and equity would approximately
     increase by $7,000 (2008: $7,000).

     The bank loans are exposed to fluctuations in interest payable as the terms stipulate that interest
     accrues daily and is based on the bank rate At 30 June 2009 that rate was 8.3% (2008:n/a). If this was
     to increase by 100 basis points the effect on net profit and equity would approximately reduce by
     $10,000 (2008: n/a). If this was to decrease by 100 basis points the effect on net profit and equity would
     approximately increase by $10,000 (2008: n/a).

     Other loans of the group consist of fixed interest hire purchase arrangements and therefore there is no
     exposure to interest rate risk.




                                                      62
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

34 Financial instruments (continued)
(d)   Interest rate risk (continued)
       The consolidated entity’s exposure to interest rate risk and the effective interest rate for classes of
       financial assets and financial liabilities is set out below:

                                        Floating                              More       Non-       Total
                            Effective   interest                             than 5    Interest     $’000
                            interest      rate        1 year or 1 to 5 years years     Bearing
                       Note   rate       $’000       less $’000     $’000     $’000     $’000
      2009
      Financial assets
      Cash assets      29        4%      209,051             -           -         -           -     209,051
      Trade and other
      Receivables      14         -            -             -           -         - 1,171,259     1,171,259
                                         209,051             -           -         - 1,171,259     1,380,310
      Financial liabilities
      Trade and other
      payables             21     -              -           -           -         -    653,931      653,931
      Loans and
      borrowings           22   8.2%             - 2,073,683     1,607,383         -          -    3,681,066
                                                 - 2,073,683     1,607,383         -    653,931    4,334,997
      2008
      Financial assets
      Cash assets      29        5%      282,963             -           -         -           -     282,963
      Trade and other
      Receivables      14         -            -             -           -         -    836,037      836,037
                                         282,963             -           -         -    836,037    1,119,000
      Financial liabilities
      Trade and other
      payables             21     -              -           -           -         -    542,504      542,504
      Loans and
      borrowings           22   10.8%            -    910,183     435,606          -          -    1,345,789
                                                 -    910,183     435,606          -    542,504    1,888,293
(e)   Liquidity Risk
      The company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate
      funds are available to meet the cash demands.


35    Related parties

The following were key management personnel of the consolidated entity during the entire reporting period,
unless otherwise indicated.

Non-executive directors
Dr Joseph Nicholas

Executive directors
Mr John Darley (Chairman)
Mr John Riemelmoser (Managing Director and CEO)

Executives
Mrs Victoria Allinson (Company Secretary) from 30 January 2009
Ms Pia Bentick-Owens (Company Secretary) from 30 November 2008 until 30 January 2009.
Mr Bruce Hocking (Company Secretary) until 30 November 2008
Mr Robert Doley (General Manager ProControl Systems)
Mr Trevor Sharpe (General Manager Bagot) resigned 20 June 2009

                                                       63
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report


                                                               Consolidated                Company
                                                             2009       2008            2009     2008
                                                Note           $          $              $         $


35 Related parties (continued)

Key management personnel compensation
The key management personnel compensation
included in ‘personnel expenses’ (note 9) are as
follows:
Short-term employee benefits                                597,316       630,359      400,191       452,150
Post-employment benefits                                    153,509       203,200       43,745        81,661
Share-based payments                                              -             -            -             -
                                                            750,825       833,559      443,936       533,811

Key management personnel compensation excludes the following professional fees:
 Mrs V Allinson was paid fees for providing company secretarial services amount to $14,022 and other
   professional services $13,086 (2008 n/a); and
 Ms P Bentick-Owens is an employee of Adelaide Equity Partners that were paid fees for providing
   company secretarial and other professional services amount to $8,000 for the period from 1 December
   2008 to 30 January 2009 (2008 n/a). During this period Adelaide Equity Partners were also paid fees for
   Corporate Advisory Services $10,000 ((2008: n/a).

Mr Hockings remuneration includes Medical Advisory Committee Chairman fees (Chairman until 30
November 2008) of $10,095 (2008: $25,000).

At the 30 June 2009 executive remuneration payable amounted to:
 Mr J Darley $66,000 (2008: $12,000);
 Mr J Riemelmoser $36,376 (2008: $nil);
 Dr J Nicholas $33,000 (2008: $6,000):
 Mrs V Allinson $7,761 (2008: n/a);
 Ms P Bentick-Owens $2,116 (2008: n/a); and
 Mr B Hocking $52,000 (2008: $35,654).

Individual directors and executives compensation disclosures
Information regarding individual directors and executives’ compensation and some equity instruments
disclosures as permitted by the Corporations Regulations 2M.3.03 and 2M.6.04 is provided in the
Remuneration Report section of the Directors’ report on pages 14 to 18.

Apart from the details disclosed in this note, no director has entered into a material contract with the
Company or the consolidated entity since the end of the previous financial year and there were no material
contracts involving directors’ interests existing at year end.

Other key management personnel transactions
A number of key management personnel, or their related parties, hold positions in other entities that result in
them having control or significant influence over the financial or operating policies of those entities.

A number of these entities transacted with the Company or its subsidiaries in the reporting period. The terms
and conditions of the transactions with management persons and their related parties were no more
favourable than those available, or which might reasonably be expected to be available, on similar
transactions to non-director related entities on an arm’s length basis.




                                                       64
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

35 Related parties (continued)

The aggregate amounts recognised during the year relating to key management personnel and their related
parties were as follows:

                                                                  Consolidation              Company
                                                                 2009      2008           2009    2008
                                                                  $          $             $        $
Key management
                                    Transaction
personnel

Mr Anthony              Consultancy
                                                                       -       30,645           -          30,645
Mitchell(1)
Mr John Darley          S.O.S. (Speeding Over Sticking) Pty
                                                                       -       27,754           -               -
                        Ltd (“SOS”) - ProControl sales
Dr Joseph Nicholas      Consultancy fees for Ugandan Trip              -        9,000           -           9,000
                        JR Trucking Conglomerate Pty Ltd -
                                                                  4,574              -          -               -
                        freight purchases
(1)
      Appointed November 2007 and resigned February 2008.

Directors Loan

During the prior year the following loans in the form of convertible notes were made by directors to the
company:

                                                                  Consolidated               Company
                                                                 2009      2008           2009     2008
                                                   Note            $         $             $         $

Mr J Darley                                                    200,000     200,000       200,000       200,000
Mr J Riemelmoser                                               300,000     300,000       300,000       300,000
Directors loans                                     22         500,000     500,000       500,000       500,000


Interest paid to Mr John Riemelmoser and Mr John Darley during the financial year ended 30 June 2009
totalled $8,980 (2008: $2,400) and $11,175 (2008: $12,264) respectively.

At 30 June 2009 Interest payable to Mr John Riemelmoser and Mr John Darley amounted to $30,525 (2008:
$2,722) and $20,837 (2008: $1,815) respectively.

The average interest rate due to Mr John Riemelmoser throughout the period of the loan was 10.27% (2008:
9%). The average interest rate due to Mr John Darley throughout the period of the loan was 10.27% (2008:
8.37%).




                                                         65
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

35 Related parties (continued)

Options over equity instruments
The movement during the reporting period in the number of options over ordinary shares in Safety
Medical Products Limited held, directly, indirectly or beneficially, by each key management personnel,
including their related parties, is as follows:


                                                                                                             Vested and
                                    Granted as                                                 Held at       exercisable
                          Held at   remunera-     Other net                                    30 June        at 30 June
                                                          (1)                        (1)
                      1 July 2008         tion   changes        Exercised   Lapsed              2009             2009

Directors
Mr John Darley and
                       1,335,573             -                          -   (1,000,000)          335,573         335,573
related parties
Mr John
Riemelmoser and       12,645,483             -                          -   (6,010,000)         6,644,483      6,644,483
related parties
Dr Joseph Nicholas     1,360,500             -                          -   (1,030,500)          330,000         330,000

Executives
Mrs V Allinson from
                                -            -              -           -                  -             -                 -
30 January 2009
Ms Pia Bentick-
Owens from 30
November 2008                   -            -              -           -                  -             -                 -
until30 January
2009
Mr B Hocking until
                         673,750             -              -           -                  -     673,750         673,750
30 November 2008
Mr Robert Doley
                       1,225,000             -              -           -                  -    1,225,000      1,225,000
and related parties
Mr Trevor Sharpe
resigned 20 June          18,000             -              -           -                  -      18,000          18,000
2009

                                                                                                             Vested and
                                    Granted as                                                 Held at       exercisable
                          Held at   remunera-     Other net                                    30 June        at 30 June
                                                          (2)
                      1 July 2007         tion   changes        Exercised   Lapsed              2008             2008

Directors
Mr John Darley and
                       1,305,068             -        30,505            -                  -    1,335,573      1,335,573
related parties
Mr John
Riemelmoser and       12,546,947             -       107,536            -                  -   12,654,483     12,645,983
related parties
Dr Joseph Nicholas     1,325,000             -        35,500            -                  -    1,360,500      1,355,000

Executives
Mr B Hocking until
                       1,173,750             -                          -                  -    1,173,750      1,173,750
30 November 2008
Mr Robert Doley
                       1,225,000             -                                             -    1,225,000        970,000
and related parties
Mr Trevor Sharpe
resigned 20 June                -            -        18,000            -                  -      18,000          18,000
2009




                                                           66
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

35 Related parties (continued)

Options vested by key management personnel were not exercisable at 30 June 2008 or 2009.
    (1)
        On 31 December 2008 the 20 cent listed options expired.
    (2)
        Movements in related party options over equity instruments throughout the financial year ended 30
        June 2008 are attributable to the following
         Mr John Darley and related parties – exercise of rights 25/10/07 (25,335, 4,085 & 1,085)
            totalling 30,505 options over equity instruments;
         Mr John Riemelmoser and related parties - exercise of rights 25/10/07 (18,250 & 89,286)
            totalling 107,536 options over equity instruments;
         Dr Joseph Nicholas and related parties - exercise of rights 25/10/07 (500, 5,000, 25,000)
            totalling 30,500 options over equity instruments and 5,000 options over equity instruments not
            included within the related party disclosures in 2007;
         Mr Trevor Sharpe – allotted 18,000 options over equity instruments on 27/11/07.

Movement in shares
The movement during the reporting period in the number of ordinary shares of Safety Medical Products
Limited held, directly, indirectly or beneficially, by each key management personnel, including their related
parties is as follows:

                                                                       Received on                       Held at
                                        Held at          Granted as    exercise of    Other net          30 June
                                      1 July 2008       remuneration     options     changes (1)          2009

Directors
Mr John Darley and related parties       671,146                   -             -                  -     671,146
Mr John Riemelmoser and related
parties
                                      13,288,964                   -             -                  -   13,288,964
Dr Joseph Nicholas                       671,000                   -             -                  -     671,000

Executives
Mrs V Allinson from 30 January
2009
                                                    -              -             -                  -              -
Ms Pia Bentick-Owens from 30
November 2008 until 30 January                      -              -             -                  -              -
2009
Mr B Hocking until 30 November
2008
                                       1,327,500                   -             -                  -    1,327,500
Mr Robert Doley and related parties    2,450,000                   -             -        50,000         2,500,000
Mr Trevor Sharpe                               -                   -             -             -                 -

                                                                       Received on                       Held at
                                        Held at          Granted as    exercise of    Other net          30 June
                                                                                              (2)
                                      1 July 2007       remuneration     options     changes              2008

Directors
Mr John Darley and related parties       610,133                   -                      61,013          671,146
Mr John Riemelmoser and related
parties
                                      13,073,892                   -             -      215,072         13,288,964
Dr Joseph Nicholas                       600,000                   -             -        71,000          671,000

Executives
Mr B Hocking                           1,347,500                   -             -      (20,000)         1,327,500
Mr Robert Doley and related parties    2,450,000                   -             -                       2,450,000
Mr Trevor Sharpe                               -                   -             -                  -            -




                                                          67
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

35 Related parties (continued)
(1)
       Movements in related party ordinary share holdings throughout the financial year ended 30 June 2009
       are attributable to the following
        The KDS Super Fund Account, a entity related to Mr Robert Doley’s acquired 50,000 fully paid
           shares on 19 November 2008.
 (2)
       Movements in related party ordinary share holdings throughout the financial year ended 30 June 2008
       are attributable to the following
        Mr John Darley and related parties – exercise of rights 25/10/07 (50,671, 2,171 & 8,171) totalling
           61,013 ordinary shares;
        Mr John Riemelmoser and related parties - exercise of rights 25/10/07 (36,500 & 178,572) totalling
           215,072 ordinary shares;
        Dr Joseph Nicholas and related parties - exercise of rights 25/10/07 (1,000, 10,000, 50,000) totalling
           61,000 ordinary shares and 10,000 ordinary shares not included within the related party disclosures
           in 2007;
        Mr Bruce Hocking – disposal 25/10/07 (18,000) and 26/10/07 (2,000) totalling a reduction in ordinary
           shares of 20,000.

Movement in convertible notes
The movement during the reporting period in the number of convertible notes of Safety Medical
Products Limited held, directly, indirectly or beneficially, by each key management personnel, including
their related parties is as follows:
                                                                   Received on                      Held at
                                   Held at          Granted as     exercise of   Other net          30 June
                                 1 July 2008       remuneration      options     changes             2009
Directors
Mr John Darley and related
parties
                                       2,000                   -             -                  -      2,000
Mr John Riemelmoser and
related parties
                                       3,000                   -             -                  -      3,000
Dr Joseph Nicholas                             -               -             -                  -             -

Executives
Mrs V Allinson from 30
January 2009
                                               -               -             -                  -             -
Ms Pia Bentick-Owens (2) from
30 November 2008 until 30                      -               -             -                  -             -
January 2009
Mr B Hocking until 30
November 2008
                                               -               -             -                  -             -
Mr Robert Doley and related
parties
                                               -               -             -                  -             -
Mr Trevor Sharpe resigned 20
June 2009
                                               -               -             -                  -             -

                                                                   Received on                      Held at
                                   Held at          Granted as     exercise of    Other net         30 June
                                                                                          (1)
                                 1 July 2007       remuneration      options     changes             2008
Directors
Mr John Darley and related
parties
                                               -               -             -         2,000           2,000
Mr John Riemelmoser and
related parties
                                               -               -             -         3,000           3,000
Dr Joseph Nicholas                             -               -             -                  -             -

Executives
Mr B Hocking                                   -               -             -                  -             -
Mr Robert Doley and related
parties
                                               -               -             -                  -             -
Mr Trevor Sharpe                               -               -             -                  -             -

                                                          68
Safety Medical Products Limited
Notes to the financial statements
30 June 2009 Annual Financial Report

35 Related parties (continued)

The notes are convertible on 31 July 2010 (extended for the original 4 June 2009 expiry date) at the option of
the holder. Interest payable on the convertible notes during the financial year was $30,525 (2008: $2,813)
and $20,837 (2008: $4,219) to Mr John Darley and Mr John Riemelmoser respectively.
(1)
      During the prior year convertible notes were issued at a face value of $100 per note with a moving interest
      rate of 500 basis Points above the 90-Day Bill Rate and can be converted into ordinary shares at a rate of
      400 shares for every one note, an effective price of $0.25c per share. Loans of $200,000 and $500,000
      owed to Mr John Darley and Mr John Riemelmoser respectively, at the time of the convertible note issue
      was exchanged for convertible notes at this date.
(2)
      Ms Pia Bentick-Owens was Company Secretary from 30 November 2008 until 30 January 2009 and during
      this time was an employee of Adelaide Equity Partners, whose subsidiary Chesser Investments Pty Ltd
      held 500 Convertible Notes from the 4 June 2008 to 7 July 2009. Interest payable on the convertible notes
      during the financial year was $4,911 (2008: $454)

Subsidiaries
Loans were made by the Company to wholly owned subsidiaries for working capital and capital
 purchases during last financial year. The loans outstanding between the Company and its subsidiaries
 have no fixed date of repayment and are non-interest bearing. As at 30 June 2009 the loan between
 the Company and Bagot Press has been impaired to $362,406 (2008: $1,820,000) due to devaluation
 of the business operations in Bagot Press.

Other related parties

Transactions and balances with other related parties
During the year ended 30 June 2009 J.R. Trucking Conglomerate Pty Ltd, an entity in which Dr Joseph
Nicholas is a director and shareholder provided $4,574 (2008: nil) of freight services to Pureste Pty Ltd.
At the 30 June 2009 no amounts were payable to J.R. Trucking Conglomerate Pty Ltd.

During the year ended 30 June 2009 SOS, an entity in which Mr John Darley is a non-beneficial related
party, acquired nil services (2008: $27,754) from ProControl. At the 30 June 2009 trade recoverable
include $15,730 (2008: $15,730) due from SOS for a development project that is expected to be
finalised in the new financial year.

Key management persons related parties
For details of these transactions refer to key management personnel related disclosures.




                                                         69
Safety Medical Products Limited
30 June 2009 Annual Financial Report

Directors Declaration


1. In the opinion of the directors of Safety Medical Products Limited (the Company):


  a) the financial statements and notes and the remuneration disclosures that are contained in
     sections 4.4.1, 4.4.2, 4.4.4.1, 4.4.4.2 and 4.4.4.3 of the Remuneration report in the Director’s
     report, set out on pages 14 to 18, are in accordance with the Corporations Act 2001,
     including:

      (i) giving a true and fair view of the financial position of the Company and the consolidated
          entity as at 30 June 2009 and of their performance, as represented by the results of their
          operations and cash flows, for the financial year ended on that date; and

      (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001;
           and

  b) the financial report also complies with International Financial Reporting Standards as
     disclosed in note 2(a);

  c) the remuneration disclosures that are contained in sections 4.4.1, 4.4.2, 4.4.4.1, 4.4.4.2 and
     4.4.4.3 of the Remuneration report in the Directors’ report comply with Australian Accounting
     Standard AASB 124 Related Party Disclosures.

  d) there are reasonable grounds to believe that the Company will be able to pay its debts as and
     when they become due and payable.

2. The directors have been given the declarations required by Section 295A of the Corporations Act
   2001 from the chief executive officer and chief financial officer for the financial year ended 30 June
   2009.




Dated at Adelaide this 27th day of September 2009


This declaration is signed in accordance with a resolution of the directors:




John Darley                                   John Riemelmoser
Chairman                                      Managing Director




                                                       70
ASX Additional Information

Shareholder Information

Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed
elsewhere in this report is set out below. The information is as at 18 September 2009.

Shareholdings as at 18 September 2009
Substantial shareholders
The number of shares held by substantial shareholders are set out below:

Shareholder                                                                                       Ordinary
John Riemelmoser and Tina Riemelmoser                                                           10,801,900

Distribution of security holders
                                                                            Options             Options
 Category                                  Ordinary Shares              $1.00 expiry        $0.25 expiry
                                                                         31/12/2010          31/12/2010
 1 – 1,000                                            164                     363                  -

 1,001 – 5,000                                        266                     389                62

 5,001 – 10,000                                       235                     239                26

 10,001 – 100,000                                     666                     314                25

 100,001 and over                                     126                      58                  -

                                                    1,457                   1,363               113


The $0.20 options expired on 31 December 2008.

Unmarketable parcels
The number of shareholders holding less than a marketable parcel is 726.
There is only one class of share and all ordinary shareholders have equal voting rights.

On-market buyback
There is no current on-market buy-back

Securities subject to escrow
The Company has no securities that are subject to escrow.




                                                      74
ASX Additional Information

Twenty largest shareholders – Ordinary Shares
                                                               Number of    Percentage
                                                                 ordinary     of capital
Name                                                          shares held          held

MR JOHN RIEMELMOSER & MRS TINA RIEMELMOSER                     10,801,900        14.157


MR GIUSEPPE GIROLAMO & MS GAYNOR ELLEN SANDERSON <G & S S/F
A/C>                                                            2,880,100         3.775

MR JOHANN RIEMELMOSER & MRS JANET RIEMELMOSER <RIEMELMOSER
FAMILY A/C>                                                     2,487,064         3.260

MR KENNETH ROBERT DOLEY & MS BEVERLEY LARWOOD <K R D SUPER
FUND A/C>                                                       1,940,000         2.543

MR MICHAEL LINDBLOM & MRS KATHRYN LINDBLOM <LINDBLOM SUPER
FUND A/C>                                                       1,661,091         2.177

MR BRUCE PERCY HOCKING                                          1,327,500         1.740

MR RICHARD BARRY HART                                           1,191,065         1.561

RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
<MLCI A/C>                                                      1,111,111         1.456

MR LAWTON JAMES PINCHBECK & MS MARIAN ANN CHEESMAN <LJ
PINCHBECK SUPER FUND A/C>                                       1,111,111         1.456

F & J HOLDINGS PTY LTD                                           900,000          1.180

MR MICHAEL GREGORY HILLAN & MRS JANE FRANCIS HILLAN <M&J
HILLAN SUPER FUND A/C>                                           829,956          1.088

DR YEW CHEEN WONG & MS EE-LYNN LAI <WE SUPERANNUATION FUND
A/C>                                                             768,726          1.007

KULGARA HOLDINGS PTY LTD <JOE NICHOLAS SUPER FUND A/C>           660,000          0.865

MR GIUSEPPE GIROLAMO                                             642,828          0.842

MR PETER GEBHARDT & MRS CARLENE GEBHARDT <PETARD SUPER
FUND A/C>                                                        587,025          0.769

MR MICHAEL JOHN QUINLAN & MRS AMANDA JANE QUINLAN <M & A
QUINLAN FAMILY A/C>                                              574,343          0.753

MR JOHN DARLEY                                                   557,382          0.731

MERGIN INVESTMENTS PTY LTD <M & V CROSS SUPER FUND A/C>          530,000          0.695

MR JAMES PATRICK BOWE <BOW PEARL SUPER FUND A/C>                 495,000          0.649

HARDINGTON PTY LTD                                               405,010          0.531
TOTAL                                                          31,461,212        41.235




                                                75
ASX Additional Information

Twenty largest option holders - $1.00 expiry 31/12/2010
                                                              Number of    Percentage
                                                                options     of options
Name                                                               held           held

MR JOHN RIEMELMOSER & MRS TINA RIEMELMOSER                     5,400,950       15.102

MR MARCUS STEPHEN BOLAND                                       2,000,000        5.592

MR GIUSEPPE GIROLAMO & MS GAYNOR ELLEN SANDERSON <G & S S/F
A/C>                                                           1,260,050        3.523

MR JOHANN RIEMELMOSER & MRS JANET RIEMELMOSER <RIEMELMOSER
FAMILY A/C>                                                    1,243,533        3.477

MR RICHARD BARRY HART                                          1,049,040        2.933

RESOURCE CAPITAL AUSTRALIA PTY LIMITED <MARCUS BOLAND A/C>     1,000,000        2.796

MR KENNETH ROBERT DOLEY & MS BEVERLEY LARWOOD <K R D SUPER
FUND A/C>                                                       970,000         2.712

MR MICHAEL LINDBLOM & MRS KATHRYN LINDBLOM <LINDBLOM SUPER
FUND A/C>                                                       827,190         2.313

MR BRUCE PERCY HOCKING                                          673,750         1.884

MR MARCUS STEPHEN BOLAND                                        670,000         1.873

SUBEQUANA PTY LTD <SUBEQUANA SUPER FUND A/C>                    530,500         1.483

MR MICHAEL GREGORY HILLAN & MRS JANE FRANCIS HILLAN <M&J
HILLAN SUPER FUND A/C>                                          460,728         1.288

M L BAKER PTY LTD                                               350,281         0.979

KULGARA HOLDINGS PTY LTD <JOE NICHOLAS SUPER FUND A/C>          330,000         0.923

MR MICHAEL JOHN QUINLAN & MRS AMANDA JANE QUINLAN <M & A
QUINLAN FAMILY A/C>                                             287,171         0.803

MR JOHN DARLEY                                                  278,691         0.779

NOTTINGHAM PTY LTD                                              268,760         0.751

MR JAMES PATRICK BOWE <BOW PEARL SUPER FUND A/C>                247,500         0.692

MR RICHARD HILLAN                                               232,532         0.650

MR MICHAEL GREGORY HILLAN                                       215,057         0.601
TOTAL                                                         18,295,733       51.154




                                                 76
ASX Additional Information

Twenty largest option holders - $0.25 expiry 31/01/2010
                                                                Number of   Percentage
                                                                  options    of options
Name                                                                 held          held

MR JURGEN HUMMEL & MS KATHY NAJAR                                  50,000        4.484

MR GEORGE TZANAKIS & MRS DIMITRIA TZANAKIS                         25,000        2.242

MRS JANICE MARIE MOBBS                                             25,000        2.242

MR HEAN CHONG LOI                                                  25,000        2.242

WELLS FREEDOM PTY LTD <THE WELLS SUPER FUND A/C>                   25,000        2.242

MR BALJIT SINGH SRAN & MRS SARBJIT KAUR SRAN                       25,000        2.242

MR ANTONIO ROMBOLA & MRS TRUDIE GRACE ROMBOLA                      25,000        2.242

MR MAURICE EDWARD VERONESE & MRS MARISA VERONESE <M&M
VERONESE SUPER FUND A/C>                                           25,000        2.242

MR GARY ALAN STEVENS                                               25,000        2.242

A R ALLEN PTY LIMITED <ALLEN FAMILY S/F A/C>                       25,000        2.242

MRS VERA LUISE WHITE                                               25,000        2.242

MR MICHAEL REYNOLDS HEWINSON & MRS JANINA HEWINSON <THE M &
J SUPER FUND A/C>                                                  25,000        2.242

MR BRIAN GORDON RIDDLE & MRS KATHLEEN MARY RIDDLE                  25,000        2.242

MR ROBERT KEITH BLANDEN & MRS JOAN SYBIL BLANDEN                   25,000        2.242

MR PHILIPPE BRUCE JAQUILLARD & MRS DIANA KAMILLA JAQUILLARD
<JAQUILLARD SUPER FUND A/C>                                        25,000        2.242

DR DAVID MATTHEW DE LACEY & MR MAURICE MOWSON MAR <SANTOS
A/C>                                                               25,000        2.242

MR DARIO ZOLLO <ZOLLO INVESTMENTS A/C>                             25,000        2.242

MR JOHN ROBERT EGARR & MRS ROBYN JILLIAN EGARR <J R EGARR S/F
A/C >                                                              25,000        2.242

MR GEORGE PAPPAS & MRS GEORGINA PAPPAS                             25,000        2.242

MRS FREDAVIC OSSWALD                                               25,000        2.242

MRS ANNA MATTIAZZO                                                 25,000        2.242

LIEFRINK & ASSOCIATES                                              25,000        2.242

MR JIMMY PANOS & MRS HELEN PANOS                                   25,000        2.242

MR GARY NEIL LOADSMAN                                              25,000        2.242

MR DENNIS PAUL REBBECK                                             25,000        2.242
TOTAL                                                             650,000       58.292




                                                 77
Offices and officers



Company Secretary
Mrs Victoria Allinson

Principal registered office
Safety Medical Products Limited
25 Fenden Road
Salisbury Plain SA 5109
Telephone:(08) 8285 5226
www.safetymed.com.au

Principal place of business
Safety Medical Products Limited
25 Fenden Road
Salisbury Plain SA 5109
Telephone: (08) 8285 5226


Location of Share Registry
Registries Limited
Level 7, 207 Kent Street
Sydney NSW 2000
Telephone: (02) 9290 9600

Stock Exchange
The Company is listed on the Australian Securities Exchange. The Home Exchange is Adelaide.
The Company is also listed on the Berlin-Bremen Stock Exchange (OTC).


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




                                                  78

				
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