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Macular Degeneration Foundation Limited (a Company Limited by Guarantee) ABN 52 096 255 177 Financial Report for the year ended 30 June 2005

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Macular Degeneration Foundation Limited(a Company Limited by Guarantee)

ABN 52 096 255 177

Financial Reportfor the year ended 30 June 2005

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

2

Contents

Chairman’s Report 3

Directors’ Report 4

Auditor’s Independence Declaration 9

Statement of Financial Performance 10

Statement of Financial Position 11

Statement of Cash Flows 12

Notes to the Financial Statements 13

Directors’ Declaration 24

Chairman’s Declaration 25

Independent Audit Report 26

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

3

Chairman’s Report

As Chairman of the Board of the Macular Degeneration Foundation, it is my pleasure to introduce the Annual Report of the Foundation for the year ended 30 June 2005. It has been an eventful year highlighted by the appointment of our new CEO, Julie Heraghty. Julie has contributed enormously to the Foundation since she started in October 2004. Our Board has been revamped to better reflect the needs of our members, the people who suffer with this devastating disease. During the year we have welcomed several new Board Members who bring diverse skills and also have been diagnosed with Macular Degeneration or have a close association with the disease. It is our aim to reduce the incidence and impact of Macular Degeneration in Australia. It is our hope that through awareness and education, every person over the age of 50 will have their macula regularly checked by their Optometrist or health care specialist. During the year, we have provided assistance and counselling to many hundreds of sufferers which has helped them improve the quality of their lives. It is difficult for many of us to imagine the extreme stress and depression which many sufferers endure as they struggle to cope with normal functions and routines which we take for granted. The Foundation has achieved several milestones this year, not the least of which was the unprecedented success of our Awareness Week in June. We appointed Ita Buttrose as our ‘face of Macular Degeneration’ for the week. Ita has a strong genetic link with the disease as her father and uncle both had MD. Ita was able to clearly articulate her increased risk in developing the disease on radio, TV and in the press. We thank the NSW Government, Novartis, Blackmores and Quantum for their ongoing financial support of the Foundation. Additional significant financial contributors will be coming on board this year including Pfizer, Alcon, The Federal Government, Australian Optometry Association and Humanware. We should also like to thank all the private donors to the Foundation. The Board is comfortable that the organisation is in a strong position to face the challenges of the forthcoming year. I thank the Directors, State Chairmen, the CEO and staff of the Macular Degeneration Foundation for their ongoing commitment to the organisation. I would also like to place on record the Board’s appreciation of the magnificent contribution of our volunteers. Leslie Lofthouse FAICD Chairman

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

4

Directors’ Report

Your directors submit their report for the year ended 30 June 2005.

DIRECTORS

The names and details of the company’s directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Leslie Lofthouse (Chairman) – FAICD

Leslie Lofthouse is currently Chairman of Job Futures and Executive Director of Northwood Corporation. She has had a long and successful career in the travel industry, during which time she served on many industry advisory boards and was keynote speaker at many tourism conventions.

Leslie was a Director of Australian Federation of Travel Agents (AFTA) and United Travel Agents Group (UTAG). She founded and publicly floated the Internet Travel Group, now part of Flight Centre.

Dr Paul Beaumont – FRACS, FRANZCO

Dr Paul Beaumont is a founding director of the Macular Degeneration Foundation and served the first Chairman’s term. He is a regular speaker at international conferences and trains doctors worldwide in his approach to Macular Degeneration. His clinic has been a pioneer in intensive counselling for patients with Macular Degeneration.

He is a past Chairman of the NSW Division of the Australian and New Zealand College of Ophthalmologists and of the Committee of Chairmen of the Australian College.

Ashley Chapman – CPA, MACS (Appointed 13 October 2004)

Ashley Chapman retired in 2004 after a career in information technology spanning over forty years. His experience includes fifteen years with IBM in a variety of roles covering systems engineering, programming and education. Industry experience included banking and finance, airline, distribution and government utilities.

After leaving IBM he became a partner in a CPA firm and then in 1978 he founded Management Control Systems Pty Ltd, a company specialising in the development and marketing of financial systems for the distribution and manufacturing industries both in Australia and overseas.

He is a member of CPA Australia and the Australian Computer Society.

Ashley is a member of the Board of the Sisters of St Joseph Aged Care Services (Darlinghurst) and maintains his involvement in the IT industry through participation in the Product Advisory Board of Microsoft Business Solutions, a division of Microsoft Corporation.

Mr Barry Clarke - PNA

Barry Clarke is a qualified accountant, current Director and past President of the Royal Society for the Blind in South Australia. He also serves on the Client Advisory Finance and Investment Committees for the Royal Society for the Blind.

In 1990 he retired from his position as General Manager of the Police Credit Union in South Australia due to the early onset of Macular Degeneration. However, after a period of rehabilitation he returned to the workforce and went on to establish and successfully develop Mortgage Find as a national mortgage broking business.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

5

Directors’ Report (Continued)

Dr Peter Herse - DipAppSc, PhD, FAAO (Appointed 13 October 2004)

Dr Peter Herse practised optometry for a number of years in Australia (North Queensland) and Kenya (1980-83). He entered academic life as a lecturer in optometry schools around the world (University of Durban -Westville in South Africa, 1984-85; University of Houston (1986-89); University of Auckland (1990-93); University of New South Wales (1994-present).

Dr Herse has a strong research interest with over 50 publications in peer reviewed journals. He has held Visiting Fellow appointments in universities in the USA, India, Saudi Arabia and Thailand. He has been a Councillor for the Optometrists Association of Australia (2000-04) and has been Chair of the Professional Education Committee (2001-04). He is a Fellow of the American Academy of Optometry and has a strong interest in international eye care.

Vision impairment and low vision are Dr Herse’s current interests. He is a lecturer in ocular disease and low vision at the University of NSW. He has worked with numerous state and local organizations to reduce visual disability in people with eye disease. He has helped establish numerous low vision clinics in Sydney (Guide Dogs NSW, Royal Blind Society, University of NSW) and around the world (Hyderabad, Durban, Auckland, Bangkok). He is a member of the International Society for Low Vision Research and Rehabilitation (ISLRR).

John McCarroll – B.Ec, SDIAM (Appointed 13 October 2004)

John McCarroll has worked in the finance industry since 1980. He began his work in the finance industry in London and since 992 has worked in Sydney. In 1998 he joined JB Were as a Senior Investment Advisor and moved from institutional to private client broking.

John is also a founding member of the Stockbrokers Awards Foundation. This group holds two functions a year and distributes the proceeds to ten charities.

Peter Reid – BA LLB (Appointed 13 October 2004)

Peter Reid is has spent the past 36 years as a lawyer. He has also served as an Australian diplomat for seven years which included serving a four year posting with the Australian Mission at the United Nations Headquarters in New York.

Peter spent nine years working as the Senior Exploration Counsel for Esso Australia Ltd and 17 years (until 2004) as a Partner in private legal practice specializing in energy and resources law. He has been a frequent speaker at international conferences and was voted by his colleagues as one of the world’s leading resources lawyer in 2002 and 2004. In 2004 he established his own legal practice, Energy and Resources Lawyers. He also serves as a member of the Centennial Park Consultative Committee.

Paul Rogan - FCPA, AICD (Appointed 10 August 2005)

Paul is a senior executive with more than 20 years experience in the financial services sector both in Australia and United Kingdom. He has served as an executive director on several subsidiary boards of the National Australia Bank and MLC group, including as CEO of the Wealth Manangement operations in the UK and MLC Building Society.

He is also a past Chairman of the Victorian Building Society Association and past Counsellor on the Association of Australian Permanent Building Societies.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

6

Directors’ Report (Continued)

Dr Jim Runciman – FRACS, FRANZCO, FAAO

Dr Jim Runciman is a Fellow of the Royal Australian and New Zealand College of Ophthalmologists and the Royal Australasian College of Surgeons.

Dr Runciman is a leading retinal ophthalmologist, principal of the Adelaide Eye Centre and senior visiting consultant to the Queen Elizabeth Hospital. He was appointed to the Macular Degeneration Foundation Board in 2003. He is the current Vice President of both the Royal Society for the Blind and Chairman of the South Australian Branch of the Macular Degeneration Foundation.

Susan Chapman (Resigned 15 June 2005)

Ramesh Karwal (Resigned 23 June 2005)

Alan Lambert (Resigned 3 August 2004)

Sally Laughlin (Resigned 13 October 2004)

Prof Paul Mitchell (Resigned 2 March 2005)

Paul Sheehan (Resigned 13 October 2004)

NATIONAL RESEARCH ADVISOR

Professor Paul Mitchell – MBBS, MD, PhD, FRANZCO, FROphth, FAFPHM

Professor Paul Mitchell is a leading retinal ophthalmologist and international speaker on Macular Degeneration. Professor Mitchell is Head of the Ophthalmology Department at the University of Sydney, Director of the Eye Centre at Westmead Hospital and a world expert in the epidemiology of Macular Degeneration.

He conducted the world renowned Blue Mountains Eye Studies which provided unique information about the incidence of the disease in an Australian population, including proving the link between smoking and Macular Degeneration.

SECRETARY

Julie Heraghty – BA DipEd (Appointed 7 December 2004)

Julie Heraghty is the Chief Executive Officer of the Macular Degeneration Foundation. She spent over seven years as a Policy Advisor to NSW State Ministers across three major portfolios.

Her career began as a secondary school teacher and she later qualified as a registered psychologist working in schools with students, teachers and parents.

Julie has served as a Director and Manager in major Government Departments including Education and Training; and Infrastructure, Planning and Natural Resources.

David Brown (Resigned 7 December 2004)

INDEPENDENCE OF DIRECTORS

The Directors are independent of the Foundation and have confirmed that they have no conflict of interest in their roles as Directors of the Foundation.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

7

Directors’ Report (Continued) DIRECTORS’ MEETINGS

The number of Directors and number of meetings attended by each of the Directors of the company during the year are:

Number of meetings held Number of

meetings attended

Number of meetings eligible to

attend Ms Leslie Lofthouse (Chairman) 6 6 Dr Paul Beaumont 6 6 Mr Ashley Chapman 4 4 Ms Susan Chapman 4 6 Mr Barry Clarke 5 6 Dr Peter Herse 3 4 Mr Ramesh Karwal 4 6 Mr Alan Lambert - - Ms Sally Laughlin 1 1 Mr John McCarroll 2 4 Prof. Paul Mitchell - 4 Mr Peter Reid 3 4 Mr Paul Rogan - - Mr Jim Runciman 5 6 Mr Paul Sheehan 1 2

PRINCIPAL ACTIVITIES

The principal activity of the Foundation is to reduce the incidence and impact of Macular Degeneration in Australia. This includes the education and support of Macular Degeneration patients, their carers and general health and eye-care professionals.

RESULTS

The surplus for the year ended 30 June 2005 was $281,359 (2004: $323,733). No income tax is payable by the company as such income is exempt from income tax under the provisions of subdivision 50 of the Income Tax Assessment ACT (1997).

The Macular Degeneration Foundation is a company limited by guarantee and has no share capital. Payment of dividends is prohibited by the company’s constitution.

REVIEW OF OPERATIONS

The core activities of the Foundation remained focused on reducing the incidence and impact of Macular Degeneration in Australia through education, awareness, research, counselling and support services. Further details of operations during the year are included in the CEO’s report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There have been no significant changes in the state of affairs of the company during the financial year.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

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Directors’ Report (Continued)

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matters or circumstances have arisen since the end of the financial year that have significantly affected or may significantly affect the company.

INDEMNIFICATION AND INSURANCE OF DIRECTORS

During the financial year, the company paid $3,835 (2004: $4,672) in order to insure the company’s directors and officers.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Foundation has made a submission to the Federal Government for assistance in funding for research, education and public awareness raising activities about macular degeneration. If successful, the funding will provide a substantial resource in helping to implement procedures to reduce the incidence and impact of macular degeneration disease.

The Foundation is also planning to consolidate its expansion in staffing, projects and support services Australia-wide.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the Auditor’s Independence Declaration for the year ended 30 June 2005 is set out on page 9.

NON-AUDIT SERVICES

The following non-audit service was provided by the company’s auditor, Ernst & Young. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of the non-audit service provided means that auditor independence was not compromised.

Ernst & Young is due to receive the following amount for the provision of non-audit services:

Tax compliance $3,450

Signed in accordance with a resolution of the directors. Ms Leslie Lofthouse Director Sydney 19 September 2005

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

9

Auditor’s Independence Declaration

Auditor’s Independence Declaration to the Directors of the Macular Degeneration Foundation Limited In relation to our audit of the financial report of the Macular Degeneration Foundation Limited for the financial year ended 30 June 2005, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Neil Wykes Partner

19 September 2005

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

10

Statement of Financial Performance

YEAR ENDED 30 JUNE 2005 Notes 2005 $

2004 $

REVENUES FROM ORDINARY ACTIVITIES Donations/fundraising Grant income Interest Other income

774,495 262,400

6,279 17,246

623,330 297,300

321 23,599

Total revenues from ordinary activities 3 1,060,420 944,550 Employee costs (426,562) (276,595) Administration and fundraising expenses (51,037) (39,883) Property and equipment costs (69,483) (57,723) Education and prevention programs (220,918) (202,279) Services and welfare (10,721) (4,222) Research costs (340) (40,115) Total expenses (779,061) (620,817) Surplus from ordinary activities 281,359 323,733 Income tax expense relating to ordinary activities - - Net surplus from ordinary activities after income tax expense

10

281,359

323,733

Net surplus 281,359 323,733 Total changes in equity other than those resulting from transactions with owners as owners attributable to members of the Macular Degeneration Foundation Limited

281,359

323,733

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

11

Statement of Financial Position

AT 30 JUNE 2005 Notes 2005 $

2004 $

CURRENT ASSETS Cash assets 11(b) 654,250 371,096 Receivables 5 112,830 132,597 Other financial assets 6 10,472 10,062 TOTAL CURRENT ASSETS 777,552 513,755 NON-CURRENT ASSETS Plant and equipment 7 28,466 26,813 TOTAL NON-CURRENT ASSETS 28,466 26,813 TOTAL ASSETS 806,018 540,568 CURRENT LIABILITIES Payables 8 139,819 118,374 Provisions 9 13,191 50,545 TOTAL CURRENT LIABILITIES 153,010 168,919 TOTAL LIABILITIES 153,010 168,919 NET ASSETS 653,008 371,649 EQUITY Retained surplus 10 653,008 371,649 TOTAL EQUITY 653,008 371,649

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

12

Statement of Cash Flows

YEAR ENDED 30 JUNE 2005

Notes 2005 $

2004 $

CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts in the course of operations 1,072,537 825,354 Cash payments in the course of operations (774,491) (571,358) Interest received 5,869 191 Net cash flows from operating activities 11(a) 300,915 254,187 Net cash flows from investing activities - - CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of fixed assets 2,000 3,125 Payments for plant and equipment (19,761) (15,609) Net cash flows used in financing activities (17,761) (12,484) Net increase in cash held 283,154 241,703 Add opening cash brought forward 371,096 129,393 Closing cash carried forward 11(b) 654,250 371,096

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

13

Notes to the Financial Statements

30 JUNE 2005

1. CORPORATE INFORMATION

The Macular Degeneration Foundation Limited is a company limited by guarantee that is incorporated and domiciled in Australia.

The registered office of the Macular Degeneration Foundation Ltd is located at:

Level 14 447 Kent Street Sydney NSW 2000

The company employed 5 full-time equivalent employees as of 30 June 2005 (2004: 4).

Members’ Guarantee

The company is limited by guarantee. If the company is wound up, the company’s constitution states that if upon winding-up or dissolution of the company:

a) there remains, after satisfaction of all its debts and liabilities, any property whatsoever, that property will not be paid to or distributed among the members but shall be given or transferred to some other institution or institutions, having objects similar to the objects of the Company, whose memorandum of association of constitution prohibits the distribution of its of their income and property among its or their members to an extent at least as great as imposed on the company under its constitution, and being an institution or institutions accepted as a deductible gift recipient under sub-division 30-B, section 30-100 of the Income Tax Assessment Act 1997 by the Commissioner of Taxation or otherwise approved for these purposes by the Commissioner of Taxation or institutions by the Members at or before the time of dissolution.

b) there is a deficit, each member and any members who ceased to be a member within 12 months of the winding up will contribute a maximum of $1.

At 30 June 2005 the company had 9 members (2004: 9 members).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Basis of accounting

The financial report is a general-purpose financial report which has been prepared in accordance with the requirements of the Corporation Act 2001 including applicable Accounting Standards. Other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with.

The financial report has been prepared in accordance with the historical cost convention.

b) Changes in accounting policies

The accounting policies are consistent with those of the previous year.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

14

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

c) Cash and cash equivalents

Cash on hand and in banks is stated at nominal value. For the purpose of the Statement of Cash Flows, cash includes cash on hand and in banks.

d) Receivables

Receivables are recognised and carried at nominal amount.

e) Investments

Term deposits are stated at nominal value.

f) Recoverable amount

Non-current assets measured using the cost basis are not carried at an amount above their recoverable amount, and where a carrying value exceeds this recoverable amount, the asset is written down. In determining recoverable amount, the expected net cash flows have been discounted to their present value using a market determined risk adjusted discount rate.

g) Plant and equipment

Plant and equipment are measured at cost. Depreciation is provided on a straight-line basis on all plant and equipment, at rates from 20% to 35%.

h) Payables

Liabilities for trade creditors and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the company.

Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis.

i) Employee benefits

Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries and annual leave.

Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled.

Employee benefit expenses arising in respect of wages and salaries, annual leave and other leave benefits are recognised against profits on a net basis in their respective categories.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

15

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

j) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Donations and fundraising revenue Revenue from donations and fundraising is not brought to account until monies are actually received. Donations in kind are recorded at the fair value of the goods or services received at the time they are received.

Grants and Commission Revenue from government grants is recognised over the period to which the contract relates.

Interest Revenue is recognised upon control of the right to receive the interest payment.

k) Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight-line basis.

l) Provisions

Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to make a future sacrifice of economic benefits to other entities as a result of past events, it is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the amount of the obligation.

m) Taxes

Income Taxes No income tax is payable by the company as such income is exempt from income tax under the provisions of subdivision 50 of the Income Tax Assessment ACT (1997).

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

16

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

m) Taxes (Continued)

Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

n) Comparatives

Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.

o) Impact of adopting Australian equivalents to International Financial Reporting Standards (AIFRS)

The directors do not expect that there will be a significant impact on the financial statements of the Macular Degeneration Foundation arising from the transition from current Australian Accounting Standards to Australian equivalents of International Financial Reporting Standards (IFRS).

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

17

2005

$ 2004

$

3. REVENUES FROM ORDINARY ACTIVITIES

Revenues from operating activities Donations and fundraising 774,495 623,330 Government grants 262,400 297,300 Other income

Optometrists network 2,250 2,639 Property income 12,996 17,835 Proceeds from disposal of fixed assets 2,000 3,125

Total other income 17,246 23,599 Total revenues from operating activities 1,054,141 944,229 Revenues from non-operating activities Interest income – other persons/corporations 6,279 321 Total revenues from non-operating activities 6,279 321 Total revenues from ordinary activities 1,060,420 944,550

4. EXPENSES AND LOSSES

Depreciation of non-current assets Plant and equipment 13,039 10,701

Total depreciation of non-current assets 13,039 10,701 Net loss on disposal of fixed assets 3,069 1,576 Operating lease rental

Minimum lease payments 34,990 33,699

5. RECEIVABLES (CURRENT)

Accounts receivable 112,830 132,597 (i) Accounts receivable are non-interest bearing and have repayment terms between 30 and 90 days.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

18

2005 $

2004 $

6. OTHER FINANCIAL ASSETS (CURRENT)

Term deposit less than 12 months 10,472 10,062

7. PLANT & EQUIPMENT (NON-CURRENT)

Plant and equipment at cost 50,389 37,540 Accumulated depreciation (21,923) (10,727) 28,466 26,813 Carrying amount at beginning 26,813 26,607 Additions 19,761 15,609 Disposals (5,069) (4,702) Depreciation expense (13,039) (10,701) 28,466 26,813

8. PAYABLES (CURRENT)

Trade creditors 74,517 22,442 Bonus accrual 30,000 - Payroll liabilities 22,782 12,126 GST payable 12,520 17,806 Loan from Paul Beaumont Pty Ltd - 66,000 139,819 118,374 Aggregate amounts payable to related parties: Director-related entity - 66,000 - 66,000 Terms and conditions (i) Trade creditors are non-interest bearing (ii) Details of the terms and conditions of related party payables are set out in Note 15

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

19

2005

$ 2004

$

9. PROVISIONS (CURRENT)

Provision for annual leave 13,191 10,545 Provision for research grant (a) - 40,000 13,191 50,545 Movements in provision (b) Research grant Carrying amount at beginning of the year 40,000 - Provision raised - 40,000 Provision utilised (40,000) - Carrying amount at end of financial year - 40,000 The provision for research grants represents an obligation to pay a research grant to The Opthalmic Research Institute of Australia.

10. NET SURPLUS

Balance at the beginning of the period 371,649 47,916 Net surplus attributable to members of the Macular Degeneration Foundation Limited

281,359

323,733

Balance at end of period 653,008 371,649

11. LEASE EXPENDITURE COMMITMENTS

Operating Leases The Foundation has one lease which is for its office premises.

Minimum lease payments Not later than one year 14,840 35,046 Later than one year and not later than five years - 14,840

Aggregate lease expenditure contracted for at reporting date 14,840 49,886

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

20

2005

$ 2004

$

12. STATEMENT OF CASH FLOWS

(a) Reconciliation of net surplus after tax to the net cash flows from operations

Operating surplus 281,359 323,733 Non-cash items Depreciation 13,039 10,701

Net loss on disposal of property, plant and equipment 3,069 1,576 Amounts set aside to provisions (37,354) 46,216 Change in assets and liabilities Decrease/(increase) in receivables 19,767 (122,713) Decrease/(increase) in other assets - 5,488 Decrease/(increase) in accrued interest receivable (410) (130) (Decrease)/increase in accounts payable and accruals (13,925) (40,498) (Decrease)/increase in payroll liabilities 10,656 12,126 (Decrease)/increase in GST liabilities -5,286 17,688 (Decrease)/increase in bonus accrual 30,000 - Net cash flows from operations 300,915 254,187 (b) Reconciliation of cash Cash balance comprises: - cash assets 654,250 371,096 Closing cash balance 654,250 371,096 (c) Financing facilities available The company has no bank overdraft facilities or bank loans at reporting date.

13. REMUNERATION OF DIRECTORS

The Directors received no remuneration from the company.

14. AUDITOR’S REMUNERATION

Amounts received or due and receivable for audit or review of the financial report of the company

-

-

Amounts received or due and receivable by the auditors for other services

Tax compliance 3,450 -

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

21

15. RELATED PARTY DISCLOSURES

Directors

The directors of the Macular Degeneration Foundation Limited during the financial year were:

Ms Leslie Lofthouse (Chairman) Dr Paul Beaumont Mr Ashley Chapman Appointed 13 October 2004 Ms Susan Chapman Resigned 15 June 2005 Mr Barry Clarke Dr Peter Herse Appointed 13 October 2004 Mr Ramesh Karwal Resigned 23 June 2005 Mr Alan Lambert Resigned 3 August 2004 Ms Sally Laughlin Resigned 13 October 2004 Mr John McCarroll Appointed 13 October 2004 Prof. Paul Mitchell Resigned 2 March 2005 Mr Peter Reid Appointed 13 October 2004 Mr Jim Runciman Mr Paul Sheehan Resigned 13 October 2004 Director Related Entity Transactions

Loans Paul Beaumont Pty Ltd, a company of which Dr P. Beaumont is sole director, provided a non-interest bearing loan to the Macular Degeneration Foundation Ltd, to allow the company to commence its operations. The amount outstanding at 30 June 2005 was Nil (2004: $66,000), following repayments made during the year of $66,000 (2004: 22,207).

16. SEGMENT INFORMATION

The Macular Degeneration Foundation Ltd is a charitable institution and operates exclusively in Australia.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

22

17. RESULTS OF FUNDRAISING APPEALS

Macular Degeneration Foundation Ltd

Income received and the cost of raising income for specific fundraising, has been audited and all revenue and expenses have been recognised in the financial statements of the Macular Degeneration Foundation Ltd.

2005 $

2004 $

(1) Gross proceeds from fundraising appeals 774,495 623,330 Direct costs of fundraising appeals (1,878) (11,302) Net Surplus obtained from fundraising appeals 772,617 612,028 (2) Application of net surplus obtained from fundraising appeals: Providing services and research 301,462 304,339 Retained earnings 471,155 307,689 772,617 612,028 (3) The net surplus from fundraising appeals, and the manner in which those funds have been applied are detailed in

Note 3.

Comparisons of certain monetary figures and percentages

2005

2004

$ % $ % Total cost of fundraising / 1,878 0.2 11,302 1.8 Gross income from fundraising 774,495 623,330 Net surplus from fundraising / 772,617 99.8 612,028 98.2 Gross income from fundraising 774,495 623,330 Total costs of services / 647,480 83.1 478,874 77.1 Total expenditure 779,061 620,817 Total costs of services / 647,480 61.1 478,874 50.7 Total income received 1,060,420 944,550 Total provision of the Charitable Fundraising Act 1991 and the Regulations under the Act have been complied with and internal controls exercised by the Macular Degeneration Foundation Limited are considered appropriate and effective in accounting for all income received in all material respects.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

Notes (continued) 30 JUNE 2005

23

18. FINANCIAL INSTRUMENTS

a) Interest Rate Risk

The entity’s exposure to interest rate risk and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at the reporting date, are as follows: Financial Instruments Floating Interest Rate Non-interest Bearing Total carrying

amount as per the statement of financial

position

Weighted average effective interest rate

2005 $

2004 $

2005 $

2004 $

2005 $

2004 $

2005 %

2004 %

(i) Financial Assets Cash 654,250 371,096 - - 654,250 371,096 4.88% 1.00% Term Deposit (Fixed Rate) 10,472 10,062 - - 10,472 10,062 5.05% 4.48% Receivables & Prepayments - - 112,830 132,597 112,830 132,597 N/A N/A Total Financial Assets 664,722 381,158 112,830 132,597 777,552 513,755 (ii) Financial Liabilities Payables - - 139,819 118,374 139,819 118,374 N/A N/A Total Financial Liabilities - - 139,819 118,374 139,819 118,374 N/A N/A b) Net Fair Values

(i) All financial assets and liabilities have been recognised at the balance date at their net fair values. (ii) The following methods and assumptions are used to determine the net fair values of financial assets and

liabilities. Cash: the carrying amounts approximate fair value because of their short-term to maturity.

Other receivables and payables: the carrying amount approximates fair value.

c) Credit Risk Exposures

The company’s maximum exposure to credit risk at reporting date in relation to each class of recognised financial asset is the carrying amounts of their assets as indicated in the Statement of Financial Performance.

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

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Directors’ Declaration

For the year ending 30 June 2005.

In the opinion of the directors of the Macular Degeneration Foundation Ltd

(a) the financial statements and notes of the company are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the company’s financial position as at 30 June 2005 and of the company’s performance for the year ended on that date; and

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

(b) there are reasonable grounds to believe that the company will be able to pay its debt as and when they become due and payable.

Signed in accordance with a resolution of the directors. Ms Leslie Lofthouse Director Sydney 19 September 2005

MACULAR DEGENERATION FOUNDATION LTD – FINANCIAL REPORT

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Chairman’s Declaration

By the Chairman in respect of fundraising appeals pursuant to section 7 (5) of the Charitable Fundraising Act 1991 – Regulation

I, Leslie Lofthouse, Chairman of the Macular Degeneration Foundation Limited, declare, in my opinion:

(a) the financial report gives a true and fair view of all income and expenditure of the company with respect to fundraising appeals, for the financial year ended 30 June 2005;

(b) the statement of financial position gives a true and fair view of the state of affairs with respect to fundraising appeal, as at 30 June 2005;

(c) the provisions of the Charitable Fundraising Act 1991 and the Regulations and the conditions attached to the authority have been complied with for the year 30 June 2004 to 30 June 2005; and

(d) internal controls exercised by the consolidated entity are appropriate and effective in accounting for all income received and applied by the company from any of its fundraising appeals.

Ms Leslie Lofthouse Chairman Sydney 19 September 2005

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Independent audit report to members of the Macular Degeneration Foundation Limited Scope The financial report and directors’ responsibility The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors’ declaration for the Macular Degeneration Foundation (the company), for the year ended 30 June 2005. The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the company, and that complies with Accounting Standards in Australia, in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report. Audit approach We conducted an independent audit of the financial report in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected. We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards in Australia, and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company’s financial position, and of its performance as represented by the results of its operations and cash flows. We formed our audit opinion on the basis of these procedures, which included: • examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the

financial report, and • assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of

significant accounting estimates made by the directors. While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls. We performed procedures to assess whether the substance of business transactions was accurately reflected in the financial report. These and our other procedures did not include consideration or judgement of the appropriateness or reasonableness of the business plans or strategies adopted by the directors and management of the company. Independence We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report. In addition to our audit of the financial report, we were engaged to undertake the services disclosed in the notes to the financial statements. The provision of these services has not impaired our independence.

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Audit opinion In our opinion the financial report of the Macular Degeneration Foundation is in accordance with: (a) the Corporations Act 2001, including:

(i) giving a true and fair view of the financial position of the Macular Degeneration Foundation at 30 June 2005 and of its performance for the year ended on that date; and

(ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and (b) other mandatory financial reporting requirements in Australia. Ernst & Young Neil Wykes Partner Sydney 19 September 2005