For personal use only Our mission is to improve patients’ lives
by providing solutions that will allow a deeper
understanding of the human body and the
importance of fluid status and tissue analysis.
For personal use only 3. Remuneration Report
Remuneration Committee
Chair Letter (Unaudited)
Remuneration Report (Audited)
Directors’ Meetings
Committee Membership
Rounding
Page 36
Page 37
Page 60
Page 60
Page 60
Auditor’s Independence Declaration
and Non-Audit Services
Page 61
4. Financial Statements
Consolidated Statement of
Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of
Cash Flows
Consolidated Statement of
Changes in Equity
Page 64
Page 65
Page 66
Page 67
Notes to the Financial Statements Page 68
Directors’ Declaration
Audit Report
Shareholder Information
(Unaudited)
Page 109
Page 110
Page 115
Table of Contents
1. Corporate Information
Corporate Information
Chairman’s Report
Chief Executive Officer’s Letter
2. Directors’ Report
Directors
Company Secretary
Executives
Dividends
Principal Activities
Group Overview
Milestones
Page 05
Page 06
Page 07
Page 10
Page 15
Page 16
Page 16
Page 17
Page 17
Page 18
Operating and Financial Review
Page 20
Significant Changes
in the State of Affairs
Significant Events After
the Balance Sheet Date
Likely Developments &
Expected Results
Page 24
Page 27
Page 27
Significant Risks to the Business Page 29
Environmental Regulations
and Performance
Share Options and
Performance Rights
Indemnification and Insurance
of Directors and Officers
Indemnification of Auditors
Employees
Diversity
Corporate Governance
Page 31
Page 32
Page 33
Page 33
Page 33
Page 33
Page 33
3
For personal use only
For personal use only Corporate Information
This financial report covers the consolidated entity
ImpediMed Limited (the “Parent” or
comprising
“Company”) with its wholly owned subsidiaries (the
“Group”). The Parent’s functional and presentation
currency and the Group’s presentation currency is the
Australian dollar (AUD or $). Certain prior year amounts
have been reclassified for consistency with the current
year presentation.
A description of the Group’s operations and of its
principal activities is included in the operating and
financial review in the Directors’ Report. The Directors’
Report is not part of the financial report.
Directors
Non-Executive Directors
S Ward, Chairman
J Downes
G Goetzke
R Graham
A Patel
D Williams
Managing Director
R Carreon, Managing Director and CEO
Company Secretary
L Ralph
Registered Office
Unit 1, 50 Parker Court
Pinkenba QLD 4008
Principal Places of Business
US Headquarters
5900 Pasteur Court, Suite 125
Carlsbad CA 92008
Phone: +1 760 585 2100
AU Headquarters
Unit 1, 50 Parker Court
Pinkenba QLD 4008
Phone: +61 7 3860 3700
Share Register
Link Market Services
Level 21
10 Eagle Street
Brisbane QLD 4000
Phone: +61 7 3320 2200
ImpediMed Limited shares are listed
on the Australian Securities Exchange
(ASX): ASX code “IPD”.
Website
www.impedimed.com
Solicitors
Johnson Winter & Slattery
Level 25, 20 Bond Street
Sydney NSW 2000
Sheppard Mullin Richter & Hampton LLP 12275
El Camino Real Suite 200
San Diego CA 92130 USA
Bankers
Commonwealth Bank of Australia
240 Queen Street
Brisbane QLD 4000
Bank of America
701 B Street Suite 2300
San Diego CA 92101 USA
Auditors
Ernst & Young
Level 51, 111 Eagle Street
Brisbane QLD 4000
Remuneration Advisors
to the Board of Directors
Willis Towers Watson
300 S. Grand Avenue
Los Angeles CA 90071 US
5
For personal use only Chairman’s Report
Scott Ward
Chairman of the Board
On behalf of ImpediMed’s Board of Directors and
Management, I am pleased to present the Annual
Report for ImpediMed Limited for financial year 2019.
This has been a transformative year for the Company,
as we continue our evolution to a connected digital
health platform
through SOZO. The Company
continued to execute on its strategy by achieving a
number of important milestones during the year, which
Richard Carreon will describe in detail in his CEO Letter.
First Strike – 2018 Remuneration Report
The Board and the Remuneration Committee have
focused on responding to items raised by the “first
strike” against the 2018 Remuneration Report. The
Board has adopted an equity remuneration model
which conserves the Group’s cash, provides incentive
to recruit and retain executives and better aligns
compensation with the interests of the shareholders.
In addition, we are working to improve both the
regarding
communications
remuneration for directors and Executive KMP to
provide greater transparency to our shareholders. A full
description of the key actions taken by the Board to
address the items raised by the first strike are
described in further detail in the Remuneration Report.
and messaging
Board Composition
I am pleased that we have a strong Board of Directors
at ImpediMed. Over the past few years, we have added
several new Board Members with strong core
in business management, finance,
competencies
reimbursement and
accounting, digital health,
healthcare economics.
Taken in total, our Board has the experience and skill
necessary to assure sound governance while also
providing effective support and guidance
for
management as, together, we build ImpediMed into a
high growth, global medical technology company.
ImpediMed’s Corporate Governance Statement, which
accompanies the release of the Annual Report,
outlines the corporate governance practices currently
in place for the Company and also addresses the 3rd
Edition of the ASX Corporate Governance Council’s
Corporate
and
Recommendations
(ASX Recommendations). The
Board continues to review the governance framework
and practices of the Company to ensure they meet the
interests of shareholders and other stakeholders.
Governance
Principles
Gratitude
On behalf of our entire Board, I would like to extend our
gratitude to all of our ImpediMed employees for their
dedication to our company and their passionate
commitment to the patients that we serve.
We also extend our thanks and congratulations to our
Managing Director and CEO, Rick Carreon, and the
leadership,
Management Team. Under Rick’s
ImpediMed has transformed into a Mission driven,
patient-centric company focused on the development
and commercialisation of SOZO bioimpedance
spectroscopy for the early detection of lymphoedema
and fluid status monitoring of heart failure patients.
And finally, thank you to our shareholders for your
ongoing support. We look to the future with a sense of
determination and enthusiasm as we focus on driving
adoption of our technology and building sustainable
revenue growth through our subscription business
model. As always, we look forward to engaging with
you throughout the year and at our 2019 Annual
General Meeting.
Sincerely,
Scott R. Ward
Chairman
6
For personal use only Chief Executive Officer’s
Letter
Richard Carreon,
Managing Director and Chief Executive
Officer
Dear Shareholders,
This financial year marked a critical turning point for
the company. The first-year data from the PREVENT
Trial was released in May, showing a 95% reduction in
the progression of lymphoedema. We successfully
transitioned our capital-intensive business to Software
as a Service (SaaS), with more than 55% of our revenue
generated from this model. Finally, more than 50,000
patient measurements have been clinically assessed
utilising our SOZO® Digital Health Platform.
Having built a strong foundation of more than 400
SOZO Digital Health Platforms in the market, we enter
financial year 2020 with a clear focus on accelerating
the commercialisation of our lymphoedema business.
Revenue and Key Metrics
Total recognised revenue increased over 25% year-
over-year to $4.2 million for financial year 2019 (2018:
$3.3 million). The increase in medical revenue was a
result of the shift of the business to a Software as a
Service (SaaS) revenue model in conjunction with the
introduction of the SOZO Digital Health Platform.
We introduced SOZO to the US market in financial year
2018, and since the launch, we have grown the
Contracted Revenue Pipeline revenue to $8.7 million
(2018: $3.5 million) and Annual Recurring Revenue to
$3.4 million (2018: $1.3 million). We are very
encouraged by the positive reception of SOZO and the
feedback we are receiving from clinicians.
The SOZO Digital Health Platform gives us the ability
to continue to increase contract value for each
customer over time by the addition of incremental
SOZO indications and modules.
Cash on hand at 30 June 2019 was $11.3 million, and
net cash used in operating activities was $19.6 million
for the financial year. Including the net proceeds from
the $13.9 million Non-Renounceable Entitlement Offer
that closed in July, the Group remains in a strong
position to invest in the areas critical for the sustained
acceleration of revenue growth over the course of
financial year 2020.
We will continue to update you on the progress of our
business, and we look forward to having you join us in
financial year 2020 as we continue to report on the
expansion and acceleration of our SOZO Digital Health
Platform.
Significant Body of Clinical Evidence
We continued to effectively build a substantial body of
clinical evidence, which will further drive adoption of
our technology throughout the financial year 2020.
The pre-specified interim analysis of the PREVENT
Trial was presented at the American Society of Breast
Surgeons Annual Meeting, and the peer-reviewed
manuscript was published in the Annals of Surgical
Oncology in May 2019. The PREVENT Trial is a multi-
centre, prospective, randomised controlled trial, the
largest trial undertaken in lymphoedema prevention.
The presentation and publication of data from the
PREVENT Trial was a significant milestone for the
Group and supports the use of L-Dex® for early
detection of lymphoedema for breast cancer patients.
Multiple, independent, investigator-led clinical studies
have reported significantly lower rates of clinical grade
lymphoedema by monitoring patients with L-Dex and
intervening. These studies have monitored over 1,400
patients, utilising
and
intervention for breast cancer related lymphoedema.
prospective
screening
We have been working with world-leading institutions
on several heart failure (HF) studies, with initial data
being presented at the World Congress of Heart
Disease and at the American Heart Congress - DVD
during financial year 2019. In addition, during financial
year 2019 we initiated a more extensive multi-centre
study of approximately 200 patients. We will meet with
the Principal Investigators and the Heart Failure
Advisory Board in the first half of financial year 2020
for a comprehensive review of the data to-date and
develop next steps. Also, we are expanding the heart
failure opportunity to include those with implantable
devices, for which we expect regulatory clearance in
financial year 2020.
Reimbursement and Guidelines
In January 2015, a dedicated Category I CPT® Code,
93702, for L-Dex came into effect in the US market,
under which physicians and clinics in the US can seek
reimbursement from Medicare and private payors.
7
For personal use only The expansion of published industry guidelines will
also be a catalyst for ImpediMed in the coming year,
with a number of guidelines issued in financial year
2019:
• New England Journal of Medicine Clinical Practice
article by Dr. Rockson recommends quarterly BIS
measures
• NAPBC follow National Lymphoedema Network
guidance (including BIS as a tool to diagnose BCRL)
for Physical and
Occupational Therapy Services - BIS is a validated
tool for diagnosing lymphoedema
• eviCore Clinical Guidelines
• Lymphatic Education & Research Network Centers of
risk
recommended as a
Excellence – BIS
assessment tool
in
for
the
inclusion of a
testing protocol
In addition, an application earlier in the year was
formalised
submitted
the National
lymphoedema
Comprehensive Cancer Network Guidelines (NCCN
Guidelines®). A second application was recently
submitted for the inclusion of BIS technology for the
detection of sub-clinical lymphoedema. Also, we have
requested a Technical Review of our BIS technology,
and we have had a number of meetings with private
payors requesting payment for our CPT® Code 93702.
ImpediMed is building a compelling case for private
payors to initiate payments in financial year 2020, and
we expect the introduction of private payors would
further drive the acceleration of our business.
We believe our SOZO Digital Health Platform is
uniquely positioned to replace current monitoring
methods through our precise, non-invasive, and cost-
effective technology. We are excited about the
significant progress we have made in optimising
outcomes for the management of cancer and HF
patients. We believe in the coming years we will make
even greater strides and look forward to having you
join us on that journey.
Thank You
Thank you again to our Shareholders for your
continued support. We look forward to delivering on
our milestones and updating you on key metrics
throughout the coming year.
As always, my sincere thank you goes out to all our
ImpediMed team members and their families.
Yours sincerely,
Richard Carreon
Managing Director and Chief Executive Officer
8
For personal use only For personal use only Directors
Scott Ward
MS, BSc
Non-Executive Chairman
Scott Ward was appointed Chairman on 15 November
2017 and serves on the Nomination Committee. Scott
is the Chairman of the Board, President and CEO of
Cardiovascular Systems Inc.
Scott has over 35+ years of experience
in the
healthcare industry, including nearly 30 years at
Medtronic, Inc. He was the Senior Vice President and
President of the CardioVascular business of Medtronic
for
responsibility
Inc., responsible for all worldwide operations of the
including the Coronary,
CardioVascular Business
Peripheral, Endovascular, Structural Heart Disease and
Revascularization and Surgical Therapies businesses.
Previously, Scott served as Senior Vice President and
President of Medtronic Neurological and Diabetes,
with
the global Neurological,
Neurologic Technologies, Diabetes, Gastroenterology
and Urology businesses; Vice President and General
Manager of the Medtronic Drug Delivery Business; and
Director of Medtronic NeuroVentures. Scott is also the
Founder of Raymond Holdings, LLC a firm with
activities in venture capital, strategy and transactional
advisory services. He holds a B.S. in genetics and cell
biology and an M.S. in toxicology, both from the
University of Minnesota.
his
including
Scott’s 35+ years of experience in the healthcare
industry,
leadership
experience of public medical device companies and his
prior service on the boards of public medical device
companies, make him a valuable contributor to the
Board.
significant
Listed company directorships held since 1 July 2016:
Company Name
ImpediMed Limited
Appointed
July-13
Cardiovascular Systems Incorporated (i)
November-13
Retired / Resigned
-
-
(i) US-based publicly traded company.
10
For personal use only focus on financial management and audit and risk
management, with large ASX listed companies. During
her executive career, she held the roles of CFO at
Alumina Limited (ASX: AWC) and as CFO/COO of
Institutional Division, ANZ Banking Group Limited
(ASX: ANZ).
Judith currently serves as Board Chairman of Bank
Australia Limited, as an Honorary Fellow of the
University of Melbourne’s Faculty of Business and
Economics and as a Director of CleanTeQ Holdings
Limited.
She is a Fellow of the CPA, Chartered Accountants
Australia and New Zealand, and Australian Institute of
Company Directors. Judith is also a past member of
the University of Melbourne’s finance committee.
Judith has significant experience
governance, debt and equity
reporting and Australian listing rules.
in corporate
financial
raisings,
Listed company directorships held since 1 July 2016:
Judith Downes
BA(Hons), DipEd, GradDipBus(Acct), FAICD, FCPA,
FCA
Non-Executive Director
Judith Downes was appointed to the Board in April
the Audit and Risk Management
2017, chairs
Committee and serves on the Nomination Committee.
Judith brings over 25 years of accounting and senior
management expertise to the Board with a strong
Company Name
ImpediMed Limited
CleanTeQ Holdings Limited
Appointed
April-17
October-18
Retired / Resigned
-
-
Committees. He is currently the Principle and Chief
Executive Officer of Compass Medical Advisors, LLC.
Gary has spent 20 years in senior management
positions of three medical device companies where he
led efforts in pursuing global coverage and payment
policy for a variety of medical device therapies in the
areas of cardiology, neurology, urology, pelvic health,
wound care, orthopaedics, ENT and sleep. Gary is
currently the Asia Pacific & Japan Business Leader for
a global medical device company focused on the
treatment of sleep apnea, in addition to serving as
President and Chief Executive Officer of Compass
Medical Advisors, LLC, an enterprise focused on
developing regulatory, clinical and reimbursement-
related mobile APPs for the medical device industry.
Gary also serves as an Advisory Board Member for the
Center for College Sleep.
Listed company directorships held since 1 July 2016:
Gary Goetzke
Juris Doctorate
Non-Executive Director
Gary Goetzke was appointed to the board in August
2016 and serves on the Remuneration and Nomination
Company Name
ImpediMed Limited
Appointed
August-16
Retired / Resigned
-
11
For personal use only He received his medical training at the University of
New South Wales, Australia, where he is now the Des
Renford Professor of Medicine, (UNSW). He has been
the inaugural Executive Director, Victor Chang Cardiac
Research Institute (VCCRI), Sydney, Australia, since
returning to Australia in 1994 after 17 years working in
the US at the University of Texas Southwestern
Medical School, Dallas; the Massachusetts General
Hospital, Harvard Medical School; the Massachusetts
Institute of Technology, and the Cleveland Clinic
Foundation and Case Western Reserve University
School of Medicine.
Listed company directorships held since 1 July 2016:
Robert Graham
AO, FAA, FAHMS, MBBS, MD, FRACP, FACP, FAHA,
GAICD
Non-Executive Director
Dr Graham was appointed to the board in November
2017 and serves on the Remuneration and Nomination
Committees.
Company Name
ImpediMed Limited
Appointed
November-17
Retired / Resigned
-
based monitoring, remote care services, and big data
analytics to alleviate gaps in patient vigilance across
in-hospital and home environments. Vios is currently
commercialising its monitoring and services solution
across major hospital systems in the US and India.
Vios Medical was acquired by Murata Manufacturing
in October of 2017.
Amit Patel
MBA, BME
Non-Executive Director
Amit Patel was appointed to the Board in March 2017
and serves on the Audit and Risk Management and
Nomination Committees.
Amit is a Co-Founder and CEO of Murata Vios (formerly
Vios Medical), which has created an FDA-cleared
patient management platform that integrates IoT-
Prior to founding Vios, Amit was with HeartFlow where
he created a joint go-to-market strategy with GE
Healthcare’s imaging division, managed the DeFACTO
clinical study across multiple UK sites, and developed
a health economic story for the NHS. Prior to
HeartFlow, Amit was with Medtronic’s Corporate
Development group and was
for
acquisitions, minority investments, and joint ventures
spanning
strategic
whitespace areas. Amit has an MBA from Stanford
University and a Bachelors of Biomedical Engineering
from the University of Minnesota.
responsible
businesses
existing
and
Listed company directorships held since 1 July 2016:
Company Name
ImpediMed Limited
Appointed
March-17
Retired / Resigned
-
12
For personal use only biotech, and medical device industries. Don has
significant experience assisting companies and
management teams with
initial public offerings,
complex business challenges and analysis of financial
reporting matters. His breadth of experience includes
a diverse set of growing domestic and international
companies including venture financings, public equity
offerings, public debt offerings, mergers and
acquisitions, and interaction with the US Securities
and Exchange Commission and Public Company
Accounting Oversight Board.
While at both Ernst & Young and Grant Thornton, Don
was focused on the Life Sciences Industry. For over 15
years, he directed Ernst & Young’s Venture Capital and
Emerging Growth Markets in the Southeast Market and
in the Pacific Southwest Market. During his seven
years at Grant Thornton he was the National Leader of
the United States Life Sciences Industry. His oversight
of the National Life Sciences Industry included setting
strategy, establishing the sales and marketing plan
and oversight of industry operations.
Listed company directorships held since 1 July 2016:
Donald Williams
BAcy, CPA
Non-Executive Director
Donald Williams was appointed to the Board in March
2017, chairs the Remuneration Committee and serves
on the Audit and Risk Management and Nomination
Committees.
Don has more than 35 years in leadership roles as a
Certified Public Accountant (CPA) and an accredited
public company director, serving the life science,
Company Name
ImpediMed Limited
Adhera Therapeutics, Inc. (i) (ii)
Akari Therapeutics (i)
Alphatec Holdings Inc (i)
Marina Biotech Inc (i)
Appointed
March-17
September-14
June-16
May-15
September-14
Retired / Resigned
-
-
-
-
-
(i) US-based publicly traded company.
(ii) Adhera Therapeutics, Inc. changed its name from Marina Biotech, Inc. in October 2018.
13
For personal use only manufacturer of cutting-edge medical devices, and
therapies. His roles at Medtronic
included Vice
President, US Cardiovascular Commercial Operations;
Vice President of Sales – Structural Heart; Vice
President of Sales and Marketing Medtronic
Gastroenterology and Urology; and Vice President of
Sales – The Americas.
Rick has a strong sales background, extensive
marketing strategy and execution experience, and a
proven track record of success. He is renowned for
building start-up and high-growth ventures, turning
around strategic business units, penetrating new
markets and delivering strong and sustainable profits,
revenues and market share value. At Medtronic, Rick
led strategic direction and tactical planning for several
sales organizations within Medtronic’s $1.1B
Cardiovascular Sector. Rick was handpicked to lead
the start-up of Medtronic Gastroenterology and
Urology, a high-risk business venture, growing
revenues threefold, and building that venture into the
fastest growing business in Medtronic.
Listed company directorships held since 1 July 2016:
Richard Carreon
Executive Director
Richard Carreon was appointed to the Board as
Executive Director in May 2015. Rick joined ImpediMed
in July 2012 as President and CEO.
in
Rick has more than 30 years of experience
management, sales and marketing, spanning the
consumer
technology
industries. Rick has more than a decade of executive
experience working for Medtronic, a leading global
and medical
products
Company Name
ImpediMed Limited
Appointed
May-15
Retired / Resigned
-
14
For personal use only Interest in the Shares and Options of the Group and Related Body Corporate
As at the date of this report, the interests of the current Directors in ImpediMed Limited were:
Director
S Ward
J Downes (i)
G Goetzke
R Graham
A Patel
D Williams
R Carreon
Title
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director
Ordinary Shares
250,000
110,134
242,000
-
88,000
130,000
1,008,591
(i) J Downes’ shareholdings include 27,534 shares acquired in July 2019 as part of the Group’s Non-Renounceable Entitlement Offer.
Company Secretary
Leanne Ralph
Company Secretary
Leanne Ralph was appointed to the position of
Company Secretary in January 2015. Leanne has over
15 years of experience in company secretarial roles
and holds this position for a number of ASX-listed
entities. Leanne is a Fellow of the Governance Institute
of Australia and a Graduate Member of the Australian
Institute of Company Directors.
15
For personal use only Executives
Frank Vicini
Chief Medical Officer
Morten Vigeland
Chief Financial Officer
Shashi Tripathi
Chief Technology Officer
David Adams
Senior Vice President Operations
and Strategic Planning
Catherine Kingsford
Senior Vice President Medical Affairs Senior Vice President R&D and
Dennis Schlaht
Technology
Dividends
No dividends were paid or proposed to be paid to
shareholders for the year ended 30 June 2019.
16
For personal use only
is the world
Principal Activities
ImpediMed
in the design and
leader
manufacture of medical devices employing bioimpedance
spectroscopy (BIS) technologies for use in the non-
invasive clinical assessment and monitoring of tissue
composition and fluid status.
ImpediMed produces a family of FDA cleared and CE
Marked medical devices, including SOZO® for multiple
indications including heart failure and lymphoedema.
ImpediMed’s devices are sold in select markets globally.
The principal activities of the Group during the year were
the development, manufacture and sale of bioimpedance
spectroscopy devices and software services with a focus
on the early detection of lymphoedema and heart failure.
Group Overview
ImpediMed Limited was founded in Brisbane, Australia in
October 1999, and was listed on the ASX on 24 October
2007. The Group consists of four entities:
ImpediMed Limited, the Parent company operating in
medical markets in regions outside North America;
incorporated in 1999 and listed on the ASX on 24
October 2007.
ImpediMed Incorporated, a Delaware corporation in
medical markets in North America.
ImpediMed Hellas, a Kalamaria, Greece corporation in a
research & development and marketing capacity in
Europe.
ImpediMed TM Incorporated (formally XiTRON
Technologies, Incorporated), a California corporation
formerly operating in power test and measurement
markets globally. ImpediMed TM Incorporated
discontinued operations during the year ended 30 June
2019.
For more information, visit www.impedimed.com.
17
For personal use only Milestones
27 June 2019
Successful $13.9 Million Fully Underwritten
Non-Renounceable Entitlement Offer
The Entitlement Offer was completed in July 2019.
Proceeds from the entitlement offer will be applied to
fund growth initiatives and general working capital.
6 May 2019
Publication of the Peer-reviewed Manuscript
of the PREVENT Interim Analysis
Prevent Interim Results – “Practice Changing”
Sheila H. Ridner, PhD, RN, FAAN, the principal
investigator of PREVENT and the Martha Rivers Ingram
Professor of Nursing at Vanderbilt University School of
Nursing, delivered the interim results at a podium
presentation during the 20th Annual Scientific Meeting
of American Society of Breast Surgeons (ASBrS), in
Dallas, Texas on Friday 3 May 2019.
The paper concluded that “the results of this interim
analysis demonstrate
that patients undergoing
surveillance with BIS had reduced but non-statistically
significant reductions in the rates of progression
requiring CDP compared with TM. These results are
currently supportive of the need for subclinical
detection and early intervention for patients with BCRL
with a 10% absolute reduction and a 67% relative
reduction in the rates of CDP. Further data with a
longer follow-up than in this study is expected in the
years to come and will strengthen these early, positive,
practice–changing results.”
The manuscript was published in the Annals of
Surgical Oncology, the most cited surgical oncology
journal and one of the most cited surgical journals in
the world. A copy of the manuscript is available at:
https://link.springer.com/article/10.1245%2Fs10434-019-07344-5
Abbreviations
BCRL
BIS
CDP
TM
Breast cancer related lymphoedema
Bioimpedance spectroscopy
Complex decongestive physiotherapy
Tape measure
3 May 2019
The American Society of Breast Surgeons
(ASBrS) Issued a Press Release and the
Abstract Submitted on the Interim Results of
the PREVENT Trial
Expert commentary provided by Dr Julie A.
Margenthaler, MD, FACS, Washington University
School of Medicine, ASBrS Communications
Committee Chair stated: “Lymphedema represents a
significant morbidity for patients who experience it.
This
that bioimpedance
spectroscopy can identify early signs of lymphoedema
so that
interventions can be taken to prevent
progression. This is an important step in improving the
lives of our breast cancer survivors.”
study demonstrates
2 April 2019
ImpediMed Becomes Business Associate-
Compliant with Launch of Third Generation
SOZO Software 3.0
The new software offers a new interface that is easier
to navigate, while providing the highest level of
security and privacy of patient data in a cloud-based
solution. It also offers additional security features for
both hospital administrators and clinical users in
compliance with the Health Insurance Portability and
Accountability Act (HIPAA), allowing customers to
collect pertinent patient information during each SOZO
test in accordance with HIPAA security and privacy
rules.
The new software will be more powerful and
significantly
and
maintenance process by moving all data handling,
storage, and analysis to a Cloud-based service.
installation
streamline
the
16 January 2019
ImpediMed Receives Ascension National
Purchasing Agreement
This agreement allows the 151 Ascension hospitals to
take advantage of pre-negotiated pricing and
streamlined IT integration of the SOZO platform.
Ascension is the largest non-profit health system in the
US and the largest Catholic health system in the world.
18
For personal use only 10 December 2018
Early Surveillance with L-Dex® Reduces
Incidence, Severity and Cost
A
landmark study out of Macquarie University,
Australia, was published in Cancer. Cancer is an
international journal of the American Cancer Society.
Based on a retrospective analysis, the study conducted
by Louise Koelmeyer, Lymphoedema Program
Manager, ALERT (Australian Lymphoedema Education,
Research & Treatment), found that the use of BIS as
part of an early prospective surveillance model of care
results
of
lymphoedema over time and that earlier detection of
lymphoedema will lead to lower health care costs.
significantly
detection
earlier
in
19 November 2018
Bioimpedance and L-Dex Recommendation
published in Leading Journals
case
authored
Dr. Stanley Rockson, Allan and Tina Neill, Professors of
Lymphatic Research and Medicine at Stanford
University,
titled
a
“Lymphedema after Breast Cancer Treatment” which
was published in the New England Journal of Medicine
(NEJM) on 15 November 2018. Dr. Rockson
recommended placing the patient in a surveillance
program,
including quarterly assessments using
bioimpedance during the first year after treatment.
vignette,
10 October 2018
First Patient Enrolled in 200 Patient Heart
Failure (“HF”) Trial
With the first patient in this at-home HF trial now
enrolled, the study will follow patients at home for 45
days post discharge from a HF-related hospital
admission. The study is designed to demonstrate the
extent to which changes in SOZO BIS measurements
preempt patient-reported symptoms of acute HF that
lead to hospital readmissions.
24 September 2018
L-Dex Suggested as New Standard of Care
The completion of the first in a series of educational
seminars to be presented by the Principal Investigator
of the PREVENT trial – “Removing the Mystery Around
Bioimpedance – Moving Towards a New Standard of
Care”. The presentation included top-line results from
the
interim analysis of the PREVENT trial and
demonstrated that L-Dex technology was seamlessly
integrated into some of the busiest breast cancer
clinics in the world.
23 September 2018
PREVENT Trial Results Published –
Outstanding Initial Data
Early results demonstrate a 67% relative improvement
in progression to persistent lymphoedema in the L-Dex
arm compared to tape measure arm.
The authors of the PREVENT trial concluded that L-Dex
is very sensitive in the assessment of sub-clinical
lymphoedema in patients with a history of breast
cancer. The paper also supports the recommendation
for an aggressive measurement protocol consisting of
an L-Dex assessment every three months, especially
during the first 6 to 12 months post – surgery to
facilitate identification of sub-clinical lymphoedema.
11 September 2018
SOZO Abstracts Presented at Key Scientific
Cardiology Meetings
Two abstracts demonstrating the utility of the SOZO
device were presented during posted presentations by
A.J. Accardi, M.D. at the American Heart Congress –
CVD, October 5-6, 2018, Los Angeles: Utilisation of
Bioimpedance Spectroscopy
Invasive
Monitoring Fluid Overload and Correlation of Limb
Bioimpedance
Indicators of
to Echocardiographic
Congestion in Patients with Heart Failure.
in Lieu of
Reduction in Lymphoedema
Data from the PREVENT Trial, the largest
randomized Lymphoedema clinical study
95%
19
For personal use only
Operating and Financial Review
Operating Results for the Year
Revenue and SaaS Financial Metrics
SOZO Revenue for the current period was $2.3 million
(30 June 2018: $0.7 million), an increase of 229% over
the previous corresponding period. This increase in
revenue was attributable to SOZO commercialisation
efforts in the US and included both the upfront SOZO
device revenue and the recurring subscription revenue
streams.
Of the SOZO revenue, $1.6 million related to recurring
subscription revenue streams (30 June 2018: $0.1
million), a significant increase over the previous
corresponding period.
Total Revenue for the current period was $4.2 million
(30 June 2018: $3.3 million), an increase of over 25%
from the previous corresponding period. The increase
in revenue was attributable to SOZO, as mentioned
legacy
above, but was offset by a decrease
consumables revenue as the existing customer base
transitioned to the SOZO platform.
in
Reported Medical Revenue
SOZO and Legacy (AUD)
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
FY'17
FY'18
FY'19
Legacy
SOZO
At 30 June 2019, there were 401 SOZO units in the
market (30 June 2018: 202), representing a 99%
increase in the number of units in the market year-over-
year.
In addition to revenue recognised during the current
period, the Contracted Revenue Pipeline (CRP) at 30
June 2019 totaled $8.7 million (30 June 2018: $3.5
million), an increase of 149%, as the majority of the
revenue associated with these SOZO units will be
recognised over the lives of the respective contracts.
Annual Recurring Revenue (ARR) at 30 June 2019
totaled $3.4 million (30 June 2018: $1.3 million), an
increase of 162%.
20
For personal use only Subscription Business Model
FY19 Revenue (AUD)
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
Q4 FY18
Q1 FY19
Q2 FY19
Q3 FY19
Q4 FY19
Medical Revenue
Annual Recurring Revenue
Contracted Revenue Pipeline
Glossary of Terms used by IPD
Medical Revenue
Total Contract Value (TCV) (i)
Contracted Revenue Pipeline (CRP) (i)
Annual Recurring Revenue (ARR) (i)
The total revenue recognised during a given period related to the
medical segment.
The total value of customer contacts including one-time and
recurring revenue.
The future period revenue amounts related to TCV that are yet to be
reported as recognised revenue. Certain customer contracts that
make up the Group’s CRP contain cancelation clauses related to
services yet to be performed. The Contracted Revenue Pipeline
assumes no churn, highlighting the importance of customer
experience and satisfaction.
The amount of revenue reasonably expected to be booked for the
next 12-month period based on existing contracts, and assuming
installation upon sale.
(i) TCV, CRP and ARR are unaudited, non-AASB financial metrics that do not represent revenue in accordance with Australian Accounting
Standards.
21
For personal use only Operating Results – Investing in Large,
Growing Markets
Net loss for the period was $24.1 million (2018: $27.4
million). The loss from continuing operations after
income tax was $24.0 million (2018: $27.2 million). The
decreased loss from continuing operations, when
compared with the prior year, is primarily attributed to
an increase in gross margin of $0.6 million, increased
capitalised software development costs of $2.2
impairment expenses of $1.1
million, decreased
million, and overall financial discipline across all
departments.
Cost of goods sold for the current period were $1.3
million (30 June 2018: $1.0 million). The increase is
primarily attributable to an increase in the number of
SOZO device sales in the current period compared to
the prior period.
Gross margin percentage for the Group was 70% for the
current period (2018: 71%). This is reflective of the
transition to the sale of SOZO as the main product
offering of the Group and the additional one-time costs
associated with converting
legacy
customer base to SOZO. The gross margin percentage
related to the SOZO product offering is expected to
increase over the course of the next twelve months as
the revenue streams related to the subscription-based
services become an increasingly larger portion of the
Group’s revenue.
the existing
Salaries and benefits for the period ended 30 June
2019 totaled $15.8 million (30 June 2018 $16.4
million), a decrease of 4%. The decrease was primarily
attributable to certain employee costs capitalised as
software development costs related to the next
generation SOZO software (SOZO version 3.0) and a
slightly reduced headcount compared to the prior
period.
Share-based payments for the period ended 30 June
2019 totaled $2.8 million (30 June 2018 $3.3 million), a
decrease of 15%. This decrease was related to the
Group not issuing existing employees option awards
during the year ended 30 June 2019. No long-term
incentive (LTI) equity awards were made to Executives
or employees during the 2019 financial year, except in
relation to new hire grants to certain employees.
Please see SECTION 7 of the Remuneration Report for
more details on LTI equity.
Administration and governance costs for the period
ended 30 June 2019 totaled $2.4 million (30 June 2018
$3.3 million), a decrease of 27%. This decrease is
primarily attributable to inventory impairment costs
related to the Group’s legacy devices in the prior period
that were not necessary in the current financial year.
Consultants and professional fees for the period ended
30 June 2019 totaled $2.1 million (30 June 2018 $3.2
million), a decrease of 34%. The decrease is primarily
attributable to overall financial discipline by the Group,
including reduced executive, sales, and marketing
consulting expenses not critical to the organization’s
success during the 2019 financial year.
22
For personal use only For personal use only Cash and Cash
Equivalents
FOR THE YEAR ENDED 30 JUNE
Net Cash Used in
Operating Activities
FOR THE YEAR ENDED 30 JUNE
$31.3
million
$11.3
million
$23.5
million
$19.6
million
2018
2019
2018
2019
Significant Changes in the
State of Affairs
Review of Financial Condition – Liquidity and
Capital Resources
Cash and cash equivalents were $11.3 million at 30
June 2019 (30 June 2018: $31.3 million). Net cash
used in operating activities for the year ended 30 June
2019 was $19.6 million (30 June 2018 $23.5 million).
The decrease in cash outflow was attributable to
reduced employee, administrative, and consulting
costs, as well as cash proceeds from the divestiture of
XiTRON Technologies, Inc.
On 27 June 2019, the Group announced a $13.9 million
fully underwritten non-renounceable entitlement offer.
The Entitlement Offer was completed in July 2019. The
Company received approximately $13.0 million net of
transaction fees.
Proceeds from the entitlement offer will be applied to
fund growth initiatives.
Cash outflow from investing activities was $1.8 million
during the period (2018: $1.2 million). The increase in
cash flows used in investing activities is primarily
related to the capitalisation of software development
costs.
Share Issues During the Year
Cash inflow from financing activities was $0.1 million
during the period (2018: $0.3 million). The following
outlines the capital raised during the year ended 30
June 2019:
• $0.1 million, net of transaction costs, from July 2018
- June 2019 through the issue of 1,560,364 ordinary
shares stemming
from employees exercising
options (2018: $0.3 million on 1,387,619 ordinary
shares).
Issued capital was $219.7 million at 30 June 2019
(2018: $219.7 million). Total equity decreased to $15.8
million at 30 June 2019 (2018: $35.8 million) due to the
Loss from Continuing Operations during the period.
Foreign Currency – Effects on Operating
Results
The Group maintains a significant portion of available
funds in U.S. dollars to match U.S. dollar expenditure
needs. The loss from continuing operations for the
period before income tax includes a realised foreign
exchange loss arising from operating expenses in the
U.S and Europe.
The spot exchange rate for the beginning and end of
the current reporting period was AUD $1.00 to USD
$0.74 and USD $0.70, respectively. The spot exchange
rate for the beginning and end of the prior reporting
period was AUD $1.00 to USD $0.77 and USD $0.74,
respectively. This fluctuation of the exchange rate led
to an unfavourable outcome in reporting operating
expenditure but led to a favourable outcome in
reporting cash and cash equivalents when compared
to the prior period.
The average exchange rate for the reporting period was
$0.72 (Australian dollar (AUD) to US dollar (USD))
(2018: $0.78). During 2019, the Group
incurred
unrealised mark-to-market foreign currency translation
losses of less than $0.1 million (2018: $0.1 million).
The loss in both periods primarily relates to exchange
rate
trade
receivables and payables between the transaction date
and settlement date.
foreign denominated
fluctuations
in
24
For personal use only Connected Digital Health Platform
Connected Digital Health Platform
Comprehensive patient data
Access to information across the care continuum
Manage large patient populations
Integrates seamlessly into hospital, clinical, and home settings
Growing database of patient measurements
Data is already driving
•
•
•
Increased accuracy
Automated protocols
Real world clinical data to support FDA filings
Dynamics of the Business
its wholly owned subsidiary,
The Parent and
ImpediMed, Inc., are a global provider of medical
technology to measure, monitor and manage tissue
composition and fluid status using bioimpedance
spectroscopy (BIS). These entities generate the BIS
revenue for the Group through the sale of medical
devices, consumables and the subscription services
associated with the license fees on SOZO devices.
Using BIS, ImpediMed’s proprietary technology sends
256 unique frequencies through the body to assess
both intra and extracellular fluid. By detecting small
amounts of fluid changes, it can help health care
providers better detect and manage chronic disease in
patients and give individuals medically meaningful
information to better manage their health. BIS is able
to provide highly accurate and informative metrics to
routinely monitor and manage the health of patients.
25
For personal use only database of patient measurements. Since the launch
of SOZO, over 50,000 patient tests have been
performed, with over 14,000 patient tests performed in
the fourth quarter of the 2019 financial year alone. The
data from these patient measurements is already
driving increased accuracy, automated protocols and
real-world clinical data to support FDA filings.
The SOZO device is sold to hospitals and clinics, along
with a SaaS subscription. The subscription is a
monthly fee based on indications licensed and the
estimated case
Initial SaaS
subscription contracts are typically for three years in
the U.S. and one to three years in other markets.
load per device.
lymphoedema market,
During the period, the Group sold its products and
subscription services through a mix of employed sales
representatives and independent distributors. In the
the Group has an
U.S.
employed, direct sales force that focuses on the sale
of SOZO devices and the associated subscription
services
related to the unilateral and bilateral
indications.
SOZO – Connected Digital Health Platform
SOZO is a highly disruptive technology offering a highly
scalable business model. SOZO provides a cloud-
based software solution to hospital systems, clinicians
and patients that allows access to comprehensive
patient data and digital health-information across the
care continuum. With seamless
into
hospitals, clinical and home settings, the technology
platform allows for ease of management of large
patient populations.
integration
The SaaS (Software-as-a-Service) business model is
now well established in lymphoedema with a growing
Technology Adoption
FY by Quarter
50,000+
Patient Tests
15,000
10,000
5,000
-
Q1'18
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
26
For personal use only Significant Events after the
Balance Sheet Date
19 July 2019
the $13.9 Million Fully
Completion of
Underwritten Non-Renounceable Entitlement
Offer
The Group announced the completion of its fully
underwritten non-renounceable entitlement offer on 19
July 2019. Under the Entitlement Offer, eligible
shareholders were invited to subscribe for one (1) new
share (“New Share”) for every three (3) shares in the
Company of which they were the registered holder, at
an issue price of $0.11 per New Share.
In accordance with the ASX Listing Rules, ImpediMed
advised that it received valid applications under the
Entitlement Offer for approximately 88,249,289 New
Shares in ImpediMed (to raise approximately $9.7
million).
The balance of 38,353,639 New Shares, being shares
not subscribed
in
accordance with their pro rata entitlements under the
Entitlement Offer, were issued under the underwriting
arrangements described in the Offer Booklet.
for by eligible shareholders
The New Shares were issued on 24 July 2019.
Proceeds from the Entitlement Offer will be applied to
fund growth initiatives.
Likely Developments &
Expected Results
The following are areas of focus for the Group, as well
as likely developments expected to impact the Group’s
financial results in the near-term:
Continued Strong Growth in SOZO SaaS
Subscription based Business
Cancer Survivorship and L-Dex
Cancer and its treatments have a huge impact on the
body that often affects the quality of life after the
disease. There are 1.8 million new cases of cancer
each year and over 15.5 million living cancer survivors
in the US. There are more than 5.5 million U.S. patients
suffering from persistent cancer-related lymphoedema
as a result of their cancer treatment, making up an
annual addressable market of over $2 billion.
Lymphoedema is a leading post-surgical complication
for many cancer patients that greatly impacts quality
of life and it is one of the most feared consequences of
cancer survivorship. ImpediMed’s L-Dex technology
provides a simple and accurate measurement of fluid
in limbs, which allows early detection and intervention.
L-Dex is the only technology that can detect the onset
of lymphoedema at a subclinical stage. If detected at
this stage, the progression of lymphoedema can be
prevented, and often reversed. Data from the PREVENT
Trial, the largest randomised lymphoedema clinical
study, has shown a 95% reduction in lymphoedema.
The Group expects to focus its U.S. commercialisation
efforts over the next twelve months on a national
Lymphoedema Prevention Program (“LPP”) aimed at
transforming patient care through the prevention of
cancer-related
lymphoedema. The LPP will be a
complete solution for cancer-related lymphoedema
prevention, incorporating ‘best practices’ from the
growing number of top cancer centres currently
utilising SOZO’s L-Dex technology. A key initiative of
the programme will be focused on changing hospital
protocols that involve testing only high-risk patients, in
order to maximise patient outcomes and ensure that
all patients are tested throughout the continuum of
care.
The Group expects that success in the Lymphoedema
Prevention Program will result in larger multi-unit
SOZO sales to new hospital systems and additional
SOZO units being sold into existing hospital systems.
The programme is expected to also lead to optimised
usage and adoption of the technology from clinicians,
thus resulting in strong SOZO revenue growth over the
next twelve months.
Revenue Growth – Expanded Footprint
In the 2019 financial year, the Group converted the
majority of its existing L-Dex users over to SOZO. With
over 400 SOZO units sold worldwide as of 30 June
2019, the Group has a strong base-business from
which will allow continued SOZO license fee revenue to
be generated over the next twelve months.
The Group believes that the challenges related to
transitioning to a SaaS business model are now
primarily complete and expects that the combination
of a strong base business and continued SOZO sales
will lead to accelerated revenue growth over the next
twelve months.
27
For personal use only FY20 Market Guidance for Revenue
Guidance
Low
Midrange
High
Midrange Growth
vs. FY19
Contracted Revenue Pipeline
A$18.0
A$21.0
Annual Recurring Revenue
Reported Revenue
Gross Margin %
A$6.0
A$7.0
75%
A$8.0
A$8.5
77%
A$24.0
A$10.0
A410.0
79%
~140%↑
~145%↑
~115%↑
~13%↑
In June 2019, the Group released a guidance range for
financial year 2020 revenue of $7.0 – 10.0 million, with
midrange guidance of $8.5 million.
Below are the primary growth drivers that will result in
the midrange revenue, as well as additional growth-
accelerators that will drive growth above midrange
guidance:
Growth Drivers
• Aggressively drive the national Lymphoedema
Prevention Program in new key centres and build
out
in existing centres (increases device and
subscription sales)
• Target existing key customers for expanded patient
testing (drives new device and subscription sales -
low acquisition costs)
• Expand indications at top cancer centres (requires
additional licensing fees - low acquisition costs)
• Educational seminars increase awareness of our
technology
• Significantly reduce “sale-to-billing” cycle time
through expansion of v3.0 software
• Continued clinical and economic publications drive
adoption
• Initial private payors begin payments for testing
Growth Accelerators
• Expand existing customers
into gynaecological,
melanoma, and prostate cancer surveillance (new
opportunity and low acquisition costs)
• Drive the incorporation of BIS surveillance into the
US National Comprehensive Cancer Network
Guidelines (NCCN Guidelines®)
• Increasing number of private payors to begin paying
for testing
The Group will be focused on integrating L-Dex testing
into clinical workflow practices and systems with the
continued adoption of SOZO. In addition, the Group
continues to build a compelling case for private payors
to initiate coverage of L-Dex and expects that the
introduction of private payors would be a catalyst for
broad adoption in the U.S., further driving the growth of
the business.
Heart Failure – Game Changing Technology
Heart Failure (HF) is a chronic, progressive and
debilitating condition and it is among the most
expensive diseases for the US health care system. HF
is a global pandemic affecting at least 26 million
people worldwide. In the United States, it’s expected
that one in five people over the age of 40 will develop
heart failure. It
is the most common cause of
hospitalisation of people over 65 years of age, and
about half the people who develop HF die within five
years of diagnosis.
The estimated annual cost of Heart Failure in the US is
$31 billion. Assessing and monitoring fluid status is
critical to the management of HF patients, as a change
in fluid status may signal the need to increase or
decrease medication levels. By appropriately altering
medication levels, the length of hospital stays and the
number of readmissions can be significantly reduced.
The Group believes that SOZO can play a vital role in
optimising outcomes for HF patient management. The
current practice is to monitor HF patients daily for fluid
burden both in-clinic and at-home through either a
weight scale, implantable leads, or an implantable
pressure monitoring device (CardioMEMs). These
methods are either inaccurate and rudimentary (weight
scale) or invasive and/or expensive (implantable leads
and CardioMEMs). SOZO is uniquely positioned to
replace these current monitoring methods, as the
device provides the precision and accuracy of
implantables at the cost of a scale.
The Group expects to continue to make progress
towards commercialisation of
failure
program in the US over the next twelve months. Below
are the primary drivers in the HF action plan:
the heart
Clinical Data for Widespread Adoption
• Working with world leading institutions on HF trials
First data presented at 23rd World Congress on
Heart Disease July 2018
28
For personal use only Correlation case study and clinical utility of SOZO
to monitor HF patients presented at American
Heart Congress - CVD
• Data from initial HF studies has led to initiation of
Significant Risks
During the financial year, the Group identified the
following risks as major risks to the business in the
foreseeable future:
larger multi-centre study
• Study commenced; first patient enrolled 9 October
2018
~200 patients - actively enroling
Fluid measurements during hospitalisation for HF
and daily for 45 days after discharge (at-home)
Principal Investigator meeting schedule for early
August to review data and publication strategy
Heart Failure advisory board meeting to include
other world
for
September at the 2019 Heart Failure Society of
America meeting. Full review of all clinical data
and next steps.
leaders scheduled
thought
Regulatory
• Expanding heart failure opportunity to include those
regulatory
implantable devices. Expect
with
clearance by end of CY’19
Favourable Reimbursement and Guidelines Regime
• Reimbursement established to pay providers to
remotely manage patients
• Current guidelines in place for daily monitoring of
Class III patients for fluid burden
SOZO Regulatory Milestones
• CE Mark granted June 2017
• FDA 510(k) clearance for fluid monitoring of patients
living with HF achieved December 2017
Significant Risks to the
Business
The Group has a formal written Risk Management
Policy that is published on ImpediMed’s website.
Framework
The identification and proper management of risk
within the Group is an important priority for the Board
and Management. The Board monitors risk within the
Group to ensure high standards of operational quality
and compliance with the Group’s approved strategies,
policies and procedures. It ensures the Board is aware
of any material risk issues and assesses the viability of
the Group’s operations.
The Group continues a proactive approach to risk
management. Management, together with the Board
and the Audit & Risk Management Committee,
continually assess the key risks and their potential
effect on the business. The Group undergoes, at
minimum, an annual review of the risk management
framework to determine whether there have been any
changes in material business risks faced by the entity.
• The availability of capital resources
• The retention and hiring of key personnel
• The strength of the Group’s Intellectual Property (IP)
portfolio
• The progress and/or outcome of clinical trials
• The adoption of the Group’s technology
• The risk of not meeting continuous disclosure
obligations
• The progress of new product and software
development
• The risk related to product liability, privacy laws and
cyber-security breaches
• The effective management of the Group’s supply
chain
• The effect of changes in laws, healthcare policy and
other regulatory issues
• Brand and reputation risks
Assessment
These risks are not ranked in any order of importance
or timeframe. The
intention of the Group’s risk
management framework is to identify risks to allow the
Group to plan, assess and execute its strategies. Risk
monitoring and assessment activities are designed to
reduce, or otherwise manage, risk to levels that are
acceptable to the Board and Management. The Board
and Management must be kept fully informed in
relation to all risk to ensure that the correct decisions
in the best interests of the Group are made and that its
strategic plans are realised.
The availability of Capital Resources
In assessing the availability of capital resources, the
Group is continuing to manage its cash position
carefully under its operating plan and longer-term
strategic plan. The Group may find additional sources
of financing and/or raise additional capital if needed. If
ImpediMed is unable to obtain additional funds when
required, the Group may be forced to delay, reduce the
scope of, or eliminate one or more clinical trials,
product
or
commercialisation efforts.
development
software
and
to
review
The Retention and Hiring of Key Personnel
In assessing the retention and hiring of key personnel,
the Group is continuing to consult with remuneration
consultants
the competitiveness of
remuneration packages for current and future key
management personnel. The Group may or may not be
able to retain or hire key personnel based upon its
remuneration structure. Details of retention and hiring
policies of the Group are set out in the Remuneration
Report.
29
For personal use only The Strength of the Group’s Intellectual Property (IP)
Portfolio
In assessing the strength of the Group’s Intellectual
Property, the Group continues to consult with IP
attorneys on the landscape of the Group’s portfolio.
The Group uses patents or trademarks to protect its
technology and applications from unauthorised use by
third parties. The term of patents may expire or may be
challenged, invalidated or circumvented. The Group is
relying on its patents for commercial protection for its
devices.
The Progress and/or Outcome of Clinical Trials
In assessing the progress and/or outcomes of clinical
trials, the Group continuously monitors key clinical
trials which have been published and evaluates
potential areas of further research. The outcomes of
clinical trials may or may not be favourable.
The Adoption of the Group’s Technology
In assessing the adoption of our technology, the Group
is focused on developing a model for practice
integration, in both L-Dex and future applications, for
all existing and new accounts. This, together with
acceptance of a Software as a Service (SaaS)
subscription business model, evaluating the cost of
the technology, fit of the technology, inclusion on
guidelines, and reimbursement/payment levels for the
technology, will all play a part in determining the future
growth of the business.
In particular, ImpediMed is requesting inclusion of a
formalised testing protocol and BIS technology for
lymphoedema prevention in the NCCN Guidelines.
Whilst ImpediMed believes there is a compelling case
for inclusion in the NCCN Guidelines and for private
health insurers to make payments on claims in the
2019 financial year, there is no guarantee that this will
occur.
The commercial success of ImpediMed’s products is
also substantially dependent on achieving acceptable
payment levels to medical providers to support pricing
strategies for L-Dex and additional indications and
uses for SOZO.
Whether acceptable third-party
payments and reimbursement levels are available from
government bodies, private health insurers and other
third parties will be reliant on clinical data, industry
guidelines and health economic arguments.
The Risk of Not Meeting Continuous Disclosure
Obligations
In assessing continuous disclosure obligation risks,
failure to disclose material information or to disclose
incorrect information or correct information in an
incorrect manner
is a potential risk. The Group
continuously monitors the business for material
information required to be disclosed and conducts
regular Management and Board meetings to discuss
business progress and activities.
The Progress of New Product and Software
Development
In assessing the progress of new product and software
development, the Group must assess the impact that
investing in product and software development has on
the business.
product
Developing software and technology, particularly in the
medical sector, is expensive and often involves an
extended period of time to achieve a return on
investment. An important aspect of ImpediMed’s
business is to continue to invest in innovation and
opportunities.
related
ImpediMed believes that it must continue to dedicate
resources to
innovation efforts to
develop ImpediMed’s product offering and to maintain
ImpediMed’s competitive position. ImpediMed may
not however, receive benefits from these investments
for several years or may not receive benefits from
these investments at all.
development
ImpediMed’s
The Group also runs the risk of not meeting timelines
or not making the right product that addresses
customer and market needs. The Group follows a
defined design control process and monitors projects
to ensure that they are staffed correctly, while also
conducting usability studies to determine customer
and patient needs.
The Group must also assess the risk related to failing
to achieve and maintain software products, which
could result
in recalls or withdrawals, product
shortages, delays or failures in software delivery or
other problems that could seriously harm ImpediMed’s
business.
The Risk Related to Product Liability, Privacy Laws and
Cyber-security Breaches
In assessing the risk related to product liability and
cyber security, the Group conducts extensive safety
and penetration testing of new and current technology
and regularly reviews customer complaints through its
quality procedures and system.
The risk is present that ImpediMed’s products could:
1) Cause harm or injury to users,
2) Be used off label,
3) Require a recall, or
4) Result in a breach to digital assets such as
cyber security data.
ImpediMed relies on third party cloud computing and
other information technology systems, especially for
SOZO. Interruption, compromise to or failure of these
systems may affect ImpediMed’s ability to service its
customers effectively. ImpediMed is vulnerable to data
30
For personal use only The Board, in conjunction with Management, has
established and implemented a system for identifying,
assessing, monitoring and managing material risk
throughout the organisation. The Board has identified
what are believed to be the highest perceived risks to
the business and will continue to monitor these risks
to make decisions in the best interest of the Group.
Environmental Regulations
and Performance
The Group’s activities are subject to licenses and
regulations under environmental laws that apply in the
jurisdictions of its operations. These licenses specify
limits for and regulate the management of moving to
components free of hazardous substances.
The Group is supporting the global move towards
components free of hazardous substances in its
device electronics and is working with its contract
manufacturers to identify replacement parts, where
necessary, to substitute into its device designs.
There have been no significant known breaches of the
license conditions or other environmental regulations.
ImpediMed has an environmental health and safety
regular
management
monitoring, periodic auditing and reporting within the
Group.
system, which
includes
is designed to continually
improve
The system
ImpediMed’s performance and systems with training,
regular review, improvement plans and corrective
action as priorities.
breaches by employees and others with both permitted
and unauthorised access which poses a risk that
sensitive data may be exposed to the public or be
in security of, or a
permanently
information
significant disruption
technology
affect
systems
ImpediMed’s operating results, financial condition,
reputation and brand.
in, ImpediMed’s
lost. A breach
adversely
could
Privacy laws around the world continue to develop and
impose greater burdens on businesses when dealing
with personally identifiable information. The laws are
designed to give greater protections to data owners,
improve transparency and require businesses to
develop better privacy practices and security
processes. Failure to do so can result in pecuniary
penalties, negative publicity, damage to brand and a
requirement to improve processes and controls, each
of which, if they were to happen, could adversely affect
ImpediMed’s operating results, financial condition,
reputation and brand.
The Effective Management of the Group’s Supply
Chain
In assessing the effective management of the Group’s
supply chain, the Group must assess the risk of not
having enough product to meet demand due to product
shortages or supply chain issues.
The Group manages the supply chain through sales
and operation planning and sustaining engineering, as
well as through long-term strategic product pipeline
planning.
The Effect of Changes in Laws, Healthcare Policy and
Other Regulatory Issues
In assessing the effect of changes in laws, healthcare
policy and other regulatory issues, the Group must
assess the effect that unforeseen changes in laws and
government policy could have in relation to material
and unforeseen changes to:
1) Licensing and clearance requirements;
2) Regulations relating to clinical trials;
3) Manufacturing;
4) Product clearance; or
5) Pricing, including any tariffs and/or taxes.
Changes in laws healthcare policy and other regulatory
issues
ImpediMed’s
operations, assets, contracts and profitability.
could materially
impact
Brand and Reputation Risks
In assessing brand and reputation risks, the Group
must assess the adverse effect that reputation
damage or negative publicity could have on ImpediMed
or its products as it relates to the Group’s customer
relationships, general business and ultimately its
financial performance.
31
For personal use only Unissued Shares
As at the date of this report and the reporting date,
there were unissued ordinary shares under options and
performance rights as outlined below:
21 Aug 2019
18,043,229
10,865,130
28,908,359
4,816,500
4,816,500
33,724,859
30 Jun 2019
18,180,771
10,865,130
29,045,901
4,916,500
4,916,500
33,962,401
Share Options and
Performance Rights
Details of movements during the year related to
options and performance rights for key management
personnel are set out in the Remuneration Report.
Unissued Ordinary Shares
EIP (Employee Incentive Plan) Options
ESOP (Employee Share Option Plan) Options
Total Options
EIP Performance Rights
Total Performance Rights
Total Unissued Ordinary Shares
Refer to Note 18 of the financial statements for further
details of options and performance rights outstanding
and the value of the share-based payments.
Option holders and performance right holders do not
have the right, by virtue of the option or performance
right, to participate in any share issue of the Group or
any related body corporate or in the interest issue of
any other registered scheme.
During the financial year, 1,560,364 ESOP options
(2018: 1,387,619) and no EIP options (2018: nil) were
exercised. In addition, no performance rights (2018:
2,080,000) vested under the EIP plan. Refer to Note 18
of the financial statements for further details of
options exercised during the year.
During the financial year, 155,550 ESOP options (2018:
48,875) and 1,582,299 EIP options (2018: 2,670,130)
were forfeited; 1,425,924 ESOP options (2018: 101,365)
and no EIP options (2018: nil) expired. In addition, no
performance rights (2018: 509,500) under the EIP plan
were forfeited during the period. Refer to Note 18 of the
financial statements for further details of options
forfeited or expired during the year.
Shares Issued to KMP as a Result of the
Exercise of Options
During the financial year, KMP exercised options to
acquire 1,238,366 (2018: 958,970) fully paid ordinary
shares in ImpediMed Limited at a weighted average
exercise price of $0.12 per share (2018: $0.15). The
weighted average exercise price of all options
exercised during the period was $0.11 (2018: $0.19).
32
For personal use only Indemnification and
Insurance of Directors and
Officers
The Group
its Directors, Secretary and
Executive Officers for the financial year ended 30 June
2019. Under the Group’s Directors’ and Officers’
Liability Insurance Policy, the Group cannot release to
any third party or otherwise publish details of the
nature of the liabilities insured by the policy or the
amount of the premium.
insured
To the extent permitted by law and subject to the
in section 199A and 199B of the
restrictions
Corporations Act 2001, the Group indemnifies every
person who is or has been an officer of the Group
against any liability (other than for legal costs) incurred
by that person as an officer of the Group where the
Group requested the officer to accept appointment as
Director or Executive.
To the extent permitted by law and subject to the
restrictions
in sections 199A and 199B of the
Corporations Act 2001, the Group indemnifies every
person who is or has been an officer of the Group
against reasonable legal costs incurred in defending
an action for a liability incurred by that person as an
officer of the Group.
Indemnification of Auditors
To the extent permitted by law, the Group has agreed
to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against
claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to
indemnify Ernst & Young during or since the financial
year.
Employees
As at 30 June 2019, ImpediMed and its subsidiaries
had a total of 67 full and part-time employees (2018: 68
employees).
Diversity
The Group has a formal written Diversity Policy that is
published on ImpediMed’s website.
The Board adopted an updated Diversity Policy on 8
March 2017. The Board has the role of overseeing the
implementation of this policy and assessing progress
in achieving its objectives.
refers
Diversity
individuals different
encompasses differences
that make
from each other. Diversity
in backgrounds and
to characteristics
experiences, and differences
in approach and
viewpoints. It includes factors such as gender, age,
ethnicity, cultural background, language, disability and
other areas of potential difference.
The diversity policy defines the initiatives that assist
the Group in maintaining and improving the diversity of
its workforce. To the extent practicable, the Group will
address the recommendations and guidance provided
in the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (ASX
Principles).
ImpediMed’s Commitment to Workplace
Diversity
The Group is committed to creating and ensuring a
diverse work environment in which everyone is treated
fairly and with respect and where everyone feels
responsible for the reputation and performance of
ImpediMed. The Board and Management of
ImpediMed believe that ImpediMed’s commitment to
this policy contributes
to achieving corporate
objectives and embeds the importance and value of
diversity within the culture of the Group.
Details of the number of management level females of
the Group as of:
Level
30 June 19
30 June 18
Female
Total
Female
Total
Board of Directors
Executives
Senior Managers
1
2
5
7
8
11
1
2
4
7
7
14
Corporate Governance
On 27 March 2014, the ASX Corporate Governance
Council (CGC) released the third edition of their
corporate
and
recommendations, including ASX listing rule 4.10.3.
governance
principles
Details of ImpediMed’s corporate governance policies
and procedures, including information about Board
Committees and Corporate Charters, can be found on
the Group’s website under the Investor Relations
section:
https://investors.impedimed.com/about/corporate-governance/
33
For personal use only For personal use only Remuneration Report
This Remuneration Report outlines the remuneration arrangements for the Key Management Personnel (“KMP”) of
the Group in accordance with the requirements of the Corporations Act 2001 (the Act) and its Regulations.
The report is structured into the following sections:
CONTENTS
SECTION 1
Introduction and Remuneration
Committee Chair Letter
SECTION 2 Key Management Personnel (KMP)
SECTION 3 Remuneration Governance
SECTION 4 Consequence of Performance
on Shareholder Value
SECTION 5 Executive Remuneration
Philosophy and Strategy
SECTION 6
Remuneration of Non-Executive
Directors (NED)
SECTION 7 Remuneration of Executives
SECTION 8 Executive Contractual
Arrangements
SECTION 9 Managing Director and CEO (MD/CEO)
Remuneration
SECTION 10 Statutory Tables
SECTION 11 Executive Comparator Group List
Page 36
Page 39
Page 39
Page 41
Page 41
Page 42
Page 43
Page 52
Page 53
Page 54
Page 59
Definitions
Key Management Personnel
(KMP)
Persons having authority and responsibility for planning, directing and controlling
the activities of the Group, directly or indirectly, including any Director (whether
Executive or otherwise) of the Group. KMP of the Group consists of Non-
Executive Directors (NEDs), Executive Directors (EDs), and Executives. Refer to
SECTION 2 of this report for a full list of the Group’s KMP.
Non-Executive Directors
Directors of the Group that are not acting in an executive capacity.
Executive Director
Is a Director of the Group that is also acting in an executive capacity. The
Managing Director and CEO (MD/CEO) of the Group is considered an Officer of the
Group and an Executive Director.
Executives
Individuals defined as KMP that are Officers of the Group and not Non-Executive
Directors of the Group.
35
For personal use only
SECTION 1
Remuneration Committee Chair Letter
Dear Shareholder,
On behalf of the Board, I present ImpediMed’s
Remuneration Report for financial year 2019.
The Group ended the financial year with over 400 SOZO
units sold since launch, grew SOZO revenues by 164%,
crossed the milestone of greater than 50% of revenues
being generated from SOZO contracts and reported
Total Contracted Revenue Pipeline of more than $8.7
million. This successful growth was partially the result
of the Group announcing late in financial year 2019, the
release of SOZO v3.0 software and the SOZO platform
becoming Business Associate—compliant. In addition
to these strong operational accomplishments, the
Group also announced the long-awaited pre-specified
interim results of its PREVENT trial which were
presented at the 2019 Annual Meeting of the American
Society of Breast Surgeons and published in the
Annals of Surgical Oncology. Management also
progressed the Heart Failure Program via a Peer-
reviewed manuscript and poster focused on the use of
BIS to aid in the monitoring of Heart Failure.
Despite the operational and development successes,
the Board and executive team were not satisfied with
the capital market’s reaction and the decrease in share
value during financial year 2019. To better align
Executive KMP remuneration with shareholder return,
the MD/CEO recommended that the Executive KMP
long-term incentive compensation be reduced to zero
for financial year 2019. In addition to better aligning
Executive KMP remuneration with performance and
shareholders, the foregoing of long-term incentive
shares by Executive KMPs ensured there would be an
adequate option pool to recruit and retain new
employees.
the
Remuneration Committee and Board approved the
recommendation made by the MD/CEO.
After careful consideration,
Throughout financial year 2019 and looking forward
into financial year 2020, the Board and Remuneration
Committee have been focused on responding to items
the 2018
raised by
“first strike” against
the
Section 1.1 of
Remuneration Report.
the
Remuneration Report accompanying this letter sets
out the action we have taken in response to the
concerns expressed by shareholders in 2018. We are
working to improve both the communications and
messaging regarding remuneration for directors and
Executive KMP to provide greater transparency to our
shareholders.
To reinforce the compensation adjustment made to the
LTIs during financial year 2019, the Remuneration
Committee continues to focus on ways to both
conserve the Group’s cash resources and at the same
time, move the MD/CEO, CFO and NEDs to an equity
remuneration model which better aligns with the risks
and rewards of the shareholders.
The Remuneration Committee is recommending, for
the financial year 2020 that the MD/CEO and CFO
exchange 20% of their cash base salary for equity
shares of the Group. The Remuneration Committee is
also recommending that the NEDs exchange 100% of
their cash Board fees for equity shares of the Group.
The reduced cash remuneration outlays will allow
management to better focus the Group’s cash
resources on growing and retaining its highly talented
employee pool and advancing
its development
programs. Increasing the equity holdings of the
MD/CEO, CFO and NEDs will better align them with the
risks and rewards of our shareholders.
The Board, supported by the Remuneration Committee,
is committed to good governance in remuneration and
to ensuring that the Group’s policies and practices are
fair, competitive and responsible. The Board is also
committed to open dialogue with shareholders and
ensuring transparent communication of remuneration
arrangements.
We look forward to the year ahead and are grateful for
your continued support.
Don Williams, Non-Executive Director
Chair, Remuneration Committee
36
For personal use only is
to
committed
Remuneration Report (Audited)
Introduction
establishing a
ImpediMed
remuneration strategy that effectively aligns KMP
remuneration with shareholder value creation and that
supports achievement of the Group’s strategic goals in
including product development,
essential areas,
regulatory approvals and market
clinical
trials,
expansion of
The Board’s
its SOZO® product.
Remuneration Committee works to balance Australian
remuneration best-
corporate governance and
practices with
to provide
remuneration that will attract, retain and motivate key
US-based executive talent in a highly competitive
market.
the business’ need
ImpediMed’s business strategy is to provide medical
technology to measure, monitor and manage fluid
status and tissue analysis. In the financial year 2019,
the Group made significant achievements in product
software development by delivering the SOZO®
product platform to the market, expanding centres of
excellence and obtaining clinical evidence supporting
market adoption. In the financial year 2020, the plan is
lymphoedema prevention
to aggressively drive a
program in key new centres and expand existing
customers into additional oncological diseases using
our SOZO® product platform with state-of-the-art BIS
technology to seamlessly integrate into hospital, clinic
and home settings. The Group will provide educational
seminars to increase awareness of our technology,
continue clinical and economic publications and
actively pursue having our BIS technology included in
clinical guidelines.
The Group’s planned transformation to a high-growth
medical technology company makes it critical to be
able to retain and attract specialised talent, including
the highly sought-after skilled information-technology
talent that is necessary to achieve the important
regulatory, clinical and commercial milestones on
which the success of our strategy depends.
1.1. Response to Comments on the 2018
Remuneration Report
As noted in the Chairman’s letter, the Board and
Remuneration Committee have been focused on
addressing the shareholder concerns that led to the
“first strike” on the 2018 Remuneration Report at the
2018 AGM.
The table below summarises the Board’s responses to
the comments made by some shareholders and proxy
advisers on the 2018 Remuneration Report. Additional
detail on the Board’s response is provided in this
remuneration report.
Concern
ImpediMed Response
No increase in fixed
remuneration for
financial year 2020; in
addition, a portion of
fixed remuneration to
be exchanged for
equity to increase
performance linkage
and conserve cash
Greater weight has
been placed on
financial metrics;
The Group’s
comparator group
mostly consists of US
based companies.
Increase was to better
align CEO remuneration
with comparator group
peer companies of
similar industry and
size
No LTI awards were
granted to MD/CEO and
other Executive KMP in
2019
Non-executive director
fees to be delivered in
shares instead of cash
to increase alignment
with shareholders and
conserve cash
CEO's fixed
remuneration appears
high relative to peers of
similar industry and size
Increased weighting of
non-financial metrics for
FY18, while not
disclosing any specific
targets
CEO's target and
maximum bonus was
increased by 17 percent
Increase in LTI awards to
the CEO, a majority of
which are time-based
options and half of
which vest less than
three years from grant
date
Although non-executive
director fees appear to
be reasonable relative to
peers, the company has
disclosed that it is
evaluating the use of
equity grants for NEDs in
future years. This
represents a departure
from expected
governance practice
37
For personal use only 1.2. Remuneration Arrangements in
Financial Year 2019
Performance-Based Remuneration
As noted above, the Remuneration Committee is
committed to executive and shareholder alignment,
and this is achieved via a remuneration philosophy
with a significant performance orientation.
The
Remuneration Committee and KMP displayed this
commitment in financial year 2019 with remuneration
actions that considered internal and external factors
impacting ImpediMed, namely the:
First strike vote in financial year 2018,
Financial and operational performance in financial
year 2019, and
Stock price performance through the end of financial
year 2019.
to
reinforce
the pay
Adhering to its pay for performance philosophy, the
MD/CEO suggested, and the Remuneration Committee
agreed, to forgo an LTI share-based grant in financial
year 2019, acknowledging the challenging stock price
circumstances and
for
performance philosophy. These decisions have
affected Executive KMP and maintained alignment
with shareholders. As an example, the total direct
compensation plus the grant date value of LTI awards
for 2018 LTI grants for the MD/CEO has decreased by
approximately 52% when compared to what the value
would be at 30 June 2019. As there were no LTI awards
granted to the MD/CEO during the year ended 30 June
2019, the grant date value for LTI awards was nil in
2019 (2018: $1.8 million).
year
2020
Executive
To further strengthen the pay for performance
philosophy and better align KMPs and shareholders,
we are intending to make select adjustments to our
financial
remuneration
programmes. Specifically, we intend to remunerate
certain senior executive staff including the MD/CEO
with equity compensation, in the form of market value
shares, in lieu of a portion of their cash Base Salary.
The Remuneration Committee believes that this quick
to
implement, short-term revision, will not only
reinforce our philosophy, but also conserve cash
required for other, more urgent investment strategies.
to
the
changes
Consistent with
executive
remuneration, the Remuneration Committee has also
recommended to the Board that NED remuneration be
changed to better align with shareholders. Specifically,
the proposal is to fully exchange the financial year
2020 cash remuneration program for NEDs with an
that
the historical actions of
equity share program, in the form of market value
shares to an equivalent amount of the cash foregone.
We believe
the
Remuneration Committee, the recent suggestions of
the KMP team and the intended actions of both NEDs
and Executive KMPs highlight ImpediMed’s focus on
delivering shareholder value and further aligning
executive and NED interest with shareholders.
conducted
Comparator Groups
a
The Remuneration Committee
comprehensive review of the Group’s peer groups
during the financial year 2019 to ensure that the
benchmarks against which ImpediMed executive and
board remuneration are assessed remain relevant and
appropriate. Comparator companies are selected by
reference to key characteristics including industry,
reflecting
financial
ImpediMed’s geographic footprint, which includes a
listing on the Australian Securities Exchange (ASX)
and a significant presence in the US, as the majority of
the Group’s Executives and NEDs reside in the US. No
changes were made to the peer groups for the financial
year 2019.
labour market,
size and
See SECTION 11 for details on the Comparator Groups.
1.3. Key Developments Expected for
Financial Year 2020
Executive Remuneration
In financial year 2020, the Group will look to resume the
transition to an increased weighting-of-performance-
based equity in the LTI program. The proportion of
Executive KMP equity grants that are subject to
specified performance and service conditions, will
likely be increased in the financial year 2020.
Consideration is being given to exchanging up to 20%
of cash base salary with equity grants, in the form of
market value shares, to manage its available cash
resources and increase the alignment of executives
with shareholders. The equity remuneration would be
treated as part of fixed remuneration for financial year
2020.
Board Remuneration
The remuneration structure among US life sciences
and medical technology companies typically includes
a significantly weighted equity component for board
members. With a majority of the ImpediMed Board
being US based, the Board is considering the use of
equity remuneration in lieu of cash for NEDs for
financial year 2020. The use of equity remuneration
will allow the Group to better utilise its available cash
resources, to increase alignment to shareholders and
38
For personal use only also to retain and attract NEDs that have the specific
background and experience required by the Group
(e.g. regulatory regime, reimbursement environment)
in the highly competitive US healthcare industry.
SECTION 2
Key Management Personnel
For the purposes of this report, the Key Management
Personnel (KMP) of the Group are those persons
defined as having authority and responsibility for
planning, directing and controlling the major activities
of the Group, directly or indirectly, including any
Director (whether executive or otherwise) of the Group.
This information has been audited as required by
section 308(3C) of the Act.
Directors
Scott Ward
Judith Downes
Gary Goetzke
Robert Graham
Amit Patel
Donald Williams
Richard Carreon
Executives (i)
Morten Vigeland
Shashi Tripathi
David Adams
Catherine Kingsford
Dennis Schlaht
Chairman and Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Managing Director and Chief Executive Officer
Chief Financial Officer
Chief Technology Officer
Senior Vice President Operations and Strategic Planning
Senior Vice President Medical Affairs
Senior Vice President R&D and Technology
(i) Frank Vicini, MD, Chief Medical Officer, is not considered part of the KMP for financial statement purposes.
There were no changes to KMP after the reporting date and before the date the financial report was authorised for
issue.
SECTION 3
Remuneration Governance
3.1. Role of the Remuneration Committee
The Remuneration Committee of the Board of Directors
of
for making
recommendations to the Board on the remuneration
arrangements for the Non-Executive Directors (NED),
Executive Directors (ED), the Managing Director and
Chief Executive Officer (MD/CEO) and Executives
reporting to the MD/CEO.
the Group
responsible
is
assesses
the
The Remuneration Committee
appropriateness of
the nature and amount of
remuneration of Executives and NEDs on a periodic
basis by reference to relevant employment market
conditions, with the overall objective of maximising
shareholder benefit by attracting and retaining high-
quality, high-performing Executives and NEDs. In
determining the level and composition of Executive
remuneration, the Remuneration Committee may also
engage external consultants to provide independent
advice.
As of the date of this report, the Remuneration
Committee comprises the following Non-Executive
Directors, all of whom are independent:
Donald Williams (Chair since November 2017)
Scott Ward
Gary Goetzke
Robert Graham
39
For personal use only has
3.2. Services from Remuneration
Consultants
obtained
The Remuneration Committee
remuneration consulting services from Willis Towers
Watson (WTW) since December 2016. The WTW
consulting team to ImpediMed includes consultants
based in the same geographies where concentrations
of ImpediMed employees are based including Australia
and the US. Matters on which WTW has assisted the
Remuneration Committee include:
Assisting with review and assessment of the 2018
first strike vote;
Reviewing the Group’s remuneration philosophy;
Recommending a peer group for remuneration
benchmarking;
Reviewing incentive plan designs to ensure the plans
are attentive to Australian governance standards
and responsive to a primarily US-based management
team and NED group;
Analysing share utilization and equity usage;
Assisting with the preparation and review of the
annual Remuneration Report.
The engagement of WTW was undertaken directly by
the Board, independent of Management, and is based
on an agreed set of protocols governing the
engagement, which was developed by WTW and
provided to the Board. The work undertaken by WTW in
financial year 2019 did not constitute a remuneration
recommendation for the purposes of the Corporations
Act 2001. Consulting fees from WTW during the year
ended 30 June 2019 totaled $48,000.
BOARD
Has overall responsibility for oversight of ImpediMed’s Remuneration Policy and its principles and processes.
OVERSEE &
APPROVE
SUPPORT & ADVICE
INFORMED &
RECOMMEND
REMUNERATION COMMITTEE
Remuneration arrangements for NED, ED, the MD & CEO and
Executives reporting to the MD & CEO;
Remuneration Philosophy, Plans and Practices
Compensation pursuant to Group’s Equity compensation Plans.
OVERSEE &
APPROVE
ENGAGE & OVERSEE
REMUNERATION
CONSULTANTS & OTHER
EXTERNAL ADVISORS
Where required, support the
Remuneration and Nomination
Committee by providing
independent advice on matters
including:
Benchmarking data;
Legal and regulatory advice
on remuneration related
issues for Directors and
Executives; and
Incentive Plans.
INFORMED &
RECOMMEND
CEO
Reviews and recommends remuneration arrangements and
outcomes of Performance Assessments to the Remuneration and
Nomination Committee for senior Executives.
40
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SECTION 4
Consequences of Performance on
Shareholder Value
ImpediMed Limited has operated as a listed public
company since October 2007. The Group is building
revenue in its core medical business and has yet to
achieve profitability. While
the Remuneration
Committee has regard to the items shown in the
following table, in respect of the current and prior
financial years, KMP remuneration is not directly linked
to these items but rather to building the elements
necessary to create shareholder wealth through
acceptance and use of the Group’s products.
Amount $
2019
SOZO Revenue (Millions)
Change in SOZO Revenue
Total Medical Revenue (Millions)
Change in Medical Revenue
$2.3
229%
$4.2
27%
2018
(restated)
$0.7
600%
$3.3
(31)%
2017
2016
2015
$0.1
N/A
$4.8
17%
nil
N/A
$4.1
37%
nil
N/A
$3.0
20%
Net Loss Attributable to Equity Holders of
the Parent Entity (000’s)
($24,123)
($27,372)
($27,571)
($25,980)
($14,797)
nil
nil
$0.114
$0.395
(71)%
(47)%
nil
$0.75
(21)%
nil
$0.95
9%
nil
$0.87
358%
$43.30
$149.70
$281.64
$352.50
$253.70
Dividends Paid
Share Price at 30 June
Change in Share Price
Market Cap (Millions)
SECTION 5
Executive Remuneration Philosophy and
Strategy
The
Remuneration
Committee
reviews
the
remuneration philosophy and strategy and makes
recommendations
to
the Board
regarding
the
remuneration arrangements
for Executive KMP.
ImpediMed’s remuneration philosophy and strategy
are designed to attract, motivate and retain Executives
of the required caliber by identifying and rewarding
high performers and recognising the contribution of
each Executive to the continued growth and success
of the Group.
The remuneration philosophy at ImpediMed targets
fixed remuneration at the median of its US peers and,
for exceptional performance,
targets
variable
remuneration above
the median. To determine
executive remuneration, the Remuneration Committee
uses benchmarking data from a peer group of
comparable companies and reviews the pay plans and
practices of other relevant companies. With assistance
of WTW, the Remuneration Committee considers
companies for inclusion in ImpediMed’s peer group
that are similar
in size
(i.e.
revenue, market
capitalisation and employee numbers), scope and
complexity; operate in similar or related businesses to
the Group (i.e. Med Tech); and that may compete with
ImpediMed for key talent (e.g. companies based in the
US, including Southern California and the West Coast).
The peer group is reviewed on a regular basis to ensure
its composition remains appropriate for ImpediMed.
Other factors the Remuneration Committee may
consider when setting remuneration include, internal
equity, individual performance, tenure, leadership skills
and ability to impact Group performance. In addition,
while recruiting and retaining key executive talent,
remuneration decisions may be determined based on
negotiations with such individuals and can reflect such
factors as the amount of remuneration that the
individual would forgo by joining or remaining with the
Group.
To this end, key objectives of the Group’s reward
framework are to:
Align remuneration with the Group’s business
strategy, remuneration philosophy and interests of
shareholders
Offer
an
attractive mix
of
remuneration
benchmarked against the peer group
Provide strong linkage between individual and Group
performance and rewards
Offer remuneration based on internal comparison
with other employees and matching the role
41
For personal use only requirements with
the skills, experience and
heavy weighting toward equity. To assist the company
responsibilities of individual executives. Support the
in managing its available cash resources, increase the
corporate mission statement, values and policies
alignment of the NED remuneration with shareholders’
through recruiting, organising and managing high
interests and ensure that NED remuneration
is
achieving individuals committed to the Group’s
attractive in both Australia and the US, for financial
success
While continuing to pursue this remuneration strategy,
the Remuneration Committee and Board vary
arrangements as needed to meet immediate priorities.
During
financial year 2019,
for example, as
recommended by the MD/CEO, planned LTI equity
awards were not made to Executive KMP.
In addition, for financial year 2020, consideration is
being given to providing up to 20% of the base salary
of Executive KMP in the form of equity, in the form of
market value shares.
This quick-to-implement
modification to the historical cash-based salary will
allow greater flexibility to manage available cash
resources and increase the alignment of executives’
remuneration to shareholders’ expectations.
SECTION 6
Remuneration of Non-Executive Directors
(NEDs)
The Remuneration Committee considers the level of
remuneration required to attract and retain highly
qualified Non-Executive Directors with the necessary
skills and experience for the Group’s board. This
remuneration is reviewed annually with regard to
market practice and NED duties, responsibilities and
accountability. This remuneration was reviewed in
2019 relative to similarly sized ASX-listed companies
in the healthcare sector, as well as medical technology
companies in the US, given NED membership is
currently 67% US and 33% Australian.
NED fees are determined within an aggregate
Directors’ fee pool, approved by shareholders at the
annual general meeting
(AGM). The maximum
aggregate remuneration approved
in 2015 was
$800,000. The sum of NED fees, including committee-
related fees paid
in 2019, was $619,235 (2018:
$586,931).
A majority of Board members are based in the US
where the healthcare industry is highly competitive
and typically structures remuneration so that it is
year 2020, consideration is being given to providing
NED remuneration in the form of equity, in the form of
market value shares, in lieu of cash. The Group’s
current NED remuneration is positioned around the
lower quartile of the US peer group, with the lack of
equity contributing
to
this
lower competitive
positioning.
Table 10.1 shows individual Director fees paid during
the financial year ended 30 June 2019.
42
For personal use only SECTION 7
Remuneration of Executives
The majority of the Group’s Executive KMP are based
in the US and are remunerated according to the laws
and norms of that country, which differ in many
important respects from Australian practice.
As described
in SECTION 5, the framework for
executive remuneration at ImpediMed is based upon a
remuneration philosophy and strategy established by
the Remuneration Committee and approved by the
Board of Directors. The Remuneration Committee
references benchmarking data from peer groups of
comparable companies and reviews the pay plans and
practices of other relevant companies, as well as input
from independent remuneration consultants.
In the financial year ended 30 June 2019, the
remuneration structure for Executive KMP and other
select employees consisted of the following elements:
Strategic Objectives and Link to
Performance
- Offer an attractive mix of
remuneration benchmarked
against the applicable market-
region and country practices
Component
Performance Measure
FIXED REMUNERATION:
Base salary, superannuation,
employee health benefits and any
salary sacrificed benefits.
The fixed remuneration is not
performance related. It is set having
regard for:
- Experience and qualifications of the
individual
- Responsibilities and criticality of
role
- Remuneration paid to similar roles
by Comparator Companies
SHORT—TERM INCENTIVE (STI):
Financial KPIs (50%):
Cash-based incentive awarded for
the achievement of ImpediMed’s
Operating Plan objectives measured
over a one-year performance period.
- Total Revenue
- Contracted Revenue Pipeline (CRP) (i)
- EBITDA (i)
Non-financial KPIs (50%):
- Corporate goals that promote
product adoption in the marketplace,
including:
- Medical evidence milestones that
influence treatment protocols
- Product development milestones
that improve customer acquisition
and retention
- Clinical research that supports the
expansion of the addressable market
for the Group’s products
No LTI equity awards were made to
Executive KMP during the financial
year 2019, except in relation to a new-
hire grant to the CTO.
- Align remuneration with the
Group’s business strategy
- Align the interests of executives
and shareholders and share the
success of the Group with the
employees
- Provide strong linkage between
individual and Group performance
and rewards
- To attract and retain the key
talent needed to deliver on our
corporate objectives and strategic
plan
LONG—TERM INCENTIVE (LTI):
Equity based incentive, comprising
a mix of Options and Performance
Rights for Group Performance over
the long-term.
(i) CRP and EBITDA are unaudited, non-AASB financial metrics that do not represent revenue in accordance with Australian Accounting
Standards. Refer to the Directors’ Report for a glossary of non-AASB financial terms used by the Group.
43
For personal use only 7.1. Fixed Remuneration
Fixed
remuneration consists of base salary,
superannuation and other entitlement benefits that
vary by state or country. Fixed remuneration is not “at
risk” as it does not vary with the performance of the
Group.
Fixed remuneration is not automatically increased but
is reviewed annually, to ensure it remains competitive.
As described in SECTION 5, fixed remuneration for
Executives is determined based upon bench-marking
data from a peer group of comparable companies. In
addition to reviewing benchmarking survey data, when
setting fixed remuneration for any given role, the
the
Remuneration Committee has
experience, qualifications and skill set of the individual,
as well as the responsibilities and criticality of the role.
regard
to
As noted above, consideration is being given to
exchanging up to 20% of the base salary for Executive
KMP with equity. Any such equity awards will be
treated as part of fixed remuneration.
44
For personal use only 7.2. Short-Term Incentive (STI)
The STI plan is a cash-based incentive that is awarded
based on annual performance. In the financial year
ended 30 June 2019, the STI Plan focused on both
Group and Individual performance. The remuneration
philosophy
variable
ImpediMed
remuneration above the median for exceptional
targets
at
the STI aims
performance and
to encourage
performance over and above what is expected as part
of the ordinary course of business. The key features of
the STI plan for the financial year ended 30 June 2019
are outlined below:
Participants
Award Type
Opportunity
KMP and other selected employees
Cash
The percentage of the target STI opportunity for the financial year 2019 has been
expressed as a percentage of Total Fixed Remuneration (TFR) in the table below:
KMP
MD/CEO
CFO
CTO
SVP Operations and Strategic Planning
SVP Medical Affairs
SVP R&D and Technology
Target STI %
70%
40%
40%
40%
40%
40%
Actual STI payments awarded depend on the extent to which specific key performance
indicator (KPI) targets are achieved, as follows:
- Threshold performance – 50% of target opportunity
- At target performance – 100% of target opportunity
- Maximum performance – 150% of target opportunity for Executives; 200% of target
opportunity for MD/CEO
Threshold performance is the minimum level of performance required to earn any STI.
Performance Period
Performance Conditions
Targets are set with a level of ‘stretch’ built-in, and therefore, maximum performance
for any STI is only achieved in respect of exceptional performance.
The performance period is the 12-month financial year.
For the financial year ended 30 June 2019, the KPIs for KMP are included in the
diagram below:
Corporate Goals
50%
Financial Goals
(Revenue, CRP,
EBITDA)
50%
Financial
Corporate Goals
Additional detail is provided in section 7.2.1.
45
For personal use only 7.2.1 STI Performance Conditions and
Outcomes
The table below provides an overview of ImpediMed’s
performance against the financial and non-financial
KPIs applicable to Executive KMP.
For the financial year ended 30 June 2019, all Executive
KMP had common KPIs.
KPI
Financial Goals: 50%
Key financial goals that are directly tied to performance
results, leading indicators of long-term growth and
management of a set operating plan.
Revenue: Revenue growth reflects increased
marketplace adoption that has already occurred.
Key Achievements & KPI Outcomes
KPI Assessment: Between Minimum and At Plan
Achieved 31.1% of the 50% target performance
(MD/CEO: 34.3% achievement) for the various
objectives.
Revenue increased 27% to $4.2M (2018: $3.3M).
Contracted Revenue Pipeline (CRP): CRP is a leading
indicator of revenue growth.
CRP increased 149% to $8.7M (2018: $3.5M).
Loss from continuing operations decreased 12% to
$(24.0)M [2018: $(27.2)M].
KPI Assessment: Maximum
Achieved 75.0% of the 50% target performance
(MD/CEO: 100.0% achievement) for the various
objectives.
SOZO Software version 3.0 introduced.
EBITDA (Loss from continuing operations): Narrowing
of loss shows progress towards profitability.
Corporate Strategic Goals: 50%
Performance conditions were selected because their
achievement will increase adoption of the Group’s
technology, sales, utilization and improved patient care
which contribute to future revenue growth and
shareholder value.
SOZO Software updates:
Selected because updated SOZO software shortens the
time to product installation and enhances usability for
physicians, which may help drive adoption and allows
ImpediMed to collect and analyze data for future
improvements.
Multi-center Heart Failure study advancements
Selected because study supports the expanded use of
SOZO technology in other therapeutic indications (i.e.
Heart Failure (HF)).
Data was published in a peer-reviewed medical journal,
Cardiology & Vascular Research. Posters were accepted
and data was presented at 2 cardiology focused
scientific meetings, American Heart Congress and 23rd
World Congress on Heart Disease.
PREVENT – publishing results of interim data
Selected because clinical data from the PREVENT trial
may influence physician practices, increasing
standards of patient care that can prevent
lymphoedema and drive further adoption of
ImpediMed’s technology.
Presented and published interim results in a peer
reviewed
journal, Annals of Surgical Oncology;
presented at ASBrS, a major medical congress.
46
For personal use only 7.2.2 STI Outcomes
US-based Executives are paid in USD. Listed below are their USD payouts, as well as the AUD equivalents.
KMP
R Carreon
MD/CEO
M Vigeland
CFO
S Tripathi
CTO
D Adams
SVP Operations and
Strategic Planning
C Kingsford
SVP Medical Affairs
D Schlaht
SVP, R&D and
Technology
Target STI
Opportunity
USD
STI Outcome
USD (i)
Target STI
Opportunity AUD
(ii)
STI Outcome
AUD (i)
%
Achieved (i)
361,434
485,297
505,410
678,614
134.3%
140,935
149,518
197,076
209,078
106.1%
124,000
131,552
173,395
183,955
106.1%
126,579
134,287
177,001
187,780
106.1%
97,102
103,016
135,782
144,052
106.1%
119,202
126,462
166,686
176,838
106.1%
(i) MD/CEO outcome based on 200% maximum performance; remaining KMP based on 150% maximum performance.
(ii) The Target STI opportunity displayed in the above table is calculated based on the average exchange rate for the year.
47
For personal use only 7.3 Long-Term Incentive (LTI)
The Board offers LTIs to reward the performance of
Executives in alignment with shareholders’ interests
and the long-term benefit of the Group. As noted
previously, no LTI grants were made to Executives in
2019, except in relation to a new-hire grant to the CTO.
The key features of the LTI plan are outlined below:
Participants
Award Type
Executives, and other selected employees and consultants, at the discretion of the Board.
In order to balance the objectives of U.S. and Australian remuneration practices, IPD’s LTI
grant policy balances the objectives and marketplace practices in the U.S. and Australia.
Options are typically granted subject to time-based vesting (as is common in the US) and do
not deliver any value in the absence of share-price appreciation. To align with Australian
practices, over time IPD has increased the weighting on performance-based rights in the LTI
portfolio.
Each Option entitles the holder to one fully paid ordinary share of ImpediMed Limited at an
exercise price based on the five (5) day Volume Weighted Average Price (VWAP) at close-of-
business when granted.
Each Performance Right is subject to achieving LTI Hurdles.
Opportunity
In financial year 2020, it is envisioned that a greater portion of LTI grants will be performance
based with a likely mix of 50% Options and 50% Performance Rights.
No annual LTI grants were made to Executive KMP in the financial year ended 30 June 2019,
except in relation to a new-hire grant to the CTO. The value of the LTI awards made for the
years ended 30 June 2019 and 2018 have been expressed as a percentage of TFR in the table
below:
KMP
MD/CEO
CFO
CTO
SVP Operations and Strategic Planning
SVP Medical Affairs
SVP R&D and Technology
2019 LTI
Opportunity
No LTI Grant
No LTI Grant
51%
No LTI Grant
No LTI Grant
No LTI Grant
2018 LTI
Opportunity
262%
110%
N/A
108%
109%
109%
Performance conditions are typically equally weighted with:
Minimum Threshold - 50% of “Plan”
Maximum - 150% of “Plan” / MD/CEO 200% of “Plan”
Plan - 100% of “Plan”
Performance
Period
No annual LTI grants were made in the year ended 30 June 2019, except in relation to a new-
hire grant to the CTO. For LTI awarded in the year ended 30 June 2018:
Performance
Conditions
Options vest annually in equal portions over a four (4) year period; and
Performance Rights vest based on performance over three (3) years.
No annual LTI grants were made to executives in the year ended 30 June 2019, except in
relation to a new-hire grant to the CTO. For Performance Rights awarded in the year ended
30 June 2018, the Board as-signed performance hurdles to increase the focus on supporting
the Group’s long-term business strategy and shareholder value. The performance hurdles
include a minimum of three strategic measures and require the achievement of key milestone
objectives.
Each Performance Right awarded in the financial year 2018 is subject to achieving LTI
Hurdles related to the following objectives:
Heart Failure Pivotal trial or enrolment in HF Registry milestone
Revenue Growth milestone
These performance conditions were selected because their achievement in the defined
timeframe is critical to the company’s success and drives long-term value-creation.
48
For personal use only Due to the commercially sensitive nature of the specific performance metrics within these
KPI’s, ImpediMed will provide further details in the annual report following the end of the
performance period.
The LTI instruments do not carry dividend or voting rights prior to vesting.
Treatment of
Dividends on
Unvested Awards
Leaver Provisions Where a participant ceases employment prior to vesting, the award is forfeited unless the
Clawback
Provisions
Change of Control
Board applies its discretion to allow vesting at, or post, cessation of employment.
Provides the Board discretion to clawback variable pay of LTI participants in the event of
serious misconduct or fraud by the employee or other specific events.
In a situation where there is likely to be a change of control of the Group, the Board may have
the discretion to determine whether some, none or all of the LTI instruments will vest.
The Remuneration Committee aims to prudently
manage dilution and the accounting-cost of executive
equity plans, while leveraging long-term incentives to
maintain shareholder alignment and execution of the
business strategy. Periodically the remuneration
committee reviews capacity levels of LTI plans. The
last time the capacity was increased was in November
2017.
49
For personal use only 7.3.1 LTI Performance Conditions and
Outcomes
For grants made in financial year 2017, in addition to
time-based requirements, performance rights also
included specific challenging performance conditions
which needed to be satisfied in order for the rights to
vest. The table below provides an overview of
ImpediMed’s performance against the performance
conditions applicable to performance rights granted to
Executive KMP for the period of 1 July 2017 to 30 June
2019. Each performance condition was set with
reference
to minimum, at-plan or maximum
achievement.
Performance Condition
HF Study: 33.33%
Key Achievements & Performance Outcomes
KPI Assessment: Minimum
Achieved 16.7% of the 33.33% target performance (MD $ CEO: 16.7%
achievement) for the objectives as detailed below.
Multi-center Heart Failure study,
published results
Achievement: Data was published in a peer-reviewed medical journal;
posters were accepted, and data were presented at 2 cardiology focused
scientific meetings.
Selected to measure progress
towards developing evidence of the
effectiveness of IPD’s technology in
monitoring patients with HF to
improve patients’ lives with more
accurate, individualized care, while
also providing savings to the
healthcare system.
Regulatory: 33.33%
Plan and Maximum levels of performance were not achieved.
Plan: Completion of follow-up of pivotal study.
Maximum: Published manuscript in A/B level journal with podium-
presentation at specialty congress or establishment of national HF
registry.
KPI Assessment: Maximum
Achieved 50.0% of the 33.33% target performance (MD/CEO: 66.7%
achievement) for the objectives as detailed below.
Obtain regulatory clearance for
additional indications including fluid
management of patients with HF
Achievement: Received clearance not only for HF, but also for the
additional indication of Bilateral for Lymphoedema where a patient is at
risk in either both arms or both legs.
Selected to measure progress
towards expanding addressable
market for IPD’s technology
Lymphoedema Study: 33.34%
Maximum level of performance achieved.
Plan: Regulatory clearance approval for monitoring fluid in patients with
heart failure
Maximum: Regulatory clearance/approval for monitoring fluid status in
patients with heart failure and at least one additional indication
KPI Assessment: Maximum
Achieved 50.0% of the 33.34% target performance (MD/CEO: 66.7%
achievement) for the objectives as detailed below.
Lymphoedema Study; published
results
Achievement: Presented and published interim results in a peer-reviewed
journal; presented at ASBrS, a major medical congress.
Selected to measure progress
towards obtaining clinical data
which may influence physician
practices, increasing standards of
patient care that can prevent
lymphoedema and drive further
adoption of ImpediMed’s technology
Maximum level of performance achieved.
Plan: Publish interim results in a peer reviewed A/B level journal
Maximum: Present trial data at a major medical congress
These rights will vest in the financial year 2020, subject to satisfying the remaining time-based requirements related
to the grant.
50
For personal use only 7.3.2 LTI Outcomes
The following table provides the percent and number of performance rights that vested as a result of the performance
summarized above.
KMP
Richard Carreon
MD/CEO
Morten Vigeland
CFO
Catherine Kingsford
SVP Medical Affairs
Dennis Schlaht
SVP, R&D and Technology
% Performance
Hurdles Achieved
(compared to at Plan)
# Performance
Rights to Vest
(subject to remaining
time-based requirements)
AUD Value of
Performance
To Vest
($0.114 share price at
30 June 2019)
150.0%
116.7%
116.7%
116.7%
352,501
95,666
81,666
80,500
$40,185
$10,906
$9,310
$9,177
7.4 Minimum Shareholding Requirement
The Board
introduced a minimum shareholding
requirement in financial year 2016 to ensure that
Executives and NEDs build and maintain substantial
shareholdings in the Group to align their long-term
interests with that of shareholders.
Executives are prohibited
from disposing of
ImpediMed shares acquired from equity-based share
schemes (other than to the extent necessary to satisfy
statutory obligations (such as to fund the associated
tax liability arising on the vesting of the equity) or with
the consent of the Board), unless immediately after
that disposal they continue to hold ImpediMed shares
with a value equal to or greater than the minimum
shareholding requirement. The minimum shareholding
requirement for Executives is equal to the value of their
annual base salary after tax.
The minimum shareholding requirement for NEDs is
equal to the value of one year’s base fee (excluding
committee fees) after tax. ImpediMed NEDs are
required to purchase ImpediMed shares, in accordance
with the Group’s Share Trading Policy, to meet the
minimum shareholding requirement within five years
of appointment to the ImpediMed Board.
As at the date of this report Judith Downes (appointed
April 2017), Gary Goetzke (appointed August 2016),
Donald Williams (appointed March 2017), Amit Patel
(appointed March 2017) and Robert Graham
(appointed November 2017) are within the first five
years of their minimum shareholding requirement.
Scott Ward (appointed July 2013) previously met the
requirement, but this changed due to the decrease in
ImpediMed’s share price. Delivering fees in equity, in
the form of market value shares, will support NEDs in
meeting the shareholding requirement. The Company
will continue to monitor progress towards the
minimum shareholding requirement of each NED.
51
For personal use only of
SECTION 8
Managing Director and CEO Remuneration
Mr Carreon’s fixed remuneration at 30 June 2019 was
USD $516,334 (2018: USD $501,295) plus non-
monetary health benefits, following the Board’s
approval
Committee’s
the Remuneration
increase Mr Carreon’s fixed
recommendation to
remuneration for financial year 2019, based on his
performance and external benchmarking undertaken
during that year. Translated to AUD, the fixed
remuneration at 30 June 2019 was AUD $722,014
(2018: AUD $646,690). As noted above, for the financial
year 2020, consideration is being given to exchanging
up to 20% of the base salary and STI of the MD/CEO
with equity, in the form of market value shares. Any
such equity award will be treated as part of
remuneration.
Mr Carreon’s STI performance conditions and
outcomes have been detailed in section 7.2.1 and
7.2.2. During the financial year 2019, the Board did not
issue any Options (2018: 1,553,000) or Performance
Rights (2018: 1,262,000) to Mr Carreon under the EIP.
The Options and Performance Rights approved by
shareholders at the 2018 AGM were not granted to Mr
Carreon.
The Options granted to Mr Carreon in 2018 consisted
of a mix of incentive stock options (ISO) and non-
statutory stock options (NSO). Subject in all cases to
continuous employment with the Group, the Options
will vest over a four-year period, with one-quarter of the
number of total options granted vesting annually, on
each one-year anniversary of the date of grant.
Additionally, if in the opinion of the Board a Change of
Control has occurred or is likely to occur, the Board
may declare an Option to be free of any Vesting
Conditions as detailed in Rule 5.3(b) of the Plan.
All options which have not vested shall automatically
lapse and be forfeited without consideration, upon
cessation of Mr Carreon’s employment with the Group,
unless otherwise determined by the Board.
The Performance Rights granted to Mr. Carreon in
2018 were issued for nil consideration when the
closing price of a share on ASX on the date of grant
was $0.815. Subject
in all cases to continuous
employment with the Group, the Performance Rights
will vest on the third anniversary of the date of grant to
the extent that relevant performance hurdles are
satisfied. The extent to which a performance condition
is satisfied will be determined by the Remuneration
Committee with a recommendation to the Board,
whose decision is final and binding on the Participant.
The Remuneration Committee may determine that a
performance condition has been satisfied at or
between “minimum” and “maximum”, in which case the
percentage of performance rights that vest will be
determined by the Remuneration Committee. If any
performance rights do not vest (as determined by the
Remuneration Committee), those performance rights
will lapse.
lapse and be
All Performance Rights that have not vested shall
automatically
forfeited without
consideration, upon cessation of Mr Carreon’s
employment with
the Group unless otherwise
determined by the Board.
The Board may declare that some, none or all
outstanding unvested Performance Rights are free of
Performance Conditions and may vest on an
accelerated basis immediately before a Change of
Control Event. Without limiting the Board’s discretion,
the Board may have regard to the degree to which the
relevant Performance Conditions have been achieved
prior to the Change of Control Event.
incapacity
If the Participant ceases employment with the
Company or any Group entity, where such cessation of
employment
is due to the Participant’s death,
permanent illness or permanent physical or permanent
mental
(as certified by a medical
practitioner who is approved in writing by the Board),
the Board may, at its discretion, determine that the
Performance Rights will vest (on the third anniversary
of the Date of Grant) on the same basis as if the
Participant was still employed by the Company or
another Group entity.
52
For personal use only SECTION 9
Executive Contractual Arrangements
Remuneration arrangements for the Executive KMP
are formalised in employment contracts. Contracts are
generally “at-will” and outline the remuneration and
other key provisions. At-will employment is a term used
in US labour law for contractual relationships where an
employee can be dismissed by an employer without
cause and warning. Certain Executive KMP have
negotiated termination provisions as follows:
Notice Period
Payment in Lieu of
Notice
Treatment of STI and LTI on
Termination
Managing Director
R Carreon
Executives
M Vigeland
S Tripathi
D Adams
C Kingsford
D Schlaht
12 months
12 months
Unvested awards forfeited
9 months
9 months
9 months
6 months
6 months
9 months
9 months
9 months
6 months
6 months
Unvested awards forfeited
Unvested awards forfeited
Unvested awards forfeited
Unvested awards forfeited
Unvested awards forfeited
53
For personal use only SECTION 10
Statutory Tables
10.1 Remuneration of KMP for the Year Ended 30 2019
30 June 2019
Short-Term Benefits
Post-
Employment
Long-Term
Benefits
Share-Based
Payments
STI Award
Non-
Monetary
Super-
annuation
Long Service
Leave
LTI Awards
Total
Performance
Related
STI as
% of
Total
LTI as
% of
Total
$AUD
Directors
Base
Salaries &
Fees
S Ward (i) (ii)
160,181
J Downes
75,000
R Graham (iv)
67,500
G Goetzke (i)
A Patel (i)
94,040
94,040
D Williams (i)
114,937
-
-
-
-
-
-
-
-
-
-
-
-
-
7,125
6,413
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
160,181
82,125
73,913
94,040
94,040
114,937
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
R Carreon (i)
(v) (vi)
Executives
M Vigeland (i)
(v) (vi)
D Adams (i)
(v) (vi)
S Tripathi (i)
(v) (vi) (vii)
C Kingsford
(vi)
D Schlaht (i)
(v) (vi)
Total
722,014
678,614
21,448
24,050
-
1,051,847
2,497,973
27%
42%
492,689
209,078
27,505
18,065
433,488
183,955
24,794
17,293
442,503
187,780
26,528
18,323
-
-
-
302,258
1,049,595
20%
29%
92,247
751,777
24%
12%
310,618
985,752
19%
32%
339,456
144,052
-
44,250
9,356
258,322
795,436
18%
33%
416,716
176,838
25,765
11,112
‐
253,719
884,150
20%
29%
3,452,564
1,580,317
126,040
146,631
9,356
2,269,011
7,583,919
The figures represent the amounts expensed in the relevant reporting period.
(i) Certain Directors and Executives are based in the US and are paid in USD. The total compensation is therefore translated for financial reporting
purposes to AUD on a monthly basis. Share-based compensation includes the expense during the financial year of all awards regardless of the
financial year awarded.
(ii) S Ward was appointed Chairman of the Board in November 2017, resulting in an increase in fees when compared to the prior year.
(iii) C Hirst AO retired from the Board in November 2017.
(iv) R Graham was appointed to the Board in November 2017.
(v) Non-monetary benefits for US based employees include the payment of certain health and disability related insurance premiums as is
customary in the US market.
(vi) The fair value of the equity-settled share options granted under the EIP plan are estimated as at the date of grant using the Black Scholes
option valuation model, while share options granted under the ESOP schemes are estimated as at the date of grant using either the Black
Scholes option valuation model or the Monte Carlo Simulation (if there is a restriction on the share price for exercisability of the option). The
fair value of equity-settled performance rights granted under the EIP plan are calculated at the date of grant using the share price from the
close of business on the day prior to the date of grant.
(vii) S Tripathi was hired in July 2018.
Refer to the Directors’ Report, details of KMP, for dates of new appointments and resignations.
54
For personal use only 10.1 Remuneration of KMP for the Year Ended 30 2018
30 June 2018
Short-Term Benefits
Post-
Employment
Long-Term
Benefits
$AUD
Directors
Salaries &
Fees
STI Award
Non-
Monetary
Super-
annuation
Long
Service
Leave
Share-
Based
Payments
LTI
Awards
Performance
Related
Total STI as % of
Total
LTI as
% of
Total
S Ward (i) (ii)
129,313
C Hirst (iii)
52,500
J Downes
75,000
R Graham (iv)
42,013
G Goetzke (i)
86,968
A Patel (i)
86,968
D Williams (i)
98,066
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,987
7,125
3,991
-
-
-
646,690
508,816
18,340
21,961
441,290
167,514
21,225
16,181
396,339
150,450
23,717
15,854
R Carreon (i)
(v) (vi)
Executives
M Vigeland (i)
(v) (vi)
D Adams (i)
(v) (vi)
C Kingsford
(vi)
D Schlaht (i)
(v) (vi)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
129,313
57,487
82,125
46,004
86,968
86,968
98,066
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1,199,967
2,395,774
21%
50%
392,914
1,039,124
16%
38%
322,655
909,015
17%
35%
332,800
126,331
-
42,706
6,908
347,700
856,445
15%
41%
373,242
141,683
23,366
9,953
-
310,448
858,692
16%
36%
Total
2,761,189
1,094,794
86,648
122,758
6,908
2,573,684
6,645,981
The figures represent the amounts expensed in the relevant reporting period.
(i) Certain Directors and Executives are based in the US and are paid in USD. The total compensation is therefore translated for financial reporting
purposes to AUD on a monthly basis Share-based compensation includes the expense during the financial year of all awards regardless of the
financial year awarded.
(ii) S Ward was appointed Chairman of the Board in November 2017, resulting in an increase in fees when compared to the prior year.
(iii) C Hirst AO retired from the Board in November 2017.
(iv) R Graham was appointed to the Board in November 2017.
(v) Non-monetary benefits for US based employees include the payment of certain health and disability related insurance premiums as is
customary in the US market.
(vi) The fair value of the equity-settled share options granted under the EIP plan are estimated as at the date of grant using the Black Scholes
option valuation model, while share options granted under the ESOP schemes are estimated as at the date of grant using either the Black
Scholes option valuation model or the Monte Carlo Simulation (if there is a restriction on the share price for exercisability of the option). The
fair value of equity-settled performance rights granted under the EIP plan are calculated at the date of grant using the share price from the
close of business on the day prior to the date of grant.
(vii) S Tripathi was hired in July 2018.
Refer to the Directors’ Report, details of KMP, for dates of new appointments and resignations.
55
For personal use only 10.2 Remuneration Awards: Granted, Vested, and Lapsed During the Year
(A) OPTIONS
30 June 2019
Numbers
Grant Date
Executives
R Carreon
R Carreon
R Carreon
R Carreon
R Carreon
M Vigeland
M Vigeland
M Vigeland
M Vigeland
M Vigeland
M Vigeland
M Vigeland
S Tripathi
D Adams
D Adams
C Kingsford
C Kingsford
C Kingsford
C Kingsford
C Kingsford
C Kingsford
C Kingsford
D Schlaht
D Schlaht
D Schlaht
D Schlaht
D Schlaht
D Schlaht
D Schlaht
Total
24-Apr-14
04-Dec-14
03-Nov-15
14-Nov-16
15-Nov-17
02-May-11
07-Oct-11
24-Apr-14
04-Dec-14
01-Jul-15
25-Oct-16
15-Nov-17
31-Jul-18
14-Nov-16
15-Nov-17
07-Oct-2011
07-Oct-2011
24-Apr-2014
04-Dec-14
01-Jul-15
25-Oct-16
15-Nov-17
07-Oct-2011
07-Oct-2011
24-Apr-2014
04-Dec-14
01-Jul-15
25-Oct-16
15-Nov-17
515,000
515,000
Value per
Option at
Grant Date ($)
Exercise
Price per
Option ($)
Expiry Date
for Option
Vested
Vested
Number of
Options this
Year (#)
Fair Value of
Options
Granted During
Year ($)
0.1147
0.3781
0.5906
0.9458
0.4963
0.4307
0.3567
0.1147
0.3781
0.5240
1.0269
0.4963
0.2258
0.9459
0.4963
0.3567
0.3567
0.1147
0.3781
0.5240
1.0269
0.4963
0.3186
0.3186
0.1147
0.3781
0.5240
1.0269
0.4963
0.2100
0.6900
1.0000
1.4600
0.8150
0.6800
0.4600
0.2100
0.6900
0.8700
1.6600
0.8150
0.5200
1.4600
0.8150
0.4600
0.4600
0.2100
0.6900
0.8700
1.6600
0.8150
0.5000
0.5000
0.2100
0.6900
0.8700
1.6600
0.8150
30-Jun-19
04-Dec-21
01-Jul-22
14-Nov-23
15-Nov-24
31-Dec-18
30-Jun-19
30-Jun-19
04-Dec-21
01-Jul-22
25-Oct-23
15-Nov-24
31-Jul-2025
14-Nov-23
15-Nov-24
31-Dec-2018
30-Jun-2019
30-Jun-2019
04-Dec-21
01-Jul-22
25-Oct-23
15-Nov-24
31-Dec-2018
30-Jun-2019
30-Jun-2019
04-Dec-21
01-Jul-22
25-Oct-23
15-Nov-24
512,000
128,125
218,000
388,250
247,000
59,375
75,750
57,500
83,750
119,000
104,382
46,875
65,000
102,500
163,750
34,375
64,500
112,000
2,582,132
116,292
116,292
Number of
Options
Lapsed
During Year
(#)
639,222
-
-
-
-
16,666
25,000
94,950
-
-
-
-
-
-
-
8,333
28,333
69,950
-
-
-
-
23,333
33,333
69,950
-
-
-
-
1,009,070
(B) PERFORMANCE RIGHTS
Granted
Terms and Conditions of Each Grant
30 June 2019
Numbers
Grant Date
Value per Perf
Right at Grant Date
($)
Expiry Date for Perf
Right Vested During
Year
Number of Perf
Rights (#)
Vested
Of Perf Rights
Granted During
Year ($)
Executives
S Tripathi (i)
Total
310,000
310,000
31-Jul-2018
0.4050
31-Jul-2021
(i) Performance rights granted in financial year 2019 have time and performance-based vesting criteria. Refer to Note 18 for additional
information.
56
For personal use only 10.3 Remuneration Awards: Awards Held by Key Management Personnel
Held at the
Start of the
Period
No.
14,434,460
3,124,416
(A) OPTIONS
30 June 2019
Directors
R Carreon
Executives
M Vigeland
S Tripathi
D Adams
C Kingsford
D Schlaht
Total
Granted
During Period
Exercised
During Period
No.
No.
Options of
Other
Changes (i)
No.
Held at the
End of the
Period
No.
Options
Vested and
Exercisable
No.
-
-
(139,366)
(639,222)
13,655,872
11,991,060
(259,600)
(136,616)
2,728,200
2,169,304
-
-
-
-
515,000
811,000
(559,600)
(106,616)
1,832,400
(279,800)
(126,616)
1,918,200
-
286,500
1,387,088
1,447,471
-
515,000
811,000
2,498,616
2,324,616
-
-
-
23,193,108
515,000
(1,238,366)
(1,009,070)
21,460,672
17,281,423
(i) Options from other changes include expired or lapsed options.
(B) PERFORMANCE RIGHTS
30 June 2019
Held at the Start
of the Period
No.
Granted During
Period
No.
Vested During
Period
No.
Perf Rights from
Other Changes
No.
Held at the End
of the Period
No.
Directors
R Carreon
Executives
M Vigeland
S Tripathi
D Adams
C Kingsford
D Schlaht
Total
1,732,000
-
445,500
-
454,500
354,000
376,500
3,362,500
310,000
310,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,732,000
445,500
310,000
454,500
354,000
376,500
3,672,500
57
For personal use only 10.4 Shareholdings of Key Management Personnel
(A) SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
30 June 2019
Held at
the Start
of Period
Granted as
Remuneration
No.
No.
On exercise
of Options &
Vesting of
Perf Rights
No.
Net Change
Other (i)
Held at the
End of Period
Held Nominally
No.
No.
No.
Directors
S Ward
J Downes
G Goetzke
R Graham
A Patel
D Williams
R Carreon
Executives
M Vigeland
D Adams
S Tripathi
C Kingsford
D Schlaht
Total
225,000
82,600
14,100
-
-
30,000
869,225
638,643
159,000
624,641
634,857
3,278,066
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
139,366
259,600
-
-
559,600
279,800
1,238,366
25,000
242,000
-
88,000
100,000
-
-
-
-
-
-
455,000
250,000
82,600
256,100
-
88,000
130,000
1,008,591
898,243
159,000
-
1,184,241
914,657
4,971,432
250,000
82,600
256,100
-
88,000
130,000
1,008,591
898,243
159,000
-
1,184,241
914,657
4,971,432
(i) The shareholding movements during the period for Directors relate to shares purchased through the open market and not through
compensation.
(B) SHARES ISSUED ON EXERCISE OF
REMUNERATION OPTIONS
During the year ended 30 June 2019, 1,509,298 shares
were issued on the exercise of remuneration options
(2018: 1,387,619) and nil shares were issued on the
vesting of performance rights (2018: 2,080,000),
including the following issuances for KMP in place at
the reporting date:
Exercise of Options
2019 Options
Exercised
Exercise Price
Weighted Average
Exercise Price ($)
Share Price
Weighted Average
on Exercise Date ($)
Total Value on
Exercise Dates ($)
Directors
R Carreon (i)
M Vigeland
C Kingsford (i)
D Schlaht
139,366
259,600
559,600
279,800
1,238,366
$0.1100
$0.1370
$0.1100
$0.1100
$0.1150
$0.2300
$0.1150
$0.2050
$16,027
$59,410
$64,354
$57,359
$197,150
(i)
Includes options exercised in June 2019 where the share issuances were pending at the reporting date and were subsequently issued in July
2019.
10.5 Other Transactions and Balances with
KMP and their Related Parties
For the year ended 30 June 2019, no transactions
occurred with Directors or Executives that would be
considered related party transactions.
58
For personal use only SECTION 11
Executive Comparator Group List
The list of comparator groups of companies that have been used in respect of the financial years 2019 and 2018
remuneration are summarized below:
ImpediMed – Executive Remuneration
ImpediMed – Non-Executive Remuneration
Peer Companies
Nanosonics Limited
Mesoblast Limited
Medical Developments International Limited
Starpharma Holdings Limited
Clinuvel Pharmaceuticals Limited
Viralytics Limited
SomnoMed Limited
Bionomics Limited
pSivida Corp.
OBJ Limited
Peer Companies
Anika Therapeutics, Inc.
Antares Pharma, Inc.
AtriCure, Inc.
AxoGen, Inc.
Cerus Corporation
ConforMIS, Inc.
Corindus Vascular Robotics, Inc.
Digirad Corporation
Entellus Medical, Inc.
GenMark Diagnostics, Inc.
IRadimed Corporation
LeMaitre Vascular, Inc.
Obalon Therapeutics, Inc.
Rockwell Medical, Inc.
STAAR Surgical Company
Surmodics, Inc.
Tandem Diabetes Care, Inc.
TransEnterix, Inc.
ViewRay, Inc.
59
For personal use only Director’s Meetings
The number of meetings of directors (including the
meetings of committees of directors) held during the
year and the number of meetings attended by each
director are detailed in the table below:
Directors (i)
Total
S Ward
J Downes
R Graham
G Goetzke
A Patel
D Williams
R Carreon
Board Meetings
Remuneration Committee
Audit & Risk Management
Committee
# Meetings
Eligible to
Attend
# Meetings
Attended
# Meetings
Eligible to
Attend
# Meetings
Attended
# Meetings
Eligible to
Attend
# Meetings
Attended
13
13
13
13
13
13
13
13
13
13
13
13
11
13
11
13
5
5
-
5
5
-
5
-
5
5
-
5
5
-
5
-
3
-
3
-
-
3
3
-
3
-
3
-
-
3
3
-
(i) A Directors’ attendance at a committee meeting is only included if the Director is a member of the committee. The Nomination Committee did
not have any meetings during the year.
Committee Membership
Remuneration Committee
S Ward
J Downes
G Goetzke
R Graham
A Patel
D Williams
R Carreon (i)
Member
-
Member
Member
-
Chair
-
Audit & Risk Management
Committee
-
Chair
-
-
Member
Member
-
Nomination Committee
Chair
Member
Member
Member
Member
Member
-
(i) As an Executive Director, R Carreon does not sit on any Committees.
Rounding
The amounts contained in this report and in the
financial report have been rounded to the nearest
$1,000 (where rounding is applicable and where noted
($000)) under the option available to the ASIC
Corporations
in Financial/Directors’
Reports) Instrument 2016/191. The Group is an entity
to which the Class Order applies.
(Rounding
60
For personal use only Auditor’s Independence Declaration
and Non-Audit Services
Auditor’s Independence Declaration
The directors received the declaration on page 62 from the auditor of the Company and have resolved the auditor is
independent.
Non-Audit Services
No non-audit services were provided.
Signed in according with a resolution of the Directors.
Scott R. Ward
Chairman
21 August 2019
Judith Downes
Director
61
For personal use only Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s Independence Declaration to the Directors of ImpediMed
Limited
As lead auditor for the audit of the financial report of ImpediMed Limited for the financial year ended 30
June 2019, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of ImpediMed Limited and the entities it controlled during the financial year.
Ernst & Young
Jennifer Barker
Partner
21 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
For personal use only CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE
Notes
2019
$000
2018
$000
(restated)(i)
Continuing Operations
SOZO Revenue
Legacy Revenue
Other Revenue
Total Revenue from Contracts with Customers
Cost of Goods Sold
Gross Profit
Finance Income
Other Income
Salaries and Benefits
Share-based Payments
Research and Clinical Trials
Administrative and Governance
Consultants and Professional Fees
Travel Expenses
Advertising and Promotion
Depreciation and Amortisation
Rent and Property Expenses
IT and Other Expenses
Loss from Continuing Operations Before Income Tax
Income Tax
Net Loss from Continuing Operations
Loss from Discontinued Operations
Net Loss
Other Comprehensive Income
Items that may be reclassified as profit:
Foreign Currency Translation Gain
Other Comprehensive Gain for the Period, Net of Tax
Total Comprehensive Loss
Basic and Diluted Loss per Share
4
4
5
6
6
7
7
7
7
7
7
19
29
16
2
2,345
1,753
58
4,156
(1,252)
2,904
371
2,644
(15,770)
(2,849)
(2,958)
(2,374)
(2,121)
(1,293)
(714)
(682)
(422)
(681)
(23,945)
(51)
(23,996)
(127)
(24,123)
1,274
1,274
(22,849)
$
(0.06)
690
2,562
66
3,318
(976)
2,342
428
3,078
(16,375)
(3,255)
(2,964)
(3,287)
(3,192)
(1,537)
(819)
(417)
(694)
(514)
(27,206)
(42)
(27,248)
(124)
(27,372)
871
871
(26,501)
$
(0.07)
(i) Please refer to Note 30 for changes in the Group’s accounting policies.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying
notes.
64
For personal use only CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 30 JUNE
Notes
2019
$000
2018
$000
(restated)
Assets
Current Assets
Cash and Cash Equivalents
Trade and Other Receivables
Contract Assets
Inventories
Prepayments and Other
Total Current Assets
Non-Current Assets
Other Financial Assets
Property and Equipment
Intangible Assets
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and Other Payables
Contract Liabilities
Provisions
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Accumulated Losses
Total Equity
8
9
5
10
10
11
12
13
5
14
14
15
16
11,330
3,488
497
1,121
537
16,973
45
188
5,375
5,608
22,581
2,447
520
3,694
6,661
135
135
6,796
15,785
31,345
4,100
8
1,811
338
37,602
95
368
3,504
3,967
41,569
2,286
230
3,147
5,663
102
102
5,765
35,804
219,727
24,775
219,746
20,652
(228,717)
(204,594)
15,785
35,804
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
65
For personal use only CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE
Cash Flows from Operating Activities
Receipts from Customers (Inclusive of GST and US
Sales Tax)
Payments to Suppliers (Inclusive of GST and US
Sales Tax)
Payments to Employees
Interest Received
Other Receipts
Notes
2019
$000
2018
$000
4,459
4,597
(11,483)
(14,283)
(15,932)
(16,677)
397
2,971
425
2,480
Net Cash Flows Used in Operating Activities
8
(19,588)
(23,458)
Cash Flow from Investing Activities
Proceeds from the Disposal of Assets, Net of
Disposal Costs
Purchase of Property and Equipment
Development Expenditures and Purchase of
Intangibles
Net Cash Flows Used in Investing Activities
Cash Flows from Financing Activities
Proceeds from Issue of Ordinary Shares
Transaction Costs from Capital Raising
Net Cash Flows from Financing Activities
459
-
11
12
(34)
(2,190)
(155)
(1,060)
(1,765)
(1,215)
163
(18)
145
280
(24)
256
Net Decrease in Cash and Cash Equivalents
(21,208)
(24,417)
Net Foreign Exchange Differences
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
8
1,193
31,345
11,330
878
54,884
31,345
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
66
For personal use only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE
Notes
Issued
Capital
$000
Share
Reserves
$000
Foreign
Currency
Reserves
$000
Reserves
$000
Accumulated
Losses
Total
$000
$000
(restated)
219,493
12,767
3,759
16,526
(177,222)
58,797
-
-
-
-
-
-
-
-
-
-
-
-
(27,248)
(27,248)
(124)
(124)
1,074
1,074
(203)
(203)
-
-
1,074
(203)
12,767
4,630
17,397
(204,594)
32,296
18
15
15
-
3,255
272
(19)
-
-
-
-
-
3,255
-
-
-
-
-
3,255
272
(19)
At 30 June 2017
Loss for the Period from
Continuing Operations
Loss from the Period from
Discontinued Operations
Other Comprehensive Gain from
Continuing Operations
Other Comprehensive Loss from
Discontinued Operations
Total Comprehensive Loss for
the Period
Equity Transactions:
Share-based Payments
Allotment of Ordinary Shares
Costs of Capital Raising
At 30 June 2018 (restated)
219,746
16,022
4,630
20,652
(204,594)
35,804
Loss for the Period from
Continuing Operations
Loss from the Period from
Discontinued Operations
Other Comprehensive Gain from
Continuing Operations
Other Comprehensive Loss from
Discontinued Operations
Total Comprehensive Loss for
the Period
Equity Transactions:
Share-based Payments
Allotment of Ordinary Shares
Costs of Capital Raising
-
-
-
-
-
-
-
-
-
-
-
-
(23,996)
(23,996)
(127)
(127)
1,554
1,554
(280)
(280)
-
-
1,554
(280)
16,022
5,904
21,926
(228,717)
12,955
18
15
15
-
96
(115)
2,849
-
-
-
-
-
2,849
-
-
-
-
-
2,849
96
(115)
At 30 June 2019
219,727
18,871
5,904
24,775
(228,717)
15,785
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying
notes.
67
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
CONTENTS
1. Basis of Preparation
2. Earnings per Share
3. Dividends Paid and Proposed
4. Segment Reporting
5. Revenue
6. Finance and Other Income
7. Expenses
8. Cash and Cash Equivalents
9. Trade and Other Receivables
10. Current Assets – Inventories and Prepayments
11. Non-current Assets – Property and Equipment
12. Non-current Assets – Intangible Assets and Goodwill
13. Current Liabilities – Trade and Other Payables
14. Provisions
15. Contributed Equity
16. Reserves
17. Key Management Personnel (KMP)
18. Share-based Payments Plans
19. Income Tax
20. Parent Entity Information
21. Related Party Disclosure
22. Auditor’s Remuneration
23. Commitments
24. Contingencies
25. Events After the Balance Sheet Date
26. Financial Risk Management Objectives and Policies
27. Financial Instruments
28. Significant Accounting Policies
29. Discontinued Operations
30. Changes to the Group’s Accounting Policies
Page 69
Page 70
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Page 72
Page 73
Page 74
Page 75
Page 75
Page 77
Page 78
Page 79
Page 82
Page 83
Page 84
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Page 95
Page 96
Page 96
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Page 98
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68
For personal use only 1. Basis of Preparation
Corporate Information
The financial report of the Group for the year ended 30
June 2019 were authorised for issue in accordance
with a resolution of the Board of Directors on 21
August 2019.
ImpediMed Limited is a for profit company limited by
shares incorporated in Australia whose shares are
publicly traded on the Australian Stock Exchange. The
nature of the operations and principal activities of the
Group are described in the Directors’ Report.
The financial report is presented in Australian dollars
and all values are rounded to the nearest thousand
dollars ($000) unless otherwise stated.
The financial report is a general-purpose financial
report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian
Accounting Standards and other authoritative
pronouncements of the Australian.
Accounting Standards Board. The financial report has
also been prepared on a historical cost basis. The
financial report is presented in Australian dollars and
all values are rounded to the nearest thousand dollars
($000) unless otherwise stated.
Reclassification
Certain prior period amounts have been reclassified for
financial statement presentation purposes. These
reclassifications have no impact to previously reported
net loss and other comprehensive income.
Going Concern
These financial statements have been prepared on a
going concern basis, which assumes continuity of
normal business activities, the realisation of assets
and the settlement of liabilities in the ordinary course
of business. The Group had cash at its disposal of
$11.3 million at 30 June 2019 (30 June 2018: $31.3
million) and had no borrowing from banks or other
financial institutions at that date.
(refer
rights offer
Whilst the Group continues to generate operating
losses and net cash outflows from operations, the
Board approved operating plan and cash flow
projections, inclusive of approximately $13.0 million
cash received in July 2019 in relation to the fully
underwritten
to Note 25),
demonstrate that the Group will be able to pay its debts
as and when they fall due for a period in excess of 12-
months from the date the financial report has been
signed. The Board approved operating plan includes
assumptions around the continued growth in sales,
and in the event that the Group does not achieve the
sales forecasts, the Group has the ability to reduce
discretionary operating expenditure to enable the
Group to continue to be able to pay its debts as and
when they fall due for a period in excess of 12-months
from the date the financial report has been signed. On
that basis, the going concern basis of accounting has
been used. No adjustment has been made to the
amounts and classifications of recorded asset and
liabilities should the Group be unable to continue as a
going concern.
Compliance with IFRS
International
The financial report complies with
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
New Accounting Standards and Interpretations
Accounting Standards and Interpretations Issued but
not yet Effective
Australian Accounting Standards and Interpretations
that have recently been issued or amended but are not
yet effective and have not been adopted by the Group
for the annual reporting period ended 30 June 2019.
These standards and interpretations are outlines in the
table below:
Reference
Title
AASB 16
IFRIC 23
Leases
Uncertainty Over Income
Tax Treatments
Application Date of
Standard
1 January 2019
Applications Date for
Group
1 July 2019
1 January 2019
1 July 2019
69
For personal use only 2. Earnings per Share (EPS)
The following reflects the net loss attributable to
ordinary equity holders and the weighted average
number of ordinary shares used in the calculations of
basic earnings per share:
2019
$000
2018
$000
Net Loss Used in Calculating Basic and Diluted Earnings
Continuing Operations
Discontinued Operations
Net Loss Attributable to Ordinary Equity Holders of the Parent for
Basic and Diluted Earnings per Share
Weighted Average Number of Ordinary Shares Used in Calculating
Basic and Diluted Earnings per Share
Basic and Diluted Loss per Share
Basic and Diluted Loss per Share from Continuing Operations
(23,996)
(127)
(27,248)
(124)
(24,123)
(27,372)
No.
No.
379,229,784
377,041,819
$
$
(0.06)
(0.06)
(0.07)
(0.07)
Diluted EPS is calculated by taking the net loss
attributable to ordinary equity holders and dividing it by
the sum of the weighted average number of ordinary
shares and
the weighted average number of
convertible instruments. For the financial year ended
30 June 2019, diluted EPS is equal to basic EPS as the
Group is currently in a loss position and any conversion
of instruments to ordinary shares would have an
antidilutive effect on earnings per share.
As of the end of financial year 2019 there were
29,045,901 (2018: 32,226,038) options and 4,916,500
(2018: 4,431,500) performance rights on issue.
Subsequent to the end of the financial year, the Group
issued 126,602,928 ordinary shares in relation to a fully
underwritten Entitlement Offer. Please refer to note 25.
Basic earnings per share is calculated as net profit
attributable to members of the Parent, adjusted to
exclude any costs of servicing equity (other than
dividends) and preference share dividends, divided by
the weighted average number of ordinary shares,
adjusted for any bonus element. Diluted earnings per
share, which is currently not applicable to the Group
due to the net loss, would be calculated as net profit
attributable to members of the parent, adjusted for:
Costs of servicing equity (other than dividends) and
preference share dividends;
The after-tax effect of dividends and
interest
associated with dilutive potential ordinary shares
that have been recognised as expenses;
Other non-discretionary changes in revenues or
expenses during the period that would result from
the dilution of potential ordinary shares;
Divided by the weighted average number of ordinary
shares and dilutive potential ordinary shares,
adjusted for any bonus element.
3. Dividends Paid and Proposed
There were no dividends paid or proposed during the
current period or in the prior year.
4. Segment Reporting
(A) Operating Segments
Identification of Reportable Segments
The Group has identified its operating segments based
on the internal reports that are reviewed and used by
the Chief Executive Officer (whom
is the Chief
Operating Decision Maker) in assessing performance
and in determining the allocation of resources.
The operating segments are identified by management
according to the nature of the products and services
provided, as the Group’s risks and returns are affected
predominantly by differences in the products produced
and services provided. Discrete financial information
about each of these operating businesses is reported
to the Chief Executive Officer on at least a monthly
basis.
During the year, the Chief Executive Officer reviewed
the business revenue information categorised by the
Group’s SOZO and Legacy product lines which make up
the Medical segment, consistent with the previous
annual report. The group is no longer including the Test
to Note 29
and Measurement segment
the
Discontinued Operations). As a
discontinued operations in the current period, all items
from Net Loss are now allocated to the Medical
segment.
result of
(refer
The primary focus during the 2019 financial year for
the Medical
continued
Segment was
commercialisation of SOZO and of the subscription
revenue model, focused on building a high margin
contracted revenue pipeline for strong recurring
revenue growth in FY2020 and beyond.
the
70
For personal use only Accounting Policies and Inter-Segment
Transactions
Accounting Policies
The accounting policies used by the Group in reporting
segments internally are consistent with the prior
period.
to
relating
An operating segment is a component of an entity that
engages in business activities from which it may earn
revenues and incur expenses (including revenues and
transactions with other
expenses
components of the same entity), whose operating
results are regularly reviewed by the entity’s chief
operating decision maker to make decisions about
resources to be allocated to the segment and assess
its performance and for which discrete financial
is available. Management will also
information
consider other factors
in determining operating
segments such as the existence of a line manager and
the level of segment information presented to the
Board of Directors.
Operating segments have been identified based on the
information provided to the chief operating decision
maker being the Chief Executive Officer. The group
aggregates two or more operating segments when
they have similar economic characteristics and the
segments are similar in each of the following respects:
Nature of the products and services
Nature of the productions processes
Type or class of customer for the products and
services
Methods used to distribute the products or provide
the services, and if applicable
Nature of the regulatory environment
Operating segments that meet the quantitative criteria
as prescribed by AASB 8 are reported separately.
However, an operating segment that does not meet the
quantitative criteria is still reported separately where
information about the segment would be useful to
users of the financial statements.
Information about other business activities and
operating segments that are below the quantitative
criteria are combined and disclosed in a separate
category for “all other segments”.
Segment results, assets and liabilities include items
directly attributable to a segment and certain allocated
corporate charges. Corporate charges comprise non-
segmental expenses such as general overhead, group
insurance and office expenses. Corporate charges are
allocated to each business segment on a proportionate
basis linked to segment headcount and the allocation
of employee time between each segment in order to
determine a segmental result.
Inter-Company Transactions
Inter-Company Transactions are eliminated for the
purposes of segment reporting.
Major Customers
The Group has several customers to which it provides
both products and services. In the Medical segment no
one customer accounts for more than 10% of the
Group’s revenues. The Group does not believe there is
inherent risk for future financial years that would stem
from reliance on revenue growth from any one
customer.
Segment Revenues and Segment Results
On a monthly basis, the Chief Executive Officer
assesses the performance of each segment by
analysing the segment’s revenues and net operating
profit / (loss) before depreciation and amortisation,
finance cost, and tax. Segment revenues, segment
expense and segment results
include transfers
between business segments. Those transfers are
eliminated upon consolidation.
Year Ended 30 June 2019
Medical
Revenue
Revenue from Subscriptions and Consumables
Revenue from Devices
Other Revenue
Total Revenue by Segment
SOZO®
$000
1,626
719
-
2,345
Legacy
$000
1,485
268
-
1,753
Total
$000
3,111
987
58
4,156
71
For personal use only Year Ended 30 June 2018
Revenue
Revenue from Subscriptions and Consumables
Revenue from Devices
Other Revenue
Total Revenue by Segment
(B) Geographical Segments
The following tables present revenue and profit/(loss)
information and certain asset and liability information
regarding geographical segments for the years ended
30 June 2019 and 2018. Revenue data is based on the
location of the customer for geographical reporting
purposes.
Australia / Rest of World (ROW)
Australia is the corporate home office of the Group and
the main domicile of
its research and product
development activities, contract manufacturing of
devices and corporate services. The Australia / ROW
Geographical Segment Revenue
Year Ended 30 June 2019
Device Revenue
Consumable Revenue
Other Revenue
Total Segment Revenue
Year Ended 30 June 2018
Device Revenue
Consumable Revenue
Other Revenue
Total Segment Revenue
Sales of Goods – Device and Consumable Revenue
All segment assets relating to the Group’s operating
segments as at 30 June 2019 are Medical.
5. Revenue from Contracts with Customers
Revenue from contracts with customers is recognised
when control of the goods or services are transferred
to the customer at an amount that reflects the
consideration to which the Group expects to be entitled
in exchange for those goods or services.
Refer to Note 30 for details on the adoption of AASB 15
and the accounting policy within the financial
statements relating to revenue from contracts with
customers, contract assets and contract liabilities.
SOZO®
$000
Medical
Legacy
$000
139
551
-
690
1,967
595
-
2,562
Total
$000
(restated)
2,106
1,146
66
3,318
geographical segment primarily sells and ships
Medical segment products
to customers and
distributors located in Australia, Europe and the rest of
the world excluding the US.
North America
The Group’s North American office
in Carlsbad,
California serves as the operational hub for the Medical
segment and the domicile of its main assets and
executive personnel. This office sells and ships
Medical segment products to customers located in the
US.
Australia/ROW
$000
333
303
20
656
North America
$000
654
2,808
38
3,500
Australia/ROW
$000
North America
$000
746
267
40
1,053
400
1,839
26
2,265
Total
$000
987
3,111
58
4,156
Total
$000
(restated)
1,146
2,106
66
3,318
72
For personal use only Sales of Goods and Subscription Services
Revenue from Subscriptions and Consumables
Revenue from Devices
Other Revenues
Total Revenue from Contracts with Customers
Contract Balances
Trade Receivables (Note 9)
Contract Assets
Contract Liabilities
Set out below is the amount of revenue recognised from:
Amounts Included in Contract Liabilities at the Beginning of the Year
Performance Obligations Satisfied in Previous Years
6. Finance and Other Income
Finance Income
Interest Income – Bank Deposits
Interest Income – Term Deposits
Finance Income
R&D Tax Incentive
Proceeds from Tax Refunds, Grants, and Other
Other Income
Interest Revenue
Revenue is recognised as interest accrues using the
effective interest rate method. This is a method of
calculating the amortised cost of a financial asset and
allocating the interest income over the relevant period
using the effective interest rate, which is the rate that
exactly discounts estimated future cash receipts
through the expected life of the financial asset to the
net carrying amount of the financial asset.
2019
$000
3,111
987
58
4,156
2019
$000
800
497
(520)
2019
$000
230
8
2019
$000
369
2
371
2,620
24
2,644
2018
$000
(restated)
2,106
1,146
66
3,318
2018
$000
(restated)
1,453
8
(230)
2018
$000
-
-
2018
$000
425
3
428
2,848
230
3,078
Tax Incentive Revenue and Grant Revenue
The Australian Taxation Office (ATO) provides certain
Research and Development (R&D) tax incentives and
concessions under the AusIndustry R&D Tax Incentive
program. The program is a broad-based entitlement
program that aims to promote innovation within
Australia for eligible R&D activities.
involved
in when there
The Group accrues for amounts when there
is
reasonable assurance of receipt. Whilst there is a
judgment
is reasonable
assurance, the Group now has a past history of
successful lodgings and receipt with the ATO. The
Group recognises income related to the R&D tax
incentive in the period in which the expenses are
recognised.
73
For personal use only 7. Expenses
Salaries and Benefits
Wages and Salaries (i)
Performance & Sales Bonus
Employee Benefits
Superannuation
Annual Leave & Long Service Leave
Other Employee Costs
Capitalised Employee Costs (i)
Sub-Total Salaries and Benefits
Share-Based Payments to Employees
Total Salaries and Benefits
2019
$000
11,337
3,933
932
457
118
994
(2,001)
15,770
2,849
18,619
2018
$000
(restated)
11,043
3,288
969
465
246
1,082
(718)
16,375
3,255
19,630
(i) Certain wages and salaries relating to SOZO software development have been recognised as Intangible Assets in accordance with AASB 138
Intangible Assets in both the current and prior corresponding periods. In addition, certain wages and salaries directly related to SOZO customer
installations and trainings are allocated to cost of revenue for the current period.
Research and Clinical Trials
Cardiology and Other Clinical Trials (i)
Oncology Clinical Trials (ii)
Product Engineering (iii)
Total Research and Clinical Trials
2019
$000
1,557
1,079
322
2,958
2018
$000
853
1,238
873
2,964
(i) The Group continues enrolment in the 200-patient-at-home heart failure trial. The study is designed to demonstrate the extent to which changes
in SOZO BIS measurements preempt patient-reported symptoms of acute HF that leads to hospital readmissions. Earlier identification of fluid
overload allows for treatment changes which have resulted in significant reduction of cost re-hospitalisation. The Group expects that
expenditure on the HF study will continue as enrolment in the trial increase.
(ii) With enrolment completed in the 1,1000 patient PREVENT Trial, the largest international multicenter randomized controlled trial undertaken in
the prevention of breast cancer-related lymphoedema, costs related to oncology clinical trials decreased in the current financial period. The
Group expects that expenditure on the PREVENT Trial will continue as follow up screening continued for existing patients within the trial.
(iii) During the financial period, as result of the initial launch of SOZO, the Group reduced third-party product engineering costs related to SOZO.
Administrative and Governance Fees
Governance and Regulatory Fees
Insurance
Director Fees
Administrative Expenses (i)
Foreign Currency Loss / (Gain) on Transactions
Total Administrative and Governance Fees
2019
$000
768
672
666
262
6
2,374
2018
$000
804
485
628
1,387
(17)
3,287
(i)
In the previous corresponding period, the Group raised provisions totaling $394,000 related to doubtful debts on certain aged receivables,
compared to $52,000 in the current reporting period.
Consulting and Professional Fees
Consulting Fees (i)
Patent and Trademark Fees
Professional Fees
Total Consulting and Professional Fees
2019
$000
1,108
633
380
2,121
2018
$000
2,018
568
606
3,192
(i) The decrease in consulting fees for the current financial period was primarily attributable to reduced sales and marketing consulting expenses
for regions outside of the United States, in addition to overall financial discipline across all departments.
Depreciation and Amortisation
Comprehensive Income
Amortisation of Intangible Assets
Depreciation of Property, Plant, and Equipment
Total Depreciation and Amortisation
Included
in Statement of
2019
$000
460
222
682
2018
$000
98
319
417
74
For personal use only 8. Cash and Cash Equivalents
Cash at Bank and in Hand
Short Term Deposits
Cash and Cash Equivalents
2019
$000
3,165
8,165
11,330
RECONCILIATION FROM NET LOSS AFTER TAX TO NET CASH FLOW FROM OPERATIONS
Net Loss After Tax
Adjustments For:
Depreciation and Amortisation Expense
Share-based Payment Expense
Amounts Set Aside for Provisions (Accounts Receivable)
Amounts Set Aside for Provisions (Inventory)
Unreleased Foreign Currency (Gain) / Loss
Changes in Net Assets and Liabilities:
Decrease / (Increase) in Assets:
Inventories
Property, Plant & Equipment and Intangible Assets
Receivables
Other Current and Non-current Assets
(Decrease) / Increase in Liabilities
Current Payables
Other Current and Non-current Liabilities
Net assets associated with discontinued operations
Net Cash Used in Operating Activities
9. Trade and Other Receivables
Trade Receivables
Allowance for Expected Credit losses (i)
Interest Receivable
Tax and Other Receivables
Total Trade and Other Receivables
2019
$000
(24,123)
682
2,849
15
-
1
690
(27)
609
(688)
451
547
(594)
(19,588)
2019
$000
800
(52)
18
2,722
3,488
2018
$000
3,046
28,299
31,345
2018
$000
(restated)
(27,372)
444
3,255
390
418
(22)
(764)
(70)
(693)
737
(62)
281
-
(23,458)
2018
$000
(restated)
1,453
(396)
41
3,002
4,100
(i) During the financial year, the Group wrote off $339,000 of outstanding aged receivables that have been provided for in the previous period.
Impairment on Current Assets
The adoption of AASB 9 has fundamentally changed
the Group’s accounting for impairment losses for
financial assets by replacing AASB 139 incurred loss
approach with a forward-looking expected credit loss
(ECL) approach.
AASB 9 requires the Group to recognise an allowance
for ECLs for all trade receivables and contract assets
through profit or loss. Upon adoption of AASB 9, there
were no adjustments required to the Group’s provision
accounts.
Trade receivables are non-interest bearing and are
generally include 30-90 day terms, based upon each
customer’s credit rating.
75
For personal use only Movements in the provision for impairment loss were as follows:
At July 1
Charge for the Year
Amounts Reversed
Amounts Written Off
Foreign Exchange Translation
At June 30
remaining
The
considered
management and viewed as recoverable.
receivables past due, but not
impaired, are actively assessed by
2019
$000
396
86
(91)
(339)
-
52
2018
$000
6
394
-
(6)
2
396
As at 30 June, the ageing analysis of trade receivables
is as follows:
Total
748
1,057
Neither Past
Due nor
Impaired
516
594
Past Due but Not Impaired
<30 Days
30-60 Days
>61 days
70
264
44
58
118
141
2019
2018
Fair Value and Credit Risk
Due to the short-term nature of these receivables, the
carrying value is assumed to approximate its fair value.
The maximum exposure to credit risk is the fair value
of the receivables.
Trade receivables, which generally have 30-90 day
terms, are recognised at fair value less an expected
credit loss for impairment.
Collectability of trade receivables is reviewed on an
ongoing basis at an operating unit level. Individual
debts that are known to be uncollectable are written off
when identified. An impairment provision is recognised
when there is objective evidence that the Group will not
be able to collect the receivable. Financial difficulties
of the debtor, default payments or debts more than 90
days overdue are generally considered objective
evidence of impairment.
The maximum exposure to credit risk at the reporting
date is the higher of the carrying value or fair value of
each class of receivables. No collateral is held as
security.
When financial assets are recognised initially, they are
measured at fair value plus, in the case of as-sets not
at fair value through profit or loss, directly attributable
transaction costs.
76
For personal use only 10. Current Assets – Inventories and Prepayments
Raw Materials (at cost) (i)
Sub-assemblies (at cost) (i)
Finished Goods (at cost) (i)
Provision for Obsolete Inventory (i)
Total Inventories at the Lower of Cost and Net Realisable Value
2019
$000
341
-
1,712
(932)
1,121
2018
$000
605
354
2,197
(1,345)
1,811
(i) Approximately $0.5M of the decrease in inventory relates to the discontinued operations of XiTRON Technologies, Inc. during the current year.
In addition, the Group delayed additional builds of SOZO inventory in the second half of the year in order to complete testing of alternative raw
materials to be used in production. These builds will be completed in fiscal year 2020.
Inventories
Inventories are valued at the lower of cost and net
realisable value. Inventory write-downs recognised as
an expense in cost of sales totaled $600 (2018:
$12,000) for the Group.
Costs incurred in bringing each product to its present
location and condition is accounted for as purchase
cost on a first-in, first-out basis. The cost of purchase
comprises the purchase price including import duties
and other taxes (other than those subsequently
recoverable by the entity from the taxing authorities), if
applicable. Volume discounts and rebates are included
in determining the cost of purchase.
A provision for inventory obsolescence is recorded
when it is determined the net realisable value of
inventory is lower than its cost. Factors contemplated
in determining net realisable value are expected future
usage, sales volumes and price and the age and nature
of the inventory held.
Prepayments
General Payments (i)
Insurance Payments
Total Prepayments
2019
$000
510
27
537
2018
$000
268
70
338
(i)
In the 2019 financial year, the Group made prepayments related to SOZO inventory builds. These builds are to be completed in fiscal year 2020.
77
For personal use only 11. Non-Current Assets – Property and Equipment
Year Ended 30 June 2019
At 1 July 2018 Net of
Accumulated Depreciation
Additions
Disposals
Transfers from Inventory
Depreciation Charge for the
Year (i)
Effect of Foreign Exchange
At 30 June 2019 Net of
Accumulated Depreciation
At 30 June 2019
Cost
Accumulated Depreciation
Net Carrying Amount
Year Ended 30 June 2018
At 1 July 2017 Net of
Accumulated Depreciation
Additions
Disposals
Transfers from Inventory
Depreciation Charge for the
Year (i)
Effect of Foreign Exchange
At 30 June 2018 Net of
Accumulated Depreciation
At 30 June 2018
Cost
Accumulated Depreciation
Net Carrying Amount
Leased, Demo
& Loan
Devices
$000
102
-
(18)
30
(47)
(1)
66
873
(807)
66
Leased, Demo
& Loan
Devices
$000
131
-
(23)
78
(93)
9
102
919
(817)
102
Leasehold
Improvements
$000
Property &
Machinery
$000
Computer
Equipment
$000
4
11
-
-
(4)
-
11
162
(151)
11
154
17
-
-
(103)
4
72
697
(625)
72
108
4
-
-
(78)
5
39
612
(573)
39
Leasehold
Improvements
$000
Property &
Machinery
$000
Computer
Equipment
$000
39
-
(27)
-
(9)
1
4
179
(175)
4
189
149
(19)
-
(165)
-
154
672
(518)
154
159
40
-
-
(94)
3
108
592
(484)
108
Total
$000
368
32
(18)
30
(232)
8
188
2,344
(2,156)
188
Total
$000
518
189
(69)
78
(361)
13
368
2,362
(1,994)
368
(i) Depreciation change for the year includes $10,000 and $16,000 of depreciation expense included in cost of goods sold for the years ending 30
June 2019 and 2018, respectively.
is stated at historical cost
Equipment
less
accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of
replacing parts that are eligible for capitalisation when
the cost of replacing the parts is incurred. Similarly,
when each major inspection is performed, its cost is
recognised in the carrying amount of the plant and
equipment as a replacement only if it is eligible for
capitalisation. All other repairs and maintenance are
recognised in profit or loss as incurred.
is calculated on a straight
Depreciation
line or
diminishing value basis over the estimated useful life
of the specific assets as follows:
Plant, Machinery and Equipment
1 – 10 years
Devices Under Lease, PSA or Loan
Leasehold Improvements
3 years
2 – 5 years
residual values, useful
lives and
The assets’
amortisation methods are reviewed, and adjusted if
appropriate, at each reporting date.
Certain assets classified as Plant, Machinery and
Equipment during the year have been determined to
have a one-year useful life based on the expected
economic life of the assets and are amortised using
the straight-line method.
Certain Leasehold improvements capitalised by the
Group were calculated to have useful lives that mirror
their respective premise leases.
78
For personal use only Derecognition
An item of property and equipment is derecognised
upon disposal or when no further future economic
benefits are expected from its use or disposal.
12. Non-Current Assets – Intangible Assets and Goodwill
Year Ended 30 June 2019
At 1 July 2018 Net of Accumulated
Amortisation & Impairment
Arising During the Year
Amortisation
Effect of Foreign Exchange
At 30 June 2019 Net of
Accumulated Amortisation &
Impairment
At 30 June 2019
Cost (Gross Carrying Amount)
Accumulated Amortisation &
Impairment
Net Carrying Amount
Year Ended 30 June 2018
At 1 July 2017 Net of Accumulated
Amortisation & Impairment
Arising During the Year
Amortisation
Effect of Foreign Exchange
At 30 June 2018 Net of
Accumulated Amortisation &
Impairment
At 30 June 2018
Cost (Gross Carrying Amount)
Accumulated Amortisation &
Impairment
Net Carrying Amount
Development
Costs (i)
$000
964
Other
Software (i)
$000
74
Patents &
Licenses
$000
17
2,190
(407)
-
2,747
3,174
(427)
2,747
3
(51)
2
28
481
(453)
28
-
(2)
1
16
36
(20)
16
Development
Costs (i)
$000
Other
Software (i)
$000
Patents &
Licenses
$000
-
984
(20)
-
964
984
(20)
964
36
115
(76)
(1)
74
461
(387)
74
18
-
(2)
1
17
34
(17)
17
Goodwill
$000
2,449
-
-
135
Total
$000
3,504
2,193
(460)
138
2,584
5,375
2,584
6,275
-
2,584
Goodwill
$000
2,358
-
-
91
(900)
5,375
Total
$000
2,412
1,099
(98)
91
2,449
3,504
2,449
-
3,928
(424)
2,449
3,504
(i) Development costs relate to internally generated SOZO software development. Other software relates to externally purchased software used
in operations of the Group.
Description of the Group’s Intangible Assets
and Goodwill
Accounting Policies for Intangible Assets
Intangible assets acquired separately or in a business
combination are initially measured at cost. The cost of
an intangible asset acquired in a business combination
is its fair value as at the date of acquisition. Following
initial recognition, intangible assets are carried at cost
less any accumulated amortisation and any
accumulated impairment losses. Internally generated
intangible assets, excluding capitalised development
costs, are not capitalised and expenditure
is
recognised in profit or loss in the year in which the
expenditure is incurred.
The useful lives of intangible assets are assessed to be
either finite or indefinite. Intangible assets with finite
useful lives are amortised over the useful life and
tested for impairment whenever there is an indication
that the
impaired. The
amortisation period and the amortisation method for
an intangible asset with a finite useful life are reviewed
at least at each financial year-end.
intangible asset may be
Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset are accounted for prospectively
by changing the amortisation period or method, as
appropriate, which is a change in accounting estimate.
The amortisation expense on intangible assets with
79
For personal use only useful lives is recognised in profit or loss in the
expense category consistent with the function of the
intangible asset.
Intangible assets with indefinite useful lives are tested
for impairment annually either individually or at the
cash generating unit
level consistent with the
methodology outlined for goodwill below. Such
intangibles are not amortised. The useful life of an
intangible asset with an indefinite life is reviewed each
reporting period to determine whether indefinite life
assessment continues to be supportable. If not, the
change in the useful life assessment from indefinite to
finite is accounted for as a change in an accounting
estimate and is thus accounted for on a prospective
basis.
A summary of the policies applied to the Group’s
intangible assets is as follows:
Useful Lives
Method Used
Internally Generated /
Acquired
Impairment Test /
Recoverable Amount Test
Software & Patents and Licenses
Development Costs
Finite
Amortised over the period of expected
future benefit from the related project
on a straight-line basis
Acquired
Finite
Amortised over the period of expected
future benefit from the related project
on a straight-line basis
Internally generated
When an indication of impairment
exists
When an indication of impairment
exists
Gains or losses arising from de-recognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognised in profit or loss
when the asset is derecognised.
Expenditures on advertising and promotional
expenses are
the statement of
comprehensive income when the Group has either the
right to access the goods or has received the services.
recognised
in
Software
The Group’s software intangible primarily includes the
Group’s investment in its Quality Management System
(QMS), Enterprise Resource Planning (ERP) system
and Customer Relationship Management
(CRM)
system.
Software costs are carried at cost less accumulated
amortisation and accumulated impairment losses. The
intangible asset has been assessed as having a finite
life and is amortised using the straight-line method
over a period of three or four years. The amortisation
has been
the statement of
comprehensive income in the line item “depreciation
and amortisation”. If an impairment indication arises,
the
is estimated, and an
impairment loss is recognised to the extent that the
recoverable amount is lower than the carrying amount.
recoverable amount
recognised
in
Development Costs
The Group capitalises certain costs related to the
development of medical technology software
in
accordance with AASB 138 Intangible Assets.
Research costs are expensed as
incurred. An
intangible asset arising from development expenditure
on an internal project is recognised only when the
Group can demonstrate:
The technical feasibility of completing the
intangible asset so that it will be available for
use or sale.
Its intention to complete and its ability to use
or sell the asset.
How the asset will generate future economic
benefits.
The availability of resources to complete the
development.
The ability to measure reliably the expenditure
attributable to the intangible asset during its
development.
Following initial recognition, the cost model is applied
requiring the asset to be carried at cost less any
accumulated
accumulated
impairment losses. Any expenditure capitalised is
amortised over the period of expected benefit from the
related project.
amortisation
and
Intangible assets related to development costs have
been assessed as having a finite life and are amortised
using the straight-line method over a period of three or
five years, based on the expected economic life of the
assets. The amortisation has been recognised in the
statement of comprehensive income in the line item
“depreciation and amortisation”. If an impairment
indication arises, impairment testing is undertaken.
The carrying value of an intangible asset arising from
development expenditure is tested for impairment
annually when the asset is not yet available for use or
more frequently when an indication of impairment
arises during the reporting period.
Patents and Licenses
The Group holds three licenses and numerous patents.
All patents and licenses are carried at cost less
accumulated amortisation and impairment losses.
80
For personal use only These intangible assets have been determined to have
a finite life and are amortised using the straight-line
method over a useful life of between five and twenty
years. The amortisation has been recognised in the
statement of comprehensive income in the line item
“depreciation and amortisation”. Patents and licenses
are subject to impairment testing whenever there is an
indication of impairment.
No impairment loss has been recognised for the years
ended 30 June 2019 or 2018.
Goodwill
Goodwill acquired in a business combination is initially
measured at cost of the business combination being
the excess of the consideration transferred over the
fair value of the Group’s net identifiable assets
acquired and liabilities assumed. If this consideration
transferred is lower than the fair value of the net
identifiable assets of the subsidiary acquired, the
difference is recognised in profit and loss.
Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
For the purpose of
impairment testing, goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash
generating units, or groups of cash generating units,
that are expected to benefit from the synergies of the
combination, irrespective of whether other assets or
liabilities of the Group are assigned to those units or
groups of units. Each unit or group of units to which
the goodwill is allocated represents the lowest level
within the entity at which goodwill is monitored for
internal management purposes and is not larger than
an operating segment determined in accordance with
AASB 8. The goodwill of the Group is allocated to the
Medical cash generating unit.
is determined by assessing
the
Impairment
recoverable amount of the cash generating unit or
group of cash generating units to which the goodwill
relates.
The Group performs its impairment testing as at 30
June each year and more frequently if indicators of
impairment exist, using the value
in use (VIU),
discounted cash flow methodology.
When the recoverable amount of the cash-generating
unit or group of cash generating units is less than the
carrying amount, an impairment loss is recognised.
Impairment losses recognised for goodwill are not
subsequently reversed. When goodwill forms part of a
cash generating unit or group of cash generating units
and an operation within that unit is disposed of, the
goodwill associated with the operation disposed of is
included in the carrying amount of the operation when
determining the gain or loss on disposal of the
operation. Goodwill disposed of in this manner is
measured based on the relative values of the operation
disposed of and the portion of the cash generating unit
retained.
Impairment Tests for Goodwill and Intangible
Assets with Indefinite Useful Lives
Description of the Group’s Cash Generating Units
(CGUs)
At 30 June 2019, the Group has only one CGU, which is
the Medical CGU. During the current period, the key
focus of the Medical CGU was the sale of devices for
the subclinical assessment of lymphoedema in cancer
survivors, though it also includes the sale of devices
used in body composition, and other areas of fluid
status measurement. The Medical CGU is the core
business of the Group and the part of the business
forecasting substantial growth. There was no
impairment in financial years 2019 and 2018.
Relationship of the Intangible Assets with the CGUs
The only intangible asset in the Group with an
indefinite useful life is goodwill. The goodwill has been
allocated to the Medical CGU.
Details of Impairment Testing
Impairment testing has been performed by reviewing
the carrying amounts of net assets and by calculating
the value in use of the CGU.
The market capitalisation of the Group at 30 June 2019
was approximately $43 million, which exceeded the net
assets recorded (including goodwill) by approximately
$27 million.
The VIU cash flow model is based on a five-year period
which analyses the net present value (NPV) of cash
flows using a 12.5% discount rate and a 3% long-term
growth rate. The short-term cash flows used in the
cash flow model are based on budgets and forecasts
approved by the Board and consider the size of
markets available to the Group. In order to calculate
the discount rate for use in the VIU cash flow model,
the Group used a weighted average cost of capital
(WACC) method. The Group currently has no debt and
has created equity by relying upon capital raises for its
operating funds. Due to the risk in future cash flows,
Management has assessed the breakeven discount
rate to be 16.2% at 30 June 2019.
81
For personal use only 13. Current Liabilities – Trade and Other Payables
Trade Payables and Accruals
Employee Related Payables
Sales Tax and Other Payables
Carrying Amount of Trade and Other Payables
Trade payables and accruals are unsecured and non-
interest bearing and normally settle on 30- 90 days
terms. Sales tax and other payables are non-interest
bearing and normally have longer payment terms.
Trade payables and other payables are carried at
amortised cost and, due to their short-term nature, are
not discounted. They represent liabilities for goods and
services provided to the Group prior to the end of the
financial year that are unpaid and arise when the Group
becomes obliged to make future payments in respect
to the purchase of these goods and services.
2019
$000
2,086
307
54
2,447
2018
(Restated) $000
1,805
317
164
2,286
Fair Value
Due to the short-term nature of these payables, their
carrying value is assumed to approximate their fair
value.
Interest Rate, Foreign Exchange and
Liquidity Risk
Information regarding interest rate, foreign ex-change
and liquidity risk exposure is set out in note 26.
82
For personal use only 14. Provisions
Current
Employee Entitlements (i)
Warranty Provision
Office Lease – Make Good Provisions
Total Current Provisions
Non-Current
Employee Entitlements
Deferred Rent Liability
Office Lease – Make Good Provisions
Total Non-current Provisions
2019
$000
3,666
28
-
3,694
26
83
26
135
2018
$000
3,114
29
4
3,147
11
57
34
102
(i) The provision for current employee benefits primarily relates to the estimate for employee short-term incentives related to that financial year,
as well as a provision for accrued employee annual leave. The short-term incentive plan is a cash-based incentive which is awarded based on
annual performance. For the financial year ended 30 June 2019, the incentive plan focused on both Group and individual performance.
Significant Movements in Provisions
During the year, the Group utilised approximately $2.1
million (2018: $2.2 million) in short-term incentives
related to the prior year accrual. This movement was
offset by the 2019 financial year accrual of $2.7 million
(2018: $2.1 million), net of
foreign exchange
differences.
Nature and Timing of Provisions
Provisions are recognised when the Group has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of economic
benefit will be required to settle the obligation and a
reliable estimate can be made of the amount of the
obligation.
When the Group expects some or all of a provision to
be reimbursed, for example under an
insurance
contract, the reimbursement
is recognised as a
separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision
is presented in the statement of comprehensive
income net of any reimbursement.
Provisions are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at the
reporting date using a discounted cash
flow
methodology. The risks specific to the provision are
factored into the cash flows and as such a risk-free
government bond rate relative to the expected life of
the provision is used as a discount rate. The increase
in the provision resulting from the passage of time is
recognised in finance costs.
Employee Entitlements
Employee entitlements comprise accrued entitlements
for annual leave, performance pay and superannuation
contributions (all current) and for long service leave
(non-current).
Employee entitlements expected to be settled within
12 months of the reporting date are recognised in
respect of employees’ services up to the reporting
date. Expenses for non-accumulating sick leave are
recognised when the leave is taken and are measured
at the rates paid or payable.
to
various
defined
Retirement Benefit Obligation
Contributions to superannuation plans are recognised
as an expense when they become payable. The Group
contributes
contribution
superannuation funds in respect to all employees and
including
at various percentages of their salary,
contributions
the Superannuation
Guarantee Charge. These contributions are made to
external superannuation funds and are not defined
benefits programs. Consequently, the Group’s legal or
constructive
these
contributions.
required by
obligation
limited
to
is
Long Service Leave
The liability for long service leave is recognised and
measured as the present value of expected future
payments to be made in respect of services provided
by employees up to the reporting date. Consideration
is given to expected future wage and salary levels,
experience of employee departures, and periods of
service. Expected future payments are discounted
using market yields at the reporting date on Australian
corporate bond market discount rates with terms to
maturity that match, as closely as possible, the
estimated future cash outflows.
Warranty Provision
A provision for warranty is recognised for expected
warranty claims on products sold during the last year,
based on experience of the level of repairs and returns
on a one-year warranty period that is generally given
for products sold. It is expected that these costs will
be incurred during the next financial year.
83
For personal use only Deferred Rent
A provision for deferred rent is recognised for fixed
increases in office leases and for rent-free periods for
the term of the leases at the Group’s four office
locations.
Make Good Provision
To comply with office lease agreements, the Group
must restore leased premises to the original condition
at the end of each premise’s respective lease term.
Because of the nature of the liability, the greatest
uncertainty in estimating the provision is the cost that
will ultimately be incurred. The provision for each
premise has been calculated using pre-tax discount
rates of 1-8%, depending on the location of the
premise.
15. Contributed Equity
Ordinary Shares
Ordinary Shares Fully Paid
Total Ordinary Shares
2019
$000
219,727
219,727
2018
$000
219,746
219,746
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax,
from the proceeds.
Ordinary shares fully paid include transaction costs of
$115,000 (2018: $19,000) pertaining to the cost of
capital from the exercise of options during the current
reporting period. Fully paid ordinary shares carry one
vote per share and carry the right to dividends.
At 1 July 2017
Issued During the Period as a Result of:
Issue of Ordinary Shares
Transactions Costs
At 30 June 2018
Issued During the Period as a Result of:
Issue of Ordinary Shares
Transactions Costs (i)
At 30 June 2019
Number of Shares
375,526,036
3,467,619
-
378,993,655
810,332
-
379,803,987
(i) Transaction costs for the 2019 financial year include $105,000 related to the July 2019 Entitlement Offer.
Capital Management
Trade and Other Payables
Less Cash and Cash Equivalents
Net Debt
Total Equity
Total Capital
Net Debt to Equity Ratio
There are no externally imposed capital requirements
on the Group. When managing capital, Management’s
objective is to ensure that the entity continues as a
going concern, as well as to maintain optimal returns
and benefits to shareholders and other stakeholders.
The Group will, from time to time, evaluate the Group’s
capital structure with a view to optimising its cost of
capital.
2019
$000
2,447
(11,330)
(8,883)
15,785
6,902
N/A
$000
219,493
272
(19)
219,746
96
(115)
219,727
2018
$000
(restated)
2,286
(31,345)
(29,059)
35,804
6,745
N/A
84
For personal use only 16. Reserves
Movements in Other Reserves
At 1 July 2017
Foreign Currency Translation
Share-based Payment
At 30 June 2018
Foreign Currency Translation
Share-based Payment
At 30 June 2019
Performance
Share Reserve
$000
Share Options
Reserve
$000
1,847
-
1,113
2,960
-
1,110
4,070
10,920
-
2,142
13,062
-
1,739
14,801
Foreign
Currency
Translation
$000
3,759
871
-
4,630
1,274
-
5,904
Total
$000
16,526
871
3,255
20,652
1,274
2,849
24,775
The Group currently maintains two long-term incentive
plans for share-based payments. All options issued
under the long-term incentive plans must be issued
with an exercise price no less than fair market value.
The actual exercise price will be determined by a
committee of Directors, which is generally determined
to be the Parent’s volume weighted average stock price
over the five days prior to the option grant. No options
or performance rights provide dividend or voting rights
to the holders.
Further details on share-based payments are provided
in Note 18.
At 30 June 2019, there were 32,962,401 (30 June 2018:
36,657,538) unissued ordinary shares in respect of
29,045,901 (30 June 2018: 32,226,038) unlisted
options, 4,916,500
(30 June 2018: 4,431,500)
performance shares and nil (30 June 2018: nil) listed
options.
Nature and Purpose of Reserves
Share Option Reserve and Performance Share Reserve
The share option and performance share reserves are
used to record the value of share-based payments
provided to employees and participants, including
KMP, as part of their remuneration. Refer to Note 18 for
further details of these plans.
Foreign Currency Translation Reserve
The foreign currency translation reserve is used to
the
record exchange differences arising
translation of the financial statements of foreign
subsidiaries.
from
85
For personal use only 17. Key Management Personnel (KMP)
Employee Benefits (i)
Post-employment Benefits
Share-based Payments
Total Compensation (ii)
2019
$000
5,168
147
2,269
7,584
2018
$000
3,950
123
2,574
6,647
(i) Short-term employee benefits include salaries and wages, short-term incentives earned during the period, either one-time short-term
incentives, long service leave, and non-monetary benefits such as insurance benefits.
(ii) The majority of KMPs are based in the US and are paid in USD. The total compensation is therefore translated for financial reporting purposes
to AUD monthly.
Interests Held by Key Management Personnel
Share options and performance rights held by KMP, under the EIP and ESOP to purchase ordinary shares, have the
following expiry dates and exercise prices:
Grant Type
Performance Rights
Share Options
Share Options
Performance Rights
Performance Rights
Share Options
Share Options
Share Options
Share Options
Share Options
Share Options
Share Options
Share Options
Share Options
Share Options
Performance Rights
Total Interest Held by KMP
Expiry Date
14-Nov-19
31-Dec-19
30-Jun-20
25-Oct-20
15-Nov-20
31-Dec-20
30-Jun-21
4-Dec-21
1-Jul-22
8-Jul-22
25-Oct-23
13-Nov-23
14-Nov-23
15-Nov-24
31-Jul-25
31-Jul-21
Exercise Price
$0.00
$0.18
$0.1100 – $0.2100
$0.00
$0.00
$0.18
$0.21
$0.69
$0.8700 – $1.0000
$0.35
$1.66
$1.46
$1.46
$0.82
$0.52
$0.00
2019
635,000
100,000
1,573,039
331,500
2,396,000
100,000
874,072
4,526,000
1,075,000
7,252,561
821,000
335,000
872,000
3,417,000
515,000
310,000
25,133,172
18. Share-Based Payment Plans
Recognised Share-Based Payment Expenses
The expense recognized for share-based payments during the year is shown in the table below:
Expense Arising from Equity-Settled Share-Based Payment Transactions –
Employees
Expense Arising from Equity-Settled Share-Based Payment Transactions –
Consultants
Expense Arising from Equity-Settled Performance Rights Payment
Transactions – Employees
Total Expense Arising from Share-Based Payment Transactions
2019
$000
1,733
6
1,110
2,849
2018
$000
2,130
12
1,113
3,255
Equity-Settled Transactions
The Group provides benefits to employees (including
key management personnel (KMP)) and certain
consultants in the form of share-based payments,
whereby employees and consultants render services in
exchange for shares or rights over shares (equity-
settled transactions).
There are currently three types of plans in place to
provide these benefits:
The Employee Incentive Plan (EIP), which provides
benefits
form of shares, options or
performance shares to employees and consultants,
including the CEO. This plan has a US Sub-Plan
established as an appendix to EIP.
the
in
86
For personal use only The Employee Share Option Plans (ESOP), which
provides benefits to employees and consultants,
including the CEO if he or she is not a member of the
Board of Directors. This Group has two (2) ESOPs –
one for US based employees and one for Australian
based employees.
The CEO Option Plan
Further details of the share-based payment plans are
described below. During the current financial year, the
Group continued to operate under the Employee
Incentive Plan (EIP).
Stakeholders and industry participants expect that the
Group’s remuneration framework should provide
competitive and appropriate remuneration so that the
company can attract and retain skilled employees and
motivate them to improve Group performance. For all
financial year 2019, the Group operated under the
Employee Incentive Plan for issuing and maintaining
employee share option schemes.
Under the EIP, participants are eligible to receive
Shares, Options or Performance Rights, which will help
to align the interests of employees (participants) with
those of the Group and its Members.
No share options schemes were issued under the
ESOP during the year. Outstanding options that reside
under the ESOPs remain under that plan, but any
outstanding options under the ESOPs that are
cancelled or forfeited do not become available under
the EIP nor return to the available option pool.
(A) TYPES OF SHARE-BASED PAYMENTS
PLANS
Employee Incentive Plan (EIP)
On 30 October 2014, the Board resolved to establish
the Employee Incentive Plan and the corresponding US
Sub-Plan as a means of providing incentives to
employees, consultants and executive or non-
executive directors of the Group.
Purpose of the EIP and the US Sub-Plan
The purpose of the EIP is to provide a long-term
incentive for employees to work with commitment
toward enhancing the value of the Group and the
shares for the benefit of shareholders, as well as to
retain and attract employees whose contributions are,
or may be, beneficial to the growth and development of
the Group.
Issue of Options Excluded from Group’s 15% Limit
Under ASX Listing Rule 7.1
Under ASX Listing Rule 7.1, subject to certain
exceptions, a company must not issue more than 15%
of the company’s total
issued capital without
shareholder approval. An exception is provided in ASX
Listing Rule 7.2 (exception 9) where holders of ordinary
securities approve the issue of securities under an
employee incentive scheme as an exception to ASX
Listing Rule 7.1.
EIP Plan Terms and Conditions
Incentives under the EIP include a Share, an Option, or
a Performance Right. Incentives are granted to eligible
employees of and collaborators with (collectively
known as Participants) the Group at the discretion of
the Board of Directors.
In granting the incentives, which are issued for nil
the Directors evaluate potential
consideration,
participants with respect to their abilities, experience,
responsibilities and their contribution to the Group.
Unless otherwise determined by the Board, an option
incentive held by a Participant will lapse upon the first
to occur of:
Its expiry date
The Participant failing to meet the Incentive’s
vesting conditions with the prescribed period;
If the Participant ceases to be employed by the
Group due to resignation or retirement:
For vested options, 30 days after the date of
cessation of employment (or such longer period
as the Board determines);
For unvested Incentives, the date of cessation of
employment (or such longer period as the Board
determines);
If the Participant ceases to be employed by the
Group due to retrenchment, or the Participant’s
death, permanent illness or permanent physical or
mental
incapacity (as certified by a medical
practitioner who is approved in writing by the
Board):
For vested options, 12 months after the date of
cessation of employment (or such longer period
as the Board determines); and
For unvested Incentives, the date of cessation of
employment (or such longer period as the Board
determines)
If the Participant ceases to be employed by the
Group for any other reason:
For vested incentives, 30 days after the date of
cessation of employment (or such longer period
as the Board determines); and
For unvested incentives, the date of cessation of
employment (or such longer period as the Board
determines)
A determination by the Board that the participant:
Has been dismissed or removed from office as
an employee or Director of the Group for any
reason which entitles the Group to dismiss the
Participant without notice, or
Acted fraudulently, dishonestly or in breach of
the participant’s obligations to the Group.
87
For personal use only If at any time or times prior to the exercise by the
participant or vesting of any outstanding Incentives,
there is any reconstruction (including a consolidation,
subdivision, reduction, cancellation or return) of the
issued capital of the Group, the terms of Incentives and
the rights of the participant will be amended by the
Board to the extent necessary to comply with the ASX
Listing Rules at the time of the reconstruction.
An Incentive is personal to the Participant to whom it
was granted, and the Participant may not sell, assign,
transfer or otherwise dispose of, or make a declaration
of trust in respect of, an Incentive except to an
Associate of that Participant. This does not prevent
the exercise of the Incentive by the estate of a
deceased Participant.
The contractual life of each Incentive granted is
specified by the participant’s Incentive agreement.
There are no cash settlement alternatives. The
Incentive issued under the plan cannot be transferred
and are not quoted as tradeable instruments on the
ASX.
US Sub-Plan
The US Sub-Plan is effective for a period of ten years
from the date of its adoption by the Board, unless
terminated earlier by the Board.
The maximum number of Shares which may be issued
under the US Sub-Plan is 15 million Shares.
The exercise price of an Option will not be less than the
fair market value of a Share on the date of grant of the
Option.
The Group’s obligation to issue securities under the US
in the
is subject to any restrictions
Sub-Plan
Corporations Act or the ASX Listing Rules.
Share Options
Share options are issued to eligible participants under
the EIP. The Group issued 1,547,000 (2018: 7,410,200)
share options to participants under the EIP during the
current year.
For new and existing employees and consultants,
share options issued during the period generally vest
on the one-year anniversary of the date of grant or of
employment in an amount equal to the product of one-
fourth multiplied by the number of total options
granted.
In a situation where there is likely to be a change of
control of the Group, the Board may have the discretion
to determine whether some, none or all of the LTI
instruments will vest.
Performance Shares
Performance shares (or Performance Rights) are
issued to eligible participants under the EIP
in
recognition of their contribution to the performance of
the Group and are often subject to meeting individual
performance hurdles. The Group issued 485,000 (2018:
3,383,000) performance rights to employees under the
EIP during the current year.
All performance rights are issued at the discretion of
the Board of Directors and are
issued for nil
consideration. The performance rights granted during
the year vest in full on the third anniversary of the grant
date. In the event of a change of control, all
outstanding unvested performance rights may vest on
an accelerated basis immediately.
If the participant ceases employment with the Group
where such cessation of employment is due to the
participant’s death, permanent illness or permanent
physical or permanent mental incapacity (as certified
by a medical practitioner who is approved in writing by
the Board), the performance rights will fully vest on the
third anniversary of the date of grant.
Performance rights which have not vested shall
automatically lapse and be forfeited without con-
sideration upon cessation of
the participant’s
employment with the Group.
The fair value of performance shares is measured by
using the stock price for ImpediMed Limited as of the
close of business on the day prior to the grant date
multiplied by the number of eligible shares. The
number of eligible shares
is measured using a
combination of the probability of future service and the
achievement of specific goals.
Employee Share Option Plan (ESOP)
The Group has two schemes under the ESOP it
operated, one for eligible Australian participants and
one for eligible US participants. The only outstanding
grants for the ESOP were issued prior to 30 October
2014, as no additional awards were issued under the
ESOP after the creation of the EIP.
ESOP Schemes Terms and Conditions
Share options were granted to participants of the
Group at the discretion of the Board of Directors.
When a participant ceases to be eligible to continue
participating in the plan prior to vesting their share
options, the unvested share options are forfeited. The
participant has 30 days to exercise vested options
after cession of employment.
In the event of a change of control of the Group, at the
discretion of the Board of Directors, all options vest
immediately.
The contractual life of each option granted is specified
by the stock option agreement not to exceed ten years
from the date of grant. There are no cash settlement
alternatives. The options issued under the plan cannot
be transferred and are not quoted as tradeable
instruments on the ASX.
88
For personal use only Chief Executive Option Plan
There were no options
issued under the Chief
Executive option plan during the current or prior year.
All CEO option grants are subject to approval by the
shareholders.
Options issued to the CEO were issued under the EIP or
ESOP, except for the issuance of 7,252,561 options
upon hiring. Those options were issued outside of any
existing option schemes upon shareholder approval at
the 2012 AGM. For additional information on option
SHARE OPTIONS
grants, refer to the Managing Director and CEO
Remuneration section of the Remuneration Report.
(B) SUMMARY
OF
OPTIONS
AND
PERFORMANCE RIGHTS
Employee Incentive Plan (EIP)
The following table illustrates the number of shares
(Number) and weighted average exercise price (WAEP)
of share options under the EIP plans:
Balance at the Beginning of the Year
Granted During the Year
Forfeited During the Year
Balance at the End of the Year
Exercisable at 30 June
PERFORMANCE RIGHTS
Balance at the Beginning of the Year
Granted During the Year
Forfeited During the Year
Exercised During the Year
Balance at the End of the Year
Exercisable at 30 June
2019
2018
Number
18,216,070
1,547,000
(1,582,299)
18,180,771
10,237,487
WAEP $
0.89
0.31
0.74
0.86
0.86
Number
13,746,000
7,410,200
(2,670,130)
18,216,070
7,324,236
2019
2018
Number
4,431,500
485,000
-
-
4,916,500
-
WAEP $
-
-
-
-
-
-
Number
3,638,000
3,383,000
(509,500)
(2,080,000)
4,431,500
-
WAEP $
0.97
0.80
1.02
0.89
0.81
WAEP $
-
-
-
-
-
-
89
For personal use only Employee Share Option Plan (ESOP)
The following table illustrates the number of shares (Number) and weighted average exercise price (WAEP) of share
options under the ESOP schemes:
Balance at the Beginning of the Year
Forfeited During the Year
Exercised During the Year
Expired During the Year
Balance at the End of the Year
Exercisable at 30 June
SHARE OPTIONS
2019
2018
Number
14,009,968
(158,550)
(1,560,364)
(1,425,924)
10,865,130
10,865,130
WAEP $
0.28
0.32
0.11
0.25
0.30
0.30
Number
15,547,827
(48,875)
(1,387,619)
(101,365)
14,009,968
14,009,968
Number of Options
106,500
169,771
5,345,000
1,446,500
300,000
375,000
200,000
821,000
590,500
335,000
872,000
120,000
262,500
5,575,000
306,000
578,000
70,000
75,000
100,000
533,000
18,180,771
PERFORMANCE RIGHTS
Number of Rights
100,000
635,000
331,500
57,000
3,128,000
180,000
310,000
175,000
4,916,500
Exercise Price ($)
$0.73 - $0.815
$0.69 - $0.87
$0.69
$0.87
$1.03 - $1.05
$0.89
$1.32
$1.66
$1.47
$1.46
$1.46
$0.74
$0.64
$0.82
$0.68
$0.52
$0.23
$0.23
$0.14
$0.14
Exercise Price ($) (i)
-
-
-
-
-
-
-
-
(i) Exercise price is nil as performance rights are issued for nil consideration.
WAEP $
0.27
0.14
0.19
0.39
0.28
0.28
Expiry Date
14-Jul-19
15-Aug-19
4-Dec-21
1-Jul-22
8-Dec-22
18-May-23
1-Aug-23
25-Oct-23
4-Nov-23
13-Nov-23
14-Nov-23
28-Apr-24
13-Sep-24
15-Nov-24
27-Apr-25
31-Jul-25
1-Oct-25
1-Dec-25
1-Jan-26
1-Apr-26
Expiry Date
31-Jul-19
14-Nov-19
25-Oct-20
4-Nov-20
15-Nov-20
27-Apr-21
31-Jul-21
5-Jun-22
90
For personal use only Employee Stock Option Plan (ESOP)
The year-end balance is represented by:
Number of Options
48,583
175,000
2,020,574
100,000
1,168,412
100,000
7,252,561
10,865,130
Exercise Price ($)
$0.21
$0.18
$0.11-$0.44
$0.18
$0.21-$0.26
$0.44
$0.35
Expiry Date
15-Aug-19
31-Dec-19
30-Jun-20
31-Dec-20
30-Jun-21
30-Jun-22
8-Jul-22
Chief Executive Option Plan
issued under the Chief
There were no options
Executive Option Plan during the current year. Options
issued to the Chief Executive Officer during the current
year were issued under the Employee Incentive Plan
and during prior years were issued under the Employee
Incentive Plan and the Employee Share Option Plan.
(C) WEIGHTED AVERAGE REMAINING
CONTRACTUAL LIFE
Employee Share Option Plan (ESOP)
The weighted average remaining contractual life for
share options outstanding as at 30 June 2019 is 2.47
(2018: 2.96) years.
Employee Incentive Plan (EIP)
The weighted average remaining contractual life for
share options outstanding as at 30 June 2019 is 4.10
(2018: 3.74) years. The weighted average remaining
contractual life for performance rights outstanding as
at 30 June 2019 is 1.34 (2018: 2.22) years.
(D) RANGE OF EXERCISE PRICES
Employee Share Option Plan (ESOP)
The range of exercise prices for options outstanding as
Expected Volatility (%)
Risk Free Interest Rate (%)
Expected Life of Options (Years)
Option Exercise Price ($)
Stock Price at Grant Date ($)
Calculated Fair Value at Grant Date ($)
at 30 June 2019 is $0.11-0.44 (2018: $0.11-0.68)
Employee Incentive Plan (EIP)
The range of exercise prices for options outstanding as
at 30 June 2019 is $0.14-1.66 (2018: $0.46-1.66). The
performance rights are issued at nil exercise price.
(E) WEIGHTED AVERAGE FAIR VALUE
Employee Incentive Plan (EIP)
The weighted average fair value of options granted
during the year was $0.31 (2018: $0.87).
(F) OPTION PRICING MODEL
The fair value of the equity-settled share options
granted under the EIP and ESOP schemes is estimated
as at the date of grant using either the Black Scholes
option valuation model or the Monte Carlo Simulation
is a restriction on the share price for
if there
exercisability of the option – taking into account the
terms and conditions upon which the options were
granted.
The following table lists the inputs in the models used
for the financial years ended 30 June 2019 and 2018:
EIP
Issue 2019
52.70%
2.36%
7
$0.14 - $0.52
$0.14 - $0.41
$0.06 - $0.24
EIP
Issue 2018
75.90%
1.90%
7
$0.64 - $0.82
$0.66 - $0.82
$0.37 - $0.53
The fair value of performance shares is measured by
using the stock price for ImpediMed Limited as of the
close of business on the day prior to the grant date
multiplied by the number of eligible shares.
The dividend yield for all tranches was nil. The
weighted average share price for all tranches at grant
date was $0.31 in financial year 2019 (2018: $0.81).
The effects of early exercise have been incorporated
into the calculations by using an expected life for the
option that is shorter than the contractual life based on
management’s expectation of exercise behaviour,
which is not necessarily indicative of exercise patterns
that may occur in the future.
The expected volatility rate was determined using a
91
For personal use only sample of industry averages based on historical share
prices. The resulting expected volatility therefore
reflects the assumption that the industry averages are
indicative of future trends, which may not necessarily
be the actual outcome.
(G) ACCOUNTING POLICIES FOR EQUITY-
SETTLED TRANSACTIONS
The cost of equity-settled transactions is measured by
reference to the fair value of the equity instruments at
the date they are granted. The fair value is determined
by a Black-Scholes model, details of which are given in
Note 18.
In valuing equity-settled transactions, no account is
taken of any vesting conditions, other than conditions
linked to the price of the shares of ImpediMed Limited
(market conditions) if applicable.
The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity, over
the period in which the performance and/or service
condition are fulfilled (the vesting period), ending on
the date on which the relevant employees become fully
entitled to the award (the vesting date).
At each subsequent reporting date until vesting, the
cumulative charge to the statement of comprehensive
income is the product of:
The grant date fair value of the award
The current best estimate of the number of awards
that will vest, taking into account such factors as
the likelihood of employee turnover during the
vesting period and the likelihood of non-market
performance conditions being met; and
The expired portion of the vesting period
The charge to the statement of comprehensive income
for the period is the cumulative amount as calculated
above less the amounts already charged in previous
periods. There is a corresponding entry to equity.
investment
Equity-settled awards granted by the Parent to
employees of subsidiaries are recognised in the
financial statements as an
Parent’s separate
additional
in the subsidiary with a
corresponding credit to equity. As a result, the expense
recognised by ImpediMed Limited in relation to equity-
settled awards only represents the expense associated
with grants to employees of the parent. The expense
is the total expense
recognised by the Group
associated with all such awards.
Until an award has vested, any amounts recorded are
contingent and will be adjusted if more or fewer awards
vest than were originally anticipated to do so. Any
award subject to a market condition is considered to
vest
irrespective of whether or not that market
condition is fulfilled, provided that all other conditions
are satisfied.
If the terms of an equity-settled award are modified, as
a minimum an expense is recognised as if the terms
had not been modified. An additional expense is
recognised for any modification that increases the
the share-based payment
total
is otherwise beneficial to the
arrangement, or
employee, as measured at the date of modification.
fair value of
During the prior period, certain options of the MD & CEO
were modified to amend the terms of the grant. The
amendment removed the market-based exercise
conditions of the options. Under AASB 2, this change
is viewed as a modification which must be accounted
for. Specifically, AASB 2 re-quires both the option using
the original terms and the option with the modified
terms to be fair valued at the modification date. The
difference between the valuations is recorded in the
profit and loss to the extent the fair value of the
modified options is greater. Based on the work
performed in the current financial year, no additional
expense was recorded for the modification of the MD
& CEO’s options, given the fair value of the modified
option was not deemed to be greater than the existing
option.
92
For personal use only 19. Income Tax
Income Tax Expense
The major components of income tax are:
Current Income Tax
Current Income Tax Expense
Prior Year Over/Under Provision
Income Tax Loss Reported in the Consolidated Statement of
Comprehensive Income
2019
$000
47
4
51
2018
$000
42
-
42
Tax Losses
The Group has tax losses in Australia of approximately
$71.0 million (2018: $64.6 million) and tax losses in the
U.S. of approximately USD $94.2 million (2018: USD
$83.8 million) that are available for offset against
future taxable profits of the companies in which the
Statement of Comprehensive Income Disclosure
losses arose, subject to satisfying the relevant income
tax loss carry forward rules. U.S. tax losses of USD
$68.2 million incurred prior to 2017 have a 20-year
expiry period, with an expiry range of 2027 to 2037. No
deferred tax asset has been recorded in relation to
these tax losses.
A reconciliation between tax expense and the accounting profit
before income tax multiplied by the Group’s applicable tax rate is as
follows:
Group’s Applicable Tax Rate is as Follows:
Accounting Loss Before Tax from Continuing Operations and
Discontinued Operations
Accounting Loss Before Income Tax
At Australia’s Statutory Income Tax Rate of 27.5% (2018: 27.5%)
Adjustment for Current Income Tax of Previous Years
Expenditure Not Allowable for Income Tax Purposes
Other Assessable Income
Non-Assessable Income
Other Temporary Differences Not Recognised
Foreign Tax Rate Adjustment (i)
Tax Losses Not Recognised (ii)
Prior Year Over/Under Provision
Income Tax Loss Reported in the Consolidated Statement of
Comprehensive Income
(i) Movement in the Foreign Tax Rate Adjustment is related to the decrease in the US corporate tax rate.
(ii) Movement in the Tax Losses Not Recognised is primarily related to increased capitalised development costs.
2019
$000
2018
$000
(24,072)
(27,132)
(24,072)
(6,620)
(27,132)
(7,461)
2,261
42
(721)
(523)
960
4,648
4
51
2,365
25
(810)
128
(4)
5,799
-
42
93
For personal use only Deferred Tax Disclosures
Deferred Tax Assets
Doubtful Debts
Employee Entitlements
S40-880 Costs
Patents and License Costs
Sundry Creditors and Accruals
Losses Available for Offset Against Future Taxable Income
Revenue Received in Advance
Inventory and Other Provisions
Unrealised Foreign Exchange Losses
Deferred Tax Liabilities
Income not Derived for Tax Purposes
Subtotal
Deferred Tax Assets not Recognisable
Net Deferred Tax Balance Per Accounts
Current tax assets and liabilities for the current and
prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities
based on the current period’s taxable income. The tax
rates and tax laws used to compute the amount are
those that are enacted or substantially enacted by
local jurisdictions as of the reporting date.
Deferred income tax is provided on all temporary
differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred income tax
liabilities are recognised for all taxable temporary
differences except:
When the deferred income tax liability arises from
the initial recognition of goodwill or of an asset or
liability in a transaction that is not a buy in
combination and that, at the time of the transaction,
affects neither the accounting profit nor taxable
profit or loss; or
When the taxable temporary difference is associated
with investments in subsidiaries and the timing of
the reversal of the temporary difference can be
controlled and it is probably that the temporary
difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences
and the carry-forward of unused tax credits and
unused tax losses can be utilised, except:
When the deferred income tax asset relating to the
deductible temporary difference arises from the
initial recognition of an asset or liability in a
transaction that is not a business combination and,
2019
$000
13
201
250
384
75
45,861
53
279
(5,981)
-
41,135
(41,135)
-
2018
$000
106
238
551
268
97
46,237
22
395
(3,728)
(27)
44,159
(44,159)
-
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
When
the deductible
temporary difference
is
associated with investments in subsidiaries in which
case a deferred tax asset is only recognised to the
is probable that the temporary
extent that
difference will reverse in the foreseeable future and
taxable profit will be available against which the
temporary difference can be utilised.
it
The carrying amount of deferred income tax as-sets is
reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
income
Unrecognised deferred
tax assets are
reassessed at each reporting date and are recognised
to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at tax
rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax
rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are
offset only if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the
deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
Other Taxes
Revenues, expenses, assets, and
recognised net of the amount of GST except:
liabilities are
Where the GST incurred on a purchase of goods and
is not recoverable from the taxation
services
94
For personal use only 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 in current assets, which, in
general 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 balance sheet.
Cash flows are included in the Cash Flow Statement 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.
The Group is subject to sales taxation in the US in
various state jurisdictions. Sales tax has several
components:
20. Parent Entity Information
Information Relating to ImpediMed Limited:
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Issued Capital
Accumulated Losses
Performance Share Reserve
Share Option Reserve
Total Shareholder’s Equity
Loss of the Parent Entity
Total Comprehensive Loss of the Parent Entity
On revenue, the Group collects sales tax from
customers and remits it to state governments.
For expenses and assets, the Group pays sales tax
on the purchase of goods that are used in the course
of business. Sales tax is recognised as part of the
cost of acquisition of the asset or as part of the
item as applicable. Receivables and
expense
payables are stated with the amount of sales tax
included.
Receipts from customers are included in the Cash Flow
Statement including sales tax amounts collected
which are payable to the taxation authority. These
amounts are offset by payments made to taxation
authorities during each period in the Cash Flow
Statement. Cash flows on expenses and as-sets are
included in the Cash Flow Statement on a gross basis
and are classified as operating, in-vesting or financing
cash flows as appropriate.
2019
$000
4,171
6,946
1,495
1,531
219,727
(236,562)
4,070
14,801
2,036
(7,472)
(7,472)
2018
$000
4,889
5,932
987
1,009
219,746
(229,090)
2,960
13,062
6,678
(8,231)
(8,231)
The Parent has not entered into any guarantees in
relation to the debts of its subsidiaries. The Parent has
not entered into any contractual commitments for the
acquisition of property, plant or equipment.
Details of any commitments and any operating leases
of the Parent entity are described in note 23 and any
contingent liabilities of the Parent entity are described
in note 24.
95
For personal use only 21. Related Party Disclosures
Subsidiaries
The consolidated financial statements include the
financial statements of ImpediMed Limited and the
subsidiaries listed in the following table:
Name
Country of Incorporation
% Equity Interest
2019
100
100
100
2018
100
100
100
Key Management Personnel (KMP)
Details
including remuneration paid, are including in note 18.
to key management personnel,
relating
For the year ended 30 June 2019, there were no other
transactions with KMP that would be considered
related party transactions.
ImpediMed Incorporated
ImpediMed Hellas
ImpediMed TM Incorporated
United States
Greece
United States
Ultimate Parent
ImpediMed Limited is the ultimate Australian parent
entity.
Details relating to Directors, including remuneration
paid, are included in the Directors’ Report.
For the year ended 30 June 2019, and for the prior year,
no transactions with Directors occurred that would be
considered related party transactions.
Terms and Conditions of Transactions with Related
Parties
Sales to and purchases from related parties are made
in arm’s length transactions both at normal market
prices and on normal commercial terms.
22. Auditor’s Remuneration
Amounts Received or Due and Receivable by Ernst & Young Australia
for:
Audit and Review of Financial Report of the Entity
Total Auditor’s Remuneration
2019
$000
209
209
2018
$000
232
232
23. Commitments
Operating Lease Commitments
The Group is under lease for one (1) Australian-based
headquarters, one (1) US-based operating facilities,
and one (1) Greece-based facility. The leases have a
total range of
less than one-year to four-years
remaining. Several of the leases contain a termination
option prior to the end of the lease, leaving a range of
less than one-year to three-years remaining under the
minimum lease obligations. In April 2017, the Group
signed a three-year commercial lease extension for the
Brisbane-based headquarters of the Parent entity.
Commitments for facilities include base rental fees
and an estimate for common-area-maintenance (CAM)
fees, where applicable.
There are no restrictions placed on the Group for
entering into these leases.
Future minimum
rentals payable under non-
cancellable operating leases as at 30 June 2019 are as
follows:
Within One Year
After One Year but not More than Five
Total Commitments
2019
$000
358
666
1,024
2018
$000
334
862
1,196
96
For personal use only Finance Lease Commitments
The Group does not currently have any open finance
leases.
Expenditure Commitments
At 30 June 2019, the Group has commitments of $2.2
million (2018: $2.2 million) relating to the funding of
future product builds, clinical trials, advertising and
promotional activities, and other activities. The
expenditure commitments primarily relate to the
commercialisation of the SOZO device with L-Dex
technology in the US marketplace, as well as the
PREVENT and CHF clinical trials.
Within One Year
Total Expenditure Commitments
Royalty Commitments
At 30 June 2019, the Group has liabilities related to
commitments for the payment of royalties, which are
provided on product sales and are accrued and
recognised for the year ended 30 June 2019.
Accounting Policies for Onerous Contracts
An onerous contract provision
is recognised for
contracts that are deemed onerous. Contracts are
deemed onerous if the unavoidable costs of meeting
the obligations under the contract exceed the benefits
expected to be received.
Accounting Policies for Commitments
The determination of whether an arrangement is or
contains a lease is based on the substance of the
arrangement and requires and assessment of whether
the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement
conveys a right to use the asset.
to
transfer
leases, which
Group as Lessee
Finance
the Group
substantially all the risks and benefits incidental to
ownership of the leased item, are capitalised at the
inception of the lease at the fair value of the leased
asset or, if lower, at the present value of the minimum
lease payments. Lease payments are apportioned
between the finance charges and reduction of the
lease liability to achieve a constant rate of interest on
the remaining balance of the liability. Finance charges
are recognised as an expense in profit or loss. The
Group had no material finance leases at 30 June 2019
(30 June 2018: nil).
Capitalised leased assets are depreciated over the
shorter of the estimated useful life of the asset or the
lease term if there is no reasonable certainty that the
Group will obtain ownership by the end of the lease
term.
lease payments are recognised as an
Operating
expense in the statement of comprehensive income on
a straight-line basis over the lease term. Operating
lease incentives are recognised as a liability when
received and subsequently reduced by allocating lease
2019
$000
2,177
2,177
2018
$000
2,153
2,153
payments between rental expense and reduction of the
liability.
Group as a Lessor
Leases in which the Group retains substantially all the
risks and benefits of ownership of the leased asset are
classified as operating leases. When material, initial
direct costs incurred in negotiating an operating lease
are added to the carrying amount of the leased asset
and recognised as an expense over the lease term on
the same basis as rental income.
Impact of AASB 16 Leases
The AASB issued a new accounting standard, called
AASB 16 Leases. It replaces the previous accounting
standard, AASB 117 Leases is effective 1 January
2019. The objective of the new standard is to set out
the principles that both parties to a contract [customer
(lessee) and supplier (lessor)] apply, in order to provide
relevant information about leases. The changes to the
accounting standard don’t represent major changes
for the lessor, but it does mean that the lessee is
required to recognise assets and liabilities arising from
a lease on its balance sheet.
Consistent with the Group’s current accounting
policies for leases, leases under AASB 117 to date have
been categorised as either ‘finance leases’ (which are
reported on the balance sheet) or ‘operating leases’
(which are disclosed only in the notes to the financial
statements). The new standard looks to provide
transparency on the
lease assets and
liabilities by requiring that they be brought on to the
balance sheet and eliminates the classification of
leases as either operating leases or finance leases for
a lessee.
lessee’s
The key changes related to AASB 16, as they relate to
the Group, are as follows:
Lessees will no longer be required to classify leases
as either operating or finance leases.
Lessees will recognise all leases in the balance sheet
in a similar manner to existing finance leases by
recognising a ‘right-of-use’ asset and a lease liability
for the present value of the obligation.
97
For personal use only If the lease contract is for a period of 12 months or
less, or it is a lease of a low value asset, then the
lessee may elect to apply recognition exemption to
lease. Under this exemption entities can
this
recognise the lease payments as an expense in profit
or loss on either a straight-line basis, or another
systematic basis that represents the pattern of your
expected benefits.
Lessees will no
longer recognise straight-line
expenses for operating lease costs. All leases will
loaded expense, comprising
incur a front-end
depreciation on the right-of-use asset, and interest
on the lease liability.
Lessees will no longer recognise the lease expense
as an operating expense in rent and property
expenses.
be
depreciation/amortization and interest in operating
expenses.
expense
The
will
The Group intends to apply the simplified transition
approach and will not restate comparative amounts for
the year prior to first adoption. The Group expects to
use the transition option that measures the right-of-
use assets as the amount of the lease liability on
adoption.
The Group has determined the estimated impact in
relation to the right-of-use assets and lease liabilities
will be materially consistent with the undiscounted
cashflows in Note 23 Commitments.
24. Contingencies
Legal Claims
At 30 June 2019, the Group has no known open claims
or lawsuits against it.
Contingent Liabilities
The Group had no contingent liabilities as at 30 June
2019 or 2018.
Cross Guarantees
As a policy, the Group does not undertake any cross
guarantees.
25. Events After the Balance Sheet Date
The Group announced the completion of its fully
underwritten non-renounceable entitlement offer on 19
July 2019. Under the Entitlement Offer, eligible
shareholders were invited to subscribe for one (1) new
share (“New Share”) for every three (3) shares in the
Company of which they were the registered holder, at
an issue price of $0.11 per New Share.
In accordance with the ASX Listing Rules, ImpediMed
advised that it received valid applications under the
in
Entitlement Offer for 88,249,289 new shares
ImpediMed (to raise approximately $9.7 million).
The balance of 38,353,639 new shares, being shares
in
not subscribed
accordance with their pro rata entitlements under the
Entitlement Offer, were issued under the underwriting
arrangements described in the Offer Booklet.
for by eligible shareholders
The new shares were issued on 24 July 2019.
growth
Proceeds from the Entitlement Offer will be applied to
fund
expanding
reimbursement and sales and marketing efforts in the
US market, software enhancements, heart failure
clinical trials and general working capital.
initiatives,
including
98
For personal use only 26. Financial Risk Management Objectives
and Policies
The Group’s principal financial instruments comprise
receivables, payables, cash and short-term deposits.
Risk Exposures and Responses
The Group has various financial instruments such as
trade debtors and trade creditors, which arise directly
from its operations. It is, and has been throughout the
period under review, the Group’s policy that no trading
in financial instruments shall be undertaken.
The Group manages its exposure to risk in accordance
with the Group’s financial risk management policy. The
objective of the policy is to support the delivery of the
Group’s financial targets while protecting future
financial security. The Board reviews and agrees to
policies
risks which are
summarized below.
for managing
these
Financial Assets
Cash and Cash Equivalents
Restricted Cash, Current and Non-current
Net Exposure
The main risks arising from the Group’s financial
instruments are credit risk,
interest risk, foreign
currency risk and liquidity risk. The Group uses
different methods to measure and manage different
types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate and
foreign exchange risk and assessments of market
forecasts for interest rate and foreign exchange.
Ageing analyses are undertaken to manage credit risk.
Liquidity risk is monitored through the development of
future rolling cash flow forecasts.
Interest Rate Risk
At balance date, the Group had the following mix of
financial assets exposed to Australian and US interest
rate risk that are not designated in cash flow hedges:
2019
$000
11,330
76
11,406
2018
$000
31,345
95
31,440
The Group does not enter into interest rate swaps,
designated to hedge underlying assets or debt
obligations, to manage the interest rate risk.
The Group consistently analyses its interest rate
exposure. Within this analysis, consideration is given
to potential renewals of existing positions, alternative
financing, and the mix of fixed and variable interest
rates.
At 30 June 2019, if interest rates had moved, as
illustrated in the table below, with all other variables
held constant, post-tax loss and equity would have
been affected as follows:
+1.0% (100 Basis Points)
-0.5% (50 Basis Points)
The movements in loss are due to higher/lower interest
income from variable rate cash balances. Reasonably
possible movements in interest rates were determined
based on the Group’s current credit rating and
relationships with financial institutions and economic
forecaster’s expectations.
Post Tax Loss
Higher / (Lower)
2019
$000
114
(57)
2018
$000
314
(157)
99
For personal use only Foreign Currency Risk
As a result of operations in the US and purchases of
inventory denominated in United States dollars (USD),
the Group’s balance sheet can be affected by
movements in the USD/AUD exchange rates. The
Group has transactional currency exposure related to
USD, EUR, and GBP resulting from sales activities into
the US and Europe.
The Group holds the majority of its funds in the
functional currency of the entity where the funds are
expected to be spent. Only funds held in the currencies
other
functional currency are
considered at risk of foreign currency are considered
at risk of foreign currency fluctuations.
than an entity’s
The group does not enter into any forward contracts or
any other instrument to hedge the currency exposure,
as the Group maintains a significant portion of
available funds in USD to match USD expected
expenses.
Whilst the Group commenced operations in Europe
during the prior year, the amounts that are sensitive to
foreign currency risk are deemed immaterial, other
than the financial assets denoted.
At 30 June 2019, the Group had the following exposure
to foreign currency:
Financial Assets
Cash and Cash Equivalents – USD
Cash and Cash Equivalents – EUR (i)
Cash and Cash Equivalents – GBP (ii)
Trade and Other Receivables – USD
Trade and Other Receivables – EUR (i)
Financial Liabilities
Trade and Other Payables – USD
Net Exposure
(i) EUR is Euro
(ii) GBP is Great Britain Pound
2019
$000
154
64
3
10
31
262
54
208
2018
$000
210
7
1
109
-
327
-
327
At 30 June 2019, had the Australian dollar moved against the US dollar, as illustrated in the table below, with all
other variables held constant, post-tax loss and equity would have been affected as follows:
AUD to Foreign Currency + 15% (2018: +15%)
AUD to Foreign Currency – 15% (2018: –15%)
Significant assumptions used in the foreign currency
exposure sensitivity analysis include the following:
in
foreign
Reasonable possible movements
exchange rates were determined based on review
of the last two years’ historical movements and
economic forecasters’ expectations.
reasonably possible movement was
The
calculated by taking the USD spot rates at balance
date, moving this spot rate by the reasonable
possible movements and then re-converting the
USD into AUD with the “new spot-rate”. This
methodology reflects the translation methodology
undertaken by the Group.
The net exposure at balance date is representative
of what the Group was and is expecting to be
Post Tax Loss
Higher / (Lower)
2019
$000
(27)
38
2018
$000
(41)
102
exposed to in the next twelve months from balance
date.
The sensitivity analysis does not include financial
instruments that are non-monetary items as these
are not considered to give rise to currency risk.
Sensitivities were only calculated on USD balances in
instances where the functional currency is not the
USD.
Credit Risk
Credit risk arises from the financial assets of the
Group, which comprise cash and cash equivalents,
trade and other receivables and other financial assets.
The Group’s exposure to credit risk arises from
potential default of the counter party, with a maximum
100
For personal use only exposure equal to the carrying amount of these
instruments. Exposure at balance date is addressed in
each applicable note.
The Group does not hold any credit derivatives to
offset its credit exposure.
The Group seeks to trade only with recognised,
creditworthy third parties, and as such collateral is
typically not requested nor is it the Group’s policy to
securities its trade and other receivables.
In addition, receivable balances are monitored on an
ongoing basis with the result that the Group’s
experience of bad debts is not significant.
With respect to credit risk arising from other financial
assets of the Group, the exposure to credit risk arises
from default of the counter party, with a maximum
exposure equal to the carrying amount of these
instruments.
There are no significant concentrations of credit risk
within the Group and $75,000 in outstanding term
deposits held at the end of the financial year (2018:
$75,000). The Group holds a large percentage of cash
in Money Market accounts through Bank of America in
the US. These accounts are not federally insured but
are highly rated and highly regulated investment funds
that carry low risk of default.
The Parent has a policy of lending to its wholly owned
subsidiaries ensuring their continued operations. The
subsidiaries are continually monitored and should
there be any risk that they are unable to repay the debt
appropriate steps will be taken to remedy this
situation.
Liquidity Risk
Liquidity risk arises from the financial liabilities of the
Group and the Group’s subsequent ability to meet their
obligations to repay their financial liabilities as and
when they fall due.
The Group’s objective is to maintain a balance between
continuity of funding and flexibility through the use of
bank overdrafts, bank loans and finance leases. The
Group has no bank overdrafts or bank loans at 30 June
2019.
The table below reflects all contractually fixed
payments and receivables for settlement, repayments
and interest resulting from recognised financial assets
and liabilities without fixed amount or timing are based
on the conditions existing at 30 June 2019.
Maturity Analysis of Financial Assets
The risk implied from the values shown in the table
below, reflects a balance view of cash inflows and
outflows. Trade payables, and other financial liabilities
mainly originate from the financing of assets used in
ongoing operations such as property, plant, equipment
and investments in working capital e.g. inventories and
trade receivables.
future
These assets are considered in the Group’s overall
liquidity risk. To monitor existing financial assets and
liabilities as well as to enable an effective controlling
the Group has established
of
comprehensive risk reporting covering their worldwide
business unit
expectations of
management of expected settlement of financial
assets and liabilities.
reflects
risks,
that
Liquid assets comprising cash and cash equivalents,
restricted cash, trade and other receivables, and other
financial assets are considered in the Group’s overall
liquidity risk. The Group monitors that sufficient liquid
assets are available to meet all the required short-term
cash payments.
Year Ended 30 June 2019
Liquid Financial Assets
Cash and Cash Equivalents
Trade and Other Receivables
Other Financial Assets
Subtotal
Financial Liabilities
Trade and Other Payables
Net Flow
≤ 6 months
$000
6 – 12 months
$000
1 – 5 years
$000
11,330
3,488
-
14,818
(2,393)
12,425
-
-
-
-
(54)
(54)
-
-
45
45
-
45
Total
$000
11,330
3,488
45
14,863
(2,447)
12,416
101
For personal use only Year Ended 30 June 2018
Liquid Financial Assets
Cash and Cash Equivalents
Trade and Other Receivables
Other Financial Assets
Subtotal
Financial Liabilities
Trade and Other Payables
Net Flow
≤ 6 months
$000
6 – 12 months
$000
1 – 5 years
$000
31,345
4,100
-
35,445
(2,286)
33,159
-
-
-
-
-
-
-
-
95
95
-
95
Total
$000
31,345
4,100
95
35,540
(2,286)
33,254
The Group monitors rolling forecasts of liquidity on the basis of expected cash flow.
27. Financial Instruments
Fair Values
Fair values have been determined as follows:
Cash and Cash Equivalents:
The carrying amount approximates fair value because
of the short-term maturity and/or because the interest
rates applied are variable interest rates.
Restricted Cash:
The carrying amount approximates fair value because
the interest rates applied are variable interest rates.
Trade Receivables and Payables:
The carrying amount approximates fair value because
of the short-term maturity.
Other Financial Assets:
By reference to the current market value of another
instrument which is substantially the same or is
calculated based on expected cash flows of the
underlying net asset base of the financial asset.
Management have assessed that the fair values of the
following assets approximate their carrying amounts:
Financial Assets
Cash and Cash Equivalents
Restricted Cash
Trade and Other Receivables
Contract Assets
Other Financial Assets
Total Financial Assets
Financial Liabilities
Trade and Other Payables
Contract Liabilities
Total Financial Liabilities
Carrying Amount
Fair Value
2019
$000
11,330
31
3,488
497
45
15,391
(2,447)
(520)
(2,967)
2018
$000
(restated)
31,345
31
4,100
8
64
35,548
(2,286)
(230)
(2,516)
2019
$000
11,330
31
3,488
497
45
15,391
(2,447)
(520)
(2,967)
2018
$000
(restated)
31,345
31
4,100
8
64
35,548
(2,286)
(230)
(2,516)
Judgements,
28. Significant Accounting Policies
Significant
Accounting
Estimates and Assumptions
The preparation of the Group’s consolidated financial
statements
to make
requires Management
judgements, estimates and assumptions that affect
the reported amounts in the financial statements.
Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent
assets and liabilities, commitments, revenue and
expenses. Management bases its judgements and
estimates on historical experience and on other
various factors it believes to be reasonable under the
circumstances, the results of which form the basis of
the carrying values of assets and liabilities that are not
readily apparent from other sources.
Management has
identified the following critical
accounting policies for which significant judgements,
estimates and assumptions are made. Actual results
may differ from these estimates under different
assumptions and conditions and may materially affect
financial results or the financial position reported in
future periods.
Further details of the nature of these assumptions and
conditions may be found in the relevant notes to the
financial statements.
Impairment of Non-Financial Assets Other than
102
For personal use only Goodwill
The Group assesses impairment of all assets at each
reporting date by evaluating conditions specific to the
Group and to the particular asset that may lead to
impairment. These include product and manufacturing
performance, technology, economic and political
environments and future sales expectations. If an
impairment trigger exists, the recoverable amount of
the asset is determined.
For assets other than inventory, the
impairment
triggers used by the Group did not show any indication
of impairment as at 30 June 2019. As a result, no
impairment has been formally estimated and no
impairment loss has been recognised for these assets
for this financial period. Refer to Note 12 for the
complete details regarding impairment testing.
Impairment of Goodwill and Intangibles with Indefinite
Useful Lives
The Group determines whether goodwill and
intangibles with indefinite useful lives are impaired at
least on an annual basis. This requires an estimation
of the recoverable amount of the cash generating
units, using a value in use discounted cash flow
methodology, to which the goodwill and intangibles
with indefinite useful lives are allocated. Management
loss should be
determined that no
recognised for this financial reporting period. The
assumptions used in this estimation of goodwill and
intangibles with indefinite useful lives are discussed in
Note 12.
impairment
Inventory Impairment
The Group reviews the value of inventories held to
determine if inventories are being held at the lower of
cost and net realisable value. This requires a
determination by Management of
the cost of
inventories held and the subsequent recognition of
these items as expenses, including any write-down to
net realisable value. During the year ended 30 June
2019, there were no write-downs to inventory. During
the year ended 30 June 2018, a review showed that due
to
the commercial availability of SOZO, an
obsolescence indicator is likely to be present for
legacy BIS measurement devices. An impairment loss
of approximately $709,000 was recognised during the
period ended 30 June 2018
to BIS
measurement devices and components.
related
to
judgement as
Taxation
The Group’s accounting policy for taxation requires
management’s
types of
arrangements considered to be a tax on income in
contrast to an operating cost. Judgement is also
required in assessing whether deferred tax assets and
certain deferred tax liabilities are recognised on the
balance sheet. Deferred tax assets, including those
arising from un-recouped tax losses, capital losses and
the
temporary differences, are recognised only where it is
considered more likely than not that they will be
recovered, which is dependent on the generation of
sufficient future taxable profits. Deferred tax liabilities
arising from temporary differences in investments,
caused principally by retained earnings held in foreign
tax jurisdictions, are recognised unless repatriation of
retained earnings can be controlled and are not
expected to occur in the foreseeable future.
tax
legislation. These
Assumptions about the generation of future taxable
profits and repatriation of retained earnings depend on
management’s estimates of future cash flows. These
depend on estimates of future production and sales
volumes, operating costs, capital expenditure,
dividends and other capital management transactions.
Judgements are also required about the application of
income
judgements and
assumptions are subject to risk and uncertainty, hence
there is a possibility that changes in circumstances
will alter expectations, which may impact the amount
of deferred tax assets and deferred tax liabilities
recognised on the balance sheet and the amount of
other tax losses and temporary differences not yet
recognised. Refer to Note 19 for the complete details
regarding deferred tax assets and deferred tax
liabilities.
Development Costs
Under AASB 138 Intangible Assets, Management must
determine the degree to which items are recognised as
intangible assets, whether those items are purchased
or self-created (at cost). Items are capitalised, as
opposed to expensed, if, and only if (1) it is probable
that the future economic benefits that are attributable
to the asset will flow to the entity and (2) the cost of
the asset can be measured reliably and other criteria
outlined in respect of development costs are met.
This requires Management to make judgements as to
the probability of future economic benefits of
development project costs incurred by the Group, as
well as to determine when technical and commercial
feasibility of the assets for sale of use have been
established.
Research and Development Tax Incentive
The Group measures the amount of refund from the
Australian Tax Office in relation to the research and
development tax incentive on an annual basis. This
requires an estimation and judgement by Management
of the eligible expenses under the AusIndustry
guidelines of self-assessment for the tax credit.
Management works in conjunction with registered tax
agents and AusIndustry to determine the eligibility of
expenses and recognises a receivable and other
income when there is reasonable assurance such
amounts will be received.
103
For personal use only Share-based Payment Transactions
The Group measures the cost of equity-settled
transactions with employees and consultants by
reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is
determined by management. The Black Scholes model
is used for option grants without conditions, while the
Monte Carlo model is used for option grants with
conditions. The assumptions are detailed in Note 18.
The accounting estimates and assumptions relating to
equity-settled share-based payments would have no
impact on the carrying amounts of assets and
liabilities within the next annual reporting period but
may impact expenses and equity.
29. Discontinued Operations
In October 2018, the Group announced that it agreed to
the divestiture of XiTRON Technologies,
Inc.
(“XiTRON”), a wholly owned subsidiary of the Parent.
Under the terms of the agreement, the Group agreed to
sell the majority of the net assets of the test and
measurement (“T&M”) business. The T&M business of
XiTRON represented the entirety of the Group’s T&M
operating segment through its closure in October
2018.
During the current financial period, the Group applied
AASB 5 Non-current Assets Held for Sale and
Discontinued Operations as part of accounting for the
divestiture of XiTRON Technologies, Inc. and the T&M
operating segment. The entirety of the transaction
occurred during the current financial period. AASB 5
retrospective classification as a
prohibits
discontinued operation, when the discontinued criteria
are met after the end of the reporting period.
With the T&M business of XiTRON being classified as
a discontinued operation, the T&M operating segment
is no longer presented as a distinct operating segment.
Refer to Note 4 Segment Reporting for additional
information on segment reporting.
the
The results of the test and measurement operating
segment for the year ended 30 June are presented as
follows:
Revenue from Contracts with Customers
Expenses
Operating Loss
Impairment Loss Recognised on the Remeasurement of Fair Value
Less Costs to Sell
Loss for the Year from Discontinued Operations
Proceeds from the Disposal of a Business, Net of Disposal Costs
Net Assets Associated with Discontinued Operations
Loss for the Year from Discontinued Operations
2019
$000
292
(386)
(94)
(33)
(127)
467
594
(127)
2018
$000
1,280
(1,404)
(124)
-
(124)
-
-
(124)
The net cash flows incurred by the test and measurement operating segment for the year ended 30 June are presented
as follows:
Operating
Investing
Financing
Net Cash Flow
30. Changes
Policies
to
the Group’s Accounting
Impact of AASB 15 Revenue from Contracts
with Customers
The Group applied AASB 15 Revenue from Contracts
with Customers for the first time during the current
financial period. The nature and effect of the changes
as a result of adoption of these new accounting
standards are described below.
AASB 15 supersedes AASB 111 Construction
Contracts, AASB 118 Revenue
related
Interpretations and it applies, with limited exceptions,
and
2019
$000
8
-
-
8
2018
$000
52
-
-
52
to all revenue arising from contracts with customers.
AASB 15 establishes a five-step model to account for
revenue arising from contracts with customers and
requires that revenue be recognised at an amount that
reflects the consideration to which an entity expects to
be entitled in exchange for transferring goods or
services to a customer.
AASB 15 requires entities to apply judgement, taking
into consideration all of the relevant facts and
circumstances when applying each step of the model
to contracts with their customers. The standard also
specifies the accounting for the incremental costs of
obtaining a contract and the costs directly related to
104
For personal use only fulfilling a contract.
AASB 15 Revenue Recognition Policy
(a) Sale of Goods – Device and Consumable Revenue
(Legacy)
Revenue from the stand-alone sale of legacy devices
and consumables is recognised at the point in time
when control of the asset is transferred to the
customer, generally on delivery of the devices or
consumables, and when there is persuasive evidence,
usually in the form of a purchase order or an executed
sales agreement with a customer at the time of
delivery of the goods to the customer that no further
work or processing
is required to satisfy the
performance obligation, the quantity and quality of the
goods has been determined, the price is fixed and
generally title has passed (for shipped goods this is the
bill of lading date).
The Group considers whether there are other promises
in the contract that are separate performance
obligations to which a portion of the transaction price
needs to be allocated.
(b) SOZO 2.0 – Sale of Device and Subscription
Services
The Group enters into contracts with customers for
bundled sales of SOZO 2.0 devices and subscription
services. The Group has determined that these
bundled sales contracts are comprised of two
performance obligations because the promises to
transfer the SOZO device and provide subscription
services for ongoing assessment are capable of being
distinct and separately identified.
Accordingly, the Group allocates the transaction price,
which may include a discount, based on the relative
stand-alone selling prices of the equipment and
subscription services.
The transaction price allocated to the SOZO device is
recognised at the point in time when control of the
asset is transferred to the customer, generally on
in accordance with the
delivery of the devices
contractual terms, and when there is persuasive
evidence, usually in the form of a purchase order or an
executed sales agreement with a customer at the time
of delivery of the goods to the customer that no further
work or processing
is required to satisfy the
performance obligation, the quantity and quality of the
goods has been determined, the price is fixed and
generally title has passed (for shipped goods this is the
bill of lading date).
The revenue from subscription services related to
ongoing provision of access to assessment and
testing for SOZO is recognised at a point in time based
on the enforceable contract value based on the quoted
price in the form of a purchase order or an executed
sales agreement with a customer.
The Group considers whether there are other promises
in the contract that are separate performance
obligations to which a portion of the transaction price
needs to be allocated.
(c) SOZO 3.0 – Sale of Device and Subscription
Services
The Group enters into contracts with customers for
bundled sales of SOZO 3.0 devices and subscription
services. The Group has determined that these
bundled sales contracts are comprised of one
performance obligations because the promises to
transfer the SOZO device and subscription services for
ongoing assessment are not capable of being distinct
and separately identified.
Accordingly, the Group allocates the entire transaction
price, which may include a discount, to the one
performance obligation.
Revenue under these contracts are recongised using
the input cost method based on the estimated cost of
fulfilling the completion of the promises in accordance
is
with the contractual terms, and when there
persuasive evidence, usually in the form of a purchase
order or an executed sales agreement with a customer
at the time of delivery of the goods to the customer.
The Group considers whether there are other promises
in the contract that are separate performance
obligations to which a portion of the transaction price
needs to be allocated.
(d) Rendering of Other Services
Revenue from the repair of instruments is recognised
at the point
in time upon completion of the
performance obligation, which is typically when the
repair has been performed. When the contract
outcome cannot be estimated reliably, revenue is
recognised only to the extent of the expenses
recognised that are recoverable.
During the year ended 30 June 2019 the Group
recognised revenue totaling $58,000 (30 June 2018:
$66,000) for the rendering of other services.
Key Considerations in the Revenue Policy
In determining
the
subscription services, the Group considers the effect
of the following:
transaction price
the
for
(i) Judgements
The Group applied the following judgements that
significantly affect the determination of the amount
and timing of revenue from contracts with customers:
Identifying the number of performance obligations
in a bundled sale of equipment and subscription
services under different contractual arrangement for
SOZO 2.0 and 3.0. The Group provides devices that
105
For personal use only are bundled together with the subscription services
to a customer. Under the contractual terms the
subscription services are a promise to provide
ongoing access to assessment and testing services
in the future and are part of the negotiated exchange
between the Group and the customer. The delivery of
those services can vary under the contracts and
impacts
the determination of performance
obligations.
(ii) Significant Financing Component
The Group may receive short-term advances from its
customers in the form of up-front payment of devices,
consumables or advance payment of subscription
services. The group has not identified any significant
financing components within these advances. Using
the practical expedient in AASB 15, the Group does not
adjust the promised amount of consideration for the
effects of a significant financing component if it
expects, at contract inception, that the period between
the transfer of the promised good or service to the
customer and when the customer pays for that good or
service will be one year or less. There was no
adjustment made in respect of this in the current or
prior periods.
(iii) Warranty Obligations
The Group typically provides warranties for general
repairs of defects that existed at the time of sale, as
required by law. These assurance-type warranties are
accounted for under AASB 137 Provisions, Contingent
Liabilities and Contingent Assets.
(iv) Incremental Costs of Obtaining a Contract
The Group pays sales commission to its employees for
each contract that they obtain for bundled sales of
SOZO devices and subscription services. The Group
has elected to apply the optional practical expedient
for costs to obtain a contract which allows the Group
to immediately expense sales commissions (included
under employee benefits and part of cost of sales)
because the amortisation period of the asset that the
Group otherwise would have used is one year or less.
(v) Contract Balances
Contract Assets
A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the Group performs by transferring goods
or services to a customer before the customer pays
consideration or before payment is due, a contract
asset is recognised for the earned consideration that
is conditional.
Trade Receivables
A receivable represents the Group’s right to an amount
of consideration that is unconditional (i.e., only the
passage of time is required before payment of the
consideration is due).
Contract Liabilities
A contract liability is the obligation to transfer goods or
services to a customer for which the Group has
received consideration (or an amount of consideration
is due) from the customer. If a customer pays
consideration before the Group transfers goods or
services to the customer, a contract
is
recognised when the payment is made, or the payment
is due (whichever is earlier). Contract liabilities are
recognised as revenue when the Group completes the
performance obligations under the contract.
liability
106
For personal use only the
Impact of Adopting the New Standard – Restatement
of Prior Period Balances
The Group adopted AASB 15 using
full
retrospective method of adoption. There was no
opening retained earnings adjustment or contract
asset and liability as at 1 July 2017 due to the fact that
there were no SOZO bundled contracts in existence at
this date. The effect of the transition on the current
period has not been disclosed as the standard provides
an optional practical expedient. The effect of adopting
AASB 15 on the comparative period is, as follows:
(i)
Impact on Statement of Profit or Loss (Increase/(Decrease) in Profit)
Revenue from Devices
Total Revenue
Loss from Continuing Operations Before Income Tax
Net Loss from Continuing Operations
(ii) Impact on Basic and Diluted Earnings per Share (EPS) (Increase/(Decrease) in EPS)
Basic and Diluted Earnings per Share
(iii) Impact on the Consolidated Balance Sheet at 30 June 2018
Trade and Other Receivables
Contract Assets
Trade and Other Payables
Contract Liabilities
Accumulated Losses
The change did not have a material impact on OCI or
the consolidated statement of cash flows for the
period.
liability balances due
There have been no significant changes in the contract
to
asset and contract
impairment, expected credit losses, change in the time
frame for a right to consideration to become
unconditional, or change in the time frame for a
performance obligation to be satisfied during the
reporting period.
30 June 2018
$000
(198)
(198)
(198)
(198)
30 June 2018
$000
-
30 June 2018
$000
(206)
8
(230)
230
(198)
107
For personal use only Impact of AASB 9 Financial Instruments
The Group applied AASB 9 Financial Instruments for
the first time during the current financial period. The
nature and effect of the changes as a result of adoption
of these new accounting standards are described
below.
The majority of the Group’s tangible assets are cash,
short term deposits, accounts receivables, and
inventory.
The new classification requirements of the standard
did not have a material impact on these existing
financial assets.
On adoption of the new standard at 1 July 2018, the
Group reviewed on transition the effect that any credit
loss impact had on trade receivables at 30 June 2018
and determined that AASB 9 did not have a material
financial
effect on
statements compared to the Group’s existing policies
on provisioning
trade
receivables.
the Group’s consolidated
for doubtful debts on
Impairment of Financial Assets
The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair
value through profit or loss. ECLs are based on the
difference between the contractual cash flows due in
accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an
approximation of the original effective interest rate.
The expected cash flows will include cash flows from
the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
in two stages. For credit
ECLs are recognised
exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are
provided for credit losses that result from default
events that are possible within the next 12-months (a
12-month ECL). For those credit exposures for which
there has been a significant increase in credit risk
since initial recognition, a loss allowance is required for
credit losses expected over the remaining life of the
exposure, irrespective of the timing of the default (a
lifetime ECL).
For trade receivables and contract assets, the Group
applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit
risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date. The Group has
established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-
looking factors specific to the debtors and the
economic environment.
transaction;
Standards – Classification
Impact of AASB 2016-5 Amendments to Australian
Accounting
and
Measurement of Share-based Payment Transactions
The AASB issued amendments to AASB 2 Share-based
Payment that address three main areas: the effects of
vesting conditions on the measurement of a cash-
settled share-based payment
the
classification of a share-based payment transaction
with net settlement features for withholding tax
obligations; and accounting where a modification to
the terms and conditions of a share-based payment
transaction changes its classification from cash-
settled to equity-settled. The Group has no share-
based payment transactions with net settlement
features for withholding tax obligations and had not
made any modifications to the terms and conditions of
its share-based payment transactions. Therefore,
these amendments do not have any impact on the
Group’s consolidated financial statements.
108
For personal use only Directors’ Declaration
For the year-ended 30 June 2019
In accordance with a resolution of the Directors of
ImpediMed Limited, we state that:
In the opinion of the Directors:
(a) The financial statements and notes of the
consolidated entity for the year-ended 30 June
2019 are in accordance with the Corporations Act
2001, including
(i) giving a true and fair view of the
consolidated entity’s financial position as
at 30 June 2019 and of its performance of
the year-ended on that date; and
(ii) complying with Australian Accounting
the Australian
(including
the
Interpretations) and
Standards
Accounting
Corporations Regulations 2001;
(b) the consolidated financial statements and notes
International Financial
also comply with the
Reporting Standards as disclosed in note 1.
(c) there are reasonable grounds to believe that the
Company will be able to pay its debts as and when
they become due and payable
This determination has been made after receiving the
declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act
2001 for the financial year ending 30 June 2019.
On behalf of the Board
Scott Ward
Chairman
Judith Downes
Director
21 August 2019
109
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111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent Auditor's Report to the Members of ImpediMed Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of ImpediMed Limited (the Company) and its subsidiaries (collectively
the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes to the financial statements, including
a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019
and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
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We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
Going Concern
Why significant
How our audit addressed the key audit matter
As disclosed in Note 1 of the financial report the
Directors concluded that in their opinion despite the
Group generating operating losses and net cash
outflows for the year, there are reasonable grounds to
believe that the Group has the ability to pay its debts
as and when they fall due. The financial report has
been prepared on a going concern basis.
The going concern assumption is fundamental to the
basis of preparation of the financial report.
As the Group has not generated a profit since it
started operations and given the judgment involved in
preparing cash flow forecasts, we considered this
matter and the related disclosures to be a Key Audit
Matter.
Our audit procedures included the following:
•
•
•
•
•
•
Assessed the Directors’ determination and conclusion
as to the going concern basis of preparation.
Considered the operating plans of the Group and
evaluated the assumptions made in the cash flows
forecasts on which the Directors’ assessment is based.
Considered the historical reliability of the Group’s
cash flow forecasts and agreed the cash flow forecasts
to the Board approved operating plan.
Considered the impact of a range of sensitivities to
the cash flow model.
Traced to subsequent receipt the cash inflow of
$13.167 million from the rights offer completed in
July 2019.
Evaluated the adequacy of the Group’s going concern
related disclosures in the financial report.
Research and development receivable
Why significant
How our audit addressed the key audit matter
As outlined in Note 6 Other Income and Expenses, the
Group recognised a research & development (R&D) tax
incentive totaling $2.620m for the year ended 30
June 2019.
The matter was considered a key audit matter for the
following reasons:
•
•
The R&D tax incentive balance is a significant
component of income to the Group; and
As outlined in Note 28 Significant accounting
judgments, estimates and assumptions, there is a
degree of judgment involved as to whether the
R&D tax incentive meets the recognition criteria
and in determining the measurement of the
rebate including the assessment of the eligibility
and appropriateness of the apportionment of
eligible expenses based on R&D activities
undertaken by the Group.
Our audit procedures included the following:
•
•
•
•
•
Assessed the mathematical accuracy of the
calculation of the Group’s claim.
On a sample basis, agreed expenses claimed to source
documentation, such as payroll information and
invoices.
Involved our R&D taxation specialists to review the
Group’s R&D claim and to consider whether the
Group’s R&D claim meets the recognition criteria.
Obtained representations from the Group that the
activities are eligible under the self-assessed R&D Tax
Incentive criteria, and for a sample of transactions
tested the support for the technical and expenditure
components of the R&D tax claim.
Considered the appropriateness of the disclosures in
the financial report.
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Revenue recognition
Why significant
How our audit addressed the key audit matter
As outlined in Note 30 Changes to the Group’s
Accounting Policies, the Group has applied AASB 15
Revenue from Contacts with Customers (AASB 15) for
the first time during the current financial period.
The matter was considered a key audit matter due to
the Group having a number of different types of
revenue, including multi-element arrangements, and
the judgements involved in the determination of the
performance obligations which impacts the amount
and timing of the recognition of revenue from
contracts with customers.
Our audit procedures included the following:
•
•
•
For each material revenue stream, we assessed the
Group’s application of AASB 15, including reviewing
the contractual terms of the different customer
contracts and the application of the requirements of
AABS 15.
Selected a sample of revenue contracts and assessed
whether revenue was recognised in accordance with
AASB 15.
Assessed the adequacy of the financial report
disclosures included in Note 30 to the financial
statements.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2019 Annual Report, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
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Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
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From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included the directors' report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of ImpediMed Limited for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Jennifer Barker
Partner
Brisbane
21 August 2019
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Shareholder Information (Unaudited)
Additional information required under ASX Listing Rule 4.10 and not shown elsewhere in this Annual Report is as
follows. This information is current as at 26 July 2019.
(A) DISTRIBUTION OF SHAREHOLDERS
The distribution of Issued Capital is as follows:
Side of Holding
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Number of
Shareholders
504
2,141
691
773
394
4,503
Ordinary
Shares
426.722.198
72,510,796
5,423,477
2,363,795
136,681
507,156,947
(B) DISTRIBUTION OF PERFORMANCE RIGHTS HOLDERS
The distribution of unquoted Performance Rights on issue are:
Side of Holding
100,001 and Over
1 to 100,000
Total
(C) DISTRIBUTION OF OPTIONS
The distribution of unquoted options on issue are:
Side of Holding
100,001 and Over
1 to 100,000
Total
Number of
Holders
9
8
17
Unlisted
Performance Rights
4,366,500
550,000
4,916,500
Number of
Holders
28
21
49
Unlisted
Options
28,016,401
1,029,500
29,045,901
(D) LESS THAN MARKETABLE PARCELS OF ORDINARY SHARES
There are 883 shareholders with unmarketable parcels totaling 1,227,997 shares.
% of Issued
Capital
84.14%
14.30%
1.07%
0.47%
0.03%
100.00%
% of Issued
Capital
89%
11%
100%
% of Issued
Capital
96%
4%
100%
115
For personal use only (E) 20 LARGEST SHAREHOLDERS
Shareholder
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSI EDA
SANDHURST TRUSTEES LTD
BNP PARIBAS NOMS PTY LTD
MOORE FAMILY NOMINEE PTY LTD
PAKASOLUTO PTY LIMITED
FOCUS ASSET MANAGEMENT PTY LTD
MBA INVESTMENTS PTY LTD
SUNLORA PTY LTD
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
THORPE ROAD NOMINEES PTY LTD
PASAGEAN PTY LIMITED
MS NICOLA JAGUSCH
Total
Total Quoted Equity Securities
Number of Fully
Paid Ordinary
Shares
53,868,520
43,671,207
34,767,137
22,805,968
22,023,151
19,802,727
19,521,363
8,178,993
6,160,302
4,281,955
4,000,000
3,981,715
3,637,252
3,408,051
3,400,000
3,380,447
3,354,977
3,221,288
2,650,001
2,176,202
268,291,256
507,156,947
% of Issued
Capital
10.62%
8.61%
6.86%
4.50%
4.34%
3.90%
3.85%
1.61%
1.21%
0.84%
0.79%
0.79%
0.72%
0.67%
0.67%
0.67%
0.66%
0.64%
0.52%
0.43%
52.90%
(F) UNQUOTED EQUITY SECURITIES
The company had the following unquoted securities
on issue as at 26 July 2019: 29,045,901 holders of
performance rights issued as part of an incentive
scheme.
The company had the following unquoted
performance rights on issue as at 26 July 2019:
4,916,500 holders of performance rights issued as
part of an incentive scheme.
(G) SUBSTANTIAL SHAREHOLDERS
Shareholder
The names of the Substantial Shareholders listed in the Group’s Register as at 12 August 2019:
Number of Fully Paid
Ordinary Shares
80,737,989
28,670,197
Allan Gray Australia Pty Limited and its related bodies corporate
Paradice Investment Management
% of Issued
Capital
15.92%
5.65%
(H) RESTRICTED SECURITIES
The company had no restricted securities on issue as
at 26 July 2019.
(J) ON-MARKET BUY-BACKS
There is no current on-market buy-back in relation to
the Company’s securities.
(I) VOTING RIGHTS
In accordance with the Constitution each member
present at a meeting whether in person, or by proxy, or
by power of attorney, or in duly authorized
representative in the case of a corporate member,
shall have one vote on a show of hands, and one vote
for each fully paid ordinary share, on a poll.
Performance rights have no voting rights.
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