For personal use only For personal use only 3. Remuneration Report
Contents
Remuneration Committee
Chair Letter (Unaudited)
Remuneration Report (Audited)
Directors’ Meetings
Committee Membership
Rounding
Auditor’s Independence Declaration
and Non-Audit Services
Page 35
Page 36
Page 37
Page 54
Page 54
Page 54
Page 55
Page 59
Page 60
4. Financial Statements
Consolidated Statement of
Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of
Cash Flows
Consolidated Statement of
Page 62
Changes in Equity
Notes to the Financial Statements Page 63
Page 97
Directors’ Declaration
Audit Report
Page 98
Shareholder Information
(Unaudited)
Page 61
Page 103
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 and News Flow
Operating and Financial Review
Significant Changes
in the State of Affairs
Significant Events After
the Balance Sheet Date
Likely Developments &
Expected Results
Significant Risks to the Business
Environmental Regulations
and Performance
Indemnification and Insurance
of Directors and Officers
Indemnification of Auditors
Share Options and
Performance Rights
Employees
Diversity
Corporate Governance
Page 05
Page 06
Page 07
Page 10
Page 13
Page 14
Page 15
Page 15
Page 15
Page 17
Page 20
Page 24
Page 26
Page 26
Page 28
Page 30
Page 30
Page 30
Page 31
Page 32
Page 32
Page 32
3
For personal use only
For personal use only ImpediMed Limited
Corporate Information
This financial report covers the consolidated entity
“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’s presentation.
(the
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
D Anderson
J Downes
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 US
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 US
Bankers
Commonwealth Bank of Australia
240 Queen Street
Brisbane QLD 4000
Bank of America
701 B Street Suite 2300
San Diego CA 92101 US
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 the Board of Directors and Management, I am
pleased to present the Annual Report for ImpediMed Limited
for the 2020 financial year. I would also like to extend our
gratitude to our customers who continued to serve patients
with lymphedema throughout the corona virus crisis.
Thank you as well to our shareholders, for your continued
commitment to our mission, as we continue to make
bioimpedance spectroscopy the standard of care for patients.
COVID-19 Update
Our Managing Director and CEO, Rick Carreon, has shown
tremendous vision and leadership in transforming ImpediMed
to become a contemporary medical technology company. This
vision has put the Company in a position to thrive, even during
the pandemic. Technology is being adopted within the medical
community at a rapid pace, and our connected digital health
platform puts us at the forefront of that digital revolution in
medicine.
There are many challenges ahead as we continue to learn
what the long-term impacts of COVID-19 will be on society,
healthcare and our business, but our board is very confident
in our ability to maintain our current customer base and to
achieve meaningful growth in the coming quarters. The
recurring revenue streams from our SaaS business model
shelter the Company from purchasing limitations on capital
equipment that many hospitals and clinics have imposed, and
the acceptance of our technology continues to accelerate.
Remuneration
The Board, at the direction of the Remuneration Committee,
has continued to listen to shareholder feedback regarding
remuneration practices as
to Company
performance. In response to this, the MD/CEO agreed to a
temporary 30% reduction in base salary and other executives
agreed to a temporary 10% reduction in base salary as of 1
April 2020. This was in addition to an earlier 20% reduction in
cash pay which is received as equity in lieu of cash under the
Executive Share Plan.
relate
they
These changes resulted in a 54% reduction to the MD/CEO’s
remuneration and a 47% reduction to key management
personnel remuneration, when compared to the previous
financial year.
In addition, the Non-executive Directors (NEDs) agreed to
receive 100% of directors’ fees as equity in lieu of cash under
the Non-executive Director Share Plan. In April 2020, the
NEDs also agreed to reduce their equity-based remuneration
by 25%.
“I am very proud of the commitment shown by
both the Board and Management in our
collective response to the global COVID-19
pandemic and to shareholder feedback. The
actions taken will assure the continuity of our
business during this crisis and enable the
Company to continue to drive critical growth
opportunities.”
I am very proud of the commitment shown by both the Board
and Management in our collective response to the global
COVID-19 pandemic and to shareholder feedback. The
actions taken will assure the continuity of our business during
this crisis and enable the Company to continue to drive critical
growth opportunities.
Please refer to the Remuneration Report for full details on
remuneration, including a letter from the Remuneration
Committee Chair, Don Williams. We are very grateful for
Don’s continued contributions to the Company over the course
of the year.
Board Composition
We have a strong Board of Directors at ImpediMed with the
experience and skill necessary to assure sound governance,
while also providing effective support and guidance for
Management.
We further strengthened our Board with the addition of David
Anderson who joined as a Non-Executive Director during the
year. David is the President and CEO of HealthNow Systems,
operating as Blue Cross Blue Shield of New York State and
he brings a deep understanding of reimbursement and health
insurance providers.
We are very excited to welcome a Director of David’s calibre
and experience to ImpediMed’s board. We anticipate David’s
experience will be invaluable in helping guide ImpediMed
through the commercialization of its SOZO Digital Health
Platform.
Gratitude
Finally, on behalf of the Board, I would like to thank our
ImpediMed employees for their perseverance during this
remarkable year. We are grateful for their dedication and
commitment to support our customers and patients during this
extraordinary time. We also express our gratitude to our
shareholders for your ongoing support throughout the year
and through our recent capital raise. As always, we look
forward to engaging with you throughout the year and at our
2020 Annual General Meeting.
Sincerely,
Scott R. Ward
Chairman
6
For personal use only
ever-evolving
“We have transformed our business to meet
the
environment…This
transformation began years ago when we
envisioned a connected digital health platform
that we believed would be able to meet the
ever-changing needs of physicians to better
serve their patients.”
falloff in patient testing at the onset of COVID-19 restrictions,
the reduction had no impact on the Company’s recurring
revenue under its SaaS model, which is based on a monthly
subscription fee per installed SOZO unit.
Pleasingly, a sharp rebound was seen in June as the
shutdown restrictions were eased in the US. In fact, patient
testing for the month of June was at an all-time record high for
the Company, with just over 8,600 tests recorded.
COVID-19
Chief Executive Officer’s
Letter
Richard Carreon,
Managing Director and CEO
Dear Shareholders,
First, I would like to thank the clinicians, staff and front lines
workers in the fight against COVID-19. Every day they
courageously face untold challenges to get us through this
global pandemic.
I also want to take a moment to thank our employees who
have tirelessly transformed this company to effectively
support our customers during these challenging times as well.
to meet
I firmly believe we have successfully navigated a very difficult
time during the global COVID-19 pandemic. We have
transformed our business
the ever-evolving
environment. This transformation did not just take place in the
last few months, this transformation began years ago when
we envisioned a connected digital health platform that we
believed would meet the ever-changing needs of physicians
and would help them better serve their patients. And although
we never envisioned a global pandemic, we set out to build a
company with a technology that would help transform
medicine. We believe these past initiatives have put us in a
strong position to thrive during these turbulent times.
Revenue and Key Metrics
SOZO® Revenue increased by 99% year-over-year to $4.7
million and the SaaS Revenue from SOZO increased by 110%
year-over-year to $3.4 million.
SOZO Annual Recurring Revenue increased by 53% year-
over-year to $5.2 million.
A number of additional key metrics further demonstrate the
strength of our business model and the recurring revenue from
SOZO accounts:
• Continued growth in the SOZO customer base, with
over 560 SOZO devices sold to date.
• Steadily increasing gross margins.
•
100% Renewal Rate on contracts up
renegotiation during the year.
for
• A Churn Rate of just 1%.
SOZO Patient Tests
Total patient tests on file at 30 June 2020 were over 128,000,
as hospitals continue to test at-risk patients during COVID-19,
which we believe demonstrates that SOZO is becoming the
standard of care for cancer patients.
Quarterly patient testing is recovering and is currently on pace
to exceed pre-COVID-19 levels. Although we saw a dramatic
*Projected Results for Q1’21
7
For personal use only
Thank you
Thank you again to the clinicians, staff and front lines workers
in the fight against COVID-19. Thank you, as well, to all our
ImpediMed team members and their families.
As always, my sincere thank you goes out to our Shareholders
for your continued support. We made tremendous progress in
the 2020 financial year and I am very confident we will
continue to see the adoption of our technology accelerate in
the coming years. We look forward to engaging with you and
reporting on our progress.
Stay safe and healthy.
Yours sincerely,
Richard Carreon
Managing Director and Chief Executive Officer
SOZO, being a digitally connected platform, gives us the
ability to see patient testing in real-time anywhere in the world.
This real-time insight provides a unique understanding of key
markets. It allows us to tailor our approach by better managing
and to reallocate our resources as we see various testing
patterns emerge.
Focus on Our Future
The Company remains focused on three key areas of growth:
Lymphoedema, Heart Failure and Renal Failure. We have
made excellent progress this past year in all three areas. This
progress will create significant value and accelerate the
uptake of SOZO in the coming years.
Lymphoedema
I am very pleased with the progress we made in lymphoedema
in the 2020 financial year, namely the expansion of SOZO at
several key cancer institutions and the announcement of a
national purchasing agreement with US Oncology and
McKesson.
The strength of our SaaS business model will continue to grow
as we further expand into our existing accounts and add new
hospital systems.
We expect the Meta-Analysis paper to be published in the first
quarter of the 2021 financial year. We believe this paper will
provide compelling Level 1 evidence to assist with enlisting
further amendments to the NCCN Guidelines® and with
submissions to insurers for private pay coverage.
In addition, the Company has further clinical papers due in the
2021 financial year related to the results from the PREVENT
Trial.
The Company reached a significant milestone in the 2020
financial year, with the alignment of policy coverage across all
10 Medicare Administrative Contractors. It has been a lot of
work over several years and is essential for obtaining private
pay coverage. Private pay coverage and/or NCCN Guidelines
that specify bioimpedance spectroscopy and/or L-Dex will
significantly accelerate the uptake of SOZO for lymphoedema.
All the groundwork has been done and we are looking forward
to sharing the Meta-Analysis paper and updating you with our
progress over the coming months.
Heart Failure
Our enhanced HF software has been launched. This came
after receiving feedback from various key opinion leaders and
then collaborating with the Scripps Heart Failure Institute.
Initial feedback of the product, with its enhanced usability and
data visualisations, has been extremely promising. We are in
discussions with first potential customers and expect to have
commercial sales to hospitals in the first half of the 2021
financial year.
Renal Failure
The Company is formulating its clinical, regulatory and
commercial strategies including discussions with potential
partners. While the Renal opportunity is still very much in its
formative stage, it remains a key focus and we can report
pleasing progress was made at the end of the 2020 financial
year.
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
including
President of the CardioVascular business of Medtronic
Inc., responsible for all worldwide operations of the
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
responsibility for 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.
Scott’s experience in the healthcare industry, including
his significant 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.
Listed company directorships held since 1 July
2017:
Company Name
ImpediMed Limited
Cardiovascular Systems Incorporated (i)
(i) US-based publicly traded company.
Appointed
July-13
November-13
Retired / Resigned
-
-
HealthNow operates as a licensee of the Blue Cross
Blue Shield Association, which in total, provides health
care services to 1 in every 3 Americans across all 50
states and US territories and is accepted at over 90% of
US doctors, hospitals and other health care providers.
David is a very experienced and respected US health
care industry executive who serves on the board of the
National Institute of Healthcare Management, Blue
Cross Blue Shield Association board of Directors, the
board of the New York State Business Council and the
New York State Insurance Advisory Committee as
appointed by the Commissioner of the Department of
Financial Services.
Additionally, David serves as an advisor and speaker
for Modern Healthcare’s CEO Power Panel and the
Aspen Institute. Prior to his role at BCBS, Mr. Anderson
was CEO of United Healthcare’s Southern California
Health Plan. Mr. Anderson is a native of Fort Wayne,
Indiana, and a graduate of Indiana University’s Kelly
School of Business, with a B.S. in Finance.
Listed company directorships held since 1 July
2017:
Retired / Resigned
-
David Anderson
BSc
Non-Executive Director
David Anderson was appointed to the Board in May
2020 and serves on the Remuneration Committee. He
currently serves as President and CEO of HealthNow
Systems Inc, operating as Blue Cross Blue Shield
health plans in New York State.
Company Name
ImpediMed Limited
Appointed
May-20
10
For personal use only
on
risk
financial management and audit and
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.
Judith 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
2017:
Judith Downes
BA(Hons), DipEd, GradDipBus(Acct), FAICD, FCPA,
FCA
Non-Executive Director
Judith Downes was appointed to the Board in April
2017, chairs
the Audit and Risk Management
Committee and serves on the Nomination Committee.
Judith brings over 25 years of accounting and senior
management expertise to the Board with a strong focus
Company Name
ImpediMed Limited
CleanTeQ Holdings Limited
Appointed
April-17
October-18
Retired / Resigned
-
-
Bob received his medical training at the University of
New South Wales, Australia, where he is now the Des
Renford Professor of Medicine, (UNSW). He was been
the inaugural Executive Director, Victor Chang Cardiac
Research Institute (VCCRI), Sydney, Australia, from
1994 – 2020, and continues there as Head, Molecular
Cardiology and Biophysics Division, VCCRI, and
Des Renford Professor of Medicine, University of NSW.
Bob returned 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
2017:
Robert Graham
AO, FAA, FAHMS, MBBS, M.D., 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
-
11
For personal use only
home
monitoring, remote care services, and big data analytics
to alleviate gaps in patient vigilance across in-hospital
and
currently
environments. Vios
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.
is
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-based
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 responsible for acquisitions, minority
investments, and joint ventures spanning existing
businesses and strategic whitespace areas. Amit has
an MBA from Stanford University and a Bachelors of
Biomedical Engineering
the University of
Minnesota.
from
Listed company directorships held since 1 July
2017:
Company Name
ImpediMed Limited
Appointed
March-17
Retired / Resigned
-
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
2017:
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)
Forte Biosciences (i)
(i) US-based publicly traded company.
Appointed
March-17
September-14
June-16
May-15
Jun-20
12
Retired / Resigned
-
December -19
-
-
-
For personal use only
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
$1.1B
organisations within Medtronic’s
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
2017:
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.
Rick has more than 30 years of experience in
management, sales and marketing, spanning the
consumer products and medical technology industries.
Rick has more than a decade of executive experience
working for Medtronic, a leading global manufacturer of
Company Name
ImpediMed Limited
Appointed
May-15
Retired / Resigned
-
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
D Anderson
J Downes
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
Company Secretary
Ordinary Shares
2,060,384
155,914
1,325,470
964,947
1,150,848
1,429,036
2,376,259
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.
13
For personal use only
Executives
Frank Vicini, M.D.
Chief Medical Officer
Timothy Cruickshank
Chief Financial Officer
Shashi Tripathi
Chief Technology Officer
David Adams
Senior Vice President
Operations and Strategic Planning Medical Affairs
Catherine Kingsford
Senior Vice President
Dennis Schlaht
Senior Vice President
R&D and Technology
Michael Bassett
Senior Vice President
Corporate and Strategic Development
Nancy Deisinger
Vice President
Human Resources
14
For personal use only
Dividends
No dividends were paid or proposed to be paid to
shareholders for the year ended 30 June 2020.
Principal Activities
ImpediMed is a medical software technology company
that non-invasively measures, monitors and manages
fluid status and tissue composition using bioimpedance
spectroscopy (BIS).
ImpediMed produces a family of FDA cleared and CE
Marked medical devices, including SOZO® for multiple
indications including heart failure, lymphoedema, and
protein calorie malnutrition. 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 BIS
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
involved in research & development with a marketing
capacity in Europe.
ImpediMed TM
(formally XiTRON
Incorporated
Technologies, Incorporated), a California corporation
formerly operating in power test and measurement
markets globally.
Incorporated
discontinued operations during the year ended 30 June
2019.
ImpediMed TM
For more information, visit www.impedimed.com.
15
For personal use only
About SOZO Digital Health Platform
SOZO,
the world’s most advanced, non-invasive
bioimpedance spectroscopy (BIS) device, delivers a
precise snapshot of fluid status and tissue composition
in less than 30 seconds. Using ImpediMed’s BIS
technology, SOZO measures 256 unique data points
over a wide spectrum of frequencies from 3 kHz to 1000
kHz. Results are available immediately online for easy
data access and sharing across an entire healthcare
system. The FDA-cleared, CE-marked and ARTG-listed
digital health platform aids in the early detection of
secondary lymphoedema, provides fluid status for
patients living with heart or renal failure, and can be
used to monitor and maintain overall health – all on a
single device.
For more information, visit:
https://www.impedimed.com/products/sozo/
About SOZO Fluid Analysis for Lymphoedema
for
fluid analysis
The SOZO
lymphoedema aids
clinicians in the early detection of lymphoedema in the
arms and legs. It utilises ImpediMed’s proprietary L-
Dex® lymphoedema index, which is 80% sensitive and
90% specific in detecting subclinical lymphoedema. L-
Dex detects fluid changes as small as 36 mL and has
been validated using gold standard lymphoscintigraphy.
The PREVENT Trial, which is the largest multi-site
randomised controlled trial ever performed to study
lymphoedema prevention, demonstrated that routine
monitoring with L-Dex combined with early intervention
resulted
lymphoedema
progression at one year.
in a 95%
reduction
in
For more information, visit:
https://www.impedimed.com/healthcare/cancer-
related-lymphoedema/
About SOZO Fluid Analysis for Heart Failure
The SOZO fluid analysis for heart failure provides an
objective measure of fluid overload in heart failure
patients. It utilises ImpediMed’s HF-Dex™ heart failure
index which is a measure of extracellular fluid as a
percent of total body water. HF-Dex is presented
together with BIS-derived reference ranges for normal
fluid volumes, elevated
fluid
overload, which is defined as HF-Dex greater than 51%.
When used as part of a clinical assessment of heart
failure, SOZO helps differentiate between fluid and
tissue-related weight changes to track response to
medication changes and to provide a marker for
readmission when HF-Dex is higher than 51%.
fluid volumes, and
For more information, visit:
https://www.impedimed.com/healthcare/heart-failure/
16
For personal use only
Milestones and News flow
HEART FAILURE and RENAL DISEASE
intensive
round of
22 July 2020
Scripps Collaboration Preps SOZO for Heart Failure
Launch
Following an
review and
improvements in collaboration with Dr. Tom Heywood
and Dr. Andrew Accardi at Scripps Health in San Diego,
California, USA, the Group announced the launch of its
fluid analysis for heart failure software. The updates
improve SOZO® usability and data visualisation for
cardiologists to implement SOZO® as an objective
measure of fluid volume for their heart failure patients.
15 April 2020
IPD Releases Heart Failure and Renal Disease
Software
The Group announces a new software release that
includes the HF-Dex™ heart failure assessment for the
SOZO® Digital Health Platform. The new software also
includes an assessment for patients with end stage
renal disease (ESRD).
in heart
HF-Dex is a novel tool for the assessment of fluid
failure patients. Defined as
overload
extracellular fluid as a percent of total body water, HF-
Dex is plotted against population-derived reference
ranges and presented alongside extracellular fluid
volume
these metrics provide
physicians valuable information to risk-stratify patients
as well as to monitor patients’ condition and response
to therapy.
(ECF). Together
The paper concluded “Statistically significant convergence
of symptom cluster scores with L-Dex® unit change support
BIS as beneficial
identification of subclinical
lymphoedema.”
in early
17
“Traditionally clinicians have poor tools for determining the
degree of congestion in heart failure, which leads to costly
hospital admissions for heart failure patients and can result in
readmissions after discharge,” said Dr. Tom Heywood,
Heart Failure Cardiologist and principal investigator of
ImpediMed’s heart failure home study.
“With this new software, we are bringing the benefits of SOZO
to thousands of patients living with heart failure and renal
disease,” said Richard Carreon, Managing Director and
CEO of ImpediMed. “This is the power of our SaaS model.
We can iterate quickly, respond to customer feedback, and
deliver new features and tools that help healthcare providers
care for their patients.”
LYMPHOEDEMA
3 June 2020
2-Year Trajectory Analysis Shows Significant
Benefit of BIS
A trajectory analysis of the PREVENT study that further
demonstrates the clear clinical utility of BIS was
published in Cancer Medicine. The analysis showed
that BIS detection of lymphoedema was statistically
significantly associated with patient symptoms through
2 years whereas
tape measure detection of
lymphoedema was not.
The data was presented as a trajectory analysis
showing the course of patients monitored by BIS or tape
measure and correlated
to symptoms. Trajectory
analyses are used to analyse longitudinal data, enabling
an understanding of how risk factors for diseases
develop over time. This is especially important for early
detection and disease prevention. The published
analysis included the same patient cohort of 508
patients
the previously published
PREVENT 1-year interim analysis with additional
triggers as expected in months 13 through 24.
that were
in
For personal use only
“The interim analysis from the PREVENT trial already
demonstrated that chronic lymphoedema can be preventable
for patients with breast cancer,” said Professor John
Boyages AM,
the ALERT
lymphoedema program and breast cancer radiation
oncologist at Icon Cancer Center and co-author. “The
exciting news is we can now detect lymphoedema when the
arm still looks normal and introduce therapy perhaps up to 12
months earlier than can be detected by clinical examination.”
founding director of
“Staying on the leading edge of technology is part of our
commitment to provide the best care for our patients,” said
Michael V. Seiden, M.D., PhD, President of The US
Oncology Network. “With SOZO, we will enhance our
survivorship program by offering lymphoedema prevention as
part of our comprehensive cancer care. This adds tremendous
value to our patients as well as the clinicians in our network.”
“At BS&W Rehab, we drive a high standard for outcomes and
patient satisfaction,” said PJ Gillard, PT, Vice President of
Outpatient Therapy, Baylor Scott and White Institute for
Rehabilitation. “The Lymphoedema Prevention Program is a
natural fit for our cancer survivorship program. Lymphoedema
has a clear impact on the quality of life of our cancer patients
and alleviating suffering
through
prevention is an inspiring goal.”
lymphoedema
from
technology and
20 April 2020
Independent BIS RE-AIM Analysis to be Released at
ASCO 2020
New results from a Reach, Effectiveness, Adoption,
Implementation, and Maintenance (RE-AIM) analysis of
its BIS
lymphoedema prevention
model-of-care were accepted as an abstract at the
annual scientific meeting of the American Society of
Clinical Oncology (ASCO), which was conducted as a
virtual meeting from 29 May to 2 June 2020. The RE-
AIM framework is designed to assess the sustainability
of evidence-based interventions and confirm that they
can be implemented effectively across a broad range of
care settings.
31 March 2020
IPD Announces National Purchasing Agreement
and Initial SOZO Order from US Oncology Care
Network
The first order of 16 units was shipped under the
recently announced national purchasing agreement
with a US oncology care network for its SOZO® Digital
Health Platform and Lymphoedema Prevention
Program. The national purchasing agreement allows
1,200 physicians at 470 cancer treatment locations
across the U.S. access to SOZO® and ImpediMed’s BIS
(L-Dex®) lymphoedema assessment. Together, these
physicians treat over 1 million patients annually.
20 March 2020
Baylor Scott & White Expands SOZO Use with New
iOS Software
Expansion of the Group’s partnership with Baylor Scott
& White Institute for Rehabilitation (BS&W Rehab),
which follows the release of the Group’s new iOS
compatible SOZOapp. Through this partnership, BS&W
Rehab will use ImpediMed’s SOZO® Digital Health
Platform to implement the Lymphoedema Prevention
Program for cancer patients.
BS&W offers a network of inpatient and outpatient
facilities to serve patients across the state of Texas. The
network
rehabilitation
hospitals, two rehabilitation units, more than 100
outpatient therapy centers and a full-service home
health division.
four stand-alone
includes
In this expansion, BS&W added 20 SOZO® units to their
Lymphoedema Prevention Program, giving them 25
total units to date under their program.
18
For personal use only
“The recent update to the NCCN Guidelines shows that the
medical community recognises the impact of lymphoedema
on cancer survivors and
like
ImpediMed’s LPP to address it,” said Richard Carreon,
Managing Director and CEO.
the value of programs
10 February 2020
NCCN Guidelines for Breast Cancer Updated for LE
NCCN Clinical Practice Guidelines for Breast Cancer
(NCCN Guidelines®) were updated with new
recommendations for early detection and diagnosis of
lymphoedema to achieve optimal management. This is
very positive for cancer patients as healthcare providers
are now encouraged to consider pretreatment baseline
measurements and is consistent with the ImpediMed
Lymphoedema Prevention Program’s (LPP) Test,
Trigger, Treat protocol. Additionally, healthcare
providers are now encouraged to consider pretreatment
baseline measurements for patients with lymphoedema
risk factors.
23 October 2019
Lymphoedema Prevention Program (LPP)
Launched
the new Lymphoedema
The Group kicked-off
Prevention Program (LPP) with the goal of ending
cancer-related lymphoedema (LE). The LPP utilises
ImpediMed’s Test, Trigger, Treat™ protocol for early
cancer-related
detection
lymphoedema. Routine lymphoedema testing of cancer
survivors uses the company’s FDA-cleared SOZO®
device with BIS (L-DEX) technology, which measures
extracellular fluid. A significant increase in a patient’s L-
Dex® score is a trigger to evaluate the patient and
initiate intervention.
intervention
and
”We are pleased that this submission to the FDA included real-
world evidence. This clearance will expand our clinical utility
and footprint in the oncology space,” said Richard Carreon,
Managing Director and CEO of ImpediMed.
“Because lymphoedema is often incurable, many patients
don’t realise it’s actually preventable,” said Chirag Shah,
M.D., staff, Director of Breast Radiation Oncology/Clinical
Research, Department of Radiation Oncology, Cleveland
Clinic. “This vitally important effort will help provide cancer
centres and physicians with the necessary tools to identify
lymphoedema earlier and potentially reverse its progression,
benefiting cancer survivors worldwide.”
PROTEIN CALORIE MALNUTRITION
28 November 2019
510K Clearance Protein Calorie Malnutrition
Assessment
Issuance by the US FDA of a further 510(k) clearance
for SOZO®. The new clearance enables ImpediMed to
market SOZO® for assessing patients at risk of protein
calorie malnutrition (PCM) and to track clinically
relevant body composition parameters over time in
healthy and unhealthy patient populations. Specifically,
the claims around PCM are to aid clinicians who are
using Subjective Global Assessment (SGA) tools to
assess patients at-risk of PCM.
SGA tools such as the American Society for Parenteral
and Enteral Nutrition (A.S.P.E.N.) guidelines define
changes in physical attributes as assessment criteria for
PCM in patients. Weight, muscle mass, fat mass and
oedema are tracked and reported by SOZO and can be
used by clinicians to support their assessment and
diagnosis of PCM.
SOZO is the only FDA-cleared medical device for the
clinical assessment of PCM.
19
For personal use only
from
increase of over 38%
Total Revenue for the current period was $5.7 million,
an
the previous
corresponding period (30 June 2019: $4.2 million). The
increase in revenue was attributable to SOZO, as
mentioned above, which was slightly offset by a
decrease in legacy consumables revenue as (i) the
legacy product customer base transitioned to the SOZO
platform and (ii) legacy revenue in the fourth quarter
was negatively impacted by COVID-19 due to social,
government, hospital and clinic related restrictions.
SOZO SaaS Gross Margin steadily increased over
FY’20, with 86% gross margin in June 2020. SOZO
SaaS Gross Margin is expected to increase to over 90%
in FY’21.
Operating and Financial Review
Operating Results for the Year
Revenue and SaaS Financial Metrics
Revenue
SOZO Revenue for the current period was $4.7 million,
an increase of 99% over the previous corresponding
period (30 June 2019: $2.3 million). 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, $3.4 million related to recurring
subscription revenue streams, an increase of 110%
over the previous corresponding period (30 June 2019:
$1.6 million).
At 30 June 2020, there were more than 560 SOZO units
in the market (30 June 2019: 401), representing a
significant increase in the number of units in the market
year-over-year.
At 30 June 2020, over 85% of the SOZO devices sold
were installed and implemented. The fourth quarter of
FY’20 represented the strongest quarter for FY’20 for
the installation of SOZO devices in the US, with a total
of 32 units installed, including all 16 units purchased
under the recently announced national purchasing
agreement with McKesson Specialty Health and US
Oncology.
20
For personal use only
SaaS Metrics
In addition to revenue recognised during the current
period, the Annual Recurring Revenue (ARR) on SOZO
contracts signed at 30 June 2020 totaled $5.2 million,
an increase of 53% (30 June 2019: $3.4 million).
Contracted Revenue Pipeline (CRP) at 30 June 2020
was $10.9 million, an increase of 25% (30 June 2019:
$8.7 million). The CRP represents the total revenue
associated with SOZO units sold that will be recognised
over the remaining lives of the respective contracts.
The Renewal Rate for FY’20 was 100% on all 30
contracts up for renegotiation during the year (2019:
N/A), with the majority of US contracts renewing for an
additional 36 months. In the fourth quarter of FY’20 and
amidst the COVID-19 global pandemic, the Group
achieved an average license fee increase of 6% on
renewal contracts, which included several large US
institutions.
Churn Rate remains low at just 1% (FY19: 0.7%), as the
Group experienced very minimal negative impacts from
COVID-19 related customer cancelations. The few
cancelations in the fourth quarter of FY’20 were from
two small
their
contracts due to financial reasons or closure of their
business due to COVID-19.
therapists canceling
independent
Glossary of Terms used by IPD
Medical Revenue
Annual Recurring Revenue (ARR) (i)
Contracted Revenue Pipeline (CRP) (i)
The total revenue recognised during a given period related to the
medical segment.
The amount of revenue reasonably expected to be booked for the
next 12-month period based on existing contracts, and assuming
installation upon sale.
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
importance of customer
experience and satisfaction.
the
Total Contract Value (TCV) (i)
The total value of customer contacts including one-time and recurring
revenue.
Churn (i)
Churn Rate (i)
Renewal Rate (i)
The total devices placed with end-user customer(s) who either (i)
canceled while under their contracted period or (ii) elected not to
renew their contract at the end of the contracted period.
[ Churn ] / [ (Total device placements at beginning of period + Total
device placements at end of period) / 2 ]
[ Total number of end-user customer contracts with expiration dates
during the period that were retained ] / [ Total number of customer
contracts with expiration dates during the period ]
(i) ARR, CRP and TCV are unaudited, non-AASB financial metrics that do not represent revenue in accordance with Australian Accounting
Standards.
21
For personal use only
SaaS Gross Margin is expected to increase to over 90%
in FY’21.
Salaries and benefits for the period ended 30 June 2020
totaled $15.5 million (30 June 2019 $15.8 million), a
decrease of 2%. The decrease was primarily
attributable to cost reductions undertaken by the Group.
The decrease was slightly offset by both the addition of
sales reps during the year and additional software
development costs related to the next generation SOZO
software compared to the prior period.
Share-based payments for the period ended 30 June
2020 totaled $2.2 million (30 June 2019 $2.8 million), a
decrease of 21%. The decrease is primarily related to
the decrease in the valuation of share-based payments
awarded due to a lower share price used in the
valuation when compared to the prior year.
Clinical Trials and Research & Development expenses
for the period ended 30 June 2020 totaled $3.3 million
(30 June 2019 $3.0 million), an increase of 10%. The
costs increased as significant progress was made with
data analytics and technical writing associated with the
2-year trajectory data, as well as the pending release of
the Meta-Analysis and Heart Failure manuscripts.
Meta-Analysis
evaluating
The
bioimpedance spectroscopy, combining data across
multiple studies,
review and awaiting
publication.
manuscript
is under
The Heart Failure manuscript using bioimpedance as a
tool in the clinical assessment and treatment of HF
patients is pending review.
Operating Results – Investing in Large,
Growing Markets
Net loss for the period was $21.4 million (2019: $24.1
million). The loss from continuing operations after
income tax was $21.4 million (2019: $24.0 million). The
decreased loss from continuing operations, when
compared with the prior year, is primarily attributed to
an increase in gross margin of $1.1 million, increased
proceeds from tax refunds and government grants of
$1.5 million, and overall financial discipline across all
departments.
Cost of goods sold for the current period were $1.7
million (30 June 2019: $1.3 million). The increase is
primarily attributable to a growing customer base of
SOZO contracts and an increase in the number of
SOZO device sales in the current period compared to
the prior period.
Gross margin percentage for all revenue for the Group,
including legacy products, was 71% for the current
period (2019: 70%). Gross margin percentage for
SOZO revenue increased to 76% (2019: 60%). 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
an
increasingly larger portion of the Group’s revenue and
as more SOZO contracts move in to their second year
under contract.
subscription-based
services
become
SOZO SaaS Gross Margin steadily increased over
FY’20, with 86% gross margin in June 2020. SOZO
1. Approved for use in healthy patients only.
2. Not available in all jurisdictions.
22
For personal use only
Leaders in BIS Technology
ImpediMed and our subsidiaries pioneered the use of BIS technology, producing the
first commercially available BIS devices in 1990. Since then, our BIS technology has
yielded five commercial products used over 20 countries to objectively measure fluid
and tissue for research and medical purposes.
500+ SOZO® Devices in Clinical Use
23
For personal use only
Cash and Cash
Equivalents
FOR THE YEAR ENDED 30
JUNE
$19.7
million
$11.3
million
Net Cash Used in
Operating Activities
FOR THE YEAR ENDED 30
JUNE
$19.6
million
$19.2
million
2019
2020
2019
2020
Significant Changes in the
State of Affairs
Review of Financial Condition – Liquidity and
Capital Resources
Cash and cash equivalents were $19.7 million at 30
June 2020 (30 June 2019: $11.3 million). Net cash used
in operating activities for the year ended 30 June 2020
was $19.2 million (30 June 2019 $19.6 million). The
decrease in cash outflow was attributable to increased
receipts
from
government grants and tax refunds, such as funds
received from the Paycheck Protection Program in the
US; as well as cost reduction measures undertaken by
the Group during the year.
from customers;
increased
funding
Cash outflow from investing activities was $2.2 million
during the period (2019: $1.8 million). The increase in
cash flows used in investing activities is primarily related
to the capitalisation of software development costs, as
the Group expanded its software applications with the
launch of the heart failure and renal disease software.
Share Issues During the Year
Cash inflow from financing activities was $30.2 million
during the period (2019: $0.1 million). The following
outlines the capital raised during the year ended 30
June 2020:
In April 2020, the Group completed a non-renounceable
accelerated entitlement offer, raising $18.2 million
before costs. As of 30 June 2020, the company has
received a further $1.1 million from the exercise of
options issued to subscribers in the entitlement offer
(with potential for up to a further $17.1 million to be
raised by 31 March 2021 from remaining options issued
in the offer). A total of 486,114,474 ordinary shares
were issued in relation to this entitlement offer during
the year ended 30 June 2020.
In July 2019, the Group completed a $13.9 million fully
underwritten non-renounceable entitlement offer. The
Company received approximately $13.0 million net of
24
transaction fees through the issuance of 126,602,928
ordinary shares.
Proceeds from the entitlement offers will be applied to
fund growth initiatives.
From July 2019 to June 2020 the Group received $0.1
million through the issue of 1,695,232 ordinary shares
stemming from employee exercising options.
Additionally, from July 2019 to June 2020 the Group
issued 7,480,640 ordinary
to
remuneration paid to Non-Executive Directors and
Executives in lieu of cash.
related
shares
Issued capital was $250.6 million at 30 June 2020
(2019: $219.7 million). Total equity increased to $27.4
million at 30 June 2020 (2019: $15.8 million) due to the
capital raising activities undertaken 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 $0.70
and USD $0.69, respectively. The spot exchange rate
for the beginning and end of the prior reporting period
was AUD $1.00 to USD $0.74 and USD $0.70,
respectively. This fluctuation of the exchange rate led to
an unfavourable outcome
reporting operating
expenditure but led to a favourable outcome in reporting
cash and cash equivalents when compared to the prior
period.
in
The average exchange rate for the reporting period was
$0.67 (Australian dollar (AUD) to US dollar (USD))
(2019: $0.72). During 2020,
incurred
unrealised mark-to-market foreign currency translation
losses of less than $0.1 million (2019: $0.1 million).
the Group
For personal use only
Dynamics of the Business
The Parent and
its wholly owned subsidiary,
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 healthcare 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.
During the period, the Group sold its products and
subscription services through a mix of employed sales
representatives and independent distributors. In the
U.S. market, the Group has an employed, direct sales
force that focuses on the sale of SOZO devices and the
associated subscription services
the
unilateral and bilateral indications.
related
to
SOZO – Connected Digital Health Platform
SOZO is a highly disruptive technology offering a
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
large
patient populations.
for ease-of-management of
integration
The SaaS (Software-as-a-Service) business model is
now well established
the management of
in
lymphoedema with a growing database of patient
measurements. Since the launch of SOZO, over
128,000 patient tests have been performed. This patient
data is already driving increased accuracy, allowing for
the development of automated protocols and yielding
critical real-world clinical data for supporting FDA filings.
The SOZO device is sold to hospitals and clinics, along
with a SaaS subscription. The subscription is an annual
or monthly fee based on indications licensed. Initial
SaaS subscription contracts are typically for three years
in the U.S. and one to three years in other markets.
25
For personal use only
Significant Events after the
Balance Sheet Date
22 July 2020
Launch of Fluid Analysis for Heart Failure software the
SOZO Digital Health Platform
On 22 July 2020, the Group announced the launch of its
fluid analysis for heart failure software for the SOZO
Digital Health Platform. The launch follows an intensive
round of review of improvements in collaboration with
Dr. Tom Heywood and Dr. Andrew Accardi at Scripps
Health in San Diego, CA USA. The Group has initiated
discussions with potential customers and although this
is initially a very targeted approach, the Group expects
first commercial sales over the balance of the calendar
year.
7 July 2020
$1.1 Million Received from Option Exercise – April 2020
Non-Renounceable Accelerated Entitlement Offer
On 7 July 2020, the Group issued 29,787,481 ordinary
shares in relation to options exercised by participants of
the April 2020 non-renounceable
accelerated
Entitlement Offer, totaling approximately $1.1 million.
There is potential for up to a further $17.1 million to be
raised by 31 March 2021, from remaining options issued
in the offer.
2 July 2020
Issuance of Ordinary Shares – Equity Share Plans
On 2 July 2020, the Group issued 3,444,527 shares to
Non-Executive Directors and Executives as part of the
Equity Share Plans. These shares were issued in lieu of
cash remuneration, which comprised 100% of Directors’
fees and up to 20% of Executive salaries.
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
Revenue Growth – Expanded Footprint
In the 2020 financial year, the Group recorded 99%
growth in its SOZO Revenue compared to the prior
year. With over 560 SOZO units sold worldwide as of 30
June 2020, the Group has a strong base-business from
which SOZO license fee revenue will continue to be
generated over the next twelve months. The Group
ended the year with $5.2 million in Annual Recurring
Revenue from existing SOZO contracts, with a Churn
Rate of just 1%, highlighting the staying power of the
technology within hospital systems.
The adoption of our SaaS model means the Group is
well placed in an environment where customers’ capital
budgets are being restrained due to the COVID-19
pandemic. The Group is able to tailor contracts to fit the
changing needs of customers by moving to a zero-
upfront capital, full SaaS model.
The Group is transforming every aspect of the business
to adapt to this new reality. Our ability to remotely
present, to conduct virtual demonstrations and train
multiple staff members across their campuses, despite
the constraints imposed by the COVID-19 global
pandemic, ensured that the Group stayed connected
with our customers.
The SOZO connected digital health platform gives the
Group the ability to see patients being tested anywhere
in the world in real-time. This provides the Group with
a unique understanding of key markets and allows the
Group to tailor our customer experience approach and
better manage and reallocate our resources as we see
testing decline or accelerate.
This rapid transformation, along with record levels of
patient testing late in the 2020 financial year and
continued interest in our technology across multiple
disciplines, puts the Group in a strong position to
accelerate growth in the coming twelve months.
Three Key Areas of Focus in FY2021
In addition to expanding the existing opportunities within
the Group’s growing customer base through its SaaS
model, the Group is focused on three key areas of
growth in the 2021 financial year.
• Lymphoedema
• Heart Failure
• Renal Failure
26
For personal use only
Lymphoedema
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 US 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,
lymphoedema can be
prevented, and often reversed. Data from the interim
results of the PREVENT Trial, the largest randomised
lymphoedema clinical study, has shown a 95%
reduction in lymphoedema.
the progression of
transforming patient care
The Group expects to focus its US commercialisation
efforts over the next twelve months on expanding the
Lymphoedema Prevention Program (LPP), which is
aimed at
the
prevention of cancer-related lymphoedema. The LPP is
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. The LPP’s aim is to
maximise patient outcomes and ensure that all patients
are tested throughout the continuum of care.
through
During the 2020 financial year, the Group saw very
positive initial success with the LPP, as a number of
large cancer centres placed multi-unit SOZO sales. This
includes the expansion of Baylor, Scott & White to 25
SOZO units, the expansion of the University of Kansas
to 16 units and the signing of the national purchasing
agreement with McKesson and US Oncology, which
resulted in a total of 17 units being deployed during the
year.
The Group expects expansion like this to continue over
the next twelve months, as the LPP also continues to
drive optimised usage and adoption of the technology
from clinicians, thus resulting in strong expansion within
existing cancer centres.
In addition, the Group expects the Meta-Analysis to be
published in the first quarter of the 2021 financial year.
The Group believes this paper will provide compelling
Level 1 evidence to assist with enlisting further
amendments to the NCCN Guidelines® and with
submissions to insurers for private pay coverage.
The Group believes that Private Pay coverage and/or
NCCN Guidelines that specify BIS and/or L-Dex will
significantly accelerate
for
Lymphoedema.
the uptake of SOZO
Heart Failure
Heart Failure (HF) is a chronic, progressive and
debilitating condition and
the most
expensive diseases for the US health care system. HF
is among
it
is a global pandemic affecting at least 26 million people
worldwide. In the United States, it is 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 change
patient management by appropriately altering
medication levels and, as a result, the length of hospital
the number of readmissions may be
stays and
significantly reduced.
The Group believes that SOZO can play a vital role in
optimising outcomes for HF patient management, as the
current methods are either inaccurate and rudimentary
(weight
invasive and/or expensive
(implantable devices). SOZO is uniquely positioned to
replace these current monitoring methods, as the
the precision and accuracy of
device provides
implantables at a fraction of the cost of a scale.
scale) or
In July 2020, the Group announced the launch of its
enhanced HF software, which was developed after
receiving feedback from various key opinion leaders
and as a result of a collaboration with Scripps Health.
Initial feedback of the product, with its enhanced
usability and data visualisations, has been extremely
promising, and the Group expects first commercial
sales to hospitals in the first half of the 2021 financial
year.
In addition to initial hospitals, the Group has started
talking to a small number of At-Risk Insurance Providers
about how the SOZO HF product may help reduce heart
failure readmission rates. This is a major cost burden,
and although formative, may provide an entry for SOZO
HF-Dex to move into the home market after the initial
commercial rollout of the HF product to hospitals.
Renal Failure
Nearly 750,000 patients per year in the U.S. and an
estimated 2 million patients worldwide are affected by
End Stage Renal Disease (ESRD). Those who live with
ESRD are 1% of the US Medicare population but
account
the Medicare budget, or
approximately US$35 billion.
for 7% of
While it is widely accepted that better fluid management
could reduce mortality and morbidity in dialysis patients,
current devices and techniques, including monitoring
and tracking tools, for improving fluid management are
either inadequate or unproven, leaving no practical way
to consistently maintain optimal volume status. SOZO
provides an accurate, non-invasive, objective way to
determine and monitor fluid levels in these patients.
The Group is formulating its clinical, regulatory and
commercial strategies in relation to the Renal Failure
market. This is an ongoing process and significant
progress has been made over the past few quarters.
The Group would expect to finalise and announce
aspects of the strategy over first half of the 2021
financial year.
27
For personal use only
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.
Significant Risks
During the financial year, the Group identified the
following risks as major risks to the business in the
foreseeable future:
• 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
• Global economic risks: outbreak of a health pandemic
timeframe. The
Assessment
These risks are not ranked in any order of importance
or
the Group’s risk
intention of
management framework is to identify risks to allow the
Group to plan, assess and execute its risk management
strategies. Risk monitoring and assessment activities
are designed to reduce, or otherwise manage, risk to
levels
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.
that are acceptable
to
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
28
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
and software development or commercialisation efforts.
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.
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.
in L-Dex, Heart Failure and
focused on developing a model
The Adoption of the Group’s Technology
In assessing the adoption of our technology, the Group
for practice
is
integration,
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 future claims,
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
from
government bodies, private health insurers and other
third parties will be reliant on clinical data, industry
guidelines and health economic arguments.
levels are available
reimbursement
For personal use only
In addition to risks identified above, there is an
additional risk that the impact of COVID-19 will cause
delays in the review and/or determination of coverage
for ImpediMed’s technology.
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
for material
information required to be disclosed and conducts
regular Management and Board meetings to discuss
business progress and activities.
the business
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.
important aspect of
Developing software and technology, particularly in the
medical sector, is expensive and often involves an
extended period of time to achieve a return on
ImpediMed’s
investment. An
business is to continue to invest in innovation and
related product development opportunities. ImpediMed
believes that it must continue to dedicate resources to
ImpediMed’s innovation efforts to develop ImpediMed’s
ImpediMed’s
product offering and
competitive position. ImpediMed may not however,
receive benefits from these investments for several
years or may not receive benefits
these
investments at all.
to maintain
from
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
29
SOZO. Interruption, compromise to or failure of these
systems may affect ImpediMed’s ability to service its
customers effectively. ImpediMed is vulnerable to data
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
permanently lost. A breach in security of, or a significant
disruption
technology
systems could adversely affect ImpediMed’s operating
results, financial condition, reputation and brand.
ImpediMed’s
information
in,
transparency and require businesses
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
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
financial condition,
ImpediMed’s operating results,
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
long-term strategic product pipeline
planning.
through
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 could materially impact ImpediMed’s operations,
assets, contracts and profitability.
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
the Group’s customer
products as
to
its
relationships, general business and ultimately
financial performance.
it relates
As part of reviewing the brand and reputation risks for
ImpediMed, the Group also considers the responsibility
it has to ensure a work environment that has considered
the impacts of environmental and social sustainability
risks on the Group.
For personal use only
to
Global Economic Risks:
Outbreak of Health Pandemic
ImpediMed’s business could be adversely impacted by
the effects of COVID-19 (more commonly referred to as
coronavirus) or other pandemics, as there is uncertainty
relating
the potential effect of COVID-19 on
ImpediMed’s business. Infections may become more
widespread and should that limit ImpediMed’s ability to
sell products or cause supply disruptions it would have
a negative impact on ImpediMed’s business, financial
condition and operating results. In addition, a significant
health pandemic could adversely affect the economies
and financial markets of many countries, resulting in an
economic downturn that could affect demand for
ImpediMed’s products which may then have an adverse
effect on ImpediMed’s business, operating results and
financial condition.
ImpediMed’s
independent
target customers and
distributors may continue to implement heightened
security policies which may inhibit ImpediMed’s ability
to access hospitals or clinics for the purposes of selling
products and may cause delays of orders for products
and negatively affect revenues.
There is an added risk that the diagnosis and treatment
of other health conditions, such as lymphoedema, could
be reduced and hospital staffing reallocated in response
to the spread of COVID-19. There is uncertainty relating
to the potential effect of COVID-19 on ImpediMed’s
business. ImpediMed’s ability to sell products or cause
supply disruptions, it would have a negative impact on
ImpediMed’s business,
condition and
operating results.
financial
Risk Management
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
its contract
electronics and
manufacturers to identify replacement parts, where
necessary, to substitute into its device designs.
is working with
There have been no significant known breaches of the
license conditions or other environmental regulations.
ImpediMed has an environmental health and safety
management
regular
monitoring, periodic auditing and reporting within the
Group.
system, which
includes
is designed
The system
improve
ImpediMed’s performance and systems with training,
regular review, improvement plans and corrective
action as priorities.
to continually
Indemnification and
Insurance of Directors and
Officers
The Group
its Directors, Secretary and
Executive Officers for the financial year ended 30 June
2020. 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
in section 199A and 199B of
To the extent permitted by law and subject to the
restrictions
the
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.
in sections 199A and 199B of
To the extent permitted by law and subject to the
restrictions
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.
30
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:
26 Aug 2020
24,150,862
8,419,639
32,570,501
7,372,095
7,372,095
39,942,596
30 Jun 2020
24,175,862
8,419,639
32,595,501
7,372,095
7,372,095
39,967,596
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.
(Employee Share Option Plan)
Unissued Ordinary Shares
EIP (Employee Incentive Plan) Options
ESOP
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, 25,534 ESOP options (2018:
1,560,364) and 403,666 EIP options (2019: nil) were
exercised. In addition, 819,666 performance rights
(2019: nil) vested and were exercised 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, 631,050 ESOP options (2019:
155,550) and 3,459,946 EIP options (2019: 1,582,299)
were
(2019:
forfeited; 1,788,907 ESOP options
1,425,924) and 169,771 EIP options (2019: nil) expired.
In addition, 2,317,414 (2019: nil) 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, key management personnel
(KMP) exercised options
(2019:
1,238,366) fully paid ordinary shares in ImpediMed
Limited at a weighted average exercise price of nil per
share (2019: $0.12). The weighted average exercise
price of all options exercised during the period was
$0.16 (2019: $0.11).
to acquire no
31
For personal use only
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 20
30 June 19
Female
Total
Female
Total
Board of Directors
Executives
Senior Managers
1
2
5
7
9
11
1
2
5
7
8
11
Corporate Governance
On 27 March 2014, the ASX Corporate Governance
Council (CGC) released the third edition of their
and
corporate
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/
Employees
As at 30 June 2020, ImpediMed and its subsidiaries had
a total of 69 full and part-time employees (2019: 67
employees).
Diversity
The Group has a formal written Diversity Policy that is
published on ImpediMed’s website.
The Board has the role of reviewing and updating this
policy, overseeing its implementation, and assessing
progress in achieving its objectives.
Diversity refers to characteristics that make individuals
different from each other. Diversity encompasses
differences in backgrounds and 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
32
For personal use only
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 by the Chair of the Remuneration
Committee
SECTION 2 Executive Remuneration
Philosophy and Strategy
SECTION 3 Remuneration Governance
SECTION 4 Key Management Personnel (KMP)
SECTION 5 Remuneration of Non-Executive
Directors (NED)
SECTION 6 Managing Director and CEO (MD/CEO)
Remuneration
SECTION 7 Remuneration of Executives
SECTION 8 Executive Contractual
Arrangements
SECTION 9 Statutory Tables
Page 36
Page 39
Page 39
Page 40
Page 41
Page 41
Page 42
Page 47
Page 48
SECTION 10 Consequences of Performance on Shareholder Value
Page 53
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 certain Executives. Refer to
SECTION 4 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
MD/CEO agreed to a temporary 30% reduction in base
salary and other executives agreed to a temporary 10%
reduction in base salary as of 1 April 2020. This was in
addition to a 20% reduction in cash pay which is received
as equity in lieu of cash under the Executive Share Plan.
The Executive Share Plan went into effect 1 July 2020
after receiving shareholder approval at the 2020 AGM
providing up to 20% base salary as equity in lieu of cash.
The Non-executive Directors (NEDs) have also agreed to
a 25% reduction in their fees effective 1 April 2020. NED
fees are being received 100% as equity using the NED
Share Plan that commenced with effect 1 July 2020. The
Board, with support of the Committee, is looking to
continue
the MD/CEO and Executive base salary
reductions, the NED fee reductions, as well as the
payment of part of executive remuneration and all director
fees with equity into financial year 2021 as we monitor the
COVID-19 impact.
The result of these impacts on KMP Remuneration is
evidenced in Table 9.1 of the Remuneration Report. Total
KMP Remuneration decreased by 47% in the reporting
period
(2019: $7,583,919), net of
severance. The MD/CEO Remuneration decreased by
54% in the reporting period to $1,142,148 (2019:
$2,497,973).
to $4,026,744
47% Reduction in KMP
Remuneration
During the reporting year, the Committee continued to
focus on performance-based remuneration by increasing
the weighting of performance-based equity grants
The Board, supported by the 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 aware that the COVID-19
situation is constantly evolving and we will continue to
keep executive
remuneration arrangements and
decisions under review between the publication of this
report and our AGM, and beyond.
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
"It is a time when our customers, shareholders and the Board
are asking more from the Group’s KMP and frontline employees
during this global pandemic. The IPD team has collectively risen
to meet the demand for continued technological product
advancement, larger customer revenue relationships and
reduced cash remuneration. As chair of the remuneration
committee, I am pleased to speak for the entire board when I
say how proud we are of the IPD team.”
SECTION 1
Introduction by the Chair of the
Remuneration Committee
Dear Shareholder,
the Board,
On behalf of
ImpediMed’s
Remuneration Report for the year ended 30 June 2020
which has been approved by both the Remuneration
Committee (the Committee) and the Board.
I present
Before I turn to the issue of executive remuneration, I
want to briefly touch upon COVID-19 and its impact on
our people and our business. I have been very impressed
by the huge efforts made throughout ImpediMed to
maintain our Company’s focus and agility in this difficult
period. At ImpediMed, we continue to put the welfare of
responsibility
our employees
obligations remain central to all our considerations. I am
pleased to report that, as I write this, we have not had to
take exceptional steps such as furloughing employees.
Nearly all of our people globally, including those with
childcare responsibilities, are working from home and
have innovatively reacted to achieve business milestones
and support the needs of our customers and the patients
they serve.
first and our social
Despite the challenges of the COVID-19 global pandemic,
the Group ended the year with over 560 SOZO units sold
since launch, grew SOZO revenues by 99%, and grew
Contracted Revenue Pipeline by 25%. The Group also
made tremendous progress with the Heart Failure
program, highlighted by the recent release of the fluid
analysis for heart failure software for the SOZO® Digital
Health Platform.
There is an economic impact from COVID-19, and both
the Committee and the wider Board are acutely aware of
the impact this unforeseen event is having and may
continue to have for a period of time. In response to this
and shareholder requests during the capital raise, the
For personal use only
Remuneration Report
(Audited)
1.1. Response to Feedback
At the 2019 Annual General Meeting (AGM), the
Company obtained 83.82% of the proxy votes (including
votes at the Board’s discretion) in favour of adopting the
2019
report. The Board carefully
considers feedback provided by shareholders and
proxy advisers on the 2019 Remuneration Report and
throughout the year as outlined in the following table.
remuneration
Concern
ImpediMed Response
CEO's fixed remuneration No increase in fixed remuneration was provided for the year ended 30 June 2020.
During the Group’s capital raise in March 2020, the MD/CEO’s base salary was
temporarily reduced by an additional 30% effective 1 April 2020. This is in addition to
the program that was effective 1 July 2019 where MD/CEO cash base salary has
been reduced by 20% stock in lieu of cash, resulting in a total cash reduction of
50%.
MD/CEO fixed cash remuneration decreased by 23% to $557,846 for the reporting
period (2019: $722,014).
Total MD/CEO Remuneration decreased by 54% to $1,142,148 for the reporting
period (2019: $2,497,973).
Similar to the MD/CEO, other executives’ base salary was temporarily reduced by an
additional 10% effective April 2020 at the request of shareholders and the
uncertainty of potential future impacts of COVID-19; This is in addition to the
program which was effective July 2020 where cash base salary has been reduced
by 20% stock in lieu of cash, a total cash reduction of 30%.
Executive fixed
remuneration
Payment of STI which
appears at odds with the
company's financial
performance and position
Increased weighting on financial KPI’s (100% for the reporting period up from 50% in
2019). This change displays our commitment to pay for performance by directly
tying incentive outcomes to predetermined financials that support long-term value
creation at ImpediMed.
STI achievements were reduced by 78% to $0.53m for the reporting period (2019:
$2.45m).
1.2. Remuneration Arrangements in
Financial Year 2020
Performance-Based Remuneration
The Remuneration Committee
to
executive and shareholder alignment, and this is
achieved via a remuneration philosophy with a
The
significant performance-based orientation.
Remuneration Committee and KMP displayed this
commitment in the year ended 30 June 2020 with
remuneration actions that considered internal and
external factors impacting ImpediMed, namely the:
is committed
• Financial and operational performance
for
the
reporting period,
• Stock price performance for the reporting period, and
• Potential impacts from the COVID-19 pandemic.
Adhering to its pay-for-performance philosophy, and
commitment to executive and shareholder alignment, a
greater weighting was placed on long-term incentives
tied to performance metrics during the reporting period
(50% in current period up from 40% in 2018; no LTI was
issued in 2019).
Additionally, in for the year ended 30 June 2020, certain
senior executive staff, including the MD/CEO, were
provided equity compensation, in the form of market
value shares, in lieu of a portion of their cash Base
Salaries. This further reinforces our performance
philosophy, but also conserved cash.
37
For personal use only
to better align NED
Consistent with the changes to executive remuneration
and
remuneration with
shareholders, in the year ended 30 June 2020, an
equity share plan
remuneration program was
established for NEDs with an equity share program
where 100% of cash fees are foregone and received in
the form of market value shares to an equivalent
amount.
the MD/CEO’s
The MD/CEO did not receive an increase in fixed
remuneration for the year ended 30 June 2020.
Effective April 2020,
fixed cash
remuneration was temporarily reduced by 30% as
requested by shareholders during the March 2020
capital raise and the uncertainty of potential future
impacts of COVID-19. This is in addition to the program
that was effective July 2019, in which the MD/CEO cash
base salary has been reduced by 20% stock in lieu of
cash, a total cash reduction of 50% effective April 2020.
Similar to the MD/CEO, other Executives’ fixed cash
remuneration was
reduced by 10%,
temporarily
effective April 2020, due to the financial situation of the
company and the uncertainty of potential future impacts
of COVID-19. This is in addition to the program which
was effective July 2019 where cash base salary has
been reduced by up to 20% stock in lieu of cash, a
cumulative cash reduction of 30% effective April 2020.
We believe that the actions of the Committee, and the
intended actions of both NEDs and Executives highlight
ImpediMed’s focus on delivering shareholder value and
further aligning executive and NED interests with
shareholders.
referenced
comparator groups,
Benchmarking
The Committee conducted a comprehensive review of
the comparator groups in 2019. Benchmarks against
together with, when
the
appropriate, other surveys were
for
establishing financial year 2020 remuneration. During
the year, due to the external environment and market,
and at the request of shareholders, changes were made
to executive and board remuneration that deviated from
the practice of benchmarking against a comparator
group. The Committee will
conduct periodic
benchmarking to measure the external market and may
reference peers, comparator groups or third-party
compensation surveys with regard to industry and size.
for
1.3. Key Developments Expected
Financial Year 2021
Executive Remuneration
In financial year 2021, the Group will continue the
temporary base salary reductions of the MD/CEO and
certain executives while the impact of COVID-19 on the
company is monitored. The Group will also look to
continue the Executive Share Plan to allow executives
to exchange 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
shareholders. The equity
of executives with
remuneration would be
fixed
remuneration.
treated as part of
As the Group shows progress with commercialisation
and a path to profitability, the Board will review MD/CEO
that
remuneration
and Executive
remuneration is in line with our remuneration practices
in relation to the highly competitive market for specific
technical skills critical to our business.
ensure
to
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 looks to continue the 25%
NED fee reduction and the use of the Non-Executive
Director Share Plan to allow equity remuneration in lieu
of cash for NEDs for financial year 2021. The use of
equity remuneration will allow the Group to better utilise
its available cash resources, to increase alignment to
shareholders and 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.
38
For personal use only
reviews
SECTION 2
Executive Remuneration Philosophy and
Strategy
The Remuneration Committee
the
remuneration philosophy and strategy and makes
recommendations
the
regarding
for Executive KMP.
remuneration arrangements
ImpediMed’s remuneration philosophy and strategy are
designed to attract, motivate and retain executives of
the required calibre by identifying and rewarding high
performers and recognising the contribution of each
Executive to the continued growth and success of the
Group.
the Board
to
remuneration at
The remuneration philosophy at ImpediMed targets
fixed
the median of external
comparators and, for exceptional performance, targets
variable remuneration above the median. To determine
executive remuneration, the Remuneration Committee
benchmarks against companies in Australia and the
United States to ensure that policy objectives are met
and are in line with good corporate practices for a
company of ImpediMed’s size and industry. The
committee obtained remuneration benchmarking with
reference to peers, together with, where appropriate,
other benchmarking reports that apply to specific
positions in 2019 and updated these analyses in 2020
through internal means.
factors
Other
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 and competitive mix of
remuneration benchmarked against applicable
markets
• Provide strong linkage between individual and Group
performance and rewards
• Offer remuneration based on internal comparison with
other employees and matching the role requirements
with the skills, experience and responsibilities of
individual executives.
39
• Support the corporate mission statement, values and
policies through recruiting, organising and managing
high achieving individuals committed to the Group’s
success
While continuing to pursue this remuneration strategy,
the Remuneration Committee and Board vary
arrangements as needed to meet immediate priorities.
SECTION 3
Remuneration Governance
of
the
the Group
Remuneration
3.1. Role
Committee
The Remuneration Committee of the Board of Directors
for making
of
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.
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)
• David Anderson
• Robert Graham
3.2 Services from Remuneration
Consultants
Under the provisions of the Committee’s Charter, the
Committee may engage the assistance and advice from
external remuneration advisors. To ensure that any
recommendations made by remuneration consultants
are provided without undue influence being exerted by
Executives, external remuneration consultants deliver
their advice directly to members of the Committee. In
the year ended 30 June 2020, Willis Towers Watson
(WTW) provided support and counsel
the
Remuneration Committee of a nature relating to
executive
remuneration within Australia and US
frameworks. The work undertaken by WTW in the year
ended 30 June 2020 did not constitute a remuneration
recommendation for the purposes of the Corporations
Act 2001.
to
For personal use only
SECTION 4
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
David Anderson
Judith Downes
Gary Goetzke
Robert Graham
Amit Patel
Donald Williams
Richard Carreon
Executives
Morten Vigeland
Shashi Tripathi
David Adams
Catherine Kingsford
Dennis Schlaht
Chairman and Non-executive Director
Non-executive Director (appointed May 2020)
Non-executive Director
Non-executive Director (retired March 2020)
Non-executive Director
Non-executive Director
Non-executive Director
Managing Director and Chief Executive Officer
Chief Financial Officer (separated from employment March 2020)
Chief Technology Officer
Senior Vice President Operations and Strategic Planning
Senior Vice President Medical Affairs
Senior Vice President R&D and Technology
Subsequent to year-end, Tim Cruickshank was appointed Chief Financial Officer of the Group.
40
For personal use only
SECTION 5
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 periodically with regard to
market practice and NED duties, responsibilities and
accountability.
increase
the alignment of
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. To
assist the company in managing its available cash
resources,
the NED
remuneration with shareholders’ interests and ensure
that NED remuneration is attractive in both Australia
and the US (NED membership is currently 67% US and
33% Australian), for the year ended 30 June 2020, with
the introduction of the Equity Share Plan, 100% of NED
remuneration was received in the form of equity, in lieu
of cash. Effective April 2020, the NED fees were
reduced by 25% at the request of shareholders during
the capital raise. The sum of NED fees paid in the
reporting year was $598,441 (2019: $619,236), which
consisted of $12,692 for superannuation and $585,749
in shares issued in lieu of cash.
Table 9.1 shows individual Director fees paid during the
year ended 30 June 2020.
on
the
Remuneration
SECTION 6
Managing Director and CEO Remuneration
Based
Committee’s
recommendation, the Board agreed to not increase Mr
Carreon’s base salary for the year ended 30 June 2020.
In addition, effective 1 April 2020 Mr Carreon received
a 30% temporary salary reduction, resulting in a base
salary of USD $361,434, down from USD $516,334
(2019: USD $516,334) plus non-monetary health
benefits. In addition, Mr Carreon exchanged 20% of
base salary with equity, in the form of market value
shares. Refer to table 9.1 for details on financial year
2020 remuneration in AUD.
Mr Carreon’s STI performance conditions and
outcomes have been detailed in section 7.2.1 and 7.2.2.
During the year ended 30 June 2020, the Board issued
1,992,612 Options (2019: no options issued) to Mr
Carreon at an exercise price of $0.15 per option under
the EIP. During the year ended 30 June 2020, the
Board issued 1,962,871 Performance Rights (2019: no
performance rights issued) to Mr Carreon under the
EIP.
41
The Options and Performance Rights were approved by
shareholders at the 2019 AGM and subsequently
granted on 11 November 2019.
The Options granted to Mr Carreon 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
The Performance Rights granted to Mr Carreon were
issued for nil consideration when the closing price of a
share on ASX on the date of grant was $0.15. Subject
in all cases to continuous employment with the Group,
the Performance Rights will vest on
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”,
the percentage of
performance rights that vest will be determined by the
Remuneration Committee. If any performance rights do
not vest
the Remuneration
Committee), those performance rights will lapse.
(as determined by
in which case
lapse and be
All Performance Rights that have not vested shall
automatically
forfeited without
consideration, upon cessation of Mr Carreon’s
the Group unless otherwise
employment with
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.
If the Participant ceases employment with the Company
or any Group entity, where such cessation of
employment
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 Board
is due
to
For personal use only
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.
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 2, 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 companies with
regard to industry and size, as well as input from
independent remuneration consultants.
For the year ended 30 June 2020, the remuneration
structure
for Executive KMP and other select
employees consisted of the following elements:
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
as benchmarked against surveyed
companies with regard to industry and
size
SHORT-TERM INCENTIVE (STI):
Financial KPIs (100%):
Strategic Objectives and Link to
Performance
- Offer an attractive mix of
remuneration benchmarked
against the applicable market-
region and country practices
Cash-based incentive awarded for
the achievement of ImpediMed’s
Operating Plan objectives measured
over a one-year performance period.
LONG-TERM INCENTIVE (LTI):
Equity-based incentive, comprising a
mix of Options and Performance
Rights for Group Performance over
the long-term.
- Total Revenue
- Contracted Revenue Pipeline (CRP) (i)
- Cash Flow (i)
- Time-based (50%): Options vest
subject to the participant remaining
in employment with ImpediMed over
a four (4) year period.
- Performance-based (50%):
Performance Rights vest subject to
achieving two (2) equally weighted
hurdles over a three (3) year period:
- Revenue Pipeline (CRP) at
30 June 2022
- Total Shareholder Return
(TSR 3-Year)
- 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
(i) CRP is 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.
42
For personal use only
remuneration
7.1. Fixed Remuneration
Fixed
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.
consists of base
Fixed remuneration is not automatically increased but is
typically reviewed annually, to ensure it remains
competitive.
As described in SECTION 7, fixed remuneration for
Executives takes into consideration benchmarking data
from other companies with regard to industry and size.
In addition to reviewing benchmarking survey data,
when setting fixed remuneration for any given role, the
Remuneration Committee has regard to the experience,
qualifications and skill set of the individual, as well as
the responsibilities and criticality of the role.
In year ended 30 June 2020, MD/CEO and other
executives took a temporary reduction in base salary
and an additional portion of base salary in equity in lieu
of cash as a result of the request of shareholders and in
consideration of external market factors (COVID-19).
7.2. Short-Term Incentive (STI)
The STI plan is a cash-based incentive that is awarded
based on annual performance. In the year ended 30
June 2020, the STI Plan focused on both Group and
Individual performance. The remuneration philosophy
at ImpediMed targets variable remuneration above the
median for exceptional performance and the STI aims
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 year ended 30 June
2020 are outlined below:
Participants
Award Type
Opportunity
KMP and other selected employees
Cash
The percentage of the target STI opportunity for the year ended 30 June 2020 has
been expressed as a percentage of Total Fixed Remuneration (TFR) in the table
below:
KMP
MD/CEO
CTO
SVP Operations and Strategic Planning
SVP Medical Affairs
SVP R&D and Technology
Target STI
%
70%
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.
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.
Performance Period
The performance period is the 12-month financial year.
Performance Conditions For the year ended 30 June 2020, the KPIs for KMP are included in the diagram
below:
Financial Goals
(Revenue, CRP,
Cash Flow)
100%
Financial
Additional detail is provided in section 7.2.1.
43
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 year ended 30 June 2020, all Executive KMP
had common KPIs.
KPI
Financial Goals: 100%
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 21.8% of the 100% target performance for the
various objectives.
Revenue increased 38% to $5.7M (2019: $4.2M).
Contracted Revenue Pipeline (CRP): CRP is a leading
indicator of revenue growth.
CRP increased 25% to $10.9M (2019: $8.7M).
Cash Flow: Narrowing of loss shows progress towards
profitability.
Operating Cash Outflow decreased 2% to $(19.2)M
[2019: $(19.6)M].
7.2.2 STI Outcomes
US-based Executives are paid in USD. Listed below are their AUD equivalents.
KMP
R Carreon
MD/CEO
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
AUD (i)
STI Outcome
AUD (i)
%
Achieved (ii)
538,610
117,417
21.8%
188,481
41,089
21.8%
190,515
41,532
21.8%
137,140
29,897
21.8%
181,188
39,499
21.8%
(i) The Target STI Opportunity displayed in the above table is calculated based on the average exchange rate for the year for US-based KMP.
(ii) The MD/CEO outcome is based on 200% maximum performance; remaining KMP are based on 150% maximum performance.
44
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.
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 US and Australian remuneration practices, IPD’s LTI grant
policy balances the objectives and marketplace practices in the US 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.
In the year ended 30 June 2020, awards issued under the Employee Incentive Plan (EIP) were
issued with a mix of 50% Options and 50% Performance Rights (increase weighting from 2018
issuance with mix of 60% Options and 40% Performance Rights and no grants issued in 2019).
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
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 2020 and 2019 have been expressed as a percentage of TFR in the
table below:
KMP
MD/CEO
CTO
SVP Operations and Strategic Planning
SVP Medical Affairs
SVP R&D and Technology
2020 LTI
Opportunity
2019 LTI
Opportunity
18% No LTI Grant
51% (i)
No LTI Grant
No LTI Grant
No LTI Grant
7%
6%
7%
6%
Performance
Period
Performance
Conditions
Performance conditions are typically equally weighted with:
• Minimum Threshold - 50% of “Plan”
• Plan - 100% of “Plan”
• Maximum - 150% of “Plan” / MD/CEO 200% of “Plan”
For LTI awarded in the year ended 30 June 2020:
• Options vest annually in equal portions over a four (4) year period; and
• Performance Rights vest based on performance over three (3) years.
For Performance Rights awarded in the year ended 30 June 2020, the Board assigned
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 is subject to achieving LTI Hurdles related to the following
objectives:
• Contracted Revenue Pipeline (CRP) at 30 June 2022
• Total Shareholder Return (TSR 3-Year)
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
demonstrating the company's achievement for shareholders over the long term.
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.
45
For personal use only
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.
(i)
2019 LTI for new hire grant.
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.
7.3.1 LTI Performance Conditions and Outcomes
For grants made in the year ended 30 June 2018, in addition to time-based requirements, performance rights also
included specific challenging performance conditions that 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 2018 to 30 June 2020. Each performance condition was set
with reference to minimum, at-plan or maximum achievement.
Performance Condition
Heart Failure (HF): 50%
Key Achievements & Performance Outcomes
KPI Assessment: Maximum
Achieved 50% of maximum performance (MD/CEO: 75% achievement) for
the objectives as detailed below.
Medical evidence necessary to
accelerate early adoption of SOZO
for the fluid management of HF
patients
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, individualised care, while
also providing savings to the
healthcare system
Achievement:
• Completed three HF studies using IPD technology, published and
presented results demonstrating clinical utility.
• Three white papers have been written to support commercial use.
Submitted manuscript to peer reviewed journal.
• Released the HF-Dex software, based on study findings as well as
utlising feedback on the product from various Key Opinion Leaders.
• Collaborated with Scripps Health in implementing improvements to the
software enhancing both usability and data visualisation aspects.
• The Group’s reimbursement consultants, MCRA, conducted a series of
reimbursement reviews with positive findings.
• The Group expects first commercial sales over the balance of the 2020
calendar year.
Revenue Growth: 50%
Revenue Growth
Selected to measure
commercialisation of IPD’s
technology
KPI Assessment: Not Achieved
Achieved 0% of the 50% target performance for the objectives as detailed
below.
Achievement:
• The milestones established for the year ended 30 June 2018 were
based on a capital-based business model but later the Group
transitioned to a SaaS business model. The Group had revenue of
$5.7m for the reporting period as well as a CRP of $10.9m as at 30
June 2020. While this represented strong growth in the SaaS model,
the revenue metric was not achieved.
These rights will vest during calendar year 2020, subject to satisfying the remaining time-based requirements related to
the grant.
46
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
summarised above.
KMP
% Performance
Hurdles
Achieved
(compared to at
% Performance
Hurdles
Opportunity
Richard Carreon
MD/CEO
Catherine
Kingsford
SVP Medical Affairs
Dennis Schlaht
SVP, R&D and
Technology
David Adams
SVP, Operations and
Strategic Planning
Plan)
100%
75%
75%
75%
200%
150%
150%
150%
# Performance
Rights to Vest
(subject to
remaining time-
based
requirements)
AUD Value of
Performance
To Vest
($0.062 share price
at 30 June 2020)
631,000
$39,122
124,500
$7,719
136,500
$8,463
144,750
$8,975
7.4 Minimum Shareholding Requirement
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 NED’s is equal to the value of one year’s base fee (excluding committee
fees) after tax. For the purposes of calculating whether the minimum shareholding has been met, the calculation is
based on the share price at the time of purchase and/or vesting.
As at the date of this report, all NED’s met their minimum shareholding requirement with the exception of David Anderson
(appointed May 2020), who is within the first five years of the minimum shareholding requirement.
SECTION 8
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
12 months
12 months
Unvested awards forfeited
Executives
S Tripathi
D Adams
C Kingsford
D Schlaht
9 months
9 months
9 months
9 months
Unvested awards forfeited
Unvested awards forfeited
Unvested awards forfeited
Unvested awards forfeited
9 months
9 months
9 months
9 months
47
For personal use only
SECTION 9
Statutory Tables
9.1 Remuneration of KMP for the Year Ended 30 June 2020
30 June
2020
$AUD
Short-Term Benefits
Post-
Employ
ment
Base
Salaries &
Fees
STI
Award
Non-
Monetary
Super-
annuation
Long-
Term
Benefi
ts
Long
Service
Leave
Share-Based
Payments
LTI Awards
Share
Plans (in
lieu of
Base
Salaries &
Fees)
Severance
Total
Performance
Related
STI
as %
of
Total
LTI
as %
of
Total
Directors
S Ward (i)
D Anderson
(i) (ii)
J Downes
R Graham
G Goetzke
(i) (iii)
A Patel (i)
D Williams
(i)
R Carreon
(i) (iv) (v)
Executives
M Vigeland
(i) (iv) (v)
(vi)
D Adams (i)
(iv) (v)
S Tripathi
(i) (iv) (v)
C Kingsford
(v)
D Schlaht
(i) (iv) (v)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,680
-
6,012
-
-
-
-
-
-
-
-
-
-
-
-
-
-
161,335
-
161,335
0%
0%
-
10,290
10,290
0%
0%
-
70,312
-
76,992
0%
0%
-
63,281
-
69,293
0%
0%
-
70,048
-
70,048
0%
0%
-
94,717
-
94,717
0%
0%
-
115,766
-
115,766
0%
0%
557,846
117,417
23,484
17,954
-
339,138
86,309
-
1,142,148
10%
30%
201,588
-
25,129
10,251
-
(380,085)
32,098
311,218
200,199
0%
(190)
%
368,728
41,532
33,717
16,816
-
113,307
66,089
-
640,189
6%
18%
435,862
41,089
33,828
16,806
-
110,837
15,966
-
654,388
6%
17%
265,710
29,897
-
45,441
8,329
87,163
38,121
-
474,661
6%
18%
351,052
39,499
33,828
11,777
-
130,040
61,740
-
627,936
6%
21%
Total
2,180,786
269,434
149,986
131,737
8,329
400,400
886,072
311,218
4,337,962
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) D Anderson was appointed to the Board in May 2020.
(iii) G Goetzke retired in March 2020.
(iv) 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.
(v) 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.
(vi) M Vigeland separated employment in March 2020.
Refer to the Directors’ Report, details of KMP, for dates of new appointments and resignations.
48
For personal use only
9.1 Remuneration of KMP for the Year Ended 30 June 2019
30 June
2019
$AUD
Directors
Short-Term Benefits
Post-
Employment
Base
Salaries &
Fees
STI Award
Non-
Monetary
Super-
annuation
Share-
Based
Payments
LTI Awards
Long-
Term
Benefits
Long
Service
Leave
Performance
Related
Total
STI as
% of
Total
LTI as
% of
Total
S Ward (i)
160,181
J Downes
75,000
R Graham
67,500
G Goetzke (i)
(iii)
94,040
A Patel (i)
94,040
D Williams (i)
114,937
-
-
-
-
-
-
-
-
-
-
-
-
-
7,125
6,413
-
-
-
722,014
678,614
21,448
24,050
-
-
-
-
-
-
-
-
-
-
-
-
-
160,181
0%
0%
82,125
0%
0%
73,913
0%
0%
94,040
0%
0%
94,040
0%
0%
114,937
0%
0%
1,051,847
2,497,973
27%
42%
R Carreon (i)
(iv) (v)
Executives
M Vigeland (i)
(iv) (v) (vi)
D Adams (i)
(iv) (v)
S Tripathi (i)
(iv) (v)
C Kingsford
(v)
D Schlaht (i)
(iv) (v)
492,689
209,078
27,505
433,488
183,955
24,794
442,503
187,780
26,528
18,065
17,293
18,323
339,456
144,052
-
44,250
-
302,258
1,049,595
20%
29%
-
-
9,356
92,247
751,777
24%
12%
310,618
985,752
19%
32%
258,322
795,436
18%
33%
416,716
176,838
25,765
11,112
-
253,719
884,150
20%
29%
Total
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)
(ii)
(iii)
(iv)
(v)
(vi)
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.
D Anderson was appointed to the Board in May 2020.
G Goetzke retired in March 2020.
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.
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.
M Vigeland separated employment in March 2020.
Refer to the Directors’ Report, details of KMP, for dates of new appointments and resignations.
49
For personal use only
9.2 Remuneration Awards: Granted, Vested, and Lapsed During the Year
(A) OPTIONS
30 June 2020
Numbers
Grant Date
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 ($)
Number of
Options
Lapsed During
Year (#)
Executives
R Carreon
R Carreon
R Carreon
R Carreon
R Carreon
R Carreon
M Vigeland
M Vigeland
M Vigeland
M Vigeland
M Vigeland
M Vigeland
M Vigeland
M Vigeland
S Tripathi
S Tripathi
D Adams
D Adams
D Adams
C Kingsford
C Kingsford
C Kingsford
C Kingsford
D Schlaht
D Schlaht
D Schlaht
D Schlaht
Total
1,992,612
11-Nov-19
- 15-Nov-17
- 14-Nov-16
- 03-Nov-15
-
24-Apr-14
-
-
-
24-Jun-13
24-Jun-13
23-Sep-13
-
24-Apr-14
- 04-Dec-14
-
01-Jul-15
-
-
603,446
649,863
25-Oct-16
15-Nov-17
11-Nov-19
11-Nov-19
-
31-Jul-18
541,863
11-Nov-19
- 14-Nov-16
- 15-Nov-17
11-Nov-19
466,476
-
01-Jul-15
-
25-Oct-16
- 15-Nov-17
510,363
-
11-Nov-19
01-Jul-15
-
25-Oct-16
- 15-Nov-17
4,764,623
0.0902
0.4963
0.9458
0.5906
0.1147
0.0513
0.0513
0.1259
0.1147
0.3781
0.5240
1.0269
0.4963
0.0902
0.0902
0.2258
0.0902
0.9459
0.4963
0.0902
0.5240
1.0269
0.4963
0.0902
0.5240
1.0269
0.4963
0.15
11-Nov-26
-
179,698
-
0.8150
15-Nov-24
388,250
1.46
14-Nov-23
218,000
1.0000
01-Jul-22
128,125
-
-
-
-
-
-
0.21
0.11
0.11
0.18
0.21
0.69
0.87
1.66
0.82
0.15
0.15
0.52
0.15
1.46
0.15
0.87
1.66
0.815
0.15
0.8700
1.6600
0.8150
30-Jun-20
30-Jun-20
30-Jun-20
13-Sep-20
30-Jun-20
04-Dec-21
01-Jul-22
25-Oct-23
15-Nov-24
11-Nov-26
11-Nov-26
01-Jul-22
25-Oct-23
15-Nov-24
11-Nov-26
01-Jul-22
25-Oct-23
15-Nov-24
-
-
639,222
-
-
139,367
-
-
-
-
-
-
-
-
-
-
-
-
-
-
279,800
200,000
189,900
988,000
237,500
303,000
530,000
-
54,420
603,466
-
58,606
-
-
-
-
-
-
-
-
-
7,812
65,000
102,500
-
-
-
-
46,026
-
5,729
64,500
112,000
-
-
-
-
-
-
1,423,416
429,684
4,110,255
31-Jul-25
128,750
-
11-Nov-26
-
48,866
14-Nov-23
83,750
-
0.815
15-Nov-24
119,000
-
11-Nov-26
-
42,068
(B) PERFORMANCE RIGHTS
Granted
Terms and Conditions of Each Grant
30 June 2020
Numbers
Grant Date
Value per Perf
Right at Grant
Date ($)
Expiry Date for Perf
Right Vested
During Year
Number of Perf
Rights (#) vested
during year
Number of Perf
Rights Lapsed
During Year
Executives
R Carreon
R Carreon
R Carreon
1,962,871
-
-
M Vigeland
445,830
M Vigeland
M Vigeland
-
-
S Tripathi
479,832
D Adams
D Adams
D Adams
400,332
-
-
C Kingsford
344,636
C Kingsford
C Kingsford
D Schlaht
D Schlaht
D Schlaht
Total
-
-
377,060
-
-
4,010,561
11-Nov-2019
15-Nov-2017
14-Nov-2015
11-Nov-2019
15-Nov-2017
25-Oct-2016
11-Nov-2019
11-Nov-2019
14-Nov-2016
15-Nov-2017
11-Nov-2019
14-Nov-2016
15-Nov-2017
11-Nov-2019
14-Nov-2016
15-Nov-2017
0.15
0.815
1.53
0.15
0.815
1.68
0.15
0.15
1.53
0.815
0.15
1.53
0.815
0.15
1.53
0.815
11-Nov-2022
15-Nov-2020
14-Nov-2019
11-Nov-2022
15-Nov-2020
25-Oct-2020
11-Nov-2022
11-Nov-2022
14-Nov-2019
15-Nov-2020
11-Nov-2022
14-Nov-2019
15-Nov-2020
11-Nov-2022
14-Nov-2019
15-Nov-2020
-
-
-
(631,000)
352,501
(117,499)
-
(445,830)
-
(322,500)
95,666
(27,334)
-
-
-
-
165,000
-
-
(144,750)
-
-
81,666
(23,334)
-
(124,500)
-
-
80,500
(23,000)
-
(136,500)
775,333
(1,996,247)
(i) Performance rights granted in financial year 2020 have time and performance-based vesting criteria. Refer to Note 18 for additional
information.
50
For personal use only
9.3 Remuneration Awards: Awards Held by Key Management Personnel
(A) OPTIONS
30 June 2020
Held at the
Start of the
Period
Granted During
Period
Exercised
During Period
Options of Other
Changes (i)
Held at the End
of the Period
Options Vested
and Exercisable
No.
No.
No.
No.
No.
No.
Directors
R Carreon
Executives
M Vigeland
S Tripathi
D Adams
C Kingsford
D Schlaht
Total
13,655,872
1,992,612
2,728,200
603,446
-
-
(778,589)
14,869,895
11,882,783
(3,331,646)
-
-
515,000
649,863
- -
1,164,863
128,750
811,000
541,863
- -
1,352,863
489,250
1,832,400
466,476
1,918,200
510,363
-
-
(69,950)
2,228,926
1,492,450
(349,750)
2,078,813
1,279,950
21,460,672
4,764,623
-
(4,529,935)
21,695,360
15,273,183
(i) Options from other changes include expired or lapsed options.
(B) PERFORMANCE RIGHTS
30 June 2020
Held at the Start
of the Period
Granted During
Period
Vested During
Period
Perf Rights from Other
Changes
Held at the End of
the Period
No.
No.
No.
No.
No.
Directors
R Carreon
Executives
M Vigeland
S Tripathi
D Adams
C Kingsford
D Schlaht
Total
1,732,000
1,962,871
(352,501)
(748,499)
2,593,871
445,500
310,000
454,500
354,000
376,500
3,672,500
445,830
479,832
400,332
344,636
377,060
4,010,561
(95,666)
-
(165,000)
(81,666)
(80,500)
(775,333)
(795,664)
-
(144,750)
(147,834)
(159,500)
(1,996,247)
-
789,832
545,082
469,136
513,560
4,911,481
51
For personal use only
9.4 Shareholdings of Key Management Personnel
(A) SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
30 June 2020
Directors
S Ward
J Downes (i)
D Anderson (ii)
G Goetzke (iii)
R Graham (i)
A Patel
D Williams
R Carreon
Executives
M Vigeland (iii)
D Adams
S Tripathi (iv)
C Kingsford (v)
D Schlaht (v)
Total
Held at
the Start
of Period
Granted as
Remuneration
No.
No.
On exercise
of Options &
Vesting of
Perf Rights
No.
250,000
1,331,321
82,600
559,445
-
256,100
674,455
- 503,502
88,000
781,598
130,000
955,286
-
-
-
-
-
-
-
1,008,591
665,310
352,501
Net Change
Other
Held at the
End of Period
Held
Nominally
No.
No.
No.
-
1,581,321
1,581,321
470,357
1,112,402
1,112,402
-
(930,555)
-
-
-
-
269,684
773,186
773,186
-
-
-
869,598
869,598
1,085,286
1,085,286
2,206,402
2,206,402
898,243
198,208
95,666
(1,192,117)
-
-
159,000
515,868
165,000
-
-
-
-
-
839,868
839,868
-
-
1,184,241
297,061
81,666
2,248,522
3,811,490
3,811,490
914,657
4,971,432
480,412
6,962,466
80,500
775,333
454,224
1,320,115
1,929,793
14,029,346
1,929,793
14,029,346
(i) The shareholding movements during the period for Directors relate to shares purchased through capital raisings during the year and not through
compensation.
(ii) D Anderson’s was appointed to the board in May 2020. Shares will be granted as remuneration beginning July 2020
(iii) The shareholding movements during the period for G Goetzke and M Vigeland relate to their changes in classification as KMP and not necessarily
to the sale of shares.
(iv) S Tripathi’s share plan election was effective April 2020. Shares will be granted as remuneration beginning July 2020.
(v) The shareholding movements during the period relate to a reclassification of shares held from indirect to held directly in the name of the KMP.
(B) SHARES ISSUED ON EXERCISE OF
REMUNERATION OPTIONS
During the year ended 30 June 2020, no shares were
issued on the exercise of remuneration options (2019:
1,509,298) and 775,333 shares were issued on the
vesting of performance rights (2019: nil).
There were 1,238,366 options exercised in June 2019
where the share issuances were pending at the
reporting date and were subsequently issued in July
2019.
9.5 Other Transactions and Balances with
KMP and their Related Parties
For the year ended 30 June 2020, the Group issued
shares to Directors and Executives as equity-based
remuneration in lieu of cash. There were no other
transactions that occurred with Directors or Executives
that would be considered related party transactions.
52
For personal use only
SECTION 10
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. The Remuneration Committee has
linked certain items below as part of the review of KMP
remuneration.
In addition, the Remuneration Committee considers
other elements are necessary to create shareholder
wealth through acceptance and use of the Group’s
products. While the Remuneration Committee has
regard to the items shown in the following table, in
respect of the current and prior financial years, KMPs’
remuneration is not solely 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 $
2020
2019
2018
(restated)
2017
2016
SOZO Revenue (Millions)
Change in SOZO Revenue
Total Medical Revenue (Millions)
Change in Medical Revenue
Net Loss Attributable to Equity Holders
of the Parent Entity (Millions)
Dividends Paid
Share Price at 30 June
Change in Share Price
Market Cap (Millions)
$4.7
99%
$5.7
38%
$2.3
229%
$4.2
27%
$0.7
600%
$3.3
(31)%
$0.1
N/A
$4.8
17%
nil
N/A
$4.1
37%
($21.5)
($24.1)
($27.4)
($27.6)
($26.0)
nil
nil
$0.062
$0.114
(46)%
$64.2
(71)%
$43.3
nil
$0.395
(47)%
$149.7
nil
$0.75
(21)%
nil
$0.95
9%
$281.6
$352.5
53
For personal use only
Directors’ 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:
Board Meetings
Remuneration Committee
Audit & Risk Management
Committee
Directors (i)
# Meetings
Eligible to
Attend
# Meetings
Attended
# Meetings
Eligible to
Attend
# Meetings
Attended
# Meetings
Eligible to
Attend
# Meetings
Attended
Total
S Ward
D Anderson (ii)
J Downes
R Graham
G Goetzke (iii)
A Patel
D Williams
R Carreon
11
11
1
11
11
7
11
11
11
11
11
1
11
9
4
11
11
11
3
3
3
2
3
3
3
2
2
3
5
5
5
5
5
5
5
5
5
5
(i) A Director’s attendance at a committee meeting is only included if the Director is a member of the committee or Chairman of the Board. The
Nomination Committee did not have any meetings during the year.
(ii) D Anderson appointed May 2020.
(iii) G Goetzke retired in March 2020.
Committee Membership
Directors
Remuneration Committee
S Ward (i)
D Anderson (ii)
J Downes
R Graham
A Patel
D Williams
R Carreon (iii)
Member
-
Member
-
Chair
-
Audit & Risk Management
Committee
Nomination Committee
-
Chair
-
Member
Member
-
Chair
Member
Member
Member
Member
Member
-
(i) S Ward left the Remuneration Committee in July 2020.
(ii) D Anderson was appointed to the Nomination Committee and the Remuneration Committee in July 2020.
(iii) 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 (Rounding in
Financial/Directors’ Reports) Instrument 2016/191. The Group is an entity to which the Class Order applies.
54
For personal use only
Auditor’s Independence Declaration
and Non-Audit Services
Auditor’s Independence Declaration
The directors received the declaration on page 56 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
26 August 2020
Judith Downes
Director
55
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 2020, 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
26 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
SOZO, the world’s most advanced, non-invasive bioimpedance spectroscopy (BIS) device, incorporates ImpediMed’s
technology to aid in the assessment of secondary lymphoedema, as well as to monitor patients living with heart failure.
SOZO delivers a precise snapshot of L-Dex®, fluid status, and tissue composition in less than 30 seconds, allowing
clinicians across multiple specialties to provide individualised, proactive care that can help improve patient outcomes.
For personal use only For personal use only CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE
Notes
2020
$000
2019
$000
Continuing Operations
SOZO Revenue
Legacy Revenue
Other Revenue
Total Revenue from Contracts with Customers
Cost of Goods Sold
Gross Profit
Finance Income, Net
Other Income
Salaries and Benefits
Share-based Payments
Clinical Trials and Research & Development
Administrative and Governance
Consultants and Professional Fees
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 or (loss):
Foreign Currency Translation Gain or (Loss)
Other Comprehensive Gain or (Loss) for the
Period, Net of Tax
Total Comprehensive Loss
Basic and Diluted Loss per Share
4
4
4
6
6
7
7
7
7
19
30
16
2
4,656
1,038
47
5,741
(1,678)
4,063
39
4,142
(15,515)
(2,246)
(3,308)
(2,329)
(2,279)
(3,896)
(21,329)
(48)
(21,377)
-
(21,377)
(162)
(162)
(21,539)
$
(0.04)
2,345
1,753
58
4,156
(1,252)
2,904
371
2,644
(15,770)
(2,849)
(2,958)
(2,374)
(2,121)
(3,792)
(23,945)
(51)
(23,996)
(127)
(24,123)
1,274
1,274
(22,849)
$
(0.06)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying
notes.
59
For personal use only
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 30 JUNE
Notes
2020
$000
2019
$000
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
Right of use Asset
Property and Equipment
Intangible Assets
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade Payables and Other
Contract Liabilities
Provisions
Interest Bearing Lease Liabilities
Total Current Liabilities
Non-Current Liabilities
Interest Bearing Lease Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued Capital
Reserves
Accumulated Losses
Total Equity
8
9
5
10
29
11
12
13
5
14
29
29
14
15
16
19,663
3,730
785
864
408
25,450
77
823
192
6,522
7,614
33,064
2,330
578
1,837
364
5,109
507
87
594
5,703
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
27,361
15,785
250,563
26,859
(250,061)
27,361
219,727
24,775
(228,717)
15,785
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
60
For personal use only
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE
Notes
2020
$000
2019
$000
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
Government Grant Receipts
Net Cash Flows Used in Operating Activities
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
Payment of Principal Portion of Lease Liabilities
Net Cash Flows from Financing Activities
8
11
12
15
Net Decrease in Cash and Cash Equivalents
Net Foreign Exchange Differences
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
8
5,385
4,459
(11,766)
(11,483)
(17,440)
131
4,472
(19,218)
(15,932)
397
2,971
(19,588)
-
459
(91)
(2,070)
(34)
(2,190)
(2,161)
(1,765)
33,251
(2,679)
(413)
30,159
(8,780)
(447)
11,330
19,663
163
(18)
-
145
(21,208)
1,193
31,345
11,330
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
61
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
$000
(restated)
Total
$000
At 30 June 2018
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 2019
Effect of Adoption of AASB 16
Leases
219,746
16,022
4,630
20,652
(204,594)
35,804
-
-
-
-
-
-
-
-
-
-
-
-
(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
29
-
96
(115)
2,849
-
-
-
-
-
2,849
-
-
-
-
-
2,849
96
(115)
219,727
18,871
5,904
24,775
(228,717)
15,785
-
-
-
-
33
33
At 30 June 2019 (adjusted)
219,727
18,871
5,904
24,775
(228,684)
15,818
Loss for the Period from
Continuing Operations
Other Comprehensive Loss from
Continuing Operations
Total Comprehensive Loss for
the Period
Equity Transactions:
Share-based Payments
Issue of Ordinary Shares
Costs of Capital Raising
-
-
-
-
-
-
(21,377)
(21,377)
(162)
(162)
-
(162)
18,871
5,742
24,613
(250,061)
(5,721)
18
15
15
-
33,335
(2,499)
2,246
-
-
-
-
-
2,246
-
-
-
-
-
2,246
33,335
(2,499)
At 30 June 2020
250,563
21,117
5,742
26,859
(250,061)
27,361
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
62
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
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 Payment 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. Changes to the Group’s Accounting Policies
30. Discontinued Operations
Page 64
Page 64
Page 65
Page 65
Page 67
Page 69
Page 70
Page 71
Page 72
Page 73
Page 74
Page 75
Page 77
Page 78
Page 79
Page 79
Page 80
Page 81
Page 87
Page 89
Page 89
Page 89
Page 90
Page 90
Page 90
Page 91
Page 94
Page 94
Page 95
Page 96
63
For personal use only
1. Basis of Preparation
Corporate Information
The financial report of the Group for the year ended 30
June 2020 was authorised for issue in accordance with
a resolution of the Board of Directors on 25 August
2020.
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.
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 $19.7
million at 30 June 2020 (30 June 2019: $11.3 million)
and had no borrowing from banks or other financial
institutions at that date. The Group incurred a net loss
of $21.4 million for the year ended 30 June 2020 (30
June 2019: $24.1 million) and had $19.2 million (30
June 2019: $19.6 million) of cash outflows from
operations.
Whilst the Group continues to generate operating
losses and net cash outflows from operations, the
Group’s future viability is dependent upon achieving the
Board approved operating plan for FY21.
The Board approved operating plan
includes
assumptions relating to (i) increased cash inflows from
growth in future sales, (ii) the take-up of options
associated with the recent capital raise, and (iii) other
funding arrangements.
Included in the FY21 operating plan is approximately
$17.1 million of cash assumed to be raised by 31 March
2021 through the take-up of options associated with the
recent Entitlement Offer. As of 30 June 2020, $1.1
million of the available $18.2 million in options had
already been exercised.
If the Group is unable to manage cash inflows and
outflows at amounts as necessary to meet future
operating plans, there is material uncertainty whether
the Group will be able to continue as a going concern to
realise assets and extinguish liabilities in the ordinary
course of business. The Directors are confident they will
be able to generate cash flows that will provide sufficient
funding 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 this basis, the going concern basis of accounting
has been used. No adjustment has been made to the
amounts and classifications of recorded assets and
liabilities should the Group be unable to continue as a
going concern.
Compliance with IFRS
The
International
report complies with
financial
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
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:
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
2020
$000
2019
$000
(21,377)
-
(23,996)
(127)
(21,377)
(24,123)
No.
No.
595,167,164
379,229,784
$
$
(0.04)
(0.04)
(0.06)
(0.06)
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 2020, 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 2020 there were
32,595,501(2019: 29,045,901) options and 7,372,095
(2019: 4,916,500) performance rights on issue.
64
For personal use only
to
relating
engages in business activities from which it may earn
revenues and incur expenses (including revenues and
expenses
transactions with other
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
financial
information is available. Management will also consider
other factors in determining operating segments such
as the existence of a line manager and the level of
segment
the Board of
Directors.
information presented
for which discrete
to
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.
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.
Subsequent to the end of the financial year, the Group
issued 29,787,481 ordinary shares in relation to options
exercised by participants of the April 2020 non-
renounceable accelerated Entitlement Offer. Refer to
Note 25 for additional disclosure.
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 Segment
Identification of Reportable Segment
The Group has identified its operating segment 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 with the Medical
Segment, consisting of the Group’s SOZO and Legacy
product lines, consistent with the previous Annual
Report.
The primary focus during the 2020 financial year for the
Medical Segment was the continued commercialisation
of SOZO and of the subscription revenue model,
focused on building a high margin contracted revenue
pipeline for strong recurring revenue growth in FY2021
and beyond.
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.
An operating segment is a component of an entity that
65
For personal use only
Year Ended 30 June 2020
Revenue
Revenue from Subscriptions and Consumables
Revenue from Devices
Other Revenue
Total Revenue by Segment
Year Ended 30 June 2019
Revenue
Revenue from Subscriptions and Consumables
Revenue from Devices
Other Revenue
Total Revenue by Segment
Gross Margins
The Group pays particular attention to its Gross Margins
by Operating Segment, specifically the Gross Margins
associated with its recurring revenue under the SOZO
SaaS business model. These revenue streams are
shown in the SOZO revenue for Revenue from
Subscriptions and Consumables.
For the 2020 financial year, the Group achieved gross
margins of over 83% from its recurring revenue streams
and 56% from device sales. At the end of Q4 FY20,
gross margins on the recurring revenue streams were
over 86% and Management anticipates
this will
continue to increase in FY21. The increase in gross
margins on the recurring revenue streams is an
important SaaS metric as it indicates that a healthy mix
of SOZO contracts are maturing past their initial year
under contract, whereby the costs of maintaining the
contract become considerably reduced compared to the
initial year of the contract.
(B) Geographical Segments
The following tables present revenue and profit/(loss)
Geographical Segment Revenue
Year Ended 30 June 2020
Device Revenue
Consumable Revenue
Other Revenue
Total Segment Revenue
Year Ended 30 June 2019
Device Revenue
Consumable Revenue
Other Revenue
Total Segment Revenue
Medical
SOZO®
$000
Legacy
$000
Other
3,410
1,246
-
4,656
714
324
-
1,038
-
-
47
47
Medical
SOZO®
$000
Legacy
$000
Other
1,626
719
-
2,345
1,485
268
-
1,753
-
-
58
58
Total
$000
4,124
1,570
47
5,741
Total
$000
3,111
987
58
4,156
information and certain asset and liability information
regarding geographical segments for the years ended
30 June 2020 and 2019. 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
its research and product
the main domicile of
intellectual property and
development activities,
corporate services. The Australia / ROW 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
468
353
12
833
Australia/ROW
$000
333
303
20
656
North America
$000
1,102
3,771
35
4,908
North America
$000
654
2,808
38
3,500
Total
$000
1,570
4,124
47
5,741
Total
$000
987
3,111
58
4,156
Sales of Goods – Device and Consumable Revenue
All segment assets and costs relating to the Group’s
operating segments as at 30 June 2020 are Medical.
66
For personal use only
2019
$000
3,111
987
58
4,156
2019
$000
800
497
(520)
2019
$000
230
8
the customer at an amount
the
consideration to which the Group expects to be entitled
in exchange for those goods or services.
reflects
that
5. Revenue from Contracts with Customers
Revenue from contracts with customers is recognised
when control of the goods or services are transferred to
Sales of Goods and Subscription Services
Revenue from Subscriptions and Consumables
Revenue from Devices
Other Revenues
Total Revenue from Contracts with Customers
2020
$000
4,124
1,570
47
5,741
Set out below are the amounts that relate to SOZO contracts that remain on the balance sheet at 30 June:
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
2020
$000
917
785
(578)
2020
$000
353
416
AASB 15 Revenue Recognition Policy
(a) Sale of Goods – Legacy Devices and Consumables
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 contract
The Group considers whether there are other promises
in
that are separate performance
obligations to which a portion of the transaction price
needs to be allocated.
(b) SOZO 2 – Sale of Device and Subscription Services
The Group enters into contracts with customers for
bundled sales of SOZO 2 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 to 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 delivery of
the devices in accordance with the contractual terms,
67
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 contract
The Group considers whether there are other promises
in
that are separate performance
obligations to which a portion of the transaction price
needs to be allocated.
(c) SOZO 3 – Sale of Device and Subscription Services
The Group enters into contracts with customers for
bundled sales of SOZO 3 devices and subscription
services. The Group has determined that these bundled
sales contracts are comprised of one performance
obligation 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 recognised using
the input cost method based on the estimated cost of
fulfilling the completion of the promises in accordance
is
with
terms, and when
the contractual
there
For personal use only
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 liability 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.
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 contract
The Group considers whether there are other promises
in
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.
Key Considerations in the Revenue Policy
In determining the transaction price for the subscription
services, the Group considers the effect of the following:
(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 and 3. The Group provides devices that are
bundled together with the subscription services to a
the
customer. Under
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.
the contractual
terms
(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
68
For personal use only
6. Finance and Other Income
Finance Income
Interest Income – term deposits
Interest Expense – lease liability (i)
Finance Income, Net
R&D Tax Incentive
Proceeds from Tax Refunds, Grants, and Other (ii)
Other Income
2020
$000
112
(73)
39
2,606
1,536
4,142
2019
$000
371
-
371
2,620
24
2,644
(i) Refer to Note 29 for details related to the implementation of AASB 16 Leases.
(ii) During the period, the Group applied for and received government grants and forgivable loans in relation to the COVID-19 pandemic. The Group
recognised $1.3M in income related to the Paycheck Protection Program (PPP) in the United States and $0.2M in income related to the
JobKeeper Program and pay as you go (PAYG) tax credits in Australia. The Group recognised $0.3M as deferred grant income related to these
programs at the balance sheet date which will be recognised in future periods. Refer to Note 13 for details.
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 discounts estimated future cash receipts through the expected life of the financial asset to
the net carrying amount of the financial asset.
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.
The Group accrues for amounts when there is reasonable assurance of receipt. Whilst there is a judgment involved in
when there is reasonable assurance, the Group now has a 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.
In relation to the COVID-19 pandemic, the Group received cash in the US from the Small Business Administration’s
(SBA) Paycheck Protection Program (PPP) in the form of a forgivable loan. Management believes there is reasonable
assurance that the Group will meet the terms for the loan to be forgiven in full and therefore have accounted for it in
accordance with AASB 120 Accounting for Government Grants and Disclosure of Government Assistance.
The Group also received cash grants from the Australian government from two programs (JobKeeper Program and pay
as you go (PAYG) tax credits from the ATO).
Under AASB 120, the Group will recognise the income from the forgivable loan and the grants on a systematic basis
over the periods in which the entity recognises as expenses the related costs for which the grants are intended to
compensate.
69
For personal use only
7. Expenses
Salaries and Benefits
Wages and Salaries (i)
Performance & Sales Bonuses (ii)
Employee Benefits
Superannuation
Annual Leave & Long Service Leave
Taxes and Other
Capitalised Employee Costs (i)
Sub-Total Salaries and Benefits
Share-Based Payments to Employees
Total Salaries and Benefits
2020
$000
11,954
2,139
1,016
496
278
1,278
(1,646)
15,515
2,246
17,761
2019
$000
11,337
3,933
932
457
118
994
(2,001)
15,770
2,849
18,619
(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.
(ii) Performance & Sales Bonuses for the 2020 financial year primarily consisted of $1.4 million (2019: 1.2 million) in sales related Commissions
and $0.7 million (2019: $2.7 million) in Short-Term Incentives (including on-costs) for employees resulting from 21.8% achievement.
Clinical Trials and Research & Development
Cardiology and Other Clinical Trials
Oncology Clinical Trials (i)
Product Engineering
Total Clinical Trials and Research & Development
2020
$000
1,623
1,590
95
3,308
2019
$000
1,557
1,079
322
2,958
(i) With enrolment completed in the 1,100 patient PREVENT Trial, the largest international multicenter randomised controlled trial undertaken in
the prevention of breast cancer-related lymphoedema, costs related to oncology clinical trials increased in the current financial period due to
costs incurred for data analytics and technical writing. The Group expects that expenditure on the PREVENT Trial will decrease in the 2021
financial year as follow up screening concludes for existing patients within the trial and the 3-year data is released.
Other Expenses
Depreciation and Amortisation (i)
Advertising and Promotion (ii)
Travel (iii)
IT, Property and Other (iv)
Total Other Expenses
2020
$000
1,436
875
856
729
3,896
2019
$000
682
714
1,293
1,103
3,792
(i) Depreciation and Amortisation increased in the financial period due to the capitalisation of Software Development costs $961,000 (refer to Note
12) and the implementation of AASB 16 Leases $332,000 (refer to Note 29).
(ii) The Group increased Advertising and Promotion expenses due to the implementation of the Lymphoedema Prevention Program (LPP), offset
slightly by a reduction of tradeshow costs in the final quarter of the financial year due the COVID-19 pandemic.
(iii) Travel decreased due to the COVID-19 pandemic.
(iv) Property expenses were reclassified to interest and depreciation expenses during the period due to the implementation of AASB 16 Leases
(refer to Note 29 for details).
70
For personal use only
8. Cash and Cash Equivalents
Cash at Bank and in Hand
Short Term Deposits
Cash and Cash Equivalents
2020
$000
10,886
8,777
19,663
RECONCILIATION FROM NET LOSS AFTER TAX TO NET CASH FLOW FROM OPERATIONS
2020
$000
2019
$000
3,165
8,165
11,330
2019
$000
Net Loss After Tax
Adjustments For:
Depreciation and Amortisation Expense
Share-based Payment Expense
Amounts Set Aside for Provisions (Accounts Receivable)
Unrealised 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
(21,377)
(24,123)
1,436
2,246
14
346
257
(49)
(256)
128
(58)
(1,905)
-
(19,218)
682
2,849
15
1
690
(27)
609
(688)
451
547
(594)
(19,588)
71
For personal use only
9. Trade and Other Receivables
Trade Receivables
Allowance for Expected Credit losses
Interest Receivable
Tax and Other Receivables
Total Trade and Other Receivables
2020
$000
917
(46)
6
2,853
3,730
2019
$000
800
(52)
18
2,722
3,488
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's 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.
During the year, the Group recognised $13,000 (2019:
nil) in expected credit losses in accordance with AASB
9.
Trade receivables are non-interest bearing and are
generally include 30-90 day terms, based upon each
customer’s credit rating.
Movements in the provision for impairment loss were as
follows:
At July 1
Charge for the Year
Amounts Reversed
Amounts Written Off (i)
Foreign Exchange Translation
At June 30
2020
$000
52
19
(25)
(1)
1
46
2019
$000
396
86
(91)
(339)
-
52
(i) During the prior period, the Group wrote off $339,000 of outstanding aged receivables that were previously provided for.
The remaining receivables past due, but not considered impaired, are actively assessed by Management and viewed
as recoverable. As at 30 June, the ageing analysis of trade receivables is as follows:
Total
871
748
Neither Past
Due nor
Impaired
605
516
Past Due but Not Impaired
<30 Days
30-60 Days
>61 days
76
70
38
44
152
118
2020
2019
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 assets not at
fair value through profit or loss, directly attributable
transaction costs.
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.
72
For personal use only
10. Current Assets – Inventories
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
2020
$000
269
-
1,320
(725)
864
2019
$000
341
-
1,712
(932)
1,121
(i)
the Group made efforts to best utilise working capital and has scheduled additional builds of SOZO inventory so that delivery of inventory from
the contract manufacturer is in line with sales forecasts.
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 $23,000 (2019: $600) 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.
73
For personal use only
11. Non-Current Assets – Property and Equipment
Year Ended 30 June 2020
At 1 July 2019 Net of
Accumulated Depreciation
Additions
Disposals
Transfers from Inventory
Depreciation Charge for the
Year
Effect of Foreign Exchange
At 30 June 2020 Net of
Accumulated Depreciation
At 30 June 2020
Cost
Accumulated Depreciation
Net Carrying Amount
Year Ended 30 June 2019
At 1 July 2018 Net of
Accumulated Depreciation
Additions
Disposals
Transfers from Inventory
Depreciation Charge for the
Year
Effect of Foreign Exchange
At 30 June 2019 Net of
Accumulated Depreciation
At 30 June 2019
Cost
Accumulated Depreciation
Net Carrying Amount
Leased,
Demo & Loan
Devices
$000
66
-
-
17
(33)
(1)
49
889
(840)
49
Leased,
Demo & Loan
Devices
$000
102
-
(18)
30
(47)
(1)
66
873
(807)
66
Leasehold
Improvements
$000
Property &
Machinery
$000
Computer
Equipment
$000
11
23
-
-
(8)
-
26
186
(160)
26
72
-
-
-
(29)
3
46
707
(661)
46
39
82
-
-
(51)
1
71
702
(631)
71
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
2,344
(2,156)
188
Total
$000
188
105
-
17
(121)
3
192
2,484
(2,292)
192
Total
$000
368
32
(18)
30
(232)
8
188
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.
Derecognition
An item of property and equipment is de-recognised
upon disposal or when no further future economic
benefits are expected from its use or disposal.
Equipment is stated at historical cost 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
Devices Under Lease or Loan
Leasehold Improvements
1 – 10 years
3 years
2 – 5 years
The assets’
lives and
amortisation methods are reviewed, and adjusted if
appropriate, at each reporting date.
residual values, useful
74
For personal use only
12. Non-Current Assets – Intangible Assets and Goodwill
Development
Costs (i)
$000
Other
Software (i)
$000
Patents &
Licenses
$000
Goodwill
$000
Total
$000
2,584
5,375
Year Ended 30 June 2020
At 1 July 2019 Net of
Accumulated Amortisation &
Impairment
Arising During the Year
Amortisation
Effect of Foreign Exchange
At 30 June 2020 Net of
Accumulated Amortisation &
Impairment
At 30 June 2020
Cost (Gross Carrying Amount)
Accumulated Amortisation &
Impairment
Net Carrying Amount
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
2,747
28
2,070
(961)
-
3,856
5,244
(1,388)
3,856
-
(11)
-
17
488
(471)
17
16
-
(3)
-
13
36
(23)
13
-
-
52
2,636
2,636
-
2,636
2,070
(975)
52
6,522
8,404
(1,882)
6,522
Total
$000
Development
Costs (i)
$000
Other
Software (i)
$000
Patents &
Licenses
$000
Goodwill
$000
964
74
2,190
(407)
-
2,747
3,174
(427)
2,747
3
(51)
2
28
481
(453)
28
17
-
(2)
1
16
36
(20)
16
2,449
3,504
-
-
135
2,584
2,584
-
2,584
2,193
(460)
138
5,375
6,275
(900)
5,375
(i) Development costs relate to internally generated and developed SOZO software. 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
intangible asset may be 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.
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
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.
75
For personal use only
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
Finite
Amortised over the period of expected
future benefit from the related project
on a straight-line basis
Acquired
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 de-recognised.
Expenditures on advertising and promotional expenses
are recognised in the statement of comprehensive
income when the Group has either the right to access
the goods or has received the services.
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 recognised in the statement of comprehensive
income in the line item “depreciation and amortisation”.
If an impairment indication arises, the recoverable
amount is estimated, and an impairment loss is
recognised to the extent that the recoverable amount is
lower than the carrying amount.
Development Costs
The Group capitalises certain costs related to the
development of medical
in
accordance with AASB 138 Intangible Assets.
technology software
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 amortisation and accumulated impairment
76
losses. Any expenditure capitalised is amortised over
the period of expected benefit from the related project.
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”.
impairment
indication arises, impairment testing is undertaken.
If an
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.
impairment
Patents and Licenses
The Group holds three licences and numerous patents.
All patents and licences are carried at cost less
accumulated amortisation and
losses.
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 licences
are subject to impairment testing whenever there is an
indication of impairment.
No impairment loss has been recognised for the years
ended 30 June 2020 or 2019.
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.
impairment
the purpose of
For
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
For personal use only
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 which is the only unit
under the Medical Segment.
Impairment is determined by assessing the 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
in use (VIU),
impairment exist, using
discounted cash flow methodology.
the value
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 2020, 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 2020 and 2019.
Details of Impairment Testing
Impairment testing has been performed by reviewing
the carrying amounts of net assets and by calculating
the value in use (VIU) of the CGU.
The market capitalisation of the Group at 30 June 2020
was approximately $62 million, which exceeded the net
assets recorded (including goodwill) by approximately
$35 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% (2019: 12.5%) discount rate and a
3% (2019: 3%) long-term growth rate. The short-term
cash flows used in the cash flow model are based on
operating plans and forecasts approved by the Board,
which 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, aside from the funds received
from the SBA and has created equity by relying upon
capital raises for its operating funds. Due to the inherent
risk related to future cash flows, Management has
assessed the breakeven discount rate at 30 June 2020
to be 17.3% (2019: 16.2%).
13. Current Liabilities – Trade and Other Payables
Trade Payables and Accruals (i)
Employee Related Payables
Sales Tax and Other Payables
Carrying Amount of Trade and Other Payables
(i)
Includes $0.3M of deferred grant revenue. Refer to Note 6 for details.
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.
2020
$000
1,913
366
51
2,330
2019
$000
2,086
307
54
2,447
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 exchange
and liquidity risk exposure is set out in Note 26.
77
For personal use only
14. Provisions
Current
Employee Entitlements (i)
Warranty Provision
Total Current Provisions
Non-Current
Employee Entitlements
Deferred Rent Liability (ii)
Office Lease – Make Good Provisions
Prepaid Service Contracts
Total Non-current Provisions
2020
$000
1,799
38
1,837
42
-
26
19
87
2019
$000
3,666
28
3,694
26
83
26
-
135
(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 2020, the incentive plan focused on both Group and individual performance.
(ii) See Note 29 for adjustments on adoption of AASB-16 Leases.
Significant Movements in Provisions
For the year ended 30 June 2020, the Group has an
accrual of $0.6 million (2019: $2.7 million) in short-term
incentives, which
the utilisation of
is offset by
approximately $2.7 million (2019: $2.1 million) in short-
term incentives related to the prior year accrual, 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.
the reimbursement
for example under an
When the Group expects some or all of a provision to
be reimbursed,
insurance
contract,
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
leave are
for non-accumulating sick
recognised when the leave is taken and are measured
78
at the rates paid or payable.
to
various
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
at various percentages of
including
contributions
the Superannuation
by
Guarantee Charge. These contributions are made to
external superannuation funds and are not defined
benefits programs. Consequently, the Group’s legal or
constructive obligation is limited to these contributions.
their salary,
required
defined
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.
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.
For personal use only
15. Contributed Equity
Ordinary Shares
Ordinary Shares Fully Paid
Total Ordinary Shares
2020
$000
250,563
250,563
2019
$000
219,727
219,727
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
$2,499,000 (2019: $115,000) pertaining to the cost of
capital from the July 2019 Entitlement Offer, the April
2020 Entitlement Offer, and 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 2018
Issued During the Period as a Result of:
Issue of Ordinary Shares
Transactions Costs (i)
At 30 June 2019
Issued During the Period as a Result of:
Issue of Ordinary Shares under the April 2020 Entitlement Offer
Issue of Ordinary Shares under the July 2019 Entitlement Offer
Issue of Ordinary Shares under the Equity Share Plans(ii)
Issue of Ordinary Shares from the Exercise of Employee Awards
Transactions Costs
At 30 June 2020
Number of Shares
378,993,655
810,332
-
379,803,987
486,114,474
126,602,928
7,480,640
1,695,232
-
1,001,697,261
$000
219,746
96
(115)
219,727
19,323
13,926
-
86
(2,499)
250,563
(i) Transaction costs for the 2019 financial year include $105,000 related to the July 2019 Entitlement Offer.
(ii) Shares issued under the Equity Share Plans relate to remuneration paid to Non-Executive Directors and Executives in lieu of cash.
Capital Management
Trade and Other Payables
Less Cash and Cash Equivalents
Net Debt
Total Equity
Total Capital
Net Debt to Equity Ratio
2020
$000
2,330
(19,663)
(17,333)
27,361
10,028
N/A
2019
$000
2,447
(11,330)
(8,883)
15,785
6,902
N/A
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.
16. Reserves
Movements in Other Reserves
At 1 July 2018
Foreign Currency Translation
Share-based Payment
At 30 June 2019
Foreign Currency Translation
Share-based Payment
At 30 June 2020
Share
Reserves
$000
16,022
-
2,849
18,871
-
1,281
20,152
Equity
Compensation
Reserve
$000
-
-
-
-
-
965
965
79
Foreign Currency
Translation
$000
4,630
1,274
-
5,904
(162)
-
5,742
Total
$000
20,652
1,274
2,849
24,775
(162)
2,246
26,859
For personal use only
The Group currently maintains two long-term incentive
plans for share-based payments in relation to awards
issued as options and performance rights. 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 2020, there were 39,967,596 (30 June 2019:
32,962,401) unissued ordinary shares in respect of
32,595,501 (30 June 2019: 29,045,901) unlisted
options, 7,372,095
(30 June 2019: 4,916,500)
performance shares and nil (30 June 2019: nil) listed
options.
Nature and Purpose of Reserves
Share Option Reserve and Performance Share
17. Key Management Personnel (KMP)
Employee Benefits (i) (ii)
Post-employment Benefits
Share-based Payments (iii)
Total Compensation (iv)
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.
Equity Escrow Reserve
The Equity Escrow reserve is used to record the value
of share-based payments to participants in the Equity
Compensation Plan. The Plan went into effect 1 July
2020 after receiving shareholder approval at the 2020
AGM providing up to 20% base salary as equity in lieu
of cash. The NEDs have also agreed to a 25% reduction
in their fees effective 1 April 2020 which were already
being received 100% in equity with the NED Share Plan
that went into effect 1 July 2020.
Foreign Currency Translation Reserve
The foreign currency translation reserve is used to
record exchange differences arising from the translation
of the financial statements of foreign subsidiaries.
2020
$000
2,600
451
1,286
4,337
2019
$000
5,168
147
2,269
7,584
(i) Short-term employee benefits include salaries and wages, short-term incentives earned during the period, other one-time short-term incentives,
and non-monetary benefits such as insurance benefits.
(ii) During the year, fixed cash remuneration was reduced by 50% for MD/CEO and 30% for certain Executives. In addition, directors’ fees, which
were already being taken as equity remuneration, were reduced by 25% during the year. See Remuneration Report for details.
(iii) Share-based Payments decreased in the 2020 financial year due to the forfeiture of certain Performance Rights and a lower share price used in
valuing long-term incentive awards during the year.
(iv) 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. Refer to the Remuneration Report for additional details in relation to KMP remuneration practices.
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
Expiry Date
Performance Rights
Share Options
Performance Rights
Share Options
Share Options
Share Options
Performance Rights
Share Options
Share Options
Share Options
Share Options
Share Options
Share Options
15-Nov-2020
30-Jun-2021
31-Jul-2021
4-Dec-2021
1-Jul-2022
8-Jul-2022
11-Nov-2022
25-Oct-2023
13-Nov-2023
14-Nov-2023
15-Nov-2024
31-Jul-2025
11-Nov-2026
80
Exercise Price
$ -
$ 0.21
$ -
$ 0.69
$ 0.87 – $1.00
$ 0.35
$ -
$ 1.66
$ 1.46
$ 1.46
$ 0.82
$ 0.51
$ 0.15
2020
1,036,750
779,122
310,000
3,538,000
837,500
7,252,561
3,564,731
518,000
335,000
872,000
2,887,000
515,000
4,161,177
26,606,841
For personal use only
18. Share-based Payment Plans
Recognised Share-based Payment Expenses
The expense recognised for share-based payments during the year is shown in the table below:
Expense Arising from Equity-Settled Share-Based Payment Transactions –
Employees and Consultants
Expense Arising from the Equity Compensation Plan – Directors and
Employees
Total Expense Arising from Share-Based Payment Transactions
2020
$000
1,281
965
2,246
2019
$000
2,849
-
2,849
motivate them to improve Group performance. For all
financial year 2020, 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
that are
outstanding options under
cancelled or forfeited do not become available under the
EIP nor return to the available option pool.
the ESOPs
(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.
the company’s
Issue of Options Excluded from Group’s 15% Limit
Under ASX Listing Rule 7.1
to certain
Under ASX Listing Rule 7.1, subject
exceptions, a company must not issue more than 15%
of
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.
total
Executive and Non-Executive Share Plans
During the period, the Group instituted an Executive
Share Plan whereby up to 20% of an Executive’s gross
salary and short-term incentives and a Non-Executive
Share Plan whereby 100% of Directors’ fees were taken
as shares in lieu of cash. The Group established these
plans to (a) align the financial interests of Executives
and Directors with those of the shareholders, (b)
facilitate the acquisition of shares by the Executives and
Directors, and
reserves by
remunerating the Executives and Directors with shares
in lieu of cash. Refer to the 2019 AGM Notice for full
details of the plans.
(c) preserve cash
During the period, share-based payments under the
Non-Executive Director and Executive Share Plans
totaled approximately $965,000 (30 June 2019: nil), of
which approximately $886,000 (30 June 2019: nil) was
related to Key Management Personnel (KMP). These
shares were issued in lieu of cash remuneration, which
comprised 100% of Directors’ fees and up to 20% of
Executive salaries.
Equity-Settled Transactions
The Group provides benefits to employees (KMP) and
certain consultants
form of share-based
the
payments, whereby employees and consultants render
services in exchange for shares or rights over shares
(equity-settled transactions).
in
There are currently three types of plans in place to
provide these benefits:
• The Employee Incentive Plan (EIP), which provides
benefits in the 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 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
framework should provide
competitive and appropriate remuneration so that the
company can attract and retain skilled employees and
remuneration
81
For personal use only
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);
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 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
the
to any
Sub-Plan
Corporations Act or the ASX Listing Rules.
is subject
restrictions
in
•
•
▪ 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.
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
82
Share Options
Share options are issued to eligible participants under
the EIP. The Group issued 9,624,808 (2019: 1,547,000)
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.
to eligible participants under
Performance Shares
Performance shares (or Performance Rights) are
issued
in
recognition of their contribution to the performance of
the Group and are often subject to meeting individual
performance hurdles. The Group issued 5,750,175
(2019: 485,000) performance rights to employees under
the EIP during the current year.
the EIP
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.
For personal use only
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.
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
the
shareholders.
to approval by
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
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:
SHARE OPTIONS
Balance at the Beginning of the Year
Granted During the Year
Forfeited During the Year
Expired 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
Expired During the Year
Balance at the End of the Year
Exercisable at 30 June
2020
2019
Number
18,180,771
9,624,808
(3,459,946)
(169,771)
24,175,862
10,980,375
WAEP $
0.86
0.15
0.70
0.73
0.60
0.89
Number
18,216,070
1,547,000
(1,582,299)
-
18,180,771
10,237,487
2020
2019
Number
4,916,500
5,750,175
(2,317,414)
(403,666)
(573,500)
7,372,095
-
WAEP $
-
-
-
-
-
-
-
Number
4,431,500
485,000
-
-
-
4,916,500
-
WAEP $
0.89
0.31
0.74
0.86
0.86
WAEP $
-
-
-
-
-
-
-
83
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:
2020
2019
Number
10,865,130
(631,050)
(25,534)
(1,788,907)
8,419,639
8,419,639
WAEP $
0.30
0.11
0.16
0.19
0.34
0.34
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
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
Employee Incentive Plan (EIP)
The year-end balance is represented by:
SHARE OPTIONS
Number of Options
Exercise Price ($)
4,234,000
1,184,500
250,000
375,000
200,000
518,000
566,500
335,000
872,000
120,000
53,500
4,974,000
306,000
578,000
70,000
100,000
498,000
40,000
100,000
40,000
7,821,362
230,000
450,000
195,000
65,000
24,175,862
0.69
0.87
1.03-1.05
0.89
1.32
1.66
1.47
1.46
1.46
0.74
0.64
0.82
0.68
0.52
0.23
0.23
0.14
0.14
0.15
0.15
0.15
0.17
0.11
0.04
0.07
PERFORMANCE RIGHTS
Number of Rights
1,402,750
415,000
150,000
4,739,345
175,000
180,000
310,000
7,372,095
Exercise Price ($) (i)
-
-
-
-
-
-
-
(i) Exercise price is nil as performance rights are issued for nil consideration.
84
Expiry Date
04-Dec-2021
01-Jul-2022
08-Dec-2022
18-May-2023
01-Aug-2023
25-Oct-2023
04-Nov-2023
13-Nov-2023
14-Nov-2023
28-Apr-2024
13-Sep-2024
15-Nov-2024
27-Apr-2025
31-Jul-2025
01-Oct-2025
01-Jan-2026
01-Apr-2026
01-Aug-2026
01-Sep-2026
01-Oct-2026
11-Nov-2026
02-Jan-2027
20-Feb-2027
08-Apr-2027
16-Jun-2027
Expiry Date
15-Nov-2020
20-Feb-2023
08-Apr-2023
11-Nov-2022
05-Jun-2022
27-Apr-2021
31-Jul-2021
For personal use only
Employee Stock Option Plan (ESOP)
The year-end balance is represented by:
Number of Options
1,067,078
100,000
7,252,561
8,419,639
Exercise Price ($)
$0.21-.26
$0.44
$0.35
Expiry Date
30-Jun-2021
30-Jun-2022
08-Jul-2022
Chief Executive Option Plan
There were no options issued under the Chief 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 2020 is .10
(2019: 2.47) years.
Employee Incentive Plan (EIP)
The weighted average remaining contractual life for
share options outstanding as at 30 June 2020 is 4.40
(2019: 4.10) years. The weighted average remaining
contractual life for performance rights outstanding as at
30 June 2020 is 1.91 (2019: 1.34) years.
(D) RANGE OF EXERCISE PRICES
Employee Share Option Plan (ESOP)
The range of exercise prices for options outstanding as
at 30 June 2020 is $0.21-0.44 (2019: $0.11-0.44)
Expected Volatility (%)
Risk Free Interest Rate (%)
Expected Life of Options (Years)
Option Exercise Price ($)
Stock Price at Grant Date ($)
Calculated Fair Value at Grant Date ($)
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
$0.14 in financial year 2020 (2019: $0.31).
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
sample of industry averages based on historical share
prices. The resulting expected volatility
therefore
reflects the assumption that the industry averages are
85
Employee Incentive Plan (EIP)
The range of exercise prices for options outstanding as
at 30 June 2020 is $0.04-1.66 (2019: $0.14-1.66). 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 $0.15 (2019: $0.31).
(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 if
there is a restriction on the share price for 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 2020 and 2019:
EIP
Issue 2020
73.45%
2.62%
7
$0.04 - $0.15
$0.04 - $0.20
$0.02 - $0.10
EIP
Issue 2019
52.70%
2.36%
7
$0.14 - $0.52
$0.14 - $0.41
$0.06 - $0.24
indicative of future trends, which may not necessarily be
the actual outcome.
(G) ACCOUNTING
POLICIES
SETTLED TRANSACTIONS
FOR
EQUITY-
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.
For personal use only
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
likelihood of non-market
performance conditions being met; and
the
• 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.
the Parent
Equity-settled awards granted by
to
employees of subsidiaries are recognised in the
Parent’s separate financial statements as an additional
investment 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 recognised by
the Group is the total expense 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 total fair value of
the share-based payment arrangement, or is otherwise
beneficial to the employee, as measured at the date of
modification.
removed
During the prior period, certain options of the MD/CEO
were modified to amend the terms of the grant. The
amendment
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 requires 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.
86
For personal use only 19. Income Tax
The major components of income tax are:
Income Tax Expense
Current Income Tax
Current Income Tax Expense
Prior Year Over/Under Provision
Income Tax Loss Reported in the Consolidated Statement of
Comprehensive Income
2020
$000
(38)
(10)
(48)
2019
$000
(47)
(4)
(51)
Tax Losses
The Group has tax losses in Australia of approximately
$78.8 million (2019: $71.0 million) and tax losses in the
US of approximately USD $101.1 million (2019: USD
$94.2 million) that are available for offset against future
taxable profits of the companies in which the losses
arose, subject to satisfying the relevant income tax loss
carry forward rules. US 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.
Statement of Comprehensive Income Disclosure
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% (2019: 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
2020
$000
2019
$000
(21,330)
(24,072)
(21,330)
(5,866)
(24,072)
(6,620)
2,099
25
(717)
(483)
696
4,283
11
48
(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.
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
Property Plan and Equipment
Subtotal
Deferred Tax Assets not Recognisable
Net Deferred Tax Balance Per Accounts
87
2020
$000
11
258
581
356
62
52,543
101
214
(6,828)
(2)
12
47,308
(47,308)
-
2,261
42
(721)
(523)
960
4,648
4
51
2019
$000
13
201
250
384
75
45,861
53
279
(5,979)
-
-
41,135
(41,135)
-
For personal use only
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
is not recoverable
• Where the GST incurred on a purchase of goods and
services
taxation
authority, in which case the GST is recognised as part
of the cost of acquisition of the asset or as part of the
expense item as applicable; and
from
the
• 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:
• 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 expense
item as applicable. Receivables and 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,
flows as
appropriate.
financing cash
in-vesting or
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, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss; or
the deductible
is
associated with investments in subsidiaries in which
case a deferred tax asset is only recognised to the
extent that it is probable that the temporary difference
will reverse in the foreseeable future and taxable profit
will be available against which
temporary
difference can be utilised.
temporary difference
• When
the
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
tax assets are
Unrecognised deferred
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
88
For personal use only
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
2020
$000
11,575
15,642
1,297
1,536
250,563
(267,628)
4,396
16,720
4,051
(31,067)
(31,067)
2019
$000
4,171
6,946
1,495
1,531
219,727
(236,562)
4,070
14,801
2,036
(7,472)
(7,472)
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.
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
2020
100
100
100
2019
100
100
100
Key Management Personnel (KMP)
Details
including remuneration paid, are including in Note 17.
to key management personnel,
relating
For the year ended 30 June 2020, 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 2020, 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:
Fees for auditing the statutory financial report of the parent covering the
group and auditing the statutory financial reports of any controlled
entities
2020
$000
251
251
2019
$000
209
209
89
For personal use only
23. Commitments
25. Events After the Balance Sheet Date
On 22 July 2020, the Group announced the launch of its
fluid analysis for heart failure software for the SOZO
Digital Health Platform. The launch follows an intensive
round of review of improvements in collaboration with
Dr. Tom Heywood and Dr. Andrew Accardi at Scripps
Health in San Diego, CA USA. The Group has initiated
discussions with potential customers and although this
is initially a very targeted approach, the Group expects
first commercial sales over the balance of the calendar
year.
On 7 July 2020, the Group issued 29,787,481 ordinary
shares in relation to options exercised by participants of
the April 2020 non-renounceable
accelerated
Entitlement Offer, totaling approximately $1.1 million.
On 2 July 2020, the Group issued 3,444,527 shares to
Non-Executive Directors and Executives as part of the
Equity Share Plans. These shares were issued in lieu of
cash remuneration, which comprised 100% of Directors’
fees and up to 20% of Executive salaries.
Expenditure Commitments
At 30 June 2020, the Group has commitments of $1.1
million (2019: $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
the
commercialisation of the SOZO device with L-Dex
technology in the US marketplace, as well as the
PREVENT and CHF clinical trials.
to
Royalty Commitments
At 30 June 2020, 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 2020.
Accounting Policies for Onerous Contracts
An onerous contract provision
for
is recognised
contracts that are deemed onerous. Contracts are
deemed onerous if the unavoidable costs of meeting the
obligations under the contract exceed the benefits
expected
received. The Group has no
commitments deemed to be onerous.
to be
24. Contingencies
Legal Claims
At 30 June 2020, the Group has no provisions provided
in relation to legal claims.
Contingent Liabilities
The Group had no contingent liabilities as at 30 June
2020 or 2019.
Cross Guarantees
As a policy, the Group does not undertake any cross
guarantees.
90
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
future
financial security. The Board reviews and agrees to
policies for managing these risks which are summarised
below.
targets while protecting
financial
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:
Financial Assets
Cash and Cash Equivalents
Restricted Cash, Current and Non-current
Net Exposure
2020
$000
19,663
77
19,739
2019
$000
11,330
76
11,406
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 2020, 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:
Post Tax Loss
Higher / (Lower)
2020
$000
197
(99)
2019
$000
114
(57)
+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.
91
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 than an entity’s functional currency are considered
at risk of foreign currency fluctuations.
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 2020, 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
2020
$000
157
21
14
2
26
220
10
210
2019
$000
154
64
3
10
31
262
54
208
At 30 June 2020, 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% (2019: +15%)
AUD to Foreign Currency – 15% (2019: –15%)
Significant assumptions used in the foreign currency
exposure sensitivity analysis include the following:
• Reasonable possible movements
foreign
exchange rates were determined based on review
of the last two years’ historical movements and
economic forecasters’ expectations.
in
• The reasonably possible movement was 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
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.
Post Tax Loss
Higher / (Lower)
2020
$000
(27)
51
2019
$000
(27)
38
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 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.
92
For personal use only
There are no significant concentrations of credit risk
within the Group and $1,500,000 in outstanding term
deposits were held at the end of the financial year
(2019: $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 2020.
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.
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 of
future risks, the Group has established comprehensive
risk reporting covering their worldwide business unit that
reflects expectations of management of expected
settlement of financial assets and liabilities.
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 2020
Liquid Financial Assets
Cash and Cash Equivalents
Trade and Other Receivables
Other Financial Assets
Subtotal
Financial Liabilities
Trade and Other Payables
Interest Bearing Lease Liabilities
Net Flow
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
19,663
3,730
-
23,393
(2,280)
(182)
20,931
-
-
-
-
(51)
(182)
(233)
-
-
77
77
-
(507)
(430)
≤ 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
19,663
3,730
77
23,470
(2,331)
(871)
20,268
Total
$000
11,330
3,488
45
14,863
(2,447)
12,416
The Group monitors rolling forecasts of liquidity on the basis of expected cash flow.
93
For personal use only
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
Financial Liabilities
Trade and Other Payables
Contract Liabilities
Carrying Amount
Fair Value
2020
$000
19,663
31
3,730
785
77
24,286
(2,330)
(578)
(2,908)
2019
$000
11,330
31
3,488
497
45
15,391
(2,447)
(520)
(2,967)
2020
$000
19,663
31
3,488
497
45
24,286
(2,330)
(578)
(2,908)
2019
$000
11,330
31
3,488
497
45
15,391
(2,447)
(520)
(2,967)
28. Significant Accounting Policies
Significant Accounting Judgements, Estimates and
Assumptions
The preparation of the Group’s consolidated financial
statements requires Management to make 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.
the
identified
following critical
Management has
accounting policies for which significant judgements,
estimates and assumptions are made. Actual results
may differ
these estimates under different
assumptions and conditions and may materially affect
financial results or the financial position reported in
future periods.
from
Further details of the nature of these assumptions and
conditions may be found in the relevant notes to the
financial statements.
than
Impairment of Non-Financial Assets Other
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
94
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 2020. 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 determined that no
impairment loss should be recognised for this financial
reporting period. The assumptions used
this
estimation of goodwill and intangibles with indefinite
useful lives are discussed in Note 12.
in
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 2020, there were
$23,000 in write-downs to inventory. During the year
ended 30 June 2019, there were no write-downs to
inventory.
For personal use only
to
the
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
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
capital expenditure,
costs,
dividends and other capital management transactions.
Judgements are also required about the application of
judgements and
income
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
liabilities
deferred
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
tax
regarding deferred
liabilities.
tax assets and deferred
tax assets and deferred
tax
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
29. Changes to the Group’s Accounting
Policies
Impact of AASB 16 Leases
AASB 16.C12 AASB 16 supersedes AASB-117 Leases,
IFRIC 4 Determining whether an Arrangement contains
a Lease, SIC-15 Operating Leases-Incentives and SIC-
27 Evaluating the Substance of Transactions Involving
the Legal Form of a Lease. The standard sets out the
principles
recognition, measurement,
presentation and disclosure of leases and requires
lessees to recognise most leases on the balance sheet.
the
for
The Group adopted AASB 16 using the modified
retrospective method of adoption with the date of initial
application of 1 July 2019. Under this method, the
standard is applied retrospectively with the cumulative
effect of initially applying the standard recognised at the
date of the initial application.
Upon adoption of AASB 16, the Group applied a single
recognition and measurement approach for all leases
for which it is the lessee. The Group recognised lease
liabilities based on the present value of the remaining
lease payments, discounted using a weighted
95
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
future economic benefits of
the probability 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
the AusIndustry
of
guidelines of self-assessment
tax credit.
the
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.
the eligible expenses under
for
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.
incremental borrowing rate at the date of initial
application of 7.68%.
The Group recognised right of use assets based on the
carrying amount as if the standard had always been
applied, apart from the use of incremental borrowing
rate at the date of initial application.
On adoption of the new standard the Group elected to
use the following transition practical expedients:
-
-
-
to not reassess whether a contract is or contains a
lease at 1 July 2019. Instead, the Group applied
the standard only to contracts that were previously
identified as leases applying AASB-117 and IFRIC
4 at the date of initial application.
to use a single discount rate to a portfolio of leases
with reasonably similar characteristics.
to use hindsight in determining the lease term
where the contract contained options to extend or
terminate the lease.
For personal use only
The following was the impact on adoption of AASB 16 at 1 July 2019:
Assets
Right of Use Assets
Total Assets
Liabilities
Lease Liabilities
Deferred Rent
Total Liabilities
Equity Adjustment (accumulated losses)
1 July 2019
$000
943
943
(994)
84
(910)
(33)
The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as of 30 June 2019, as
follows:
Operating lease commitments as at 30 June 2019
Weighted average incremental borrowing rate as at 1 July 2019
Discounted operating lease commitments as at 1 July 2019
Adjusted for deferred rent previously recognised
Lease liabilities as at 1 July 2019
1 July 2019
$000
(1,024)
7.68%
(994)
84
(910)
At 30 June 2020, the Right of Use assets totaled $823,000 and the lease liability totaled $871,000.
30. 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 previous 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. AASB 5 prohibits the retrospective
classification as a 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 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
2020
$000
-
-
-
-
-
-
-
-
2019
$000
292
(386)
(94)
(33)
(127)
467
594
(127)
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
96
2020
$000
-
-
-
-
2019
$000
8
-
-
8
For personal use only
Directors’ Declaration
For the year-ended 30 June 2020
In accordance with a resolution of the Directors of ImpediMed Limited, we stated that:
In the opinion of the Directors:
(a) The financial statements and notes of the consolidated entity for the year-ended 30 June 2020 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 2020 and of its
performance of the year-ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001;
(b) the consolidated financial statements and notes also comply with the International Financial 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 2020.
On behalf of the Board
Scott Ward
Chairman
26 August 2020
Judith Downes
Director
97
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
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 balance sheet as at 30 June 2020, 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)
b)
giving a true and fair view of the consolidated balance sheet of the Group as at 30 June 2020
and of its consolidated financial performance for the year ended on that date; and
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 (including Independence Standards) (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.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss
of $21.4 million during the period ended 30 June 2020 (30 June 2019: $24.1 million) and is
dependent on sufficient cash inflows from growth in future sales, capital raises or other funding
arrangements. These events or conditions indicate that a material uncertainty exists that may cast
significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
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. In addition to the matter described in the Material uncertainty
related to going concern section of our report, we have determined the matter described below to be
the key audit matter to be communicated in our report. Our description of how our audit addressed
the matter is provided in that context.
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.
Research and development incentive 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 $2.6m for the year ended 30 June
2020.
Our audit procedures included the following:
• Assessed the mathematical accuracy of the
calculation of the Group’s claim.
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.
• 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
Revenue recognition
Why significant
How our audit addressed the key audit matter
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.
The revenue recognition policy is outlined in Note 5.
Our audit procedures included the following:
• Assessed the application of AASB 15 Revenue from
Contracts with Customers including reviewing the
contractual terms of the existing, new and modified
customer contracts and the application of the
requirements of AABS 15.
•
•
Selected a sample of revenue contracts and assessed
whether the different elements within the contract
should be recognised over a period of time or at a
point in time, and when the revenue recognition
commences for a contract in accordance with AASB
15.
For a sample of contracts recalculated the revenue
recognised during the year based on the contractual
terms and conditions and the revenue recognition
policy of the Group.
• Assessed the adequacy of the financial report
disclosures included in Note 5 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 2020 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
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, actions
taken to eliminate threats or safeguards applied.
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
2020.
In our opinion, the Remuneration Report of ImpediMed Limited for the year ended 30 June 2020,
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
26 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
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 31 July 2020.
(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
892
1,827
479
578
368
4,144
Ordinary
Shares
958,029,940
71,168,092
3,893,843
1,722,693
114,701
1,034,929,269
(B) DISTRIBUTION OF OPTIONS HOLDERS (excluding employee incentive options)
The distribution of unquoted options on issue to shareholders are:
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
381
568
128
45
12
1,134
Ordinary
Shares
434,002,920
21,230,554
944,834
141,583
7,102
456,326,993
(C) 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
Number of
Holders
11
8
19
Unlisted
Performance Rights
6,881,595
490,500
7,372,095
(D) DISTRIBUTION OF EMPLOYEE OPTIONS
The distribution of unquoted options on issue are:
Side of Holding
100,001 and Over
1 to 100,000
Total
Number of
Holders
34
21
55
Unlisted
Options
31,500,001
1,095,500
32,595,501
(E) LESS THAN MARKETABLE PARCELS OF ORDINARY SHARES
There are 1,058 shareholders with unmarketable parcels totaling 2,497,980 shares.
% of Issued
Capital
92.57%
6.88%
0.38%
0.17%
0.01%
100.00%
% of Issued
Capital
95.11%
4.65%
0.21%
0.03%
0.00%
100.00%
% of Issued
Capital
93%
7%
100%
% of Issued
Capital
97%
3%
100%
103
For personal use only
(F) 20 LARGEST SHAREHOLDERS
Shareholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED -
A/C 2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
MR GREGORY WAYNE BROWN
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-
GSI EDA
SUNLORA PTY LTD
MR GREGORY WAYNE BROWN & MRS STEFANIE
BROWN
MBA INVESTMENTS PTY LTD
MR STEPHEN EDWARD MAHNKEN & MRS DIOR
LEONE MAHNKEN
PAKASOLUTO PTY LIMITED
APEX INVESTMENT MANAGEMENT PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
SANDHURST TRUSTEES LTD
PASAGEAN PTY LIMITED
MOORE FAMILY NOMINEE PTY LTD
EQUITAS NOMINEES PTY LIMITED
Total
Total Quoted Equity Securities
Number of Fully Paid
Ordinary Shares
94,116,697
83,484,732
48,516,192
40,372,280
% of Issued
Capital
9.09%
8.07%
4.69%
3.90%
26,344,467
24,212,886
20,000,000
19,812,718
14,999,999
14,000,000
13,080,000
11,297,134
10,000,000
9,153,298
9,095,288
8,708,075
8,168,695
7,280,002
6,600,000
5,853,137
475,095,600
1,034,929,269
2.55%
2.34%
1.93%
1.91%
1.45%
1.35%
1.26%
1.09%
0.97%
0.88%
0.88%
0.84%
0.79%
0.70%
0.64%
0.57%
45.91%
(G) UNQUOTED EQUITY SECURITIES
The Group had the following unquoted securities on issue as at 31 July 2020: 456,326,993 shareholder options and
32,595,501 options and 7,372,095 performance rights issued as part of an incentive scheme.
(H) SUBSTANTIAL SHAREHOLDERS
The names of the Substantial Shareholders listed in the Group’s Register as at 7 August 2020:
Shareholder
Allan Gray Australia Pty Limited and its related bodies corporate
Paradice Investment Management Ltd
National Nominees Ltd ACF Australian Ethical Investment Ltd
Number of Fully Paid
Ordinary Shares
104,869,050
65,941,454
59,925,691
% of Issued
Capital
10.13%
6.58%
5.98%
(I) RESTRICTED SECURITIES
The company had no restricted securities on issue as at 31 July 2020.
(J) 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 authorised 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.
(K) ON-MARKET BUY-BACKS
There is no current on-market buy-back in relation to the Company’s securities.
104
For personal use only
For personal use only