ANNUAL REPORT
NANOSONICS LIMITED ABN 11 095 076 896
Contents
Company overview
Financials at a glance
The trophon® EPR
Nanosonics 2013 highlights
trophon® EPR: at the innovation forefront of infection control
trophon® EPR product suite
Chairman’s letter
Review of operations
Intellectual property
Case studies
Information on the directors, company secretary and senior management
Directors’ report
Corporate governance statement
Remuneration report
Contents of the financial statements
Auditor’s independence declaration
Financial statements
Notes to the financial statements
Directors’ declaration
Independent auditor’s report to the members
Shareholder information
Glossary
1
2
3
4
6
7
8
10
15
16
18
24
30
37
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52
94
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99
Corporate directory and information for investors
101
Company overview
1
Nanosonics (ASX: NAN) is an ASX-listed company that develops easy to
use, environmentally friendly and quality-assured products for the infection
control market.
Nanosonics is committed to preventing healthcare-acquired infections
(HAIs), through its first product, trophon® EPR, which is commercially
available in North America, Europe, Australia, New Zealand and
a number of other markets.
trophon® EPR is the next generation in ultrasound probe disinfection.
Nanosonics identified an unmet need in the market for fast, safe,
eco-friendly probe disinfection. HAIs are infections acquired while receiving
medical care, and are the fourth largest cause of fatalities in the United
States each year. The Center for Disease Control and Prevention (CDC)
estimates that as many as two million people suffer from HAIs annually
in the U.S., resulting in around 100,000 deaths.
Nanosonics, with its unique and patented platform technology,
NanoNebulant™, is well positioned to take a leading role in the healthcare
disinfection and sterilisation arena and the Company is investing in
expanding this platform into new product categories.
Nanosonics Ltd was founded in 2001 and headquartered in
Sydney, Australia with offices in the USA (Nanosonics Inc) and
Europe (Nanosonics Europe GmbH).
You can read more about Nanosonics and its products at
www.nanosonics.com.au.
2
Financials at a glance
The year in numbers
CASH
RESERVES
2012
2013
$14.9m
$12.3m
$29.3million
$24.1million
$16.4m
$13.5m
$8.5m
$7.5m
$5.8m
$4.7m
%
1
2
P
U
2012
2013
2012
2013
2012
2013
2012
2013
SALES
GROSS PROFIT
NET LOSSES
OPERATING
EXPENSES
Revenue
Operating revenue
Less cost of sales
Gross profit
Other income
2013
$’000
2012
$’000
2011
$’000
2010
$’000
2009
$’000
14,899
12,301
2,247
763
(6,428)
(4,799)
(981)
(284)
8,471
7,502
1,266
479
309
(121)
188
Government grants received
1,498
150
–
161
150
Expenses
Operating expenses (excluding depreciation and amortisation)
(15,335)
(12,634)
(13,229)
(8,827)
(9,867)
EBITDA
(5,366)
(4,982)
(11,963)
(8,187)
(9,529)
Depreciation and amortisation
(1,044)
(914)
(1,010)
(771)
(419)
EBIT
Interest income
Interest expense
Operating loss before tax
Net income tax benefit
Operating loss after tax
Cash assets
(6,410)
(5,896)
(12,973)
(8,958)
(9,948)
1,192
(517)
586
1,052
785
1,194
–
–
–
–
(5,735)
(5,310)
(11,921)
(8,173)
(8,754)
(33)
631
707
–
–
(5,768)
(4,679)
(11,214)
(8,173)
(8,754)
Cash and cash equivalent assets on hand
24,064
29,310
12,356
21,144
13,881
nanosonics limited | annual report 2013
The trophon® EPR
3
it is a more effective disinfection method…
PATHOGENIC
BACTERIA
12.9%
U
O
ULTR A S
N D P ROBE HANDLES C
O
N
T
A
M
I
N
A
T
E
D
A
F
WHEN trophon®
EPR NOT USED*
T
E
R
C
H
E
MICAL REPROCESSIN
VIRUSES
1%
G
HPV DNA
7.5%
it saves time...
trophon® EPR
ULTRASOUND PROBE
7MINUTES
TO
PERFORM
HLD
SAVE
20
MINUTES#
U
O
ULTR A S
N D P ROBE HANDLES C
O
N
T
A
WITH trophon®
EPR
100%
DISINFECTED
M
I
N
A
T
E
D
A
F
T
E
R
C
H
E
MICAL REPROCESSIN
G
STAFF SAVE BY
SWITCHING TO
trophon® EPR†
7.5HOURS
SAVED
EACH
WEEK
MANUAL CHEMICAL
REPROCESSING
METHODS
and as a result is emerging as the new global standard of care.
WO R L D
L EADING SIT
E
S
U
SING troph o n ® E PR
* Clinical comparison of high level disinfection techniques for reprocessing trans-vaginal ultrasound probes, Dr Andrew Ngu,
Senior Obstetrician and Gynaecologist East Melbourne Ultrasound Clinic, Melbourne, Australia presented to the World Federation
for Ultrasound in Medicine and Biology (WFUMB) conference, Sao Paulo, Brazil from May 2 – 5
# Radiology Consultants Associated, trophon® EPR High-Level Disinfection Platform Boosts Productivity and Reduces Costs at
Radiology Consultants Associated, Whitepaper published by GE Healthcare, 2013
† Dr Blum, Oschner Medical Centre, Louisiana, delivered at the Radiological Society of North America (RSNA) Congress 2012
4
Nanosonics 2013 Highlights
BETTER,
FASTER
INDEPENDENT RESEARCH PRESENTED AT
RSNA SHOWS SIGNIFICANT WORKFLOW
IMPROVEMENT AND SATISFACTION
RATING OF trophon® EPR OVER
TOXIC LIQUID CHEMISTRY
PROCESSES.
WINS
EXPORTER
AWARD
NANOSONICS WINS EMERGING
EXPORTER AWARD AT 2012
PREMIER’S NEW SOUTH
WALES EXPORT AWARDS
UK,
FRANCE &
GERMANY
SENIOR SALES STAFF APPOINTED
IN THE UK, FRANCE AND
GERMANY
SPECIALISTS
TECHNICAL SALES SPECIALISTS BEGIN
WORKING IN NORTH AMERICA TO SUPPORT
GE HEALTHCARE SALES AND MARKETING
EFFORTS
Q1
Q2
Q3
Q4
nanosonics limited | annual report 2013 5
GROUND
BREAKING
TOP TIER US MEDICAL FACILITY SCRIPPS
HEALTH ENDORSES trophon® EPR AS
“GROUND BREAKING” WHILE ROLLING
OUT DEVICES ACROSS ITS NETWORK
OF HOSPITAL CAMPUSES AND
OUTPATIENT CLINICS
TOSHIBA
TOSHIBA SIGNED AS
DISTRIBUTOR IN
THE UK
trophon®
SUPERIORITY
RESEARCH BY DR ANDREW NGU,
PRESIDENT OF THE INTERNATIONAL
SOCIETY OF ULTRASOUND IN OBSTETRICS
AND GYNAECOLOGY, SHOWS
SUPERIORITY OF trophon® EPR TO
CURRENT METHODS
>500
NANOSONICS DOUBLES NUMBER
OF PROBES ASSESSED AND
CERTIFIED FOR USE WITH
trophon® EPR TO 500
Q1
Q2
Q3
Q4
6
trophon® EPR: at the innovation forefront of infection control
Y AUTOMATE D 7
L
L
U
F
T H ALL MAKES O
F P
R
O
MPATIBLE W I
O
C
S
A
V
E
S
CONVENIENT/
EFFICIENT
TI
M
E, INFRASTR U C T
U
B
E
S
T
R E AND COS
IN-B UIL T C H ECKING SYSTE
EFFECTIVE/
TRACEABLE
M
S
D
I
SINFECTS EN T I R E P
R OBE
M I NUTE DISINF
E
C
T
I
O
N
C
Y
C
L
E
RAPID
F C ONTAINED
L
E
S
SAFE
N
O
N-TOXIC C H E M I S T RY
A M A GING TO PRO
B
E
NO N- D
GENTLE
nanosonics limited | annual report 2013
trophon® EPR product suite
7
Simple, safe and cost effective, the trophon® EPR addresses an unmet need for disinfecting intra-cavity ultrasound probes
at the point of care. The trophon® EPR is the world’s first fully automated system for disinfecting ultrasound probes, and is
compatible with more than 500 models and a dozen manufacturers.
The trophon® EPR stores all disinfection cycle data which can be downloaded on request or during a yearly maintenance
service. trophon® EPR is a complete ultrasound probe disinfection system that is fast, easy to use, environmentally-friendly
and quality-assured.
Nanosonics has built on the technology of the trophon® EPR by offering an expanded product suite based on customer
feedback. The suite aligns trophon® EPR and Nanosonics with the needs of our customers – allowing them to more
effectively provide and monitor high-level disinfection procedures. The trophon® EPR product suite expands Nanosonics’
offering in the market and provides additional revenue streams from service contracts and consumables supply.
trophon® PRINTER
The trophon® Printer is a fast, easy-to-use traceability solution for quality system documentation
requirements in hospitals and health clinics. The trophon® Printer provides complete and accurate
documentation by printing up to four labels per cycle based on operator, site or procedure preferences.
trophon® WALL MOUNT AND CART
Attach the trophon® EPR to the wall for clinics or hospitals with space constraints
or make the trophon® EPR mobile to ensure point of care use.
CHEMICAL INDICATORS
Each box of chemical indicators contains 300 indicator tabs which verify successful disinfection
when the tab turns from red to yellow. Each box includes a colour assessment chart to cross check
the probe has been successfully cleaned.
SONEX HL™/ NANONEBULANT™ CARTRIDGES
The trophon® EPR runs on cartridges, much like a printer. Changing cartridges is a quick, clean and
easy process. Cartridges ensure there is no need for chemical mixing or neutralisation and each cartridge
is made from recyclable plastic materials. Empty cartridges can be disposed as standard waste or under
recognised disposal procedures.
8
Chairman’s letter
pleased to report that our efforts in North America led
to the recent joint announcement with GE Ventures and
GE Healthcare, confirming that GEHC would expand its
promotion of trophon® EPR and establish a dedicated
trophon® EPR sales organisation to cover the North
American market in collaboration with the current
GE Healthcare Ultrasound sales team. In addition to the
new sales force, an investment is being made available by
GE Ventures to fund a fully integrated expanded marketing
program to support the acceleration of sales of trophon®
EPR in North America and establish it as the Standard of
Care for quality assured ultrasound probe disinfection.
This investment follows the adoption by a growing number
of luminary customers across the US and Canada as
healthcare providers become increasingly aware of the
benefits of trophon® EPR. This new, non-dilutive sales and
marketing investment further supports GE’s move in June
2012 to make a strategic $7.5m investment in Nanosonics
via its healthymagination fund.
Dear Shareholders,
On behalf of the Board I am pleased to present Nanosonics’
2013 Annual Report. The past year has seen continued
achievements by Nanosonics in terms of increased revenue
in trophon® EPR’s second full year of international sales
and the technology’s emergence as the new standard
In April this year, Nanosonics signed a non-exclusive
for ultrasound probe disinfection. During the year the
sales agreement with Toshiba in the United Kingdom.
Company also forged new and deeper relationships with
The UK is another market where the issue of hospital
key distribution partners GE Healthcare and Toshiba
acquired infection is attracting increasing government
in the UK – two of the world’s leading healthcare
and community scrutiny, which is creating a more
technology companies.
Solid revenue growth was driven by sales of trophon® EPR
units into the Company’s major North American market.
Leading US healthcare facilities are adopting trophon®
EPR to obtain the increasingly recognised efficiency gains,
favourable environment for Nanosonics and leading to
safer disinfection practices for patients. Where healthcare
regulators have imposed new guidelines for ultrasound
probe disinfection, trophon® EPR is the only product in
market that is compliant.
but also as part of a broader push to raise the bar on
This year we almost doubled the number of ultrasound
infection control standards. It is pleasing to see several of
probes which have been tested and certified as compatible
these customers becoming advocates for trophon® EPR as
with trophon® EPR providing further testament to trophon®
Nanosonics moves towards taking on a market leading role,
EPR’s growing endorsement from major ultrasound
and as healthcare systems globally follow suit in the fight
manufacturers. Feedback from manufacturers also
against hospital acquired infections.
During the year we made a significant investment in a
direct sales force in North America and Europe, which had
a tangible impact on our results in terms of increasing sales
and engagement with key opinion leaders and potential
customers. As we enter the new financial year, we were
indicated compatibility with trophon® EPR is increasingly a
factor affecting ultrasound machine purchasing decisions
by healthcare facilities, underscoring the emergence of
Nanosonics’ lead product as the new gold standard for
ultrasound probe reprocessing. Another signal of the
Company’s increasingly global outlook was Nanosonics’
nanosonics limited | annual report 2013 9
win in the Emerging Exporter Award category at the 2012
I would like to thank my fellow Board members for their
Premier’s New South Wales Export Awards.
continued efforts in supporting our success and on behalf
Nanosonics continues to show growth in its home market,
Australia, and as our base matures we are seeing the high
margin consumables form a greater part of our revenue
of the Board and shareholders, take the opportunity to
acknowledge the efforts and commitment of the entire
Nanosonics team as led by Managing Director and CEO
mix. This annuity revenue stream provides further evidence
Dr Ron Weinberger.
of the value of Nanosonics’ business model.
Nanosonics’ objective for the coming year remains clear:
leverage further growth in our key markets and deliver
continued successes for our shareholders by leveraging
our human capital, intellectual property, distribution
partnerships and market momentum. These are exciting
times with the Company’s lead product well positioned
to establish Nanosonics as a global leader in advanced
microbial control technologies.
As we recently announced, Nanosonics’ non-executive
director Michael Kavanagh will take on the position of CEO
and President from 21 October, 2013. Dr Ron Weinberger
will take on a newly created role of President Technology
Development / Commercialisation. Both positions will serve
on the Board of Directors of Nanosonics.
Michael brings to the role more than 20 years of international
commercial experience in the healthcare market, having
held local, regional and global roles in Medical Device
and Pharmaceutical industries – including as Senior Vice
President of Global Marketing for Cochlear Ltd. Michael
joined Nanosonics as a non-executive director in July 2012.
These appointments will lead Nanosonics through its next
phase of growth and reflect the strategic importance of our
expansion initiatives. Ron will partner closely with Michael
Mr Maurie Stang
Chairman
Sydney
and the Board in leveraging his extensive experience and
18 September 2013
knowledge of our technology and the global infection
control marketplace. The Board and I would like to
acknowledge Ron for the major contribution he has made
to Nanosonics to date, and look forward to his continuing
contribution to our growth and success.
The significant achievements by Nanosonics during the year
have contributed to growing momentum for the Company
and rising value for our shareholders. Nanosonics has a
strong balance sheet, and is ideally positioned to establish
a leadership position in a global market potentially worth
in excess of $1 billion in annual sales.
The achievements of the past year are real validation of our
strong business model and that the growth strategies are
being put in place.
The Company also remains committed to generating a
strong and exciting R&D pipeline to underpin the growth
of the business in the years to come.
10
Review of operations
Financial Year 2013 has been one of continued growth
Sales growth in key markets
and maturation for Nanosonics, highlighted by a number of
We have seen strong growth in sales of trophon® EPR units
achievements, including:
•
Increased sales driven mainly by sales to our key
North American market;
•
Sales growth in the US strongly supported by
Nanosonics’ US sales team;
•
Hiring of a highly experienced team to drive sales in the
key European markets;
•
Forging new and deeper relationships with our major
distribution partners;
and consumables into the North American market which
has been the main driver of our overall revenue growth.
Within North America a number of luminary sites, including
Scripps Clinic, Mayo Clinic, Massachusetts General Hospital
and John Hopkins, have been early adopters of trophon®
EPR, purchasing multiple units. This acceptance from
leading healthcare providers, which regard trophon® EPR
as essential to demonstrating commitment to the highest
standards of patient safety, is helping to accelerate market
penetration in the US. Scripps Clinics, a highly respected
•
A significant increase in the number of ultrasound
facility in the key US market, has also provided a strong
probes that are certified for use with our technology,
endorsement of our technology (see case study on Page 16).
and broadened our patent portfolio;
As we see these leading facilities introduce trophon® EPR,
•
Progress towards regulatory approval in new markets
as part of their efforts to remain on the cutting edge of
including Japan, South Korea and Mexico;
infection control, we will continue to see growth in the
•
Continued and growing awareness of our technology,
awareness and adoption of our technology.
with healthcare facilities and regulators who are
Europe is an area of focus for the Company over the coming
increasingly alert to the issue of healthcare acquired
year. The signing of Toshiba as a distributor in the UK is
infection (HAIs); and
•
Growing evidence of risks associated with TGA/FDA
approved liquid disinfection procedures.
During the year, Nanosonics made further progress towards
the goal of establishing trophon® EPR as the new global
standard for ultrasound probe disinfection. Considerable
concern regarding ultrasound disinfection has been
identified in Europe where deaths have occurred due to
poor reprocessing practice. This concern is now being
considered by the European Parliament where a bill will be
presented to make high level disinfection mandatory.
The Company has maintained a strong balance sheet
and remains well positioned to progress the international
roll-out, support and development of our technology. These
factors have combined to support rising adoption and sales
of trophon® EPR units and consumables into healthcare
facilities, and a growing appreciation of Nanosonics’
business case and near-term prospects among investors.
already driving additional activity and the appointment of
Nanosonics sales staff in Europe over the past year has
seen further engagement with customers and distribution
partners in the key European markets.
“OUR NEW PARTNERSHIP WITH
TOSHIBA ENSURES NANOSONICS’
TECHNOLOGY NOW ENJOYS THE
BACKING FROM TWO OF THE
WORLD’S LEADING ULTRASOUND
MANUFACTURERS.”
nanosonics limited | annual report 2013 11
Sales and marketing investment by GE Healthcare
manufacturers also provide important third-party validation
In August this year, we announced that our exclusive
for our technology, and leveraging the strength of their
North American partner, GE Healthcare, will build on its
brand and sales force assists in driving market penetration
earlier commitment to help establish trophon® EPR as the
for trophon® EPR.
accepted technology for ultrasound probe reprocessing in
North America. This arrangement signals a new level of
commitment by GE and includes the establishment of a
dedicated GE Healthcare trophon® EPR sales organisation
to cover the North American market in collaboration with
the current GE Healthcare Ultrasound sales team. GE
Ventures will also make a non-dilutive investment to fund a
fully integrated marketing program to accelerate the North
American growth strategy. This investment is a strong
endorsement of our technology and follows the adoption of
trophon® EPR by a number of luminary customers across
the USA and Canada. We look forward to seeing continued
increases in trophon® EPR sales into this key market as a
result of these changes that are now being introduced.
More probes compatible with trophon® EPR
Our efforts to boost market penetration also extended to
an increase in the range of probes approved for use with
trophon® EPR. This has enabled more healthcare facilities
to adopt trophon® EPR without the concern of whether their
probe is certified for use with the device. As announced
in April, the number of trophon® EPR-approved probes
almost doubled (up 92%) within six months, and trophon®
EPR is now certified for use with over 500 probes from
11 ultrasound system manufacturers. This comprises
219 probes from ultrasound probe manufacturers Esaote,
Hitachi-Aloka, Ultrasonix, Mindray and Zonare, and is in
addition to the already extensive list of approved probes
from GE, Philips, Siemens, Sonosite, Toshiba, BK Medical,
New distribution partner in the UK and growing sales
and Prosonic. While the Company set out to address a
In April 2013, the Company announced it had signed
potential barrier to trophon® EPR adoption by healthcare
Toshiba Medical Systems as a non-exclusive distributor of
facilities, it is also important to note the role of ultrasound
trophon® EPR in the United Kingdom. Nanosonics remains
device manufacturers in this push. Nanosonics has received
able to sell trophon® EPR into the UK directly. However, the
an increasing number of inquiries from manufacturers who
arrival of Toshiba as a leading distributor has significantly
are actively seeking out trophon® EPR probe certification for
strengthened our position in this important market.
a broader array of machines (and machines in development),
Toshiba’s sales team is now actively promoting and selling
knowing this is emerging as a factor in healthcare facility
trophon® EPR across the UK and we are already seeing
purchasing decisions. As a result, in an increasing number
tangible results. Since signing the distribution agreement,
of instances these global ultrasound probe manufacturers
Toshiba has initiated numerous trials of trophon® EPR and,
are becoming indirect sales advocates for trophon® EPR.
as a result, the 600-bed Nottinghamshire-based Kings Mill
All of this augurs well for trophon® EPR emerging as the new
Hospital recently purchased six trophon® EPR units for its
gold-standard for high level disinfection of ultrasound probes.
highly-regarded ultrasound department. Feedback from
the site has been excellent and the facility has signalled an
intention to install additional units. The signs are positive for
significant growth in this key market.
Our new partnership with Toshiba ensures Nanosonics’
technology now enjoys the backing from two of the world’s
leading ultrasound manufacturers. These major ultrasound
12
Review of operations (continued)
New clinical evidence quantifies benefits of trophon® EPR
New products enhance the trophon® EPR
in the fight against infection
customer experience
Conventional manual and liquid-based ultrasound probe
Research and development remains an important part of
disinfection practices have changed little in 20-plus years.
Nanosonics’ business and enables us to develop solutions
What is changing is the view of health authorities as to the
which enhance the trophon® EPR customer experience.
appropriateness of this as a means to provide high-level
Our time in the field working with customers has enabled
disinfection of ultrasound probes with sufficient rigor to
us to identify a number of need areas to which we’ve
address HAI risk. A recent study conducted in Australia
responded with new products and innovations which meet
assessed the ability of liquid-based, manual disinfection
customer needs, enhance the overall value proposition for
processes to fully address the risk of pathogens remaining
trophon® EPR and provide additional revenue streams.
on the probe handle. According to most manufacturers
advice, the handle cannot be fully submerged in
disinfecting liquid. Almost all (96%) of samples collected
from 51 manually decontaminated probes showed signs
of bacteria on the handle after disinfection, and so posed
a risk of HAI transmission. Swabs were also taken from
handles of 42 probes decontaminated using the trophon®
EPR unit and all were completely free of bacteria on
the handle. More recent work presented at ISUOG has
indicated that some of these organisms are pathogenic,
such as MRSA. These are the first studies to show that
FDA and TGA approved processes can still place patients
and operators at risk. This supports the growing data of
viral pathogens that may still reside on ultrasound probes
post disinfection processing. This is important data that
underscores not only the superior performance of our
technology compared to the conventional liquid-based
disinfection, but also the approach being taken by health
authorities.
There is also growing scrutiny over the environmental
impact of disinfection practices, with the liquid-based
Over the past year we have also augmented the “Traceability
Solutions Pack” with new software known as trophon®
Connect, which works alongside the printer released last
year. This will enable disinfection cycle records as logged
by a trophon® EPR unit to be downloaded to a computer.
The trophon® EPR already automatically logs the required
data which eliminates the need for manual record keeping
of disinfection cycles. With trophon® Connect, we will be
taking this to the next level as users will be able to download
their disinfection cycle records from the unit and to their
computer, for either storage or printing out. Many of our
existing customers have requested this type of functionality
while other facilities have indicating they are waiting for
trophon® Connect before they move to adopt trophon® EPR,
so we expect this to generate new sales. Trophon® Connect
will be launched and rolled out in the first half of 2014.
Nanosonics has recently developed a trophon® EPR
validation kit which has been developed specifically for
select European markets where each newly installed
trophon® EPR unit must pass a validation test, to
demonstrate that it is operating correctly. In the UK
approach resulting in hazardous chemical waste in need of
this includes showing that a disinfected probe is free of
disposal. Again here we are seeing increasing recognition
of the advantages offered by Nanosonics’ technology, with
its disinfection processes resulting only in water and oxygen
as by-products. The Company is included in the Australian
Clean Tech index - an index of companies that also deliver
environmental benefits – with Nanosonics ranked inside the
top 20 on market capitalisation.
disinfectant (hydrogen peroxide) residue. The test must be
done before a trophon® EPR unit can enter routine use in
a healthcare facility and must be repeated periodically as
part of ongoing servicing. The trophon® EPR validation kit
includes all equipment and consumables necessary for a
technician to conduct an on-site and guideline-compliant
validation test and will soon provide an additional revenue
stream for the Company.
nanosonics limited | annual report 2013 13
“THE trophon® EPR IS
GROUND-BREAKING,
AND GIVES AN ULTRASOUND
DEPARTMENT ITS FIRST
TECHNOLOGY-DRIVEN
DISINFECTION PROCESS.”
CANDACE GOLDSTEIN,
CLINICAL EDUCATOR,
SCRIPPS
Manufacturing
Over the past year we have continued our development
as a world class manufacturer of a medical product. We
have consolidated our supplier base and strengthened
supplier relationships to improve visibility and involvement
in materials supply. We continue to develop the capabilities
of our production team and continuously improve our
processes, quality and yields. Our sales forecast, production
planning, purchasing and order fulfilment are now
formalised into our Integrated Business Planning processes
which, along with the successful implementation of the
Manufacturing Resource Planning (MRP) functionality
of our ERP system, provide improved control for the
anticipated increase in volumes and complexity.
Outlook
The Company is well positioned for growth and working
towards profitability is a focus for 2014. Priorities include:
•
Significantly increase market penetration in
North America and Europe;
•
Maximise penetration in our home markets of
Australia and New Zealand;
•
Expand into new Asian markets;
• Enhance the range of trophon® EPR accessories; and
•
Identify the next product opportunity that leverages our
platform technology.
Dr Ron Weinberger
Managing Director and CEO
Sydney
18 September 2013
14
nanosonics limited | annual report 2013 Intellectual property
15
Nanosonics has protected its platform technologies.
through the applicable patent offices. An acceleration of
These provide significant competitive advantage and
research and development into new products will continue
protects future revenues and product ranges in all major
and this will constitute the research and development
markets. Nanosonics’ platform technology is protected
team’s focus in the coming year.
by a combination of patents, trademarks, confidentiality
agreements, copyright and trade secrets.
Nanosonics’ current patent portfolio consists of 16 patent
families, 3 of which have been added during the year.
Our intellectual property portfolio continues to underpin our
Each patent family provides Nanosonics with a fundamental
products and technologies, with existing patents progressing
competitive advantage to protect the Company’s inventions.
Patent family
Description
Improved Disinfection Aerosol disinfection using liquid disinfectant
combined with a surfactant
Quaternary Ammonium
Compound Liquid
Disinfectant
A method of high level disinfecting using a liquid
incorporating greater than 1% w/w quaternary
ammonium compound
Status (all regions)
Granted or awaiting/ undergoing
national examinationa
Priority date*
23 June 1998
Granted or awaiting/ undergoing
national examinationa
9 July 2004
Space Disinfection
A method for disinfecting a space using a
concentrated aerosol or with controlled humidity
Granted or awaiting/ undergoing
national examinationa
4 August 2005
Improved Aerosol
An ultra-fine mist to disinfect and sterilise, including
the process of vapour removal and controlled humidity
Granted or awaiting/ undergoing
national examinationa
4 August 2005
Membrane Sterilisation Enclosing an article in a chamber featuring a semi-
permeable membrane and introducing a biocide for
sufficient time such to sterilise or disinfect the article
Granted or awaiting/ undergoing
national examinationa
4 August 2005
Membrane
Concentrator
An aerosol and vapour biocide concentrator
incorporating a semi-permeable membrane
Granted or awaiting/ undergoing
national examinationa
4 August 2005
Membrane Vapour
Concentrator
A vapour biocide concentrator incorporating a
semi-permeable membrane
Granted or awaiting/ undergoing
national examinationa
2 February 2007
Sub-cycle Based
Disinfection System
A method for fast disinfection and rapid removal
of residual sterilant
Allowed or awaiting/ undergoing
national examination
30 June 2008
Aerosol Sensor
A method and apparatus for the measurement of
aerosol for the purposes of certifying sterilisation
Awaiting/undergoing national
examination
30 June 2008
Safe Chemical Delivery
System
A method and apparatus for the safe handling of
chemical consumables
Allowed or awaiting/ undergoing
national examination
30 June 2008
Nebuliser Manifold
A manifold for improving aerosol properties and
flow in a chamber
Awaiting/undergoing national
examination
15 August 2008
Disinfection Product
and Process
Self-neutralising aerosols
Awaiting/undergoing national
examination
22 May 2009
Liquid Level Sensor
Sensor for detecting liquid peroxy chemicals
PCT awaiting examination
24 June 2011
Disinfectant
Peroxyacetic acid/peroxide/carbonate disinfectants
Provisional Filed
Synergistic
Disinfection
Enhancement
Peroxyacetic acid/surfactant compositions
Provisional Filed
14 December 2012
14 December 2012
Test method
Simple test for residual peroxide
Provisional Filed
13 May 2013
Design family
Bottle
Non-refillable bottle for safe delivery of
consumables
Registered
1 June 2009
a Certain national applications not of interest have now been abandoned. *Patents expire 20 years after filing date or priority date.
16
Case Studies
Canada’s Radiology Consultants Associated (RCA)
Leading US provider, Scripps Clinic,
quantifies the trophon® EPR advantages
endorses trophon® EPR
Conventional liquid-based disinfection of ultrasound probes
trophon® EPR was hailed as “groundbreaking”
“just didn’t compute for us any longer”, said the head of
following its introduction to multiple sites by a major US
Canada’s Radiology Consultants Associated (RCA) group
healthcare organisation.
following the introduction of trophon® EPR.
Scripps Health, a $2.6 billion private and nonprofit
The community expected the “latest and greatest technology
integrated health system operating in San Diego, California
to maximize imaging quality along with patient care and safety”,
has purchased 21 trophon® EPR units for use across its
said RCA chief executive Feisal Keshavjee, and that “in the
network of community-based clinics and another 10 for use
case of high-level disinfection, means trophon® EPR”.
in its acute care hospitals.
The RCA, based in Calgary, has installed 51 trophon® EPR
“As the clinical educator for a multi-site clinic system, I am
units across its network of clinics which conduct around
continually looking for ways to improve work flow, reduce
13,500 ultrasound examinations per year. It moved as
potential exposures to our staff of sonographers, and
more stringent probe disinfection guidelines were being
upgrade our disinfection process in the interest of providing
introduced that would further elongate the time needed for
the best patient care,” said Candace Goldstein from Scripps
liquid-based disinfection of probes.
Clinic, a part of Scripps Health.
“If the number of ultrasound scans we can do in a day is
“The trophon® EPR is ground-breaking, and gives
cut down by lengthening the probe cleaning process, the
an ultrasound department its first technology-driven
clinic not only loses revenue but access to care by patients
disinfection process.”
in the community is also impacted,” Mr Keshavjee said.
Eric Rosenberg, Manager of the Scripps’ Gooding Imaging
“… Here we are, with a new CAD$150,000 ultrasound
Center in San Diego, said Scripps Health sought to be on
machine and CAD$15,000 probes to go with it that we’re
the cutting edge of infection control and “we have selected
cleaning with 1960s glutaraldehyde soaking technology –
the trophon® EPR device to achieve this goal”.
this just didn’t compute for us any longer.”
“As a result of our conversion, thus far we have improved
An analysis of the RCA’s practices before and after the
efficiency of the cleaning process, created more
introduction of trophon® EPR identified significant cost
standardization and eliminated non-value added variation,
savings, and probe disinfection cycle times reduced from
reduced chances for human error, and improved safety
30 minutes for the liquid-based manual disinfection to 10
by reducing exposure to harsh chemicals previously used
minutes, on average, using trophon® EPR.
during the manual cleaning process,” Mr Rosenberg said.
Staff satisfaction also improved as did patient throughput,
“Scripps is focused on remaining a leader in making
with one site able to re-purpose a dedicated cleaning room
improvements in healthcare through the use of
as an additional examination room.
innovative technology.”
nanosonics limited | annual report 2013 17
Australian study shows only trophon® EPR removes 100%
Independent cost benefit analysis presented at
of bacteria from probe handles
RSNA conference
Conventional liquid-based probe disinfection creates “a
trophon® EPR use saves time and “pays for itself”,
safe haven for bacteria on the handle”, a leading Australian
according to research presented at the RSNA (Radiological
obstetrician has concluded after studying the improved
Society of North America) 2012 conference in November.
disinfection offered by trophon® EPR.
The study, conducted by doctors at Oschner Medical
Dr Andrew Ngu, Senior Obstetrician and Gynaecologist
Center in Louisiana, found probe decontamination using
at the East Melbourne Ultrasound Clinic, took swabs
trophon® EPR took less than half the time than was needed
from probe handles which had undergone disinfection
for the conventional liquid-based cleaning (14 vs 32 mins).
using either the conventional liquid-based process or
trophon® EPR.
The time saving amounted to, on average, 7.5 hours per
week per trophon® EPR unit. The cost of the trophon® EPR
Only trophon® EPR had a 100% strike rate for eliminating
system and weekly maintenance also “pays for itself” if 1.5
bacteria on probe handles.
more ultrasound procedures were performed per week, the
“The inability to fully submerge these probes in the
researchers also concluded.
liquid disinfectant creates a safe haven for bacteria on
the handle,” said Dr Ngu, who is also president elect of
the International Society of Ultrasound in Obstetrics and
Gynecology (ISUOG).
“We found large quantities of bacteria on most handles
when probes were reprocessed this way, and this was not
an entirely unexpected result.”
“While it is important to note these probes are used with a
protective sheath, and the handle does not enter the body,
the presence of bacteria on a medical device does pose a
risk of cross infection for patients.”
Almost all (96%) of swabs collected from probes involved
in the liquid disinfection process indicated bacteria
remaining on the handle. All samples taken after automated
reprocessing with trophon® EPR showed no growth
indicating complete disinfection of the probe handle.
Dr Ngu presented his research at the World Federation for
Ultrasound in Medicine and Biology (WFUMB) conference,
in Sao Paulo, Brazil in May 2013.
18
Information on the directors, company secretaries
and senior management
Maurie Stang
Non-Executive Chairman
Mr Stang has been Non-Executive Chairman since March
2007 and a member of the Board since November 2000.
Mr Stang is a member of the Audit and Financial Risk
Management Committee, the Governance and Nomination
Committee and the Remuneration Committee.
Skills, experience and expertise
Mr Stang has more than two decades of experience
building and managing companies in the healthcare and
biotechnology industry in Australia and internationally.
He has strong business development and marketing skills,
which resulted in the successful commercialisation of
intellectual property across global markets.
Other current and former directorships in last 3 years
Current: Non-Executive Chairman of Aeris Environmental
Ltd (ASX: AEI) since 2002.
Related parties
Details of transactions in the financial year ended 30 June
2013 between the Group and entities which are considered
to be director-related parties are set out in the Directors’
and key management personnel disclosures note to the
financial statements.
nanosonics limited | annual report 2013 19
Ron Weinberger BSc (Hons), PhD
David Fisher BRurSc (Hons), MAppFin, PhD, FFin
Managing Director and Chief Executive Officer
Non-Executive Director
(until 20 October 2013)
Dr Fisher has been a member of the Board since
Dr Weinberger joined the Company in August 2004 and
30 July 2001.
was appointed as Executive Director in July 2008.
Dr Fisher is a member of the Remuneration Committee
Dr Weinberger was appointed Managing Director and Chief
and he is a member of the Audit and Financial Risk
Executive Officer in December 2011. Dr Weinberger will
Management Committee and the Governance and
assume a new role, President of Technology Development
Nomination Committee.
/ Commercialisation from 21 October 2013. He will remain
as an executive director of the Company.
Skills, experience and expertise
Dr Fisher is founding partner of Brandon Capital Partners,
Skills, experience and expertise
a leading Australian venture capital provider.
Dr Weinberger has over two decades of experience in the
medical research and biotechnology arena. He is an intellectual
property expert and entrepreneur in the development of
novel technologies. Dr Weinberger is co-inventor of several
of Nanosonics’ key technology patents which underpin
the Company’s platform technology. Dr Weinberger has
extensive experience across all aspects of the business
having driven key strategies during its growth phase.
Other current and former directorships in last 3 years
No ASX listed companies.
He has over two decades of extensive operating experience
in the biotechnology and healthcare industry in Australia
and overseas. Dr Fisher was CEO of Peptech Limited (now
part of Cephalon Inc. (Nasdaq:CEPH)). During this period
Peptech grew from a start up to having R&D operations in
Australia, the UK, the US and manufacturing operations in
Denmark. Prior to Peptech, Dr Fisher spent 10 years with
Pharmacia AB (now part of Pfizer, Inc), including five years
at their head office in Sweden.
Other current and former directorships in last 3 years
Current: Director of Aeris Environmental Ltd (ASX: AEI)
since May 2011.
20
Information on the directors, company secretaries
and senior management (continued)
Richard England FCA, MAICD
Non-Executive Director
Michael Kavanagh BSc, MBA (Advanced)
Non-Executive Director (until 20 October 2013)
Mr England was appointed as director on 5 February 2010.
Mr Kavanagh joined the Board as a non-executive director
Mr England is Chairman of the Audit and Financial Risk
on 30 July 2012. He was appointed CEO and President
Management and the Governance and Nomination
to take effect from 21 October 2013. Mr Kavanagh is
Committees and is a member of the Remuneration Committee.
Chairman of the Remuneration Committee.
Skills, experience and expertise
Skills, experience and expertise
Mr England is a Chartered Accountant and professional
Mr Kavanagh is a highly experienced executive with
non-executive director. He has over 30 years’ experience in
international experience, having worked for more than
accounting and financial services, as well as considerable
20 years in the area of healthcare marketing. He is
experience with early-stage biotech and medical
currently Senior Vice President of Global Marketing for
device companies.
the major medical device company, Cochlear Limited,
Other current and former directorships in last 3 years
a position he’s held for more than 10 years.
Current: Chairman of Ruralco Holdings Limited (ASX:RHL),
Other current and former directorships in last 3 years
appointed Chairman in 2002 with a period as Deputy
Mr Kavanagh has no other current and former directorships
Chairman between June 2006 and February 2007;
in the last 3 years.
Chairman of Chandler Macleod Group Limited (ASX:CMG),
appointed a director February 2008 and Chairman since
May 2008; and director of Macquarie Atlas Roads Limited
(ASX:MQA) since June 2010.
Former: Director of Healthscope Limited from October 1996
to October 2010.
nanosonics limited | annual report 2013 21
McGregor Grant BEc, CA, GAICD
Gerard Putt BSc (Hons)
Michael Potas BE (E&C)
Chief Financial Officer and
Chief Operations Officer
Head of Research, Design
Company Secretary
Mr Putt joined Nanosonics full time
and Development
Mr Grant joined Nanosonics in
in 2011 as Head of Manufacturing
Mr Potas has over 17 years of
April 2011 and is responsible for
after serving on the Nanosonics
experience in the development and
the overall financial management
Advisory Board, progressing to Chief
commercialisation of new products
of the Company and, together with
Operations Officer in 2012. Mr Putt
and technologies. Since joining
Dr Weinberger, has joint responsibility
has considerable experience in the
Nanosonics in 2006, Mr Potas has
for investor relations. Mr Grant has over
medical device industry, including
been instrumental in the research,
16 years of commercial experience
12 years as a leader of development,
design & development of the trophon®
in a number of senior roles in the
engineering and production teams at
EPR & associated core intellectual
medical device and healthcare
ResMed. As Head of Manufacturing at
property. He has previously initiated
industries located in Australia and
ResMed, Mr Putt acquired particular
and operated multiple technology
the United States. Previously Mr Grant
experience in the implementation
start-up businesses and established
worked for Coopers & Lybrand (now
of new products into manufacturing
new technology R&D collaborations
PWC) in Australia and Europe.
and rapid scaling of production to
with global industry leaders. In addition
international market needs. Mr Putt
to his research and development
has a strong background in medical
responsibilities, Mr Potas contributes
device GMP, project management,
at the Nanosonics executive level based
engineering and entrepreneurial roles
on his substantial previous experience
in medical, retail and building.
in business development, sales,
marketing, and customer support
within rapidly growing organisations.
22
Information on the directors, company secretaries
and senior management (continued)
Ronald J Bacskai BSME, MBA (Hons)
Vincent Wang BSc, MSc, MBA
Robert Waring BEc. (Sydney), CA,
President and CEO – Nanosonics Inc.
Head of Global Services
Mr Bacskai joined Nanosonics in
Mr Wang has over 12 years’
FCIS, FFin, FAICD
Company Secretary
2010 and is responsible for leading
experience in developing service
Mr Waring was appointed Company
Nanosonics’ operations in the United
strategy, establishing and managing
Secretary in October 2010. Mr Waring
States. Mr Bacskai is an experienced
customer support and technical
was Company Secretary of Nanosonics
executive having worked in multiple
service function in global medical
at the time of the Company’s IPO in
industries with a broad technical,
device business. Before joining
May 2007. He has over 40 years’
marketing and sales, and technology
Nanosonics in May 2011, Mr Wang
experience in financial and corporate
commercialization background.
had worked for Sonova Hearing
roles, including over 20 years in
Mr Bacskai has significant experience
as president, CEO and board
member of several public and private
organizations as well as serving on
the advisory board of a specialty
environmental firm.
Healthcare Group and Cochlear
company secretarial roles for ASX-
Ltd as Service Operations Manager,
listed companies and over 15 years
Technical Services Manager and
as a director of ASX-listed companies.
Operations Manager, respectively.
He is a director of Oakhill Hamilton
Pty Ltd, which provides secretarial and
corporate advisory services to a range
of listed and unlisted companies.
nanosonics limited | annual report 2013 23
Jianhe Chen MD, MSc
Kirste Courtney BA
Ruth Cremin MSc
Quality Assurance Manager
Human Resources Manager
Regulatory Affairs Manager
Dr Chen has been with the Company
Mrs Courtney joined Nanosonics
Ms Cremin joined Nanosonics in July
since July 2009. She has over 11 years’
in 2008 and has over 15 years of
2011 with extensive regulatory affairs
experience in quality assurance and
human resources experience having
experience. She worked at Cochlear
regulatory affairs in globalised medical
worked in a variety of industry sectors
as a Senior Regulatory Affairs
device and pharmaceutical companies.
including chartered accounting,
Specialist for the Asia Pacific region.
In addition to broad skills and
media, logistics and banking.
Prior to that, Ms Cremin worked in
knowledge obtained from 6 years of
clinical experience and 12 years of
medical research, she specialised in
establishing, developing and maintaining
the quality management systems, and
played senior leadership roles in various
companies in the past 12 years.
both Regulatory and Quality roles
at Pfizer Australia and Bio-Medical
Research Ltd in Galway, Ireland.
24
Directors’ report
Your directors submit their report together with the
Significant changes in the state of affairs
Consolidated Financial Report of the Group, being
Nanosonics Limited and its subsidiaries, for the
year ended 30 June 2013.
There were no significant changes in the state of affairs of
the Group during the year and to the date of this report.
Principal activities
During the year the principal activities of the Group
consisted of:
•
research, development and commercialisation of
infection control and decontamination products and
related technologies;
• and manufacturing and distribution of the trophon®
EPR ultrasound probe disinfector and its associated
consumables and accessories.
Further information is included in the Results of
operations below, in the Review of operations and in the
financial statements.
There have been no significant changes in the nature of
these activities during the year.
Results of operations
Dividends – Nanosonics Limited
The directors do not recommend the payment of a dividend
for the financial year ended 30 June 2013. No dividends
were proposed, declared or paid during the financial year
(2012: Nil).
The Company’s dividend policy in the future, the extent of
future dividends and any franking of dividends will depend
upon the profitability and the financial and taxation position
of the Group at the relevant time.
Matters subsequent to the end of
the financial year
No matter or circumstance has arisen since 30 June 2013
that has significantly affected, or may significantly affect:
a. the Group’s operations in future financial years;
b. the results of those operations in future financial
years; or
Revenue from sales for the year amounted to $14,899,000
c. the Group’s state of affairs in future financial years.
(2012: $12,301,000) and other income amounted to
$2,690,000 (2012: $736,000). The net operating loss after
income tax amounted to $5,768,000 (2012: $4,679,000).
Likely developments and expected results
of operations
Cash and cash equivalents at 30 June 2013 amounted
to $24,064,000 (2012: $29,310,000) which include the
net proceeds from the issuance of shares of $536,000
(2012:$15,394,000) and in 2012, the net proceeds from
the issuance of convertible notes of $7,400,000. Other
information on the operations of the Group and its business
strategies and prospects is discussed in the Review of
operations on pages 10 to 13 of this report.
Comments on expected results of the operations of the
Group are included in the Review of operations on pages
10 to 13. Further information on likely developments in
the operations of the Group and the expected results of
operations have not been included in this annual report
because the Directors believe it would be likely to result in
unreasonable prejudice to the Group.
nanosonics limited | annual report 2013 25
Directors and committees of the Board
Environmental regulation
During the year and to the date of this report, the Board
The Group is subject to meeting statutory environmental
and committees of the Board of Nanosonics Limited
regulations. To demonstrate its commitment to meeting these
comprised the following members:
regulations, the Group has put in place an Environmental
Board of directors Nanosonics Limited
Maurie Stang, Non-Executive Chairman
David Fisher, Non-Executive Director
Richard England, Non-Executive Director
Michael Kavanagh, Non-Executive Director
Ron Weinberger, Managing Director and CEO
Audit and Financial Risk Management Committee
Richard England, Chairman
David Fisher
Maurie Stang
Management System, which was certified to ISO14001 in
August 2013.
Information on directors
The Information on the directors, company secretaries and
senior management is a part of the Directors’ report and
can be found on pages 18 to 23 of this report.
Retirement, resignation, appointment
and continuation in office of directors
and secretaries
Governance and Nomination Committee
(a) Directors
Richard England, Chairman
David Fisher
Maurie Stang
Remuneration Committee
Michael Kavanagh, Chairman
Richard England
David Fisher
Maurie Stang
In accordance with the Constitution:
• Mr Stang retires as a director at the next annual
general meeting and, being eligible, offers himself
for re-election.
• Mr Fisher retires as a director at the next annual general
meeting and, being eligible, offers himself for election.
(b) Company secretaries
Mr Robert Waring was appointed as a company secretary
on 1 October 2010 and continues in office at the date of
this report.
Mr McGregor Grant was appointed as a company secretary
on 28 April 2011 and continues in office at the date of
this report.
26
Directors’ report (continued)
Meetings of directors
The number of directors’ meetings, including meetings of the committees, held during the year ended 30 June 2013, and
numbers of meetings attended by each of the directors were as follows:
Full meetings
of directors
Audit
Meetings of committees
Governance and
Nomination
Remuneration
Held1
Attended
Held1
Attended
Held1
Attended
Held1
Attended
Maurie Stang
Richard England
David Fisher
Ron Weinberger
Michael Kavanagh
11
11
11
11
10
11
10
10
11
9
3
3
3
3
3
3
1
1
1
1
1
1
3
3
3
2
3
3
3
2
1 Number of meetings held above represents the number of meetings that a director is eligible to attend.
Loans to directors and executives
During the financial year and to the date of this report, the Group made no loans to directors and other key management
personnel and none were outstanding as at 30 June 2013 (2012: Nil).
Share-based payments
Shares issued under the DESP and options granted under ESOP and GSOP during the year are detailed below. These
were part of the Company’s short-term and long-term incentive plans and also in recognition of the achievements of the
Company’s personnel and contractors related to global commercialisation of its first product, the trophon® EPR ultrasound
probe disinfector.
Shares issued
During the year ended 30 June 2013, the Company issued a total of 2,005,800 (2012: 29,492,333) new ordinary shares
in Nanosonics Limited as detailed below. To the date of this report, the Company issued a total of 2,839,545 new ordinary
shares as detailed below. No amount was unpaid on any of the shares so issued.
Shares issued
Share purchase plan
Share options exercised under Share Option Plans
Total new shares issued during the year
Share options exercised under Share Option Plans post balance date
Total new shares issued and to the date of this report
Number of shares issued
718,196
1,287,604
2,005,800
833,745
2,839,545
As at 30 June 2013 there were 261,988,718 (2012: 259,982,918) ordinary shares in Nanosonics Limited on issue.
At the date of this report, there were 262,822,463 shares on issue. Further information on issued shares is provided
in the Contributed equity and the Share-based compensation notes to the financial statements.
nanosonics limited | annual report 2013
27
Share options granted
During the financial year and to the date of this report, the Company granted, for no consideration, 3,736,899 (2012: 852,442)
unquoted options over unissued ordinary shares in Nanosonics Limited. Further information on the grants is provided below,
in the Remuneration report on page 37 and in the Share-based compensation note to the financial statements.
Share options granted
Employee Share Option Plan (ESOP)
General Share Option Plan (GSOP)
Total new options granted during the year
Employee Share Option Plan (ESOP) granted after 30 June 2013
Total options granted to the date of this report
Number of options granted
2,487,891
536,038
3,023,929
712,970
3,736,899
Shares under option
At the date of this report, there were 5,267,285 unissued ordinary shares of Nanosonics Limited under option as detailed
below. As at 30 June 2013, there were 5,418,625 (2012: 3,758,269) unissued ordinary shares of Nanosonics Limited
under option. Further information on the options is provided in the Share-based compensation note to the financial statements.
Share option plan
Employee Share Option Plan (ESOP)
General Share Option Plan (GSOP)
Total shares under option at 30 June 2013
Share options exercised under Share Option Plans after 30 June 2013
Share options lapsed under Share Option Plans after 30 June 2013
Employee Share Option Plan (ESOP) granted after 30 June 2013
Total shares under option to the date of this report
Number of shares under option
4,603,625
815,000
5,418,625
(833,745)
(30,565)
712,970
5,267,285
The options entitle the holder to participate in a share issue of the Company provided the options are exercised on or after
their vesting date and prior to their expiry date. No option holder has any right under the options to participate in any other
share issue of the Company or any other entity.
28
Directors’ report (continued)
Interests of directors
The relevant interest of each director in the shares and share options of the companies within the consolidated Group at the
date of this report, as notified by the directors to the Australian Securities Exchange in accordance with section 205G(1) of
the Corporations Act 2001, are set out below. All shares and options are in the parent entity, Nanosonics Limited.
Maurie Stang
Richard England
David Fisher
Michael Kavanagh
Ron Weinberger
Ordinary shares
Options over ordinary shares
28,402,424
78,301
812,705
150,000
29,881
–
50,000
–
–
1,458,726
Indemnifying officers or auditor
During the financial year, the Company paid insurance premiums to insure the directors and secretary and key management
personnel of the Company and its controlled entities.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities
incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct
involving a willful breach of duty by the officers or the improper use by the officers of their positions or of information to
gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the
premium between amounts relating to the insurance against legal costs and those relating to other liabilities.
The directors have not included in this report the amount of the premium paid in respect of the insurance policy, as such
disclosure is prohibited under the terms of the contract.
No indemnities have been given or insurance premiums paid, during or since the financial year, for any person who is or
has been an auditor for the Group.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company or intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of
the Corporations Act 2001.
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 Company under ASIC CO 98/100. The Company is
an entity to which the class order applies.
nanosonics limited | annual report 2013 29
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the Group are important.
The Board of directors has considered the position and, in accordance with advice received from the Audit Committee, is
satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor,
as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the
following reasons:
a. all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and
objectivity of the auditor and
b. none of the services undermines the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants.
Details of the amounts paid or payable for audit and non-audit services provided by the auditor of the Group, its related
practices and non-related audit firms are set out in the Auditor’s remuneration note to the financial statements.
Auditor’s independence declaration
A copy of the Auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included
on page 47 of this report.
Auditor
UHY Haines Norton continues in office as auditor in accordance with section 327 of the Corporations Act 2001.
This report, which includes the Review of operations (on pages 10 to 13), the Information on the directors, company
secretaries and senior management (on pages 18 to 23) and the Remuneration report (on pages 37 to 45) is made and
signed in accordance with a resolution of directors on 18 September 2013.
Richard England
Director
Sydney
18 September 2013
30
Corporate governance statement
The Board of directors of Nanosonics Limited is responsible
Management and oversight
for the corporate governance of the Company and of the
Group, consisting of the Company and its subsidiaries.
The Board regularly reviews the policies and practices
applied by the Group to ensure they meet the interests
of shareholders and other key stakeholders, both for the
present and as the Group progresses its business plans
and grows in operational complexity.
Role of the Chairman
The Chairman is responsible for leading the Board, its
meetings and directors, so that all directors are able to
contribute effectively, all matters are properly considered
and there is clear decision-making. The Chairman has
ultimate responsibility for corporate governance.
This statement sets out Nanosonics Limited’s Corporate
Role of the Board
Governance framework. Nanosonics Limited is committed
Under the leadership of the Chairman, the role of the
to ensuring all its directors, officers, employees, advisors,
Board is to provide strategic guidance to the Company and
contractors and consultants align with its integrity,
to provide effective oversight of its management for the
objectivity, corporate governance and ethical standards.
benefit of all stakeholders.
Compliance
The Board acts on behalf of shareholders and is
accountable to the shareholders for the overall strategy,
The Company supports the ASX Listing Rules and the
governance and performance of the Company. The Board
Corporate Governance Principles and Recommendations
retains ultimate authority over the management of the
with 2010 Amendments (2nd Edition) issued by the
Group; however day-to-day management of the Group’s
Australian Securities Exchange, as well as other prominent
affairs and the implementation of its strategies are formally
guidance on good governance.
The Group has followed the ASX Corporate Governance
Principles and Recommendations, with certain exceptions
as noted below.
Further information is available in the Company’s
various Charters and Policies, mentioned below, copies
of which are available on the Company’s website
at www.nanosonics.com.au.
delegated by the Board to the Managing Director and
CEO and senior executives. The respective roles and
responsibilities of the Board and senior executives, and
how they are separate, are set out in detail in the Group’s
Corporate Governance Charter. The Board meets regularly
in accordance with an agreed schedule and special
meetings are held as required.
Roles of senior executives
This Corporate Governance Statement was approved by the
The Company sets responsibilities and performance
Board and a copy is available on the Company’s website.
expectations for all senior executives, including executive
directors, as described in Information on directors,
company secretaries and senior management and in
the Remuneration report in the Company’s Annual Report.
Committees of the Board
The Board is assisted by committees, which are responsible
for aspects of the operation of the Group and which act by
examining relevant matters and making recommendations
to the Board. The Board may establish additional
committees to assist it in carrying out its responsibilities.
The Board may also delegate specified responsibilities to
nanosonics limited | annual report 2013 31
ad-hoc committees. The directors must be satisfied that the
• Mr Michael Kavanagh is an independent non-executive
members of a committee are competent and will exercise
director: appointed 30 July 2012 (until October 2013
their delegated functions in accordance with directors’
when he becomes CEO and President), re-elected
duties. General requirements of board committees are:
9 November 2012.
• a committee is expected to meet as often as necessary
• Dr Ron Weinberger is the Chief Executive Officer
to fulfil its obligations;
• a committee is authorised to seek the information and
advice it needs, at the cost of the Company, to assist it
in the performance of its obligations;
(CEO): appointed as an executive director 2 July 2008,
re-elected 3 November 2010, appointed Managing
Director and CEO 19 December 2011 (until October
2013 when he becomes President of Technology
• a committee does not have executive powers in respect
Development / Commercialisation).
of its findings and recommendations;
• a committee is intended to have an independent
director appointed as its Chairman; and
Details of each director, including their qualifications and
experience, are set out in the Information on the directors,
company secretaries and senior management of the annual
•
the membership and performance of each committee
report and on the Company’s website.
is assessed at least once every year by that committee
and by the Board.
Currently there are three committees of the Board:
the Governance and Nomination Committee, the Audit
and Financial Risk Management Committee and the
Remuneration Committee. Summaries of the roles and
responsibilities of each of the current committees are
provided in this Corporate Governance Statement. Details
of directors’ attendances at meetings of the committees are
shown in the Directors’ report contained in the Company’s
Annual Report.
Structure of the Board
The current Board consists of four non-executive directors
and one managing director. The role of the Chairman is
separate from that of the Chief Executive Officer.
Directors’ independence
Directors’ independence is assessed according to the
provisions set out in the Company’s Corporate Governance
Charter and in the ASX Corporate Governance Principles
and Recommendations. Accordingly:
• Mr Stang is not considered to be an independent
director as: he is a founder of the Company; he held
executive office in the Company until March 2007;
he is a major shareholder of the Company and he is a
director and/or shareholder of companies with which
the Company had significant transactions during the
year (refer to the Directors and Key Management
Personnel disclosures note to the financial statements
section of the Annual Report.
• Dr Weinberger is not considered to be an independent
director as he is an executive of the Company.
• Mr Maurie Stang is non-executive Chairman:
• Dr Fisher is considered to be an independent director,
appointed a director 14 November 2000,
except that he served as interim executive director for
re-elected 11 November 2011.
the period 14 December 2007 to 16 June 2008. For the
• Dr David Fisher is an independent non-executive
period 9 May 2011 to 29 March 2013 Dr Fisher served
director: appointed 30 July 2001,
re-elected 11 November 2011.
as Managing Director of Aeris Environmental Ltd where
Mr Stang is the Non-Executive Chairman.
• Mr Richard England is an independent non-executive
• Mr England is considered to be an independent director.
director: appointed 5 February 2010,
• Mr Kavanagh is considered to be an independent director.
re-elected 9 November 2012.
32
Corporate governance statement (continued)
The Board is considering opportunities to appoint additional
Directors and the Board have the right, in connection with
suitably qualified and experienced independent directors.
their duties and responsibilities, to obtain independent
At the time when the Company has appointed other
independent directors, the Board will also consider its
opportunities to appoint an independent chairman.
Governance and Nomination Committee
The members of the Governance and Nomination
Committee are: Mr Richard England (Chairman), Dr David
Fisher, and Mr Maurie Stang. The Committee comprises
a majority of independent directors and is chaired by an
independent director.
The role of the Governance and Nomination Committee,
as set out in detail in its Charter, is to provide advice and
assistance to the Board by assessing the competencies,
performance, composition and succession plans of the Board.
If necessary, the Committee makes recommendations to
professional advice at the Company’s expense. Subject
to prior approval from within the Board, which will not
unreasonably be withheld, a director may have direct
access to any employee or contractor of the Group and
seek any information from any employee in order to
perform his or her responsibilities.
Board performance evaluation
The Board requires that each director has the appropriate
competencies to fulfil their role and that they perform
effectively in their respective role and on the Board. The
Governance and Nomination Committee is responsible
for recommending a framework for the assessment and
evaluation of the performance of each director individually,
of each committee and of the Board as a whole.
the Board for the appointment and removal of directors.
• Board and Directors
The Committee also evaluates the time required of non-
executive directors to perform their duties.
Selection and appointment of directors
The Governance and Nomination Committee is responsible
for the identification and selection of suitable candidates
for appointment as a director. The Committee assesses
potential directors against the following selection criteria:
•
integrity;
• skills, experience and qualifications;
• availability;
• communication capabilities; and
• community standing.
After assessment, candidates are recommended by the
Committee to the Board.
Induction, education and access of directors
Every new director receives an appointment letter
accompanied by:
• Director’s Deed of Access;
• Director’s Handbook (containing Company policies and
charters); and
•
Induction training.
The Board continuously reviews its own performance
and mix of skills to ensure that they allow the Board
to maximise its effectiveness and contribution to
the Company.
• Committees
The performance of each of the Board’s committees is
assessed annually by the chairman of the committee
and by the chairman of the Board to ensure that the
committees and the Board as a whole work effectively.
The Board receives the meeting minutes and an update
from the chairman of each of the Board’s committees
on an ongoing basis, setting out the committee’s
achievements based on their duties. The Board
reviews and approves the charters of each of the
committees annually.
Executive performance evaluation
The Nanosonics Performance and Development Program
requires individual appraisals by a director at least annually
for all senior executives, including executive directors
but excluding the CEO, who is assessed with the rest of
the Board. In accordance with that program, individual
appraisals of the performance of all senior executives were
undertaken by the CEO during the year.
nanosonics limited | annual report 2013 33
Ethical and responsible decision making
transaction. Approval for a transaction is given only if the
Code of conduct & ethics
All directors, officers, employees, advisors, consultants and
contractors of the Group are expected to act with integrity
and objectivity and to maintain the highest possible ethical
standards which have been formalised and set out in the
Company’s Code of Conduct and Ethics. The Code of
Conduct & Ethics can be found on the Company’s website.
Securities trading policy
The Company has a Securities Trading Policy, which applies
to all Designated Persons, comprising its directors, officers,
employees, advisors, consultants and contractors and such
other persons as the Board nominates. Designated Persons
may only deal in the Company’s securities in terms of that
policy. Securities trading “black-out” periods are notified to
all Designated Persons. The Company periodically reviews
share trading reports and its share register to ensure
compliance with the policy.
Whistleblower policy
director is satisfied that the Company has ascertained that
the selected goods or services to be supplied are equivalent
or superior to similar goods or services available elsewhere
and that the terms and conditions of the transactions
are no more favourable than those available, or which
might reasonably be expected to be available, on similar
transactions with unrelated entities on an arms-length
basis. Management is required to provide written evidence
of the comparative assessments undertaken to satisfy these
selection criteria. Contractual agreements for related party
transactions are reviewed by the director for compliance
with the same selection criteria.
Integrity in financial reporting
Financial systems and compliance
The Managing Director and CEO and Chief Financial Officer
have jointly confirmed to the Board that the declaration
provided in this Annual Report in accordance with section
295A of the Corporations Act 2001 is founded upon sound
The Company recognises its responsibilities to conduct
systems of risk management and internal control and that
its business in accordance with both Australian and
the systems are operating effectively in all material respects
internationally accepted practices and procedures. As part
in relation to financial reporting risks.
of this, the Company is committed to maintaining a culture
where all directors, staff, contractors and consultants to
the Company are encouraged to raise concerns about poor
and/or unacceptable practices and misconduct.
The Company has a Whistleblower Policy to provide a
process through which staff, contractors and consultants
to the Company can express serious concerns and
report misconduct.
Audit and Financial Risk Management Committee
The members of the Audit and Financial Risk Management
Committee are: Mr Richard England (Chairman), Dr David
Fisher and Mr Maurie Stang. The Committee comprises only
non-executive directors and has a majority of independent
directors. The Committee Chairman is an independent
director who is appropriately qualified and financially literate
and who is not also Chairman of the Board.
Directors’ interests and related party transactions
The role of the Audit and Financial Risk Management
Directors’ declarations of interests or conflicts of interest are
Committee, as set out in detail in its Charter, is to provide
recorded in the minutes of Board meetings and included in
advice and assistance to the Board in fulfilling the following
the register of directors’ interests. The register of directors’
obligations for the Company’s:
interests is formally tabled and reviewed at Board meetings
• audit, accounting and financial reporting;
on a quarterly basis.
•
legal and financial regulatory compliance; and
A transaction with a related party requires the prior approval
• adequacy of and compliance with financial risk
of a non-executive director who has no interest in the
management policies and procedures.
34
Corporate governance statement (continued)
The Committee regularly reports to the Board on all matters
Rules and to ensure individual accountability at senior
relevant to the responsibilities of the Committee.
executive level for that compliance. In determining whether
The Audit and Financial Risk Management Committee
is responsible for reviewing the integrity of the Group’s
financial systems and reporting and for overseeing the
appointment, compensation and independence of the
Company’s external auditor.
Selection and appointment of external auditors
The Audit and Financial Risk Management Committee
is responsible for selecting and recommending the
appointment of the external auditor. The Committee
considers a number of criteria in appointing the external
auditor, such as audit approach, governance processes,
key personnel and cost. The Committee then provides the
Board with its recommendation.
External audit
information should be disclosed, the Board takes into
consideration the needs and interests of the Group’s
shareholders and other stakeholders in the context of the
Board’s obligations under the Corporations Act 2001 and
the ASX Listing Rules. ASX announcements are prepared
directly when the Board or executive management
becomes aware of information required to be disclosed
to the market. The announcements are vetted by the
Board prior to their release to the market. Apart from the
Company’s authorised spokespersons, no employee or
associated person may comment publicly on matters that
are market sensitive or confidential to the Company.
The disclosure policy gives guidance as to the information
that may need to be disclosed and how to deal with market
analysts and the media. This policy clearly outlines who has
It is the external auditor’s role to provide an independent
the responsibility for approving public documents and acts
opinion that the Company’s financial reports are true and
as a spokesperson.
fair and comply with the Australian Accounting Standards
This policy is made known to all directors, officers,
and the Corporations Act 2001. The external auditor
employees, advisors, consultants and contractors, who
performs an independent audit in accordance with the
sign confidentiality agreements designed to prevent
International Audit Standards. All services provided by the
unauthorised disclosure of information.
external Auditor must be in accordance with the principles
that the external Auditor should not:
The Board has approved, as part of the Continuous
Disclosure and Shareholder Communications Policy, the
• have a conflict of interest in the Company;
Company’s policy to promote effective communication with
• audit its own work; or
its shareholders. In addition to its disclosure obligations
•
function as a part of management or as an employee of
under the ASX Listing Rules, the Company communicates
the Company.
Rotation of external audit partners
In line with current professional standards the Company
requires the external auditor to rotate after 5 years and
cannot return for a further 2 years. Key audit staff are
required to rotate every 7 years.
Timely and balanced disclosure
The Board has adopted a Continuous Disclosure and
Shareholder Communications Policy to ensure compliance
with the disclosure requirements of the ASX Listing
with its shareholders through:
• annual and half-yearly reports;
• shareholder updates sent by email or mail;
• media releases, public announcements and investor
briefings; and
• annual general meetings.
Rights of shareholders
The Company recognises and respects the rights of
shareholders and seeks to facilitate the effective exercise
of those rights within the limitations of the continuous
disclosure provisions of the ASX Listing Rules.
nanosonics limited | annual report 2013 35
The Company encourages shareholder participation,
Risk management
particularly attendance at the general meetings of the
Company. The Company complies with the ASX best
practice guidelines for the content of notices of meeting.
The external financial auditor is requested to attend the annual
general meeting and be available to answer shareholder
questions about the conduct of the audit of the Company
and the preparation and content of the auditor’s report.
The Company has a Risk Management Policy for the
oversight and management of material business risks,
which reflects the Group’s risk profile and which describes
the risk management processes applied. The Board is
responsible for risk oversight and risk management and to
ensure legal and regulatory compliance.
The Board requires the Group’s executive management,
Website and corporate information
led by the Managing Director and CEO, to design,
It is Group policy that its corporate information is complete,
implement and review an effective risk management and
timely and available on its website at www.nanosonics.com.au.
internal control system. Executive management is required
The corporate information, including reports and media
releases, governance and shareholder information and
at least three years of financial data, is available from its
website and includes:
• Announcements to the ASX
• Constitution
• Corporate Governance Charter
to report via the Managing Director and CEO to the Board
whether the Group’s material business risks are being
managed effectively.
In the period under review in the Annual Report, executive
management regularly reported to the Board on the
effectiveness of the Group’s management of its material
business risks.
• Audit and Financial Risk Management Committee Charter
The Annual Report includes reports on or references
• Code of Conduct and Ethics
to the following risks: strategic planning, intellectual
• Governance and Nomination Committee Charter
property protection, competition, manufacturing capacity,
• Securities Trading Policy
• Remuneration Committee Charter
• Whistleblower Protection Policy
financial, systems and controls, human resources and
the environment.
• Terms and Conditions of Appointment for a
Diversity
Non-Executive Director
• Continuous Disclosure and Shareholder
Communications Policy
• Profiles of directors and senior management
• Risk Management Policy
• Notices of Annual General Meetings
• Privacy Policy
• Diversity Policy
• Annual Reports
• Half-year Reports.
Engagement with shareholders
Shareholders and prospective shareholders are welcome,
by prior appointment, to speak with executive managers
responsible for investor relations and to view the
Group’s operations.
Nanosonics believes that the pursuit of diversity in the
workplace increases its ability to attract, retain and develop
the best talent available, creates an engaged workforce,
delivers the highest quality services to its customers,
enhances individual work-life balance, encourages personal
achievement, improves co-operation and assists in the
optimisation of organisational performance. Diversity in the
workplace mirrors the diversity of the broader community,
encompassing age, gender, ethnicity, cultural and other
personal factors. The Company respects the diversity of all
employees, consultants and contractors, and cultivates an
environment of fairness, respect and equal opportunity.
36
Corporate governance statement (continued)
Set out below are the measurable gender and other diversity
Fair and responsible remuneration
objectives established by the Board, in accordance with the
Company’s Diversity Policy (which can be found on the
Company’s website).
• Hiring: The Board will ensure that appropriate
selection criteria, based on diverse skills, experience
and perspectives, are used when recruiting new staff
and directors. Job specifications, advertisements,
The Company’s remuneration philosophy and policies are
set out in the Remuneration report in the Annual Report.
The Remuneration Committee oversees remuneration
policies and strategies to ensure that performance is
rewarded in a manner that is competitive and appropriate
for the results delivered.
application forms and contracts will not contain any
Remuneration Committee
direct or inferred discrimination.
The members of the Remuneration Committee are:
• Training: All internal and external training opportunities
Mr Michael Kavanagh (Chairman), Mr Richard England,
will be based on merit, and Company and individual
Dr David Fisher and Mr Maurie Stang. The Committee is
needs. The Board will consider senior management
chaired by an independent director and has a majority of
training and executive mentoring programmes to
independent directors.
develop skills and experience to prepare employees for
The role of the Remuneration Committee, as set out in
senior management and Board positions.
detail in its Charter, is to provide advice and assistance
• Career Advancement: All decisions associated with
to the Board in fulfilling its responsibilities in respect
career advancement, including promotions, transfers,
of remuneration policies, performance enhancement
and other assignments, will meet the Company’s needs,
systems and fair and responsible rewards for individual
and be determined on skill and merit.
performance. The Committee is responsible for advising the
• Work Environment: The Company will ensure that
Board on remuneration issues and policies in the context
all officers, employees, consultants and contractors
of the Group’s operations and markets and, with regard to
have access to a work environment that is free
the overriding goal that directors and senior executives are
from harassment and unwanted conduct in relation
recruited, motivated and retained so as to pursue the long-
to personal circumstances or characteristics.
term growth and success of the Group as well as ensuring
Directors,managers and supervisors will ensure that
a clear relationship between individual performance and
complainants or reports of sexual, racial or other
remuneration structures, both short and long term.
harassment are treated seriously, confidentially and
sympathetically by the Company.
The Remuneration Committee is authorised to seek
the information and advice it needs, at the cost of the
As at 30 June 2013, woman represented 33% (2012: 34%)
Company, to assist it in the performance of its obligations.
of the Group’s workforce, 36% in key executive positions
Advisers to the Remuneration Committee are appointed by
(2012: 45%) and 0% at Board level (2012: 0%).
the Committee itself and report directly to the Committee.
During the year ended 30 June 2013 the Company has
The Company distinguishes the structure of non-executive
reviewed its progress against each of the diversity objectives
directors’ remuneration from that of executive directors and
set by the Board. The Company considers that it has successfully
senior executives. Non-executive directors’ remuneration does
achieved the objectives that have been established, particularly
not include any retirement benefits other than contributions
in view of its size and stage of growth. The Board considers
to their nominated superannuation funds. The Company will
that the current objectives are appropriate for the forthcoming
not permit an executive director to have direct involvement
financial year and the Company will continue to take
in the determination of their own remuneration.
advantage of opportunities to improve gender representation
Details of the respective remuneration structures are set out
across all levels of the organisation, as appropriate.
in Part 1 of the Remuneration report in the Annual Report.
nanosonics limited | annual report 2013 Remuneration report
The Remuneration report is a part of the Directors’ report.
37
1. Remuneration principles
Objective of the remuneration policy
Details of Nanosonics Limited’s remuneration policies
and practices, together with details of the remuneration of
directors and key management personnel (KMP), are set
out below. For the purposes of this report, KMP are defined
In consultation with external remuneration specialists, the
Remuneration Committee ensures that rewards align with the
achievement of strategic corporate objectives and the creation
of value for shareholders, in line with current market practice.
as those persons having authority and responsibility for
The remuneration structure provides a mix of fixed and
planning, directing and controlling the major activities of
variable pay. The structure of non-executive and executive
the Company, directly or indirectly and include the five
compensation is separate and distinct.
executives receiving the highest remuneration.
1.2 Directors
Remuneration report approval at 2012 AGM
Non-executive directors are paid an annual fee for their
The 2012 remuneration report was adopted at the 2012
services on the Board and committees of the Board.
AGM held on 9 November 2012.
1.1 Overview of remuneration policies
Remuneration philosophy
The total annual fee payable to a non-executive director
is determined on a total cost basis comprising cash,
superannuation and securities. The aggregate amount
of remuneration that may be paid to all non-executive
Nanosonics recognises that the quality and performance of
directors and which may be divided among the non-
directors, executives and staff are essential to achieving a
executive directors in such a way as the directors may
competitive advantage and a sustainable future.
determine is a maximum of $500,000 as approved at a
The Group’s remuneration philosophy is to proactively attract,
motivate and retain key talent in line with the following criteria:
• Business performance;
• Sustainable growth in shareholder wealth;
• Transparency of structures for earning rewards;
•
Individual performance recognition;
• Labour market conditions; and
• Capacity to pay.
Remuneration Committee
general meeting of the Company on 19 September 2006.
Non-executive directors do not receive any performance-
related remuneration, options or shares.
The remuneration of the Managing Director and CEO and any
other director appointed to an executive office is fixed by the
directors. Executive directors are eligible to participate in the
Company’s short-term incentive scheme and share-based
compensation plans. Executive directors are not separately
remunerated for their positions as directors.
Details of directors’ remuneration are set out in Part 5 of
The Remuneration Committee oversees remuneration
this report.
policies and strategies to ensure that performance is
rewarded in a manner that is competitive and appropriate
1.3 Executives
for the results delivered.
The Remuneration Committee presently comprises four
non-executive directors, Mr Michael Kavanagh (Chairman),
Executive pay structures consist of fixed and variable
components, incorporating short term incentives (STI)
and long term incentives (LTI) as follows:
Mr Richard England, Dr David Fisher, and Mr Maurie
Remuneration component
Vehicle
Stang. The Chairman of the Remuneration Committee is
Fixed remuneration
required to be an independent director who is not also
Chairman of the Board.
Variable remuneration (STI)
The Remuneration Committee Charter, which is available
Variable remuneration (LTI)
from the Company’s website, provides further information
Base salary, superannuation,
and non-monetary benefits
Paid partly in cash and partly
as share options
Awards made in the form of
share options
on the role of the committee.
Details of key management personnel remuneration are set
out in Part 5 of this report.
38
Remuneration report (continued)
Fixed remuneration
The committee is satisfied the advice received from CRA
Fixed remuneration is part of the total employment cost
is free from undue influence from the KMP to whom
(TEC) package which may be provided as a combination of
the remuneration recommendations apply as CRA were
cash and non-cash benefits, at the executive’s discretion.
engaged by and reported directly to the Remuneration
Executives are offered a competitive fixed component
of base pay inclusive of superannuation contributions.
Executive remuneration is reviewed annually by the
Committee. CRA also confirmed in writing to the Chairman
of the Remuneration Committee that the remuneration
recommendations were made free from undue influence
Remuneration Committee. Part of this review includes
by the Group’s KMP.
an analysis of company and individual performance and
As a result of this review the Board made changes to the
external comparative remuneration benchmarking.
remuneration arrangements for the Managing Director and
Short term incentive scheme
The Company has a short term incentive scheme whereby
senior executives and staff can earn bonuses, comprising a
mix of cash and share options, of up to 33.3% of their
base salary, subject to the achievement of defined company
performance objectives which are tied to financial performance
of the Group and individual key performance indicators.
Long term incentive scheme
CEO and selected key management personnel, including
the introduction of a long term incentive scheme, to be now
considered on an annual basis.
At the 2012 AGM, shareholders approved the granting of
1,220,000 performance rights to the Managing Director
and CEO, Dr Ron Weinberger. In August 2013, a further
712,970 performance rights were issued to selected KMPs
and senior executives. The performance rights were issued
by the Nanosonics Employee Share Option Plan (ESOP),
The Company has a long term incentive scheme whereby
which will vest in accordance with the rules of the ESOP
senior executives are awarded share options to align
and are subject to the performance and service vesting
remuneration with the creation of shareholder value over
conditions described below.
the longer term. As such, LTI awards are only made to
executives and other key employees who have an impact
on the Company’s performance against relevant long term
performance measures.
During the year the Board carried out a review of the
Company’s remuneration strategy with the assistance of
Performance condition
Financial
Year
Revenue and Net Profit
after Tax (NPAT)
% of Performance
Rights to Vest
30 June 2015 Revenue of $50M or
100%
more and NPAT of 12%
of revenue or more
independent remuneration consultant, CRA Plan Managers
Service condition
Pty Ltd (CRA). The review incorporated benchmark
assessment and analysis in respect of the three key
components of remuneration being fixed remuneration,
short term incentives (STI) and long term incentives (LTI).
The recommendations provided by CRA were only used
as a guide by the Board who applied their own judgment
in determining the final remuneration decisions. For 2013,
CRA received fees amounting to $6,008 (2012:$4,140) for
the executive remuneration benchmark assessments and
fees totaling $28,964 (2012: $44,397) for other services.
Continuous employment with Nanosonics Limited from
the date of grant to the Vesting Date, being 31 August
2015. The performance rights granted to Dr Weinberger
include additional service conditions as follows: 50% of
any Nanosonics shares acquired by the DESP Trustee on
behalf of Dr Weinberger will be available to Dr Weinberger
on acquisition; and 50% of any Nanosonics shares
acquired by the DESP Trustee on behalf of Dr Weinberger
will be available to Dr Weinberger provided he remains with
Nanosonics Limited until 31 August 2016. If Dr Weinberger
does not satisfy these further service vesting conditions, the
shares will be subject to forfeiture.
nanosonics limited | annual report 2013 39
If the vesting conditions are satisfied, the performance
receive any guaranteed benefits. The maximum number of
rights will automatically vest, at no cost and no amount
options able to be on issue under the ESOP during any five-
payable, and shares will be acquired either on-market or
year period is 5% of the total number of shares on issue.
via a new issue of shares under the Nanosonics Deferred
Employee Share Plan (DESP).
Under the ESOP, participants are granted options for no
consideration which vest in varying tranches from the date
Any performance rights which fail to meet the performance
of issue. The exercise price of options is determined by
condition or service condition above will lapse immediately:
the Board at the time of issue. Options vest and become
there will be no retesting.
exercisable at the end of each vesting period. The ESOP
2. Service agreements
On appointment to the Board, all non-executive directors
enter into a service agreement with the Company in the
form of a letter of appointment which summarises the
Board policies and terms, including compensation, relevant
to the office of director. A copy of the letter is available on
the Company’s website. Remuneration and other terms of
employment for the Managing Director and CEO, CFO and
KMP are formalised in employment agreements. Each of these
agreements provides for the provision of performance-
related cash bonuses and participation, when eligible, in the
share-based compensation plans. Employment contracts
for KMP may be terminated by either party with one
month’s notice, except in the case of the Managing Director
and CEO and Chief Operations Officer, where the Company
is required to give three months’ notice of termination, and
in the case of the CFO, where the Company is required to
give four months’ notice of termination.
requires the holder to be an employee of the Company at
the time vested options are exercised, except that they may
be exercised up to 30 days after voluntary termination of
employment or within a period as approved by the Board.
When exercisable, each option is convertible into one
ordinary share which ranks equally with any other share
on issue in respect of dividends and voting rights.
The Company granted 2,487,891 ESOP options during
the year (2012: 657,442 options).
3.2 Nanosonics Employee Share Plans
The Company has two employee share plans, being the
Exempt Employee Share Plan (“EESP”) and the Deferred
Employee Share Plan (“DESP”).
Adoption of the EESP and DESP was approved at a general
meeting of shareholders on 3 November 2010 and the
approval is for a period of 3 years. Shareholder approval
was also granted on 3 November 2010 to enable the
Company to grant financial assistance under both the EESP
and the DESP in accordance with the Corporations Act 2001.
3. Share-based compensation
Nanosonics Exempt Employee Share Plan
The Company has three share-based compensation
schemes designed to facilitate the provision of short-
term and long-term incentives for executives and certain
employees. The schemes are:
• Employee Share Option Plan (“ESOP”)
• Exempt Employee Share Plan (“EESP”)
• Deferred Employee Share Plan (“DESP”)
The EESP enables eligible employees, including directors,
to acquire up to $1,000 worth of Nanosonics shares each
year on a tax-exempt basis in accordance with enabling tax
legislation. As a contemporary company the Board believes
allowing employees to acquire equity in the Company on
tax-preferred terms should be encouraged. No shares have
been issued under the EESP to the date of this report.
3.1 Nanosonics Employee Share Option Plan
The establishment of the Nanosonics Employee Share Option
Plan (ESOP) was approved by the directors on 2 April 2007.
Participation in the plan is at the Board’s discretion and no
individual has a contractual right to participate in the plan or to
Nanosonics Deferred Employee Share Plan
The DESP allows invited eligible employees, including
directors, to receive Nanosonics shares as a bonus or
incentive or as remuneration sacrifice and, subject to
certain conditions and impending changes to legislation,
40
Remuneration report (continued)
not to pay tax for up to 10 years on the benefit in
accordance with enabling tax legislation. The DESP is
designed to allow the Company to meet contemporary
executive equity incentive practices. No shares were
granted under the DESP during the financial year (2012:
Nil). However, shares issued on the exercise of share
options granted to employees as part of their short term
incentive has been included in the DESP.
Details of share-based compensation included in director
and key management personnel remuneration are set out
in Parts 7 and 8 of the Remuneration Report and in the
Share-based compensation note to the financial statements.
4. Directors and key management personnel
All the directors and key management personnel named in
this report held office throughout the year ended 30 June
2013, except for Michael Kavanagh, who was appointed
non-executive director on 30 July 2012. On 28 August
2013 the Company announced that Michael Kavanagh
was appointed as CEO and President effective 21 October
2013. At the same time, the Company announced that
Dr Weinberger was appointed to the newly created office
of President Technology Development / Commercialisation.
Apart from these changes, there were no other changes
to KMP after the reporting date and before the date the
financial report was authorised for issue.
5. Remuneration of directors and
key management personnel
Details of the nature and amount of each major element
of the remuneration of each director of the Company,
key management personnel and each of the five highest
remunerated Company executives are set out below.
No remuneration was paid by any other company in the
Group. The aggregate remuneration for non-executive
directors for the current financial year was within the
aggregate amount of $500,000 approved at a general
meeting of the Company on 19 September 2006.
Remuneration of directors and
key management personnel
Non-executive directors
Maurie Stang
Richard England
David Fisher
Michael Kavanagh7
Executive directors
Ron Weinberger1
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Key management personnel
McGregor Grant2
Gerard Putt3
Michael Potas
Kirste Courtney4
Vincent Wang5
Jianhe Chen6
Total
Total
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Short-term benefits
Long-term benefits
Share-based payments
Salary
and
fees
$
Cash
bonus
$
Non-
monetary
benefits
Other
Superannuation
$
$
$
Long
service
leave
Options
and
Termination
rights(a)
Shares
payments
$
$
Performance
Total
$
related
%
310,000
32,901
42,886 3,100
16,470 14,193
125,877
303,065
29,550
29,034
16,441
16,286
31,161
–
–
–
–
–
–
–
–
–
–
90,000
90,000
60,000
60,000
60,000
58,915
55,450
–
284,801
29,751
229,577
24,227
251,577
191,500
180,000
18,591
152,385
16,296
151,875
16,928
141,623
17,118
151,875
16,928
121,803
15,493
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
527
356
231
231
40
8,100
16,200
5,400
10,800
5,400
5,510
4,991
-
16,470
16,662
16,470
16,450
15,174
14,929
15,174
25,136
15,956
7,252
23,386
14,958
11,723
9,274
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
879
2,993
$
–
–
–
–
–
–
173,075
237,113
79,424
94,782
26,127
19,273
18,245
26,226
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
545,427
425,537
28%
10%
504,624
11%
–
–
–
–
–
–
–
–
–
–
13%
17%
12%
19%
19%
17%
12%
98,100
106,200
66,279
73,793
65,400
64,425
60,441
-
505,708
349,929
302,963
245,185
204,636
210,104
192,943
202,222
188,698
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,573,578
139,326
42,886 3,858
119,605
21,445
447,013
1,370,868
78,457
29,034
627
137,086
28,009
420,822
– 2,347,711
2,064,903
1 On 9 November 2012 Dr Weinberger was granted 1,220,000 options which vest on 31 August 2015, subject to vesting conditions.
2 Mr Grant joined the Company on 28 April 2011 as Chief Financial Officer and Company Secretary. As part of his employment contract, he was granted
1,000,000 options which vest in 4 tranches, subject to service conditions.
3 Mr Putt was granted, 400,000 options which vest in 4 tranches subject to service conditions, as part of his employment contract on his appointment on
27 April 2011.
4 Mrs Courtney is included as one of the five named Company or Group executives who received the highest remuneration in the current financial year.
5 Mr Wang is included as one of the five named Company or Group executives who received the highest remuneration in the current financial year.
6 Ms Chen was included as one of the five named Company or Group executives who received the highest remuneration in the previous financial year.
7 Mr Kavanagh was appointed non-executive director on 30 July 2012.
(a) The value disclosed above is the proportion of the fair value of the options and shares allocated to the financial year. The ability to exercise the options
and shares is subject to vesting conditions (i.e service conditions and/ or based on achievement of personal goals and specified performance criteria).
The estimated value of options for the current financial year is calculated at the date of the grant using the Black-Scholes model. Further details of the
options granted during the financial year are set out on pages 42 to 45 and the Share-based compensation note to the financial statements.
nanosonics limited | annual report 2013
Remuneration of directors and
key management personnel
Non-executive directors
Key management personnel
Maurie Stang
Richard England
David Fisher
Michael Kavanagh7
Executive directors
Ron Weinberger1
McGregor Grant2
Gerard Putt3
Michael Potas
Kirste Courtney4
Vincent Wang5
Jianhe Chen6
Total
Total
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
41
Short-term benefits
Long-term benefits
Share-based payments
Salary
and
fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Other
$
Superannuation
$
Long
service
leave
$
Options
and
rights(a)
$
Shares
$
Termination
payments
$
Performance
related
%
Total
$
90,000
90,000
60,000
60,000
60,000
58,915
55,450
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,100
16,200
5,400
10,800
5,400
5,510
4,991
-
–
–
–
–
–
–
–
–
–
–
879
2,993
–
–
–
–
310,000
32,901
42,886 3,100
16,470 14,193
125,877
303,065
29,550
29,034
–
16,441
16,286
31,161
284,801
29,751
251,577
–
229,577
24,227
191,500
–
180,000
18,591
152,385
16,296
151,875
16,928
141,623
17,118
151,875
16,928
121,803
15,493
–
–
–
–
–
–
–
–
–
–
527
356
231
231
–
–
–
–
–
40
16,470
16,662
16,470
16,450
–
–
–
–
173,075
237,113
79,424
94,782
15,956
7,252
23,386
14,958
11,723
9,274
15,174
14,929
15,174
25,136
–
–
–
–
26,127
19,273
18,245
26,226
1,573,578
139,326
42,886 3,858
119,605
21,445
447,013
1,370,868
78,457
29,034
627
137,086
28,009
420,822
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
28%
10%
11%
–
13%
–
17%
12%
19%
19%
17%
12%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
98,100
106,200
66,279
73,793
65,400
64,425
60,441
-
545,427
425,537
504,624
505,708
349,929
302,963
245,185
204,636
210,104
192,943
202,222
188,698
– 2,347,711
–
2,064,903
1 On 9 November 2012 Dr Weinberger was granted 1,220,000 options which vest on 31 August 2015, subject to vesting conditions.
2 Mr Grant joined the Company on 28 April 2011 as Chief Financial Officer and Company Secretary. As part of his employment contract, he was granted
1,000,000 options which vest in 4 tranches, subject to service conditions.
3 Mr Putt was granted, 400,000 options which vest in 4 tranches subject to service conditions, as part of his employment contract on his appointment on
27 April 2011.
4 Mrs Courtney is included as one of the five named Company or Group executives who received the highest remuneration in the current financial year.
5 Mr Wang is included as one of the five named Company or Group executives who received the highest remuneration in the current financial year.
6 Ms Chen was included as one of the five named Company or Group executives who received the highest remuneration in the previous financial year.
7 Mr Kavanagh was appointed non-executive director on 30 July 2012.
(a) The value disclosed above is the proportion of the fair value of the options and shares allocated to the financial year. The ability to exercise the options
and shares is subject to vesting conditions (i.e service conditions and/ or based on achievement of personal goals and specified performance criteria).
The estimated value of options for the current financial year is calculated at the date of the grant using the Black-Scholes model. Further details of the
options granted during the financial year are set out on pages 42 to 45 and the Share-based compensation note to the financial statements.
42
Remuneration report (continued)
6. Fair value of share-based compensation
6.1 Shares
The issue price for shares granted during the year is calculated as the 5-day weighted average market price of shares of the
Company on the Australian Securities Exchange as at close of trading on the date the shares were granted. The fair value
of shares granted during the year is taken to be the issue price. This amount is allocated to remuneration in the period the
shares are granted, unless the shares have a vesting condition, in which case this amount is allocated to remuneration
evenly over the vesting period and a share based payments reserve is created as part of shareholders’ equity.
6.2 Options
The fair value of options granted during the year is the value calculated at grant date using a Black-Scholes option pricing
model and allocated to each reporting period evenly over the period from grant date to vesting date. A share based
payments reserve is created as part of shareholders’ equity. The value disclosed is the portion of the fair value of the options
allocated to this reporting period. In valuing the options, market conditions have been taken into account in both the current
and prior periods. Comparative information is not restated as market conditions were already included in the valuation.
The value of options exercised during the year is calculated as the market price of shares of the Company on the Australian
Securities Exchange as at close of trading on the date the options were exercised after deducting the price paid to exercise
the options.
The value of options which lapsed during the year represents the benefit forgone and is calculated at the date the
option lapsed using a Black-Scholes model with no adjustments for whether the performance criteria have or have not
been achieved.
The following factors and assumptions were used in determining the fair value on grant date of options granted to directors,
key management personnel and five highest remunerated Company executives which were unexpired on 30 June 2013:
Option type
Grant date
Expiry date
Share price at
grant date
Exercise
price
Estimated
volatility
Risk free
interest rate
Value of
option
GSOP
ESOP
ESOP
ESOP
ESOP
ESOP
Jan-10
Aug-10
May-11
Nov-12
Nov-12
Apr-13
5-Jan-14
19-Jul-14
28-Apr-16
30-Sep-15
1-Oct-13
1-Apr-14
$0.62
$0.54
$0.80
$0.55
$0.55
$0.45
$0.55
$0.56
$0.85
$0.00
$0.00
$0.00
71.04%
74.87%
73.62%
45.46%
39.91%
35.35%
5.29%
4.77%
5.14%
2.58%
2.66%
2.83%
$0.30
$0.31
$0.50
$0.55
$0.55
$0.45
The following factors and assumptions were used in determining the fair value on grant date of options granted to directors,
key management personnel and five highest remunerated Company executives which were granted after 30 June 2013
and to the date of this report:
Option type
Grant date
Expiry date
Share price at
grant date
Exercise
price
Estimated
volatility
Risk free
interest rate
Value of
option
ESOP
Aug-13
30-Sept-15
$0.78
$0.00
45.49%
2.35%
$0.78
nanosonics limited | annual report 2013 43
7. Share-based compensation granted as remuneration
7.1 Shares granted
No shares were granted during the year as long-term incentive remuneration under the Company’s Deferred Employee
Share Plan (DESP) to each director, each of the key management personnel and each of the five highest remunerated
Company executives.
7.2 Options granted
The vesting profiles as at 30 June 2013 of options granted under the Company’s Employee Share Option Plan (ESOP) and
General Share Option Plan (GSOP) as long-term incentive remuneration to each director, each of the key management
personnel and each of the five highest remunerated Company executives are detailed below.
Directors
Richard
England
Ron
Weinberger
Option plan,
exercise price
Number
granted
Date
granted
Expiry
date
Number
vested
Number
exercised
GSOP@$0.55
50,000
Jan-10 05-Jan-14
50,000
ESOP@$0.00*
38,726
Apr-13 01-Apr-14
ESOP@$0.002 1,220,000 Nov-12 30-Sep-15
ESOP@$0.00*
29,881 Nov-12 01-Oct-13
–
–
–
–
–
–
–
ESOP@$0.00*
30,970
Apr-12 01-Apr-13
30,970
30,970
ESOP@$0.00*
20,689
Jan-12 01-Oct-12
20,689
20,689
ESOP@$0.556
200,000
Jul-10
19-Jul-14
132,000
–
ESOP@$0.75
175,000
Apr-07 17-May-11
175,000
175,000
ESOP@$0.20
1,000,000
Apr-07 17-May-11 1,000,000 1,000,000
Key management personnel
McGregor
Grant
ESOP@$0.00*
35,578
Apr-13 01-Apr-14
ESOP@$0.00*
26,478 Nov-12 01-Oct-13
–
–
Gerard
Putt
Michael
Potas
ESOP@$0.85
1,000,000 May-11 28-Apr-16
500,001
ESOP@$0.00*
29,357
Apr-13 01-Apr-14
ESOP@$0.00*
21,189 Nov-12 01-Oct-13
–
–
ESOP@$0.85
400,000 May-11 27-Apr-16
200,001
ESOP@$0.00*
22,486
Apr-13 01-Apr-14
ESOP@$0.00*
16,299 Nov-12 01-Oct-13
–
–
–
–
–
–
–
–
–
–
ESOP@$0.00*
15,544
Apr-12 01-Apr-13
15,544
15,544
ESOP@$0.00*
12,905
Jan-12 01-Oct-12
12,905
12,905
ESOP@$0.345
75,000
Jun-09 26-Jun-13
75,000
75,000
Number
lapsed/
forfeited
Number vesting in future
financial years1
2014
2015
2016
–
38,726
–
–
–
–
–
– 1,220,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29,881
–
–
68,000
–
–
35,578
26,478
–
–
–
–
–
–
–
–
– 333,333 166,666
–
–
29,357
21,189
–
–
– 133,333
66,666
22,486
16,299
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
ESOP@$0.75
175,000
Apr-07 17-May-11
175,000
– 175,000
44
Remuneration report (continued)
Option plan,
exercise price
Number
granted
Date
granted
Expiry
date
Number
vested
Number
exercised
Kirste
Courtney
ESOP@$0.00*
18,973
Apr-13 01-Apr-14
ESOP@$0.00*
16,299 Nov-12 01-Oct-13
–
–
–
–
ESOP@$0.00*
15,484
Apr-12 01-Apr-13
15,484
15,484
ESOP@$0.00*
14,379
Jan-12 01-Oct-12
14,379
14,379
ESOP@$0.556
100,000
Aug-10
19-Jul-14
67,000
–
ESOP@$0.345
75,000
Jun-09 26-Jun-13
75,000
75,000
ESOP@$0.30
45,000 Nov-08 19-Nov-12
45,000
45,000
Vincent
Wang
Jianhe
Chen3
ESOP@$0.00*
18,973
Apr-13 01-Apr-14
ESOP@$0.00*
16,299 Nov-12 01-Oct-13
–
–
–
–
ESOP@$0.00*
10,987
Apr-12 01-Apr-13
10,987
10,987
ESOP@$0.00*
17,143
Apr-13 01-Apr-14
ESOP@$0.00*
14,727 Nov-12 01-Oct-13
–
–
–
–
ESOP@$0.00*
12,409
Apr-12 01-Apr-13
12,409
12,409
ESOP@$0.00*
14,575
Jan-12 01-Oct-12
14,575
14,575
Number
lapsed/
forfeited
Number vesting in future
financial years1
2014
2015
2016
–
–
–
–
–
–
–
–
–
–
18,973
16,299
33,000
–
–
18,973
16,299
–
– 17,143
– 14,727
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
ESOP@$0.556
200,000
Jul-10
19-Jul-14
132,000
–
– 68,000
1 In terms of the rules of the DESP and ESOP, shares and options will vest only if the holder is an employee of the Group and/or if the performance condition
is met on the vesting date. All options expire on the fourth anniversary of the grant date or a year after the vesting date of the last tranche of options with the
exception of the zero-priced options issued under the option plans as short term incentives marked * which typically expire a month after the vesting date
within a year from the grant date.
* Zero-priced options issued as part of short term incentive.
2 These options are issued as long term incentive and vest on 31 August 2015 subject to performance conditions.
3 Ms Jianhe Chen was included as one of the five named Company or Group executives who received the highest remuneration in the previous financial year.
nanosonics limited | annual report 2013
45
8. Movements in share-based compensation
8.1 Shares
No shares were granted as incentive remuneration to each director of the Company, each of the other key management
personnel and each of the five highest remunerated Company executives named during the year (2012: Nil).
8.2 Options
Details of the movement during the reporting period, by value, of options granted as long-term incentive remuneration to
each director of the Company, each of the other key management personnel and each of the five highest remunerated
Company executives named are detailed below.
Value of options
Granted in year1
$
Exercised in year
$
Forfeited in year
$
Directors
Ron Weinberger
Key management personnel
McGregor Grant
Gerard Putt
Michael Potas
Kirste Courtney
Vincent Wang2
Jianhe Chen3
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2012
2011
704,861
51,659
30,573
–
24,865
–
19,083
15,412
17,502
16,237
17,502
14,782
–
27,794
–
–
–
–
–
26,769
–
35,833
–
5,603
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
62,000
38,565
115,935
1 The total value of options granted in the year is shown in the table above. This amount is assessed and allocated to remuneration over the vesting period
taking into account the probability of achievement of vesting conditions.
2 Mr Vincent Wang is included as one of the five named Company or Group executives who received the highest remuneration in the current year.
3 Ms Jianhe Chen was included as one of the five named Company or Group executives who received the highest remuneration in the previous financial year
but not in the current year.
46
Contents of the financial statements
For the year ended 30 June 2013
Auditor’s independence declaration
Financial statements
Notes to the financial statements
47
48
52
1. Corporate information ............................................................................................................................................. 52
2. Summary of significant accounting policies ............................................................................................................ 52
3. Financial risk management .................................................................................................................................... 65
4. Critical accounting estimates and judgements ........................................................................................................ 70
5. Segment information .............................................................................................................................................. 71
6. Other income ......................................................................................................................................................... 72
7. Loss before income tax expense ............................................................................................................................. 72
8. Taxation .................................................................................................................................................................. 73
9. Current assets – Cash and cash equivalents ........................................................................................................... 74
10. Current assets – Trade and other receivables .......................................................................................................... 74
11. Current assets – Inventories ................................................................................................................................... 75
12. Derivative financial instruments .............................................................................................................................. 75
13. Current assets – Other ............................................................................................................................................ 75
14. Parent company investments in controlled entities ................................................................................................. 75
15. Non-current assets – Property plant and equipment ............................................................................................... 76
16. Non-current assets – Intangible assets ................................................................................................................... 76
17. Non-current assets – Other .................................................................................................................................... 77
18. Current liabilities – Trade and other payables .......................................................................................................... 77
19. Current liabilities – Deferred revenue ...................................................................................................................... 77
20. Employee provisions ................................................................................................................................................ 77
21. Borrowings ............................................................................................................................................................. 78
22. Convertible notes ................................................................................................................................................... 78
23. Contributed equity .................................................................................................................................................. 79
24. Reserves ................................................................................................................................................................ 79
25. Dividends ............................................................................................................................................................... 80
26. Capital and leasing commitments ........................................................................................................................... 80
27. Auditor’s remuneration ........................................................................................................................................... 81
28. Related party disclosure ......................................................................................................................................... 81
29. Directors and key management personnel disclosures ........................................................................................... 82
30. Notes to the cash flow statements... ........................................................................................................................ 87
31. Loss per share ........................................................................................................................................................ 88
32. Share-based compensation .................................................................................................................................... 88
33. Parent entity information ........................................................................................................................................ 93
34. Events subsequent to reporting date ...................................................................................................................... 93
Directors’ declaration
Independent auditor’s report to the members
94
95
nanosonics limited | annual report 2013 Auditor’s independence declaration
47
48
Consolidated statement of profit or loss
and other comprehensive income
For the year ended 30 June 2013
Continuing operations
Sale of goods and services
Cost of sales
Gross profit
Other income
Government grants
Interest income
Total other income
Operating expenses
Staffing costs
Intellectual property
Quality & regulatory management
Business development
Premises, plant & equipment
External consultants & advisors
Other operating costs
Total operating expenses
Other expense
Borrowing costs
Operating loss before income tax
Income tax (expense)/benefit
Net loss after income tax expense attributable to owners of
the parent entity
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange difference on foreign currency translation
Income tax on items of other comprehensive income
Total items that may be reclassified subsequently to profit or
loss:
Total other comprehensive income
Total comprehensive income for the period attributable to
owners of the parent entity
(Loss) per share for losses attributable to ordinary
shareholders of the company:
Basic (loss) per share
Diluted (loss) per share
Notes
5
6
6
7
22
8
31
31
2013
$’000
14,899
(6,428)
8,471
1,498
1,192
2,690
9,177
459
247
988
1,567
1,861
2,080
16,379
517
(5,735)
(33)
2012
$’000
12,301
(4,799)
7,502
150
586
736
7,745
382
124
684
1,370
1,470
1,773
13,548
–
(5,310)
631
(5,768)
(4,679)
38
–
38
38
3
–
3
3
(5,730)
(4,676)
Cents
(2.2)
(2.2)
Cents
(2.0)
(2.0)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
nanosonics limited | annual report 2013 Consolidated statement of financial position
As at 30 June 2013
49
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Deferred revenue
Employees provisions
Borrowings
Total current liabilities
Non-current liabilities
Employees provisions
Borrowings
Convertible notes
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Option premium on convertible notes
Reserves
Accumulated loss
Total equity
Notes
9
10
11
12
13
15
16
17
18
12
19
20
21
20
21
22
23
22
24
2013
$’000
24,064
4,199
2,909
–
488
31,660
1,812
37
144
1,993
33,653
3,002
198
209
783
6
4,198
183
24
7,541
7,748
11,946
21,707
74,068
376
2,700
(55,437)
21,707
2012
$’000
29,310
3,030
2,398
31
205
34,974
1,468
77
141
1,686
36,660
2,374
–
91
989
6
3,460
143
30
7,024
7,197
10,657
26,003
73,532
376
1,764
(49,669)
26,003
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
50
Consolidated statement of changes in equity
For the year ended 30 June 2013
Option
premium on
convertible
notes
Note 22
$’000
–
–
–
–
–
381
(5)
–
Contributed
equity
Note 23
$’000
58,138
–
–
–
15,500
–
(188)
82
Share-
based
payments
reserve
Note 24
$’000
1,172
Foreign
currency
translation
reserve
Note 24
$’000
Accumulated
losses
Total equity
$’000
$’000
(14)
(44,990)
14,306
–
–
–
–
–
–
603
–
3
3
–
–
–
–
(4,679)
(4,679)
–
3
(4,679)
(4,676)
–
–
–
–
15,500
381
(193)
685
73,532
376
1,775
(11)
(49,669)
26,003
–
–
–
381
(48)
203
–
–
–
–
–
–
–
–
–
–
–
898
–
38
38
–
–
–
(5,768)
(5,768)
–
38
(5,768)
(5,730)
–
–
–
381
(48)
1,101
At 30 June 2011
Loss for the period
Other comprehensive income
Total comprehensive income (loss)
Transactions with owners in their capacity
as owners
Shares issued
Convertible notes issued
Transaction costs
Share-based payment
At 30 June 2012
Loss for the period
Other comprehensive income
Total comprehensive income (loss)
Transactions with owners in their capacity
as owners
Shares issued
Transaction costs
Share-based payment
At 30 June 2013
74,068
376
2,673
27
(55,437)
21,707
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
nanosonics limited | annual report 2013
Consolidated statement of cash flows
For the year ended 30 June 2013
51
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Receipts from government grants (inclusive of refundable
R&D tax offset)
Receipts from ATO for R&D tax concession
Payments to suppliers and employees (inclusive of GST)
Interest received
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Net cash used in investing activities
Cash flow from financing activities
Notes
6
30
Net proceeds from issue of shares and exercise of options
Net (repayments of) proceeds from borrowings
Net proceeds from issue of convertible notes
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of year
9
2013
$’000
14,025
1,498
–
(21,086)
1,096
(39)
(4,506)
(1,359)
(1,359)
536
(6)
–
530
(5,335)
29,310
89
24,064
2012
$’000
10,741
150
678
(17,166)
615
(47)
(5,029)
(844)
(844)
15,394
36
7,400
22,830
16,957
12,356
(3)
29,310
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
52
Notes to the financial statements
For the year ended 30 June 2013
1. Corporate information
The financial report on pages 48 to 93 covers Nanosonics Limited as a consolidated entity consisting of Nanosonics Limited
(the Company) and its subsidiaries (the Group).
Nanosonics Limited is a company, limited by shares, incorporated and domiciled in Australia.
A description of the nature of the Group’s operations and its principal activities is included in the Review of operations on
pages 10 to 13 and in the Directors’ report on page 24.
The financial report was authorised for issue in accordance with the resolution of the directors on 18 September 2013.
2. Summary of significant accounting policies
a. Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards, and other authoritative pronouncements of the Australian
Accounting Standards Board. The financial report has also been prepared on a historical cost basis and does not take into
account changes in money values, except for derivative financial instruments, which have been measured at fair value.
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class
Order, all financial information presented in Australian dollars has been rounded to the nearest one thousand dollars
($’000) unless otherwise stated.
b. Compliance with IFRS
The financial report of Nanosonics Limited also complies with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
c. New accounting standards and interpretations
1) Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous financial year except as follows:
The Group has adopted the following new and amended Australian Accounting Standards and AASB Interpretations
as of 1 July 2012:
• AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income,
effective 1 July 2012.
The adoption of the standards or interpretations is described below:
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income
This standard requires entities to group items presented in other comprehensive income on the basis of whether
they might be reclassified subsequently to profit or loss and those that will not. The adoption of the amendment is
reflected in the statement of profit or loss and other comprehensive income and did not have any impact on the
financial position or performance of the Group.
Improvements to AASBs
In May 2010, the AASB issued its third omnibus of amendments to its standards, primarily with a view to removing
inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption
nanosonics limited | annual report 2013 53
of the following amendments resulted in changes to accounting policies and disclosures, but no impact on the
financial position or performance of the Group.
• AASB 7 Financial Instruments – Disclosures: The amendment was intended to simplify the disclosures provided by
reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information
to put the quantitative information in context. The Group reflects the revised disclosure requirements in Note 3 to the
financial statements.
• AASB 101 Presentation of Financial Statements: The amendment clarifies that an entity may present an analysis of
each component of other comprehensive income maybe either in the statement of changes in equity or in the notes to
the financial statements. The Group provides this analysis in the Statement of Changes in Equity.
• AASB 127 Consolidated and Separate Financial statements; and
• AASB 134 Interim Financial Statements.
Other amendments resulting from Improvements to AASBs did not have any impact on the accounting policies,
financial position or performance of the Group.
2) Accounting Standards and Interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective
and have not been adopted by the Group for the annual reporting period ended 30 June 2013, are outlined below:
Standards to be applied by the Group effective 1 July 2013:
• AASB 10 Consolidated Financial Statements, effective 1 January 2013. AASB 10 establishes a new control model
that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with
the accounting for consolidated financial statements and UIG-112 Consolidation – Special Purpose Entities. The new
control model broadens the situations when an entity is considered to be controlled by another entity and includes new
guidance for applying the model to specific situations, including when acting as a manager may give control, the impact
of potential voting rights and when holding less than a majority voting rights may give control.
Consequential amendments were also made to other standards via AASB 2011-7
• AASB 11 Joint Arrangements, effective 1 January 2013
• AASB 12 Disclosure of Interests in Other Entities, effective 1 January 2013
• AASB 13 Fair Value Measurement, effective 1 January 2013. AASB 13 establishes a single source of guidance for
determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value,
but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of
this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the
disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions
made and the qualitative impact of those assumptions on the fair value determined. Consequential amendments were
also made to other standards via AASB 2011-8.
• AASB 119 Employee Benefits, effective 1 January 2013. The revised standard changes the definition of short-term
employee benefits. The distinction between short-term and other long-term employee benefits is now based on whether
the benefits are expected to be settled wholly within 12 months after the reporting date. Consequential amendments
54
were also made to other standards via AASB 2011-10. The adoption of this standard by the Group will affect the current
and noncurrent classification of provision for employee benefits.
• Annual Improvements to IFRSs 2009–2011 Cycle, effective 1 January 2013. This standard sets out amendments to
International Financial Reporting Standards (IFRSs) and the related bases for conclusions and guidance made during
the International Accounting Standards Board’s Annual Improvements process. These amendments have been adopted
by the AASB for AASB 1, AASB 101, AASB 116, AASB 132 and AASB 134 via by ASB 2012-5 effective 1 January 2013.
• AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirements, effective 1 January 2013. This Amendment deletes from AASB 124 individual key
management personnel disclosure requirements for disclosing entities that are not companies.
• AASB 1053 Application of Tiers of Australian Accounting Standards, effective 1 July 2013. This Standard establishes a
differential financial reporting framework consisting of two Tiers of reporting requirements for preparing general purpose
financial statements. Consequential amendments to other standards to implement the regime were introduced by AASB
2010-2, 2011-2, 2011-6, 2011-11 and – 1.
• AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments,
effective 1 January 2013. The transition guidance amendments to AASB 10 ‘Consolidated Financial Statements’ and
related Standards and interpretations clarify the circumstances in which adjustments to an entity’s previous accounting
for its involvement with other entities are required and the timing of such adjustments.
Standards to be applied by the Group beyond 1 July 2013:
• AASB 9 Financial Instruments, effective 1 January 2013. AASB 9 includes requirements for the classification and
measurement of financial assets. It was further amended by AASB 2010-7 and AASB 2012-6 to reflect amendments to
the accounting for financial liabilities and to defer the mandatory effective date to annual periods beginning on or after 1
January 2015. These requirements improve and simplify the approach for classification and measurement of financial
assets compared with the requirements of AASB 139.
Unless otherwise stated above, the future adoption of the above standards is not expected to have a significant
effect on the way the Group accounts for and presents its financial results.
d. Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Nanosonics Limited
(‘Company’ or ‘parent entity’) as at 30 June each year and the results of all subsidiaries for the year then ended. Nanosonics
Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the
financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of
more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group controls another entity.
A list of controlled entities is contained in note 14 to the financial statements.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies. In prior years, for the subsidiary with non-coterminous year end, management accounts
for the relevant period to the Group’s reporting date have been consolidated. In the opinion of the directors, the expense of
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 55
providing additional coterminous statutory accounts, together with consequential delay in producing the Group’s financial
statements would outweigh any benefit to shareholders. Effective 1 July 2012, all subsidiaries have the same reporting
period as the parent company.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated
from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. In preparing the
consolidated financial statements, all inter-company balances and transactions between entities in the Group, including any
unrealised profits or losses, have been eliminated in full.
Investments in subsidiaries are accounted for at cost in the separate financial statements of Nanosonics Limited less any
impairment charge.
e. Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Managing Director and
CEO, who is the Group’s chief operating decision maker. The chief operating decision maker is responsible for allocating
resources and assessing performance of the operating segments.
f. Foreign currency
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Australian dollars, which is Nanosonics Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement, except when they are deferred in equity as qualifying cash flow hedges and qualifying net
investment hedges or are attributable to part of the net investment in a foreign operation.
Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation
differences on non-monetary financial assets and liabilities are recognised in profit or loss as part of the fair value gain or loss.
(iii) Group companies
The functional currency of the overseas subsidiaries is as follows:
• Nanosonics Europe GMBH is Euro; and
• Nanosonics Inc. is US dollars.
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
•
income and expenses for each income statement are translated at average exchange rates (unless this is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions), and
• all resulting exchange differences are recognised in other comprehensive income – foreign currency translation reserve.
56
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive
income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate
share of such exchange differences is reclassified to profit or loss, as part of the gain or loss on sale where applicable.
g. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances, rebates and amounts collected on behalf of third parties.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic
benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below.
The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been
resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of
transaction and the specifics of each arrangement.
Revenue is recognised for the major business activities as follows:
(i) Sale of goods
Revenue is recognised when the significant risks and rewards of ownership have been transferred to the distributor or end
customer. Sales are recorded based on the prices specified in the sales contracts net of any discounts and returns at the
time of sale. No element of financing is deemed to be present as the sales are made with credit terms which are consistent
with practices in each market.
(ii) Sale of services
Revenue from trophon® EPR maintenance and repairs are recognised as services are rendered. Revenue from service
contracts are recognised as services are rendered over the service period, typically over one year. Unearned service
revenue is deferred and recognised as liability in the Statement of Financial Position.
(iii) Interest income
Interest income is recognised on a time proportion basis using the effective interest method.
h. Government grants
Grants from government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Group will comply with the attached conditions.
i. Income tax and other taxes
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on
the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be
paid to the tax authorities.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 57
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income
tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business
combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance date and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses and on the assumption that
no adverse change will occur in income tax legislation enabling the benefit to be realised and comply with the conditions of
deductibility imposed by the law.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where
the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle
the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Tax consolidation
Nanosonics Limited and its wholly-owned Australian controlled entity are part of a tax consolidated group.
The head entity, Nanosonics Limited, and the controlled entity in the tax consolidated group account for their own current
and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be
a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts, Nanosonics Limited also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities
in the tax consolidated group.
Goods and services tax (GST), Value added tax (VAT)
Revenues, expenses and assets are recognised net of the amount of associated GST or VAT as applicable, unless the GST/
VAT incurred is not recoverable from the taxation authority, in which case, the GST/VAT is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST/VAT receivable or payable. The net amount of GST/
VAT recoverable from, or payable to, the taxation authority is included with other current receivables or payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST/VAT components of cash flows arising from investing or financing
activities which are recoverable from, or payable to, the taxation authority are presented as operating cash flows.
j. Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement
at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.
58
Group as a lessee
Finance leases that transfer to the Group substantially all the risks and benefits incidental to ownership of the leased
item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the
present value of the minimum lease payments. Lease payments are apportioned between finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are recognised in finance costs in the statement of profit or loss.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the
Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated
useful life of the asset and the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as
lessee are classified as operating leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
Group as a lessor
Leases in which the Group does not transfer all the risks and benefits of ownership of an asset are classified as
operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount
of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are
recognised as revenue in the period in which they are earned.
k. Borrowing costs
Borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity
incurs in connection with the borrowing of funds.
l. Cash and cash equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call
with financial institutions, other short-term, highly liquid investments presented at market value that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
m. Trade receivables
Trade receivables, which generally have 30 to 60 day credit terms, are recognised at fair value less provision for
impairment. The collectability of trade receivables is reviewed on an on-going basis. Debts which are known to be
uncollectible are written off by reducing the carrying amount directly. A provision for impairment of trade receivables
account is used when there is objective evidence that the Group will not be able to collect all amounts due according to
the original terms of the receivables. The amount of the impairment loss is recognised in the income statement with other
expenses. When a trade receivable for which an impairment allowance has been recognised becomes uncollectible in a
subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off
are credited against other expenses in the statement of profit or loss.
n. Inventories
Raw materials, starting components, consumable stores, work in progress and finished goods are stated at the lower of cost
and net realisable value.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 59
Costs of purchased inventory are determined to be actual costs on a batch basis, after including import duties, taxes
(other than those subsequently recoverable by the entity), transport, handling and other costs directly attributable to the
acquisition of the inventory, and after deducting rebates and discounts.
Costs of work in progress and finished goods comprise purchased materials at cost, direct labour and an appropriate
proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
o. Investments and other financial assets
Classification
Financial assets within the scope of AASB 139 are classified as financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments
in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition.
The Group’s financial assets include cash and short-term deposits, trade and other receivables, and derivative
financial instruments.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities
that the Group’s management has the positive intention and ability to hold to maturity. All of the Group’s cash term
investments are captured in this category. Cash term investments, which are highly liquid irrespective of their maturity
dates, are classified as current assets, as they may not necessarily be held for their full term.
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for those with maturities greater than 12 months after the reporting
period which are classified as non-current assets. Receivables are disclosed in trade and other receivables (note 10) in the
Statement of Financial Position.
Derivative financial instruments are classified as held for trading unless they are designated as effective hedging instruments.
Recognition and derecognition
All financial assets are recognised initially at fair value plus transaction costs, except in the case of financial assets recorded
at fair value through profit or loss.
Regular purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to
purchase or sell the asset. Financial assets carried at fair value through profit or loss are initially recognised at fair value
and transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and
rewards of ownership.
Subsequent measurement
Receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
At each balance date the Group assesses whether there is objective evidence that a financial asset is impaired. If any such
evidence exists, the cumulative loss, measured as the difference between the acquisition cost and the current fair value
less any impairment loss previously recognised in profit or loss, is recognised in the income statement.
Investments in controlled entities are carried in the Company’s financial statements at the lower of cost and recoverable amount.
60
p. Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments, i.e. forward currency contracts, to hedge its foreign currency risks. Such
derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into
and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and
as financial liabilities when the fair value is negative.
The fair values of forward currency contracts are calculated by reference to current forward exchange rates for contracts
with similar maturity profiles.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to the income statement, except
for the effective portion of cash flow hedges, which is recognised in other comprehensive income.
For the purposes of hedge accounting, hedges are classified as:
•
fair value hedges, when they hedge the exposure to changes in the fair value of a recognised asset or liability; or
• cash flow hedges, when they hedge the exposure to variability in cash flows that is attributable either to a particular risk
associated with a recognised asset or liability or to a forecast transaction.
Hedges that meet the strict criteria for hedge accounting are accounted as follows:
•
for cash flow hedges, the effective portion of the gain or loss on the hedging instrument is recognised directly in equity,
while the ineffective portion is recognised in profit or loss.
• For fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to the risk
being hedged and the derivative is remeasured to fair value. Gains and losses from both are taken to profit or loss.
q. Convertible notes
Convertible notes are separated into liability and equity components based on the terms of the contract.
On issuance of the convertible note, the fair value of the liability component is determined using a market rate for an
equivalent non-convertible note. This amount is classified as a financial liability measured at amortised cost (net of
transaction costs) until it is extinguished on conversion or redemption.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity. Transaction
costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not
remeasured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the convertible note based on the
allocation of proceeds to the liability and equity components when the instruments are initially recognised.
r. Property, plant and equipment
All property, plant and equipment is stated at historical cost less depreciation and/or accumulated impairment
losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of any component accounted for as a separate assets is
derecognised when it is replaced. All other repairs and maintenance are charged to the income statement during
the reporting period in which they are incurred. Production tooling used to manufacture component parts qualifies
as property, plant and equipment when the Company expects to use it during more than one period.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
the statement of profit or loss.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 61
All assets have limited useful lives and are depreciated using the straight line method over their estimated useful
lives, or in the case of leasehold improvements, over the estimated useful life or lease term, whichever is shorter,
taking into account residual values. The assets’ residual values, useful lives and depreciation methods are reviewed
prospectively and adjusted if appropriate at least annually. Depreciation is expensed. The depreciation rates or
useful lives used for each class of assets are as follows:
Depreciation of property, plant and equipment
Laboratory fit-out
Laboratory and manufacturing equipment
Office furniture and equipment
Computer equipment and software
Leasehold improvements
Service and demonstration equipment
s. Intangible assets
(i) Research and development
2013
6 years
5 years
7 years
3 years
Lease term
2-3 years
2012
6 years
5 years
7 years
3 years
Lease term
2-3 years
Research and development expenditure is expensed as incurred except that costs incurred on development projects,
relating to the design and testing of new or improved products, are recognised as intangible assets when it is probable
that the project will, after considering its commercial and technical feasibility, be completed and generate future economic
benefits and its costs can be measured reliably. The expenditure capitalised comprises directly attributable costs, including
costs of materials and services. Other development expenditures that do not meet these criteria are recognised as an expense
as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Capitalised development expenditure which has a finite life is recorded as an intangible asset from the point at which the
asset is ready for use and amortised on a straight-line basis over the period during which the related benefits are expected
to be realised.
(ii) Patents and Trademarks
The costs of registering and protecting patents and trademarks are expensed as incurred.
t. Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. Intangible assets
are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value
in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-
generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of
the impairment at each reporting date.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit
or loss in expense categories consistent with the function of the impaired asset.
62
u. Trade and other payables
Trade and other payables are carried at amortised cost. These amounts represent liabilities for goods and services provided
to the Group prior to the end of financial year which are unpaid and arise when the Group becomes obliged to make future
payment in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within
60 days of recognition.
v. Provisions
Provisions for legal claims, service warranties and other obligations are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the
obligation and the amount has been reasonably estimated. Provisions are not recognised for future operating losses.
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. The discount rate used is to determine the present value reflects current market
assessments of the time value of money and the risks specific to the liability. An increase in the provision due to the
passage of time is recognised as interest expense.
Provision for warranties
Provision is made in respect of the Group’s estimated liability on all products under warranty at balance date. The provision
is measured at current values estimated to be required to settle the warranty obligation. The initial estimate of warranty-
related costs is revised annually. The provision is included in Current liabilities – trade and other payables in the Statement
of Financial Position.
w. Employee benefits
Wages, salaries and annual leave and sick leave
Liabilities for employee benefits, including wages, salaries and non-monetary benefits, and accumulating annual and other
leave, represent present obligations resulting from employees’ services provided to reporting date. Employee benefits have
been measured at the amounts expected to be paid when the liability is settled and are recognised in the provision for
employee benefits. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at
the rates paid or payable.
Long service leave
The liability for long-service leave is recognised in the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration
is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the reporting date on national government bonds with terms to
maturity that match as closely as possible, the estimated future cash outflows.
Bonuses
The Group recognises a liability and an expense for bonuses. The Group recognises a provision where contractually obliged
and where there is a past practice that has created a constructive obligation.
Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement or end of employment
contract date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises
termination benefits when it is demonstrably committed to either terminating the employment of current employees
according to a formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to
encourage voluntary redundancy.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 63
Share-based compensation
Share-based compensation benefits are provided to employees via the Nanosonics share-based compensation plans.
Information relating to the plans is set out in the Remuneration report on page 39 and in note 32 to the financial statements.
Share option plans
The assessed fair value on the date options are granted is independently determined using a Black-Scholes option pricing
model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant
date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for
the term of the option. In valuing options, market conditions are taken into account in both the current and prior periods.
Comparative information is not restated as market conditions were already included in the original valuation.
General Share Option Plan (GSOP)
The assessed fair values of options granted under the GSOP are expensed in full in the month in which they are granted
with a corresponding increase in a share based payments reserve as part of shareholders’ equity, except where the options
are granted as part of a capital raising programme, in which case no cost is recognised.
Employee Share Option Plan (ESOP)
The fair value of options granted under ESOP is recognised as an employee benefit expense with a corresponding increase
in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised
for share-based payment transactions at each reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income
statement expense or credit for a period represents the movement in cumulative expense recognised as the beginning and
end of that period.
No expense is recognised for options that do not ultimately vest, except for option transaction for which vesting is
conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market
or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The value of ESOP options exercised is calculated as the market price of shares of the Company on the Australian
Securities Exchange as at close of trading on the date the options are exercised after deducting the price paid to exercise
the options. The value so derived is transferred within shareholders’ equity, from the share based payments reserve to
accumulated profits/(losses).
The value of ESOP options which lapse represents the benefit forgone and is calculated at the date the option lapsed
using a Black-Scholes model with no adjustments for whether the performance criteria have or have not been achieved.
The value so derived is transferred within shareholders’ equity, from the share based payments reserve to accumulated
profits/(losses).
Deferred Employee Share Plan (DESP)
The issue price of DESP shares granted during the year is calculated as the 5-day weighted average market price of shares
of the Company on the Australian Securities Exchange as at close of trading on the date the shares are granted. The fair
value of DESP shares granted is taken to be the issue price.
The assessed fair values of DESP shares are expensed in full in the month in which they are granted with a corresponding
increase in equity, except if they are granted with a vesting condition, in which case the fair value of DESP shares granted is
apportioned on a straight line monthly basis over the period between grant date and the date on which the shares all vest.
At the end of a period the Company assesses the probability of achievement of a benefit, being the percentage probability
that employees will achieve at least the fair value of the unvested shares. The value of DESP shares with vesting conditions
64
expensed in any period is calculated as that portion of the fair value applicable to the period factored by the probability of
achievement and a share based payments reserve is created as part of shareholders’ equity.
x. Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
y. Earnings per share
(i) Basic earnings per share
Basic earnings per share (“EPS”) is calculated by dividing the net profit or loss attributable to equity holders of the
Company for the reporting period, by the weighted average number of ordinary shares of the Company outstanding during
the financial year.
(ii) Diluted earnings per share
Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after income tax
effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential
ordinary shares.
z. Rounding of amounts
The Company is of a kind referred to in Class order 98/100, issued by the Australian Securities and Investments
Commission, relating to the ‘’rounding off’’ of amounts in the financial report. Amounts in the financial report have been
rounded off in accordance with that Class Order to the nearest thousand dollars.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 65
3. Financial risk management
The Group is exposed to financial risks, predominantly interest rate risk, foreign currency risk and credit risk and it has a
financial risk management program which seeks to minimise potential adverse effects on financial performance. The Board
provides written principles for investment of the Group’s cash reserves, so as to ensure operational liquidity whilst optimising
interest earnings from a mix of instruments with one or more of Australia’s four main banks.
The Group held the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total financial assets
Financial liabilities
Trade and other payables
Derivative financial instruments
Convertible notes
Borrowings
Total financial liabilities
2013
$’000
24,064
4,199
–
28,263
2013
$’000
2,553
198
7,541
30
10,322
2012
$’000
29,310
3,030
31
32,371
2012
$’000
2,006
–
7,024
36
9,066
a. Interest rate risk exposures
Interest rate risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group’s exposure to interest rate risk is noted below:
2013
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total financial assets
Weighted average interest rate
Financial liabilities
Trade and other payables
Derivative financial instruments
Convertible notes
Borrowings
Total financial liabilities
Weighted average interest rate
Fixed interest rate maturing in:
Floating
interest
rate
Notes
1 year or
less
Over 1 to
5 years
More than
5 years
Non-
interest
bearing
Total
9
10
12
18
12
22
21
5,477
18,587
–
–
–
–
5,477
18,587
3.34%
4.20%
–
–
–
–
–
–
–
7,541
–
–
–
6
24
6
7,565
8.06%
6.01%
–
–
–
–
–
–
–
–
24,064
– 4,199
4,199
–
–
–
–
–
–
–
–
–
–
–
4,199
28,263
–
–
2,553
2,553
198
–
–
198
7,541
30
2,751
10,322
–
–
Net financial assets (liabilities) 2013
5,477
18,581
(7,565)
–
1,448
17,941
66
2012
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total financial assets
Weighted average interest rate
Financial liabilities
Trade and other payables
Convertible notes
Borrowings
Total financial liabilities
Weighted average interest rate
Fixed interest rate maturing in:
Floating
interest
rate
Notes
1 year or
less
Over 1 to
5 years
More than
5 years
Non-
interest
bearing
Total
9
10
12
18
22
21
3,153
26,157
–
–
–
–
3,153
26,157
2.72%
5.46%
–
–
–
–
–
–
7,024
30
–
–
6
–
–
–
–
–
6
7,054
8.09%
6.01%
–
–
–
–
–
–
–
–
–
–
–
–
29,310
3,030
3,030
31
31
3,061
32,371
–
–
2,006
–
–
2,006
7,024
36
2,006
9,066
–
–
1,055
23,305
Net financial assets (liabilities) 2012
3,153
26,151
(7,054)
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonable possible change in interest rates, with all other variables
held constant:
2013
2012
Increase /decrease
in basis points
Effect on profit before tax and
other comprehensive income
$’000
+ 75
– 100
+ 75
– 100
200
(266)
151
(201)
b. Foreign currency risk exposures
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily
to the Group’s operating activities (when revenue or expense is denominated in different currency from the Group’s
functional currency) and the Group’s net investments in foreign subsidiaries. The Group enters into foreign currency
forward contracts to mitigate its foreign currency risk on its trade receivables.
The Group’s exposure to foreign currency risk at the reporting date comprised:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
2013
2012
Euro
€’000
22
16
(27)
11
USD
$’000
695
3,503
(174)
4,024
Euro
€’000
59
86
(59)
86
USD
$’000
769
2,021
111
2,901
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 67
Foreign currency sensitivity
The following table demonstrates the sensitivity to a reasonable possible change in the US dollar and Euro against the
Australian dollar, with all other variables held constant:
Effect on profit
before tax and other
comprehensive income
$’000
121
(282)
80
(188)
Effect on profit
before tax and other
comprehensive income
€’000
0
(1)
3
(8)
Change in EUR rate
4%
– 9%
4%
– 9%
Change in USD rate
3%
– 7%
3%
– 7%
2013
2012
c. Operational risk
Operational risk is the risk of direct and indirect loss arising from a wide variety of causes associated with company
processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks
such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour.
Operational risks arise from all of the Company’s operations.
An objective of the Company is to manage operational risk so as to balance the avoidance of financial losses and damage to
the Company’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of control to address operational risk is assigned to the
Audit and Financial Risk Management Committee. This responsibility is supported by the development of standards for the
management of operational risk in the following areas:
•
•
requirements for appropriate segregation of duties, including the independent authorisation of transactions;
requirements for the reconciliation and monitoring of transactions;
• compliance with regulatory and other legal requirements;
• documentation of controls and procedures;
•
requirements for the periodic assessment of operational risks faced, and the adequacy of controls and
procedures to address the risks identified;
• development of contingency plans;
•
training and professional development;
• ethical and business standards; and
•
risk mitigation, including insurance where this is effective.
68
d. Credit risk
Credit risk arises from holdings in cash and cash equivalents, trade receivables, and derivative financial instruments.
The Group invests only in deposits and floating rate notes offered by Australia’s four main banks.
The Company has limited number of customers which are appointed distributors for specific markets. The Company,
by policy, performs customer credit assessment prior to entering into a distribution agreement and routinely assesses the
financial strength of its customers and reviews distribution agreements. As a result, the Company believes that its accounts
receivable credit risk exposure is mitigated and has not experienced significant write-downs in its accounts receivable
balances. As of 30 June 2013, GE Healthcare and Regional Healthcare, combined, accounts for over 99% of the trade
receivables (2012: GE Healthcare and Regional Healthcare, combined, accounts for over 99% of the trade receivables).
The credit risk arising from derivative financial instruments is not significant.
The maximum exposure to credit risk as at the reporting date is the carrying amount of the financial assets as set out above.
The carrying amount is determined according to the Group’s accounting policies.
e. Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities. Surplus funds are invested in short and medium term instruments which are
tradeable in highly liquid markets.
Maturity profile
Following is the contractual maturity profiles of undiscounted cash flows from financial liabilities:
On demand
Less than
3 months
3 to 12
months
1 to 5 years
Over 5 years
Total
2013
Trade and other payables
Borrowings
Derivative financial instruments
Convertible notes
Total financial liabilities
2012
Trade and other payables
Borrowings
Convertible notes
Total financial liabilities
–
–
–
–
–
–
–
–
–
2,553
2
198
–
2,753
2,006
2
–
2,008
–
6
–
–
6
–
6
–
6
–
28
–
9,300
9,328
–
36
9,300
9,336
–
–
–
–
–
–
–
–
–
2,553
36
198
9,300
12,087
2,006
44
9,300
11,350
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 Fair values
Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments that are
carried in the financial statements:
69
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial liabilities
Trade and other payables
Derivative financial instruments
Convertible notes
Borrowings
24,064
4,199
–
28,263
(2,553)
(198)
(7,541)
(30)
(10,322)
Carrying amount
2013
2012
2013
29,310
3,030
31
32,371
24,064
4,199
–
28,263
Fair value
2012
29,310
3,030
31
32,371
(2,006)
(2,553)
(2,006)
–
(7,024)
(36)
(9,066)
(198)
(7,541)
(30)
(10,322)
–
(7,024)
(36)
(9,066)
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and
assumptions were used to estimate the fair values:
• Cash and cash equivalents, trade and other receivables, trade and other payables approximate their carrying amounts
largely due to the short term maturities of these instruments.
• The Group enters into derivative financial instruments with various counterparties principally with Australia’s four
major banks. Derivatives valued using valuation techniques with market observable inputs are mainly foreign exchange
forward contracts. The most frequently applied valuation techniques include forward pricing models, using present
value calculations. The models incorporate various inputs including the foreign exchange spot and forward rates and
credit quality of counterparties.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
• Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable,
either directly or indirectly.
• Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on
observable market data.
70
As at 30 June 2013, the Group held the following derivative financial instruments carried at fair value in the Statement of
Financial Position:
Foreign exchange forward contracts
30 June 2013
Foreign exchange forward contracts
30 June 2012
$’000
(198)
31
Level 1
$’000
–
–
Level 2
$’000
(198)
31
Level 3
$’000
–
–
4. Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates
and requires management to exercise judgment in the process of applying the Group’s accounting policies. Estimates and
associated assumptions and judgments affect the recognised amounts of assets, liabilities, revenues and expenses and the
disclosure of contingent liabilities and are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of
certain assets and liabilities are:
Provision for warranty
The Group has recognised a provision in accordance with the accounting policy describe in note 2. The Group has made
assumptions in relation to the values estimated to be required to settle the warranty obligation on all products under
warranty at balance date.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. Estimating the fair value for share based payment transactions requires
determining the most appropriate valuation model, which is depended on the terms and conditions of the grant. This
estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the
share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for
estimating fair value for share based-payment transactions are disclosed in note 32.
Recognition of deferred tax assets
Deferred tax assets are only recognised for unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant management judgement is required to determine the amount
of deferred tax asset that can be recognised, based upon the likely timing and level of future taxable profits together with
future tax planning strategies. Details of the unrecognised deferred tax assets on unused tax losses are disclosed in note 8.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 71
5. Segment information
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Managing
Director and CEO (the chief operating decision maker) in assessing performance and in determining the allocation of
resources. The Group operates in a single operating segment, being the healthcare equipment segment.
Types of products and services
The principal products and services of the healthcare equipment segment are the manufacture and commercialisation of
infection control and decontamination products and related technologies.
Major customers
The Group has a number of customers to which it provides products and services. The most significant customer accounts for
88% (2012: 83%) of external revenue. The next most significant customer accounts for 7% of external revenue (2012: 9.5%).
Geographical information
Geographically, the Group operates in the global markets. Australia is the home country of the parent entity. Operations in
Europe commenced in August 2007 and in North America in March 2011.
Revenue from external customers by geographical location is detailed below:
Segment revenue
North America
Australia and New Zealand
Europe and other countries
Total revenue
The analysis of the location of non-current assets is as follows:
Segment assets
North America
Australia and New Zealand
Europe and other countries
Total assets
2013
$’000
13,165
1,497
237
14,899
2012
$’000
10,236
1,651
414
12,301
2013
$’000
2012
$’000
17
2
1,962
1,676
14
8
1,993
1,686
Non-current assets for this purpose consist of property, plant and equipment, intangible assets and other non-current assets.
Segment information is prepared in conformity with the accounting policies of the Group as set out in note 2 and
Accounting Standard AASB 8 Operating Segments.
Segment revenues are allocated based on the country in which the customer is located. Segment assets and capital
expenditure are allocated based on where the assets are located.
72
6. Other income
Government grants
Interest income
Total
Government grants comprise:
2013
$’000
1,498
1,192
2,690
2012
$’000
150
586
736
a. payments under the Export Market Development Grant scheme and assistance with an overseas trade show.
b. 45% research and development refundable tax offset received during the year.
There were no unfulfilled conditions or other contingencies attaching to these grants. The Group did not benefit directly from any
other form of governmental assistance.
7. Loss before income tax expense
The loss from ordinary activities before income tax includes:
2013
$’000
2012
$’000
Expenses
Staffing costs broken into:
Salaries and wages
Superannuation contribution
Workers compensation costs
Other employee benefits
Share-based payments
Less: Staffing costs included in cost of sales
Total staffing costs
Depreciation and amortisation
Research and development costs
Rental expenses relating to operating leases
Bad debts provision (reversal)
Inventories provision / write off
Unrealised loss (gain) on foreign exchange forward contracts
Realised loss (gain) on foreign exchange forward contracts
7,859
673
112
2,302
898
(2,667)
9,177
1,044
3,167
537
(1)
197
198
40
6,445
648
64
1,495
603
(1,510)
7,745
914
3,135
472
(60)
294
(31)
(16)
In accordance with AASB 138 Intangible Assets, the Company capitalises certain development costs as an intangible asset
subject to amortisation – refer to note 16. No development costs were capitalised during the year (2012: NIL).
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 8. Taxation
(a) Income tax expense
Operating loss from ordinary activities
The prima facie income tax benefit applicable to the operating loss is calculated at
30% (2012:30%)
Non-assessable income
Research and development tax offset received during the year
Non-deductible items:
Research and development expense
Equity-based benefits
Entertainment
Other temporary differences
Deferred tax benefit not recognised
Research and development tax concession received relating to previous year
Adjustment in respect of current income tax of previous years
Income tax benefit reported on the Consolidated Statement of profit or loss and
other Comprehensive Income
73
2012
$’000
5,311
1,593
–
(941)
(181)
(12)
(21)
438
(454)
678
(31)
631
2013
$’000
5,735
1,721
404
(950)
(157)
(13)
10
1,015
(1,048)
–
–
(33)
(b) Deferred tax assets
The potential deferred tax assets in a controlled entity, which is a company, arising from tax losses and timing differences
are only recognised when it is probable that future taxable amounts will be available to utilise those tax losses and temporary
differences. Estimated tax losses carried forward are:
Estimated tax losses carried forward at the end of the year
Beginning of the year unrecognised tax losses carried forward
Adjustment in respect of unrecognised tax losses carried forward from previous year
Tax losses for the year
2013
$’000
53,856
50,201
273
3,382
53,856
2012
$’000
50,201
51,495
(2,755)
1,461
50,201
The potential future income tax benefit of 30% of tax losses carried forward will only be obtained if:
(i) the Company and the Group derive future assessable income of a nature and an amount sufficient to enable the benefit
to be realised
(ii) the Company and the Group continue to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the Company and the Group is realising the benefit.
74
9. Current assets – Cash and cash equivalents
Cash at bank and on hand
Deposits on call
Short term deposits
2013
$’000
972
1,005
22,087
24,064
2012
$’000
952
2,201
26,157
29,310
Cash term investments which are highly liquid irrespective of their maturity dates are classified as current assets at
market value as they may not necessarily be held by the Company for their full term.
The Group’s exposure to interest rate risk is discussed in note 3. The maximum exposure to credit risk at the reporting
date is the carrying amount of each class of cash and cash equivalents mentioned above.
10. Current assets – Trade and other receivables
Trade receivables net of allowance for impairment loss
GST receivable
VAT receivable
Interest and other receivables
As at 30 June 2013, the aging analysis of trade receivables is as follows:
2013
$’000
3,972
91
18
118
2012
$’000
2,717
302
5
6
4,199
3,030
Total
$’000
3,972
2,717
Neither past due
nor impaired
$’000
3,964
2,079
Past due but not impaired
<30 days
$’000
30-60 days
$’000
>60 days
$’000
2
170
1
465
5
3
2013
2012
Information about the Group’s exposure to foreign currency risk in relation to trade and other receivables is provided in note 3.
Due to the short-term nature of the receivables, their carrying amount is assumed to approximate their fair value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above.
Collateral is not held as security, nor is it the Group’s policy to transfer (on-sell) receivables to special purpose entities.
As at 30 June 2013, trade receivables with a nominal value of Nil (2012: $1,000) were considered impaired.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 11. Current assets – Inventories
Raw materials and stores – at cost
Work in progress – at cost
Finished goods – at net realisable value
75
2013
$’000
1,854
673
382
2,909
2012
$’000
1,508
96
794
2,398
Write-downs of inventories to net realisable values during the year ended 30 June 2013 amounted to $197,000 (2012: $293,000).
The expense has been included in other operating costs in the income statement.
Roll forward of provision for inventories:
Beginning balance
Provided during this year
Utilised during this year
Ending balance
12. Derivative financial instruments
Current assets
Foreign exchange forward contracts
Current liabilities
Foreign exchange forward contracts
13. Current assets – Other
Prepaid expenses
Prepaid foreign income tax
Service work in progress
2013
$’000
485
197
(535)
147
2013
$’000
–
–
(198)
(198)
2013
$’000
475
10
3
488
14. Parent company investments in controlled entities
Equity holding %
Name of controlled entity
Nanosonics Europe GmbH
Saban Ventures Pty Limited
Nanosonics Inc.
Country of
incorporation
Class of shares
Germany
Australia
USA
Ordinary
Ordinary
Ordinary
2013
100%
100%
100%
2012
$’000
756
293
(564)
485
2012
$’000
31
31
–
–
2012
$’000
205
–
–
205
2012
100%
100%
100%
76
15. Non-current assets – Property plant and equipment
Laboratory
fit out
Laboratory
equipment
Office
furniture &
equipment
Leasehold
improvements
Manufacturing
equipment
Service &
demo
equipment
Computer
equipment
& software
Capital
Work in
Progress
Total
Year ended 30 June 2012
Opening net
book amount
Additions
Disposals
Depreciation
charge
Closing net book
amount at
30 June 2012
At 30 June 2012
Cost
Accumulated
depreciation
Net book amount
at 30 June 2012
17
–
–
69
26
–
147
24
–
130
204
–
720
225
–
80
194
(3)
359
171
(21)
(4)
(30)
(53)
(185)
(271)
(112)
(219)
– 1,522
–
–
–
844
(24)
(874)
13
65
118
149
674
159
290
– 1,468
343
324
799
876
1,459
621
781
– 5,203
(330)
(259)
(681)
(727)
(785)
(462)
(491)
–
(3,735)
13
65
118
149
674
159
290
– 1,468
Year ended 30 June 2013
Opening net
book amount
Additions
Disposals
Depreciation
charge
Foreign currency
translation effect
(net)
Closing net book
amount at
30 June 2013
At 30 June 2013
13
–
–
65
27
–
118
149
674
159
290
–
1,468
14
–
6
–
88
–
838
–
–
275
97 1,345
(3)
(26)
(49)
(138)
(300)
(283)
(205)
–
–
–
(1,004)
–
–
–
–
–
2
1
3
10
66
83
17
462
716
361
97 1,812
Cost or fair value
343
351
817
882
1,546
1,462
1,057
97 6,555
Accumulated
depreciation
Net book amount
at 30 June 2013
(333)
(285)
(734)
(865)
(1,084)
(746)
(696)
–
(4,743)
10
66
83
17
462
716
361
97 1,812
16. Non-current assets – Intangible assets
Development Costs
At cost
Accumulated amortisation
Net book value
2013
$’000
201
(164)
37
2012
$’000
201
(124)
77
Development costs relate to the trophon® project and are carried at cost less accumulated amortisation. The intangible asset has
been assessed as having a finite life and is amortised using the straight line method over a period of 5 years. Amortisation of
$40,000 (2012: $40,000) is included in depreciation and amortisation expense in the statement of profit or loss.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013
17. Non-current assets – Other
Refundable deposits and bonds
Total
18. Current liabilities – Trade and other payables
Trade payables
Other payables
Provision for warranty
Total
Roll forward of provision for warranty:
Beginning balance
Provided during this year
Utilised during this year
Balance as at 30 June
77
2012
$’000
141
141
2012
$’000
1,174
832
368
2,374
2012
$’000
174
236
(42)
368
2013
$’000
144
144
2013
$’000
1,302
1,251
449
3,002
2013
$’000
368
638
(557)
449
The Group has recognised a provision for warranty in accordance with the accounting policy describe in note 2. The Group has made
assumptions in relation to the values estimated to be required to settle the warranty obligation on all products under warranty at
balance date.
19. Current liabilities – Deferred revenue
Beginning balance
Deferred during the year
Released to the Statement of Profit or Loss
Ending balance
20. Employee provisions
Provision for bonuses
Provision for annual leave
Provision for long service leave
Total
Employee provisions – current
Provision for bonus
Provision for annual leave
Provision for long service leave
Total
Employee provisions – non-current
Provision for long service leave
Total
2013
$’000
91
416
(298)
209
2013
$’000
157
607
202
966
2012
$’000
–
123
(32)
91
2012
$’000
619
370
143
1,132
157
619
607
19
370
–
783
989
183
143
183
143
78
Employee benefits:
Aggregate liability for employee benefits, including on-cost but excluding provision for bonuses:
Payables
Employee benefits provision
2013
$’000
142
809
2012
$’000
150
513
The provision for long service leave includes all unconditional entitlements where employees have completed the required period
of service and also where employees are entitled to pro-rata payments in certain circumstances.
Superannuation commitments
The Company makes contributions to superannuation plans for the benefit of eligible employees. The Company has a legally
enforceable obligation to make these contributions under the auspices of the Superannuation legislation and related guidelines
proclaimed by the federal government. The contributions are made as a fixed percentage of salary.
21. Borrowings
Finance lease obligations
Current portion
Noncurrent portion
Total
22. Convertible notes
Non-current liabilities
Convertible notes at amortised value
Accrued interest on convertible notes
Convertible notes – noncurrent liabilities
Convertible notes – Equity component
Option premium on convertible notes
2013
$’000
2012
$’000
30
6
24
30
2013
$’000
7,091
450
7,541
36
6
30
36
2012
$’000
7024
–
7,024
376
376
On 28 June 2012, the Company issued unsecured Tranche A convertible note of $4,000,000 and Tranche B convertible note of
$3,500,000 which matures 4 years after the issue date. The convertible notes bear 6% interest per annum on a simple interest
basis calculated on each anniversary of the issue date. No interest repayment will be made to the noteholder in the first two years
but the interest will accrue and form part of the face value of the note but will not bear any further interest. After that period,
the noteholder may elect whether to receive interest in cash or to have such interest accrue and form part of the Face Value (but
this will not bear further interest). The convertible notes may be converted at any time up until the Maturity Date at $0.75 per
share, subject to certain adjustments. The effective interest on convertible notes is 7.364%. As at 30 June 2013, the amortised
value of convertible notes recognised in non-current liabilities including accrued interest amounted to $7,541,000 (2012:
$7,024,000) and borrowing costs related to the convertible notes amounted to $517,000 (2012: Nil).
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 23. Contributed equity
Share capital
261,988,718 ordinary fully paid shares (2012: 259,982,918)
Movements in ordinary shares on issue
At 30 June 2011
Share options exercised
Shares issued
At 30 June 2012
Share options exercised
Shares issued
At 30 June 2013
79
Number of shares
$’000
230,490,585
247,050
29,245,283
259,982,918
1,287,604
718,196
58,138
82
15,312
73,532
203
333
261,988,718
74,068
All ordinary shares are fully paid. Ordinary shares carry one vote per share and entitle the holder to participate in dividends and
the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands, every ordinary
shareholder present at a meeting in person or by proxy is entitled to one vote and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
At 30 June 2013 there were 5,418,625 (2012: 3,758,269) options to acquire one ordinary share each outstanding, of which
1,397,002 (2012: 1,236,484) had vested and were exercisable.
Information relating to the Company’s employee share-based payment schemes, including details of shares and options issued,
options exercised and options lapsed during the financial year, as well as options outstanding at the end of the financial year,
is set out in note 32.
Capital Management
Management controls the capital of the Group to ensure that the Group can fund its operations and continue as a going concern.
The Group’s capital includes ordinary share capital and financial liabilities supported by financial assets. There are no externally
imposed capital requirements. Management effectively manages the Group’s capital by assessing the Group’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market. These responses include the management
of share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
24. Reserves
Share-based payments reserve
Foreign currency translation reserve
Balance 30 June
Share-based payments reserve
Balance 1 July
Share-based payment (ESOP)
Share-based payment (GSOP)
Balance 30 June
2013
$’000
2,673
27
2,700
2013
$’000
1,775
804
94
2,673
2012
$’000
1,775
(11)
1,764
2012
$’000
1,172
572
31
1,775
The Share-based payments reserve is used to record the value of share-based payments provided to employees, including KMP,
as part of their remuneration. Refer to note 32 for further details of these plans.
80
Foreign currency translation reserve
Balance 1 July
Exchange difference on foreign currency translation during the year
Balance 30 June
2013
$’000
(11)
38
27
2012
$’000
(14)
3
(11)
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
25. Dividends
No dividends were proposed, declared or paid during the financial year and to the date of this report (2012: Nil).
26. Capital and leasing commitments
2013
$’000
2012
$’000
Future operating lease commitments not provided for in the financial statements
and payable:
Within one year
One year or later and no later than five years
The Group does not have any non-cancellable capital expense commitments.
Finance lease and
hire purchase commitments
2013
$’000
424
185
609
462
189
651
2012
$’000
Within one year
After one year but not more than 5 years
Total minimum lease payments
Less finance charges
Present value of minimum lease payments
Minimum
payments
Present value
of payments
Minimum
payments
Present value
of payments
8
28
36
6
30
6
24
30
0
30
8
36
44
8
36
6
30
36
0
36
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 81
2013
$
2012
$
52,000
52,000
49,000
49,000
–
–
–
3,600
3,600
3,600
27. Auditor’s remuneration
Audit services
Audit and review of financial reports
Total remuneration for audit services
Non-audit services
Assurance related services
Audit of regulatory returns
Total remuneration for assurance related services
Total remuneration for non-audit services
28. Related party disclosure
(a) Parent entities
The parent entity within the Group is Nanosonics Limited which at 30 June 2013 owned 100% of the issued ordinary
shares of Nanosonics Europe GmbH, Saban Ventures Pty Limited and Nanosonics Inc.
(b) Subsidiaries
Interests in subsidiaries are set out in note 14.
(c) Directors and key management personnel
Related party disclosures in respect of directors and key management personnel are set out in note 29.
(d) Transactions with related parties
The following transactions occurred with related parties:
Sales of goods and services
Sale of products to related parties
Purchases of goods
Purchases of goods and services from related parties
Superannuation contributions
Contributions to superannuation funds on behalf of all employees
Other transactions
Rent of premises and equipment from related parties
2013
$
2012
$
1,056
1,186
553
695
185
649
637
189
82
(e) Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables (supply of goods and services)
Current payables (purchases of goods and services)
(f) Guarantees
2013
$
53
37
2012
$
728
89
No guarantees were provided during the year under review and none were in effect at the year-end between the Company
and its subsidiaries (2012: Nil).
(g) Terms and conditions
All other transactions were made on normal commercial terms and conditions and at market rates, except that there are no
fixed terms for the repayment of loans between the parties.
Outstanding balances are unsecured and are repayable in cash.
29. Directors and key management personnel disclosures
(a) Directors
The following persons were directors of Nanosonics Limited throughout the financial year unless shown otherwise:
Mr Maurie Stang, Non-Executive Chairman
Dr Ron Weinberger, Managing Director and CEO (until 20 October 2013)
Dr David Fisher, Non-Executive Director
Mr Richard England, Non-Executive Director
Mr Michael Kavanagh, Non-Executive Director (appointed 30 July 2012)
(b) Key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group,
directly or indirectly, throughout the financial year ended 30 June 2013 unless shown otherwise:
Mr McGregor Grant, Chief Financial Officer & Company Secretary
Mr Gerard Putt, Chief Operations Officer
Mr Michael Potas, Head of Research, Design & Development
Mrs. Kirste Courtney, Human Resources Manager
Mr Vincent Wang, Head of Global Support and Services (included in the top five highest remunerated executive in 2013)
Dr. Jianhe Chen, Quality Assurance Manager (included in the top five highest remunerated executive in 2012)
All of the above persons were employed by Nanosonics Limited and were respectively directors and key management
personnel for the year ended 30 June 2012, except as noted above.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 (c) Directors and key management personnel compensation
Director fees
Short-term employee benefits
Long-term benefits
Termination benefits
Share based payments
Total compensation
Total compensation includes total remuneration for
executive and non-executive directors of the parent entity
83
Group and Company
2013
$’000
2012
$’000
265,450
208,915
1,494,198
1,270,071
141,050
165,095
–
–
447,013
420,822
2,347,711
2,064,903
835,647
669,955
The Company has taken advantage of the relief provided by Corporations Regulation 2M.6.04 and transferred the detailed
remuneration disclosures to the Directors’ report. The relevant information can be found in Parts 5 to 8 of the Remuneration
report on pages 40 to 45.
(d) Equity instrument disclosures relating to directors and key management personnel
(i) Options provided as remuneration
Details of options provided as remuneration and shares issued on exercise of such options, together with the terms and
conditions of the options, can be found in Sections 6 to 8 of the Remuneration report on pages 42 to 45.
84
(ii) Options holdings
The numbers of options over ordinary shares in the Company held during the financial year by each director of the
Company and key management personnel of the Group, including their personally-related parties, are set out below.
Balance
at start
of the year
Granted as
compensation
Other
changes
Exercised
Balance
at the end
of the year
Vested and
exercisable
Unvested
or not
exercisable
Option holder
Directors
Maurie Stang
David Fisher
Richard
England
Ron
Weinberger1
Michael
Kavanagh8
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
–
–
–
–
50,000
50,000
–
–
–
–
–
–
251,659
1,288,607
200,000
51,659
–
–
–
–
Key management personnel
McGregor
Grant2
2013 1,000,000
62,056
2012 1,000,000
–
Gerard Putt3
2013
400,000
50,546
Jianhe Chen7
Michael Potas4
Kirste Courtney5
Vincent Wang6
2012
400,000
2013
2012
2013
2012
2013
2012
2013
2012
226,984
200,000
78,699
50,250
249,863
220,000
10,987
–
–
31,870
26,984
38,785
28,449
35,272
29,863
35,272
10,987
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50,000
50,000
50,000
33,000
–
–
–
–
–
17,000
(51,659) 1,488,607
132,000 1,356,607
–
–
–
–
–
–
–
251,659
66,000
185,659
–
–
–
–
–
–
1,062,056
500,001
562,055
1,000,000
166,667
833,333
450,546
200,001
250,545
400,000
66,667
333,333
(26,984)
231,870
132,000
99,870
–
226,984
66,000
160,984
(78,699)
38,785
–
–
78,699
(149,863)
135,272
50,250
66,000
–
249,863
153,000
(10,987)
35,272
–
10,987
–
–
38,785
28,449
69,272
96,863
35,272
10,987
1 Mr Weinberger was granted on 9 November 2012 1,220,000 options which vests on 31 August 2015 subject to vesting conditions.
2 Mr. Grant joined the Company and was appointed Chief Financial Officer and Company Secretary on 28 April 2011.
As part of his employment contract, he was granted 1,000,000 options which vest in 4 tranches subject to service conditions.
3 Mr Putt was granted 400,000 options which vest in 4 tranches subject to service conditions, as part of his employment contract on his appointment
on 27 April 2011.
4 Michael Potas was employed by the Company on 7 August 2006 and was appointed Head of Research, Design & Development on 23 March 2011.
5 Mrs Courtney is included as one of the five named Company or Group executives who received the highest remuneration in the current financial year
in accordance with section 300a of the Corporations Act 2001.
6 Mr Wang is included as one of the five named Company or Group executives who received the highest remuneration in the current financial year
in accordance with section 300a of the Corporations Act 2001.
7 Ms Chen was included as one of the five named Company or Group executives who received the highest remuneration in the previous financial year
in accordance with section 300a of the Corporations Act 2001.
8 Mr Kavanagh was appointed non-executive director on 30 July 2012.
All vested options were exercisable at the end of the financial year.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 85
(iii) Share holdings
The numbers of shares in the Company held during the financial year by each director of the Company and key
management person of the Group, including their personally-related parties, are set out below. Details of shares provided as
remuneration, together with the terms and conditions of the shares, can be found in Sections 6 to 8 of the Remuneration
report on pages 42 to 45.
Balance at start
of the year
Received during
the year on the
exercise of options
Other net changes
during the year
Balance at
end of the year
(5,033)
28,402,424
Share holders name
Directors
Maurie Stang
David Fisher
Richard England
Ron Weinberger
Michael Kavanagh1
Key management personnel
McGregor Grant2
Gerard Putt2
Jianhe Chen
Michael Potas
Kirste Courtney
Vincent Wang
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
28,407,457
28,407,457
812,705
812,705
50,000
25,000
808,013
808,013
–
–
15,0003
–
18,5003
18,5003
–
–
5,506
5,506
5,880
5,880
–
–
1 Shareholder appointed in the 2013 financial year.
2 Shareholder appointed in the 2011 financial year.
3 This represents shareholding of a close family member of the KMP.
–
–
–
–
–
–
51,659
–
–
–
–
–
–
–
26,984
–
–
–
–
28,301
25,000
–
–
100,000
–
–
15,0003
–
–
–
–
78,699
(63,155)
–
–
149,863
(155,743)
–
10,987
–
–
–
–
28,407,457
812,705
812,705
78,301
50,000
859,672
808,013
100,000
–
15,000
15,000
18,500
18,500
26,984
–
21,050
5,506
–
5,880
10,987
–
86
(e) Loans to directors and key management personnel
During the financial year and to the date of this report, the Group made no loans to directors and key management
personnel and none were outstanding at the year ended 30 June 2013 (2012: Nil).
(f) Transactions with directors and key management personnel
Certain directors and key management personnel, or their personally-related entities, hold positions in other entities that
result in them having control or significant influence over the financial or operating policies of those entities.
A number of these entities transacted with the Company in the financial years to 30 June 2013 and 30 June 2012.
The terms and conditions of the transactions were no more favourable than those available, or which might reasonably be
expected to be available, on similar transactions with unrelated entities on an arms-length basis.
Details of the types of transactions that were entered into with directors and key management personnel are:
Directors and
key management personnel
Maurie Stang
Maurie Stang
Maurie Stang
Maurie Stang
Maurie Stang
Related entities
Gryphon Capital Pty Ltd
Medi-Consumables Pty Ltd
Transactions
Services received
Products purchased, services received
and products sold
Novapharm Research (Australia) Pty Ltd
Services received
Ramlist Pty Ltd
Rent of premises
Regional Healthcare Group Pty Ltd
Products purchased, services received
and products sold
Richard England
Angleterre Pty Ltd and Domkirke Pty Ltd
Services received
The aggregate amounts of each of the above types of transactions with directors and key management personnel of the
Group were:
Amounts recognised as revenue
Products and services sold
Amounts recognised as expenses
Services received
Products purchased and services received
Rent of premises
2013
$’000
2012
$’000
1,056
1,186
150
403
185
150
499
189
The aggregate amounts of assets and liabilities relating to the above types of transactions with directors and key
management personnel of the Group were:
Assets
Current receivables
Liabilities
Current liabilities
2013
$’000
2012
$’000
53
150
728
150
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 30. Notes to the cash flow statements
(a) Reconciliation of cash
Cash and cash equivalents
87
2013
$’000
24,064
2012
$’000
29,310
For the purpose of the Statement of cash flows, cash includes cash on hand and at bank, deposits on call and short term
deposits, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the Statement of cash flow is
reconciled to the related items in the statement of financial position as follows:
(b) Reconciliation of operating loss after income tax to net cash
provided by operating activities
Operating loss after income tax
Adjustment for:
Depreciation and amortisation
Share-based payments expense
Loss on sales of fixed assets
Borrowing costs on convertible notes
Loss (gain) on foreign exchange forward contracts
Unrealised foreign exchange (gain) loss
Changes in assets and liabilities
(Increase) / decrease in receivables
(Increase) / decrease in inventories
(Increase) / decrease in other current assets
(Increase) / decrease in other non-current assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in provisions
Increase / (decrease) in other current liabilities
Increase / (decrease) in current tax liabilities
Net cash used in operating activities
2013
$’000
(5,768)
1,044
898
–
517
238
(70)
(1,171)
(512)
(285)
(3)
130
(151)
623
4
2012
$’000
(4,679)
914
603
24
–
(31)
3
(2,097)
(788)
4
(43)
360
347
354
–
(4,506)
(5,029)
(c) Credit standby arrangements unused
Borrowing facilities
Facility Limit
$’000
Facility used by
$’000
Facility available at
$’000
30 June 2013
30 June 2012
256
256
74
21
182
23
88
31. Loss per share
(a) Basic loss per share
Loss attributable to ordinary shareholders of the Company
(b) Diluted loss per share
Loss attributable to ordinary shareholders of the Company
(c) Losses used in calculating loss per share
2013
Cents
(2.2)
(2.2)
2012
Cents
(2.0)
(2.0)
Net loss after income tax expense attributable to shareholders
(5,768)
(4,679)
(d) Weighted average number of shares used
For basic earnings per share
For diluted earnings per share
(e) Information concerning options granted
261,201,368
234,650,192
261,201,368
234,650,192
Options granted under the Nanosonics Employee Share Option Plan and the Nanosonics General Share Option Plan are
considered to be potential ordinary shares and have been excluded from the calculation of diluted loss per share as the
effect would have been anti-dilutive. Details relating to the options are set out in note 32 to these financial statements.
32. Share-based compensation
The Company’s share-based compensation schemes comprise option plans and share plans. Options have been granted
under the option plans. Shares have been granted under the Deferred Employee Share Plan. To the date of this report no
shares have been granted under the Exempt Employee Share Plan.
(a) Option plans
The establishment of both the Nanosonics Employee Share Option Plan (ESOP) and the Nanosonics General Share
Option Plan (GSOP) was approved by the directors on 2 April 2007. Under the plans, participants are granted options for
no consideration which vest in three equivalent tranches on each of the first three anniversaries of the issue date of the
options. The options expire on the fourth such anniversary. The exercise price of options is determined by the Board at the
time of issue. Participation in the plans is at the Board’s discretion and no individual has a contractual right to participate in
a plan or to receive any guaranteed benefits.
General Share Option Plan (GSOP)
The General Share Option Plan is designed to provide incentive, recognition and reward for non-employees, usually
consultants and contractors, who create long-term value for the Company.
536,038 share options were issued under the GSOP during the financial year (2012:195,000 issued).
Employee Share Option Plan (ESOP)
The Employee Share Option Plan is designed to provide long-term incentives for employees (including executive directors)
to deliver long-term shareholder returns. All employees and directors are eligible to participate in the ESOP at the invitation
of the Board. The maximum number of options able to be on issue under the ESOP during any five-year period is 5% of the
total number of shares on issue.
2,487,891 share options were issued under the ESOP during the financial year (2012: 657,442 issued).
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 89
(b) Exercise of options
Options are granted under the plans for no consideration and options carry no dividend or voting rights. When exercisable,
each option is convertible into one ordinary share that ranks equally with any other share on issue in respect of dividends
and voting rights. The exercise prices of all options issued to the date of this report were fixed on the dates the options were
granted. Details are provided in section (c) of note 32 to these financial statements.
(c) Unexpired options
ESOP
GSOP
All Option Plans
Number of Options
2013
2012
2013
2012
2013
2012
Unexpired options as at 1 July
3,330,719
3,032,700
427,550
353,500
3,758,269
3,386,200
Granted during the year
2,487,891
657,442
536,038
195,000
3,023,929
852,442
Exercised during the year
(1,173,016)
(126,100)
(114,588)
(120,950)
(1,287,604)
(247,050)
Forfeited during the year
(41,969)
–
(34,000)
Expired during the year
–
(233,323)
–
–
–
(75,969)
–
–
(233,323)
Unexpired options as at 30 June
4,603,625
3,330,719
815,000
427,550
5,418,625
3,758,269
Number of holders as at 30 June
68
46
6
9
74
541
1 Includes a common holder of both ESOP and GSOP options.
Set out below are details of unexpired options granted under the plans as at 30 June 2013:
Option
type
Exercise
price
Grant
date
Assessed
fair value
at grant
date Expiry date
Number
at start of
the year
Number
granted
during the
year
Number
exercised
during
the year
Number
forfeited
during
the year
Number at
end of
the year
Number
vested and
exercisable at
end of year
ESOP
$0.30 Nov-08
$0.06 17-Nov-12
45,000
ESOP
$0.35 Jun-09
$0.23 26-Jun-13
501,600
GSOP
$0.35 Jun-09
$0.23 26-Jun-13
82,550
GSOP
$0.55 Jan-10
$0.30
5-Jan-14
50,000
ESOP
$0.56 Aug-10
$0.31
19-Jul-14
500,000
GSOP
$0.78 Oct-10
$0.49
1-Oct-14
100,000
ESOP
$0.56 Mar-11
$0.63
19-Jul-14
200,000
ESOP
$0.92 Mar-11
$0.58 23-Feb-15
30,000
ESOP
$0.85 May-11
$0.50 28-Apr-16 1,400,000
GSOP
$0.53 Nov-11
$0.38 21-Nov-15
195,000
ESOP
$0.00 Jan-12
$0.58
1-Oct-12
318,057
ESOP
$0.00
Apr-12
$0.51
1-Apr-13
315,757
ESOP
$0.00 Jun-12
$0.49
1-Apr-15
20,305
–
–
–
–
–
–
–
–
–
–
–
–
–
(45,000)
(501,600)
–
–
(48,550)
(34,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50,000
50,000
500,000
330,000
100,000
100,000
200,000
132,000
30,000
20,000
– 1,400,000
700,002
–
195,000
65,000
(303,891)
(14,166)
(315,757)
(6,768)
–
–
13,537
–
–
–
–
GSOP
$0.00 Sep-12
$0.49 21-Sep-13
–
66,038
(66,038)
ESOP
$0.00 Nov-12
$0.55 30-Sep-15
– 1,220,000
ESOP
$0.00 Nov-12
$0.55
1-Oct-13
GSOP
$0.51 Nov-12
$0.27 24-Nov-16
GSOP
$0.52 Dec-12
$0.20 21-Nov-16
ESOP
$0.00
Apr-13
$0.45
1-Apr-14
–
–
–
–
557,483
195,000
275,000
710,408
–
–
–
–
–
– 1,220,000
(13,292)
544,191
–
–
195,000
275,000
(14,511)
695,897
Totals as at year end
3,758,269 3,023,929 (1,287,604)
(75,969) 5,418,625
1,397,002
–
–
–
–
–
–
–
–
–
90
(d) Fair value of options granted
The assessed fair value on the date options were granted was independently determined using a Black-Scholes option
pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at
grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for
the term of the option.
The inputs to the valuations of options granted and not expired to 30 June 2013 included:
Option
type
Exercise
price
Grant date
Expiry date
Estimated share
price at
grant date
Expected price
volatility of the
company’s shares
Expected
dividend
yield
Risk-free
interest rate
Assessed fair
value at
grant date
GSOP
ESOP
GSOP
ESOP
ESOP
ESOP
GSOP
ESOP
ESOP
ESOP
GSOP
GSOP
ESOP
$0.55
$0.56
$0.78
$0.56
$0.92
$0.85
$0.53
$0.00
$0.00
$0.00
$0.51
$0.52
$0.00
Jan-10
5-Jan-14
Aug-10
19-Jul-14
Oct-10
1-Oct-14
Mar-11
19-Jul-14
Mar-11
23-Feb-15
May-11
28-Apr-16
Nov-11
21-Nov-15
Jun-12
1-Apr-15
Nov-12
30-Sep-15
Nov-12
1-Oct-13
Nov-12
24-Nov-16
Dec-12
21-Nov-16
Apr-13
1-Apr-14
(e) Recognition of expense of options granted
General Share Option Plan (GSOP)
$0.62
$0.54
$0.80
$0.93
$0.93
$0.80
$0.63
$0.49
$0.55
$0.55
$0.56
$0.49
$0.45
71.04%
74.87%
77.58%
77.97%
80.48%
73.62%
73.09%
49.04%
45.46%
39.91%
54.96%
53.13%
35.35%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
5.29%
4.77%
4.95%
5.15%
5.15%
5.14%
3.44%
2.43%
2.58%
2.66%
2.71%
2.87%
2.83%
$0.30
$0.31
$0.49
$0.63
$0.58
$0.50
$0.38
$0.49
$0.55
$0.55
$0.27
$0.20
$0.45
The assessed fair values of options granted under the GSOP are expensed in full in the month in which they are granted
and a share-based payments reserve is created as part of shareholders’ equity, except where the options are granted as
part of a capital raising program, in which case no cost is recognised.
Employee Share Option Plan (ESOP)
Options granted under the ESOP require the holder to be an employee of the Company at the time the options are exercised,
except that they may be exercised, if vested, up to 30 days after voluntary termination of employment. The fair value of options
granted under ESOP is recognised as an employee benefit expense with a corresponding increase in equity, over the period
in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for share-based
payment transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired
and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement expense
or credit for a period represents the movement in cumulative expense recognised as the beginning and end of that period.
No expense is recognised for options that do not ultimately vest, except for option transaction for which vesting is
conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market
or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 91
(f) Employee share plans
The Company has two Employee Share Plans, being the Exempt Employee Share Plan (“EESP”) and the Deferred
Employee Share Plan (“DESP”).
Adoption of the EESP and DESP was approved at a general meeting of shareholders on 26 November 2007 and the
approval is for a period of 3 years ending 26 November 2010. Shareholder approval was also granted on 26 November
2007 to enable the Company to grant financial assistance under both the EESP and the DESP in accordance with the
Corporations Act 2001.
Exempt Employee Share Plan (“EESP”)
The EESP enables eligible employees, including directors, to acquire up to $1,000 worth of Nanosonics shares each year
on a tax-exempt basis in accordance with enabling tax legislation. As a contemporary company the Board believes allowing
employees to acquire equity in the Company on tax-preferred terms should be encouraged. No shares have been issued
under the EESP to the date of this report.
Nanosonics Deferred Employee Share Plan (“DESP”)
The DESP allows invited eligible employees, including directors, to receive Nanosonics shares as a bonus or incentive or
as remuneration sacrifice and, subject to certain conditions, not to pay tax for up to 10 years on the benefit in accordance
with enabling tax legislation. The DESP is designed to allow the Company to meet contemporary executive equity incentive
practices. No shares were granted under the DESP during the financial year.
(g) Shares granted
During the financial year there were no shares directly granted under the DESP. Details of shares granted under the DESP
to the date of this report are set out below.
Share Plan
Share issue price
Grant date
Assessed fair value
at grant date
Closing share price
on grant date
Number granted
DESP
DESP
DESP
DESP
0.2880
23 March 2009
0.4251
26 June 2009
0.4251
26 June 2009
0.9080
3 May 2011
0.2880
0.4251
0.4251
0.9080
0.2950
0.4100
0.4100
0.9080
Total Employee Shares granted to date
336,424
176,400
75,000
102,403
690,227
Share issued on the exercise of zero-priced options granted to employees as part of their performance bonus or short term
incentive has been issued to the DESP. These shares were excluded in the above table.
No shares have been granted to the date of this report under the EESP.
(h) Fair value of shares granted
The issue price for shares granted is calculated as the 5-day weighted average market price of shares of the Company
on the Australian Securities Exchange as at close of trading on the date the shares were granted. The fair value of shares
granted is taken to be the issue price.
92
(i) Recognition of expense of shares granted
Deferred Employee Share Plan (DESP)
The assessed fair values of shares granted under the DESP are expensed in full in the month in which they are granted,
except if they are granted with a vesting condition, in which case the fair value of DESP shares granted is apportioned on
a straight line monthly basis over the period between grant date and the date on which the shares all vest. At the end of a
period the Company assesses the probability of achievement of a benefit, being the percentage probability that employees
will achieve at least the fair value of the unvested shares. The value of DESP shares expensed in any period is calculated as
that portion of the fair value applicable to the period factored by the probability of achievement. A share-based payments
reserve is created as part of shareholders’ equity.
(j) Shares on issue under employee share plans
Number of Shares
2013
2012
2013
2012
2013
2012
DESP
EESP
All Share Plans
Employee Shares on issue as at 1 July
305,483
371,424
Granted during the year
Issued on exercise of zero-priced options
during the year
Issued on share purchase plan allotment
during the year
–
626,416
7,548
–
–
–
Withdrawn during the year
(160,394)
(65,941)
Forfeited during the year
–
–
Employee Shares on issue as at 30 June
779,053
305,483
Number of holders as at 30 June
37
30
(k) Expenses arising from share-based compensation transactions
–
–
–
–
–
–
–
–
Options issued under ESOP
Options issued under GSOP
Shares issued under DESP
Total share-based compensation
–
–
–
–
–
–
–
–
305,483
371,424
–
626,416
7,548
–
–
–
(160,394)
(65,941)
–
–
779,053
305,483
37
30
2013
$’000
804
94
–
898
2012
$’000
572
31
–
603
nanosonics limited | annual report 2013Notes to the financial statements (continued)For the year ended 30 June 2013 33. Parent entity information
Set out below is the supplementary information about the parent entity.
Current assets
Total assets
Total current liabilities
Total liabilities
Contributed Equity
Option premium on convertible notes
Share-based payments reserve
Accumulated losses
Total equity
Profit or loss for the year
Total comprehensive income (loss)
Hire purchase commitment
For acquisition of manufacturing equipment
Contingent liabilities
The parent entity had no contingent liabilities.
93
2013
$’000
31,335
33,385
3,964
11,926
74,068
376
2,562
(55,547)
21,459
2013
$’000
(5,819)
(5,819)
2012
$’000
34,929
36,691
3,454
10,765
73,532
376
1,747
(49,729)
25,926
2012
$’000
(4,728)
(4,728)
30
36
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2
except for the following:
Investments in subsidiaries are accounted for at cost, less any impairment.
34. Events subsequent to reporting date
No matter or circumstance has arisen since 30 June 2013 that has significantly affected, or may significantly affect:
a. the Group’s operations in future financial years;
b. the results of those operations in future financial years; or
c. the Group’s state of affairs in future financial years.
94
Directors’ declaration
In the directors’ opinion:
1. the financial statements and notes set out on pages 48 to 93 are in accordance with the Corporations Act 2001,
including:
(a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
(b) giving a true and fair view of the Company’s and Group’s financial position as at 30 June 2013 and of their
performance for the financial year ended on that date; and
2. there are reasonable grounds to believe that the Company and its subsidiaries will be able to pay their debts as and
when they become due and payable.
The directors have been given the declarations by the Managing Director and CEO and Chief Financial Officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of directors.
Richard England
Director
Sydney
18 September 2013
nanosonics limited | annual report 2013 Independent auditor’s report to the members
95
96
Independent auditor’s report to the members (continued)
nanosonics limited | annual report 2013 Shareholder information
97
The shareholder information set out below was applicable as at 12 September 2013.
A. Equity security holders
Twenty largest holders of quoted equity securities.
Ordinary shares
National Nominees Limited
Mr Maurie Stang1
Mr Bernard Stang
Mr Steve Kritzler
Aust Executor Trustees SA Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
J.P. Morgan Nominees Australia Limited
Link Traders (Aust) Pty Ltd
Asia Union Investments Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/C 2
BNP Paribas Noms Pty Ltd
Dr Harry Hirschowitz
Citicorp Nominees Pty Limited
Bennelong Resources Pty Ltd
UBS Nominees Pty Ltd
Moore Family Nominee Pty Ltd
Bevan Holdings Pty Ltd
Hofbauer Nominees Pty Ltd
Bentale Pty Ltd
Total top 20 holders
Total all other holders
Total shares on issue
1 Include indirect holdings of 116,368 shares.
Number of quoted
shares held
29,503,535
28,402,424
27,713,255
19,651,439
16,182,541
11,162,197
8,734,703
8,291,899
3,228,635
3,000,000
2,970,619
2,646,433
2,010,000
1,615,245
1,500,000
1,435,893
1,290,000
1,262,487
1,200,000
1,158,000
172,959,305
89,863,158
262,822,463
Percentage
11.23%
10.81%
10.54%
7.48%
6.16%
4.25%
3.32%
3.15%
1.23%
1.14%
1.13%
1.01%
0.76%
0.61%
0.57%
0.55%
0.49%
0.48%
0.46%
0.44%
65.81%
34.19%
100%
Unquoted equity securities
Options on issue
General Share Options to take up unissued ordinary shares
Employee Share Options to take up unissued ordinary shares
Total options on issue
Number of options over
ordinary shares
Number of holders
815,000
4,452,285
5,267,285
6
65
71
98
Shareholder information (continued)
B. Distribution of equity securities
Analysis of numbers of ordinary shares and options by size of holding:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total Holders
There were 92 holders of less than a marketable parcel of 559 ordinary shares.
C. Substantial holders
Substantial holders in the Company are shown below:
National Nominees Limited
Mr Maurie Stang1
Mr Bernard Stang
Mr Steve Kritzler
Aust Executor Trustees SA Ltd
1 Includes indirect holdings of 116,368 shares.
Quoted ordinary
shares
Unquoted
options
215
540
426
1,027
191
2,399
–
9
34
20
8
71
Number of ordinary
shares
Percentage
29,503,535
28,402,424
27,713,255
19,651,439
16,182,541
11.23%
10.81%
10.54%
7.48%
6.16%
D. Voting rights
The voting rights attaching to each class of equity securities are set out below:
(a) Ordinary shares including restricted ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and on a poll
each share shall have one vote.
(b) Options
Options have no voting rights.
nanosonics limited | annual report 2013 Glossary
99
AASB
AGM
ANZ
APES
APIC
ASUM
ASX
BBSW
Australian Accounting Standards Board
Annual General Meeting
Australia and New Zealand
Standards issued by the Accounting Professional & Ethical Standards Board (APESB)
Association for Professionals in Infection Control
Australian Society for Ultrasound in Medicine
Australian Securities Exchange Limited
Bank bill swap reference rate
Clostridium difficile
A bacterium, the most common cause of infectious diarrhoea in hospitals and long-term care homes
Company
Nanosonics Limited
Date of this report
18 September 2013
DESP
EESP
EN15883
EPS
ESOP
FDA
Financial Year
Fiscal Year
FY
Glutaraldehyde
GMP
Group
GSOP
GST
HAI
HLD
HLD+
IASB
IFRS
IP
Deferred Employee Share Plan
Exempt Employee Share Plan
A Standard, also known as HTM2030, for the testing of Washer Disinfectors for surgical
instruments, including endoscopes, to ensure they are operating correctly.
Earnings Per Share
Employee Share Option Plan
Food and Drug Administration – USA
Year to 30 June
Year to 30 June
Financial year, eg. FY2013 is the financial year ending 30 June 2013
An used to disinfect medical and dental equipment. It is and can cause severe eye, nose,
throat and lung irritation, along with headaches, drowsiness and dizziness. It is a main source
of occupational asthma among health care providers (source: Canadian Centre for Occupational
Health and Safety – February 2005).
Good Manufacturing Practices
Nanosonics Limited and its wholly owned subsidiary companies
General Share Option Plan
Goods and Services Tax
Healthcare Acquired/Associated Infections
High Level Disinfection – the minimum treatment recommended for reprocessing a device or
item of equipment for use in a semi critical site, if it cannot be sterilised. It involves killing all
microorganisms, with the exception of high numbers of bacterial spores.
High Level Disinfection Plus, including sporicidal efficacy – Nanosonics new dimension of
disinfection based on the Company’s platform technologies
International Accounting Standards Board
International Financial Reporting Standards
Intellectual Property
ISO 13485
Quality Management System for Medical Devices – Requirements for Regulatory Purposes
IVF
ISOOG
KMP
MRSA
In-vitro fertilisation
International Society of Ultrasound in Obstetrics and Gynaecology
Key management personnel (excludes non-executive directors)
Methicillin resistant staphylococcus aureus, a bacterium resistant to broad-spectrum antibiotics
NanoNebulant™
The biocide used in Nanosonics’ technological process
PCT
Patent Co-operation Treaty
100
Glossary (continued)
Q 1, 2, 3, or 4
3-monthly periods beginning 1 July, 1 October, 1 January and 1 April, respectively
R&D
Reporting period
RoHS compliant
RSNA
S+
TEE
TGA
trophon®
Research and Development
Year to 30 June 2013
Restriction of Use of Hazardous Substances
Radiological Society of North America
Sterilisation Plus, including prionicidal efficacy – Nanosonics new dimension of sterilisation
based on the Company’s platform technologies
Transoesophageal Echocardiagram, a type of probe
Therapeutic Goods Administration – Australia
The brand representing Nanosonics’ range of infection control solutions designed specifically for
healthcare settings
trophon® EPR
The brand of Nanosonics’ device specifically designed to disinfect intracavity and surface
ultrasound probes. See also www.trophon.com.au
VAT
Value Added Tax
nanosonics limited | annual report 2013 Corporate directory and information for investors
Nanosonics Limited ABN 11 095 076 896 incorporated 14 November 2000
Directors
Maurie Stang
Richard England
David Fisher
Michael Kavanagh
Ron Weinberger
Company Secretaries
McGregor Grant
Robert Waring
Registered Office
Unit 24, 566 Gardeners Road
Alexandria NSW 2015 Australia
Ph: +61 2 8063 1600
European Office
Nanosonics Europe GmbH
Falkenried 88. House A
D-20251 Hamburg Germany
Ph: +49 40 468 56885
Share Register
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne, VIC 3001 Australia
Ph: +61 3 9415 4088
Ph: 1300 555 159 (within Australia)
www.au.computershare.com
Investor Relations
Legal Advisors
Shelston IP
Level 21, 60 Margaret Street
Sydney NSW 2000 Australia
Spruson & Ferguson
Level 35, St Martins Tower,
31 Market Street
Sydney NSW 2000 Australia
Baker & McKenzie
AMP Centre
Level 27, 50 Bridge Street
Sydney NSW 2000 Australia
Dibbs Barker
Level 8, Angel Place
123 Pitt Street
Sydney NSW 2000 Australia
Bankers
ANZ Banking Group Limited
Level 17, 242 Pitt Street
Sydney NSW 2000 Australia
National Australia Bank Limited
Level 36, 100 Miller Street
North Sydney NSW 2060 Australia
Deutsche Bank AG
Eppendorfer Landstrasse 70
Hamburg 20249 Germany
Computershare Investor Services Pty Ltd
PNC Bank N.A
Ph: +61 8 9323 2000
Ph: 1300 557 010 (within Australia)
McGregor Grant – Secretary
Ph: +61 2 8063 1600
Email: info@nanosonics.com.au
Auditor
UHY Haines Norton
Level 11, 1 York Street
Sydney NSW 2000 Australia
Website Address
www.nanosonics.com.au
created by mobius.com.au
1015 S Bethlehem Pike
Ambler PA 19002 USA
Stock Exchange Listings
Nanosonics Limited shares are listed on the Australian
Securities Exchange
ASX code: NAN
Industry Group: Healthcare Equipment & Services
2013 Annual General Meeting
The 2013 AGM of Nanosonics Limited will be held:
At 11.00am on Friday 8th November 2013
Level 3, Sydney Harbour Marriott Hotel
30 Pitt Street, Sydney NSW 2000 Australia
Nanosonics Limited
Unit 24, 566 Gardeners Road
Alexandria NSW 2015 Australia
T +61 2 8063 1600
E info@nanosonics.com.au
www.nanosonics.com.au