Optiscan Imaging Limited
ABN 81 077 771 987
Annual Financial Report
for the year ended 30 June 2016
Optiscan Imaging Limited
Annual Report 2016
Contents
CORPORATE INFORMATION ......................................................................................................................... 3
DIRECTORS’ REPORT .................................................................................................................................... 4
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES ......................................................................... 20
CORPORATE GOVERNANCE STATEMENT ................................................................................................ 21
STATEMENT OF FINANCIAL POSITION ...................................................................................................... 22
STATEMENT OF COMPREHENSIVE INCOME ............................................................................................ 23
STATEMENT OF CHANGES IN EQUITY ...................................................................................................... 24
STATEMENT OF CASH FLOWS ................................................................................................................... 25
NOTES TO THE FINANCIAL STATEMENTS ................................................................................................ 26
1 CORPORATE INFORMATION ................................................................................................................. 26
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ....................................................................... 26
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES ......................................................... 38
4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS .............................. 43
5 SEGMENT INFORMATION ...................................................................................................................... 44
6 REVENUE AND EXPENSES ................................................................................................................... 47
7
INCOME TAX ........................................................................................................................................... 48
8 EARNINGS (LOSS) PER SHARE ............................................................................................................ 50
9 CASH AND CASH EQUIVALENTS .......................................................................................................... 51
10 TRADE AND OTHER RECEIVABLES ................................................................................................... 52
11 INVENTORIES ....................................................................................................................................... 53
12 PLANT AND EQUIPMENT .................................................................................................................... 53
13 TRADE AND OTHER PAYABLES .......................................................................................................... 54
14 INTEREST BEARING LOANS AND BORROWINGS ............................................................................ 55
15 FINANCING FACILITIES ........................................................................................................................ 56
16 PROVISIONS ......................................................................................................................................... 57
17 CONTRIBUTED EQUITY AND RESERVES .......................................................................................... 58
18 PARENT ENTITY INFORMATION ......................................................................................................... 60
19 RELATED PARTY DISCLOSURE .......................................................................................................... 60
SHARE-BASED PAYMENTS ................................................................................................................ 62
20
21 COMMITMENTS AND CONTINGENCIES ............................................................................................. 63
22 EVENTS AFTER THE BALANCE SHEET DATE .................................................................................... 64
23 AUDITORS’ REMUNERATION ............................................................................................................. 64
DIRECTORS’ DECLARATION ....................................................................................................................... 65
INDEPENDENT AUDIT REPORT TO MEMBERS OF OPTISCAN IMAGING LIMITED ................................ 66
PATENT INFORMATION ................................................................................................................................ 68
ASX ADDITIONAL INFORMATION ................................................................................................................ 69
Page | 2
CORPORATE INFORMATION
ABN 81 077 771 987
Directors
Alan Hoffman (Chair, appointed 2 May 2016)
Ian Mann (appointed 9 December 2015)
Peter Francis (appointed 2 May 2016)
Ian Griffiths (appointed 2 May 2016)
Company Secretary
Michael Corry FGIA
Registered office
15-17 Normanby Road
Notting Hill Vic 3168
Australia
Principal place of business
15-17 Normanby Road
Notting Hill Vic 3168
Australia
T 61 3 9538 3333
F 61 3 9562 7742
www.optiscan.com
Share Register
Computershare Registry Services
Yarra Falls
452 Johnston Street
Abbotsford Vic 3067
Australia
T 61 3 9415 5000
Solicitors
HWL Ebsworth Lawyers
530 Collins Street
Melbourne VIC 3000
Auditors
Ernst & Young
Melbourne
Bankers
National Australia Bank
Optiscan Imaging Limited
Annual Report 2016
Page | 3
Directors’ Report
Optiscan Imaging Limited
Annual Report 2016
The Board of Directors of Optiscan Imaging Limited has pleasure in submitting its report in respect of the
financial year ended 30 June 2016.
Directors
The names of the directors in office during or since the end of the financial year and up to the date of this
report are:
Alan Hoffman, Chair, (appointed 2 May 2016)
Ian Mann (appointed 9 December 2015)
Peter Francis (appointed 2 May 2016)
Ian Griffiths (appointed 2 May 2016)
Patrick O’Connor, (appointed 21 July 2015, resigned 12 April 2016)
Mr Angus Holt, (resigned 21 July 2015)
Mr Peter Delaney, (resigned 2 May 2016)
Mr Bruce Andrew, (resigned 9 December 2015)
Mr George Cameron-Dow (appointed 21 July 2015, resigned 16 September 2015)
Details of the qualifications and experience of the directors in office during the financial year and up to the
date of this report are as follows:
Alan Hoffman
MAICD
Age 58
Mr Hoffman has more than twenty years’ experience in executive management roles
in organisations such as Shell Australia, the Wesfarmers Group and the Coventry
Group.
Ian Mann
B. Com, GAICD including textiles, garments, investments, foodstuffs and construction materials.
Age 48
Mr Mann has twenty years’ experience as a private company director in industries
Through the shareholding of related entities, Mr Mann is a Substantial Shareholder
in the Company.
Peter Francis
B Juris, LLB
Grad Dip IP Law
Age 60
Dr Ian Griffiths
BSc, PhD
Age 46
Mr Francis is a partner of FAL Lawyers, a firm of commercial and technology
lawyers based in Melbourne. He is one of Australia’s pre-eminent lawyers in the
field of technology commercialisation. Mr Francis is Chairman of Benitec Biopharma
Limited and holds a number of other non-executive director roles.
Dr Griffiths is CEO of Wound Management Innovations CRC and has previously
held a number of senior executive roles in innovative biotech companies. Dr
Griffiths has an honours degree, a business degree, and a PhD from the University
of Manchester with his thesis based on instrumentation physics and polymer
chemistry.
Patrick O’Connor
B.Com, SEP Stanford
(USA), FAICD
Age 53
Mr O’Connor is a non-executive director of Stanmore Coal Limited (ASX:SMR) and
Tech Mpire Limited (ASX:TMP).
He has previously held the roles of Chairman for TFS Corporation Limited
(ASX:TFC), Xceed Resources Limited, Perilya Limited, Water Corporation and has
been a non executive director of a number of other ASX listed entities.
Mr O’Connor was appointed to the board on 21 July 2015 and resigned on 12 April
2016.
Page | 4
Directors’ Report (continued)
Optiscan Imaging Limited
Annual Report 2016
Peter Delaney
BSc (Pharm) (Hons.)
Age 48
Mr Delaney completed a science degree with honours in Pharmacology at Monash
University in 1989. He has played a major role in the refinement of the fibre optic
approach to produce a commercial instrument which received an R&D 100 Award in
1991. In 1993, Mr Delaney received the Victorian Young Achiever Award (Science
and Technology) for his development of the company strategy and infrastructure.
Mr Delaney was appointed a director of Optiscan Pty Ltd in March 1994, and was
Managing Director until December 2002, at which time he assumed the role of
Director of Technology. In April 2007, Peter Delaney was awarded a prestigious
ATSE Clunies Ross award for excellence in the innovation and commercialisation of
scientific endeavours. Mr Delaney held no other directorships of public companies
during the past three years. Mr Delaney resigned as Director on 2 May 2016 and
remains as an executive manager of the Company.
Bruce Andrew
B Bus, CPA
Age 62
Mr Andrew was appointed Company Secretary when Optiscan listed in 1997. After
several years in a part time role, Mr Andrew was appointed Chief Financial Officer
in 2001. Mr Andrew resigned as Director on 9 December 2015 and as Company
Secretary and Chief Financial Officer on 10 June 2016. Mr Andrew held no other
directorships of public companies during the past three years.
George Cameron-Dow
(Master of
Management (cum
laude) Wits, SEP
Stanford (USA),
FAICD, FAIM)
Age 59
Angus Holt
B Com
Age 45
Mr Cameron-Dow is a non-executive director of Bioxyne Limited (ASX:BXN) and
Windward Resources Limited (ASX:WIN). Mr Cameron-Dow was previously the
Managing Director of Xceed Capital Limited, and a past director of Calzada Limited
(now PolyNovo) and Naracoota Resources Limited. Mr Cameron-Dow was
appointed to the board on 21 July 2015, and resigned on 16 September 2015.
Mr Holt has 16 years experience as a public company director in Australia and was
appointed to the Board of Optiscan in February 2009 and later Chairman in May
2009. Mr Holt assumed the role of Executive Chairman in January 2010. Mr Holt
held no other directorships of public companies during the past three years.
Mr Holt resigned from the board on 21 July 2015.
Page | 5
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Directors’ Interests
No Director has any direct holding in shares, options or other instruments of the company at the date of this
report.
Other Interests of Directors
Ian Mann
Parties related to Ian Mann hold a combined total of 17,668,445 ordinary shares as at the date of this report
(2015: N/A).
Directors’ Meetings
The company held sixteen Directors’ meetings during the year. The attendances of the directors at meetings
of the Board were:
Director
Alan Hoffman
Ian Mann
Peter Francis
Ian Griffiths
Patrick O’Connor
George Cameron-Dow
Angus Holt
Peter Delaney
Bruce Andrew
Board of Directors
Attended
Held
4
12
4
4
11
1
0
12
5
4
12
4
4
11
1
0
12
5
The column marked “Held” refers to meetings held while each Director was in office.
As at the date of this report, the board is comprised of four directors, all of whom are non-executive. Mr Ian
Mann is a substantial shareholder of the Company. All other Directors are independent.
At this stage, the role of board committees including the Audit Committee, Remuneration Committee and
Nomination committee are assumed by the Board of Directors. This will be reviewed over the coming year.
Principal Activities
The principal activity of the consolidated entity during the year was the development and commercialisation
of confocal microscopes. There was no change in the nature of this activity during the year.
Corporate Structure
Optiscan Imaging Limited is a company limited by shares that is incorporated and domiciled in Australia.
Trading Results
The consolidated loss of the consolidated entity for the financial year was $1,337,056 (2015: $1,395,399)
after income tax.
Page | 6
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Operating and Financial Review
Operating and Financial Review
Operations
Whilst the 2016 accounts show a loss for the financial year, this was not unexpected and reflected continued
research and development expenditure.
However, it is relevant to note that the outlook for Optiscan Imaging Limited (the “Company“) changed
significantly upon the appointment of:
• A new Chairman and Board in May 2016;
• A new CEO in May 2016;
• A new CFO/Company Secretary in June 2016; and
• A new sales-focused General Manager – Preclinical Research Products in August 2016.
The new board and management undertook a complete review of the strategic direction of the Company with
a view to a significantly improving performance and creating a drive towards a new mission:
“To create shareholder wealth through the profitable delivery of microscopic imaging and related
technologies into the global market”.
Several significantly positive initiatives have emanated from the establishment of this new team including:
• A capital raising in July 2016 which injected significant cash into the Company;
• A capital raising in August 2016 which injected significant cash into the Company;
• Key staff appointments highlighted by the appointment of the General Manager – Preclinical
Research Products;
• Announced on 3 August 2016,
the
commercialisation of the second generation pre-clinical research product which will generate
revenue in the 2017 financial year with a view towards a cash positive Optiscan in the 2018 financial
year; and
the above appointment coincides with a drive
to
• Continuation of the Carl Zeiss Meditec (Zeiss) collaboration following the endorsement by Zeiss of
the prototypes sold to them in May 2016.
As acknowledged during the year, Optiscan has for too long under-delivered on its potential.
The new board and management are determined to drive true commercialisation of the Company’s world-
leading technology in order to deliver on our mission.
To highlight this further, principal operational activities during the period after appointment of the new board
and management were focussed almost entirely on:
(Zeiss) collaboration and driving
it
toward
full
1) Progression of
the Carl Zeiss Meditec
commercialisation in the first part of the 2017 calendar year; and
the second-generation pre-clinical
commercialisation, also in the first part of the 2017 calendar year.
2) Developing
research product and driving
it
toward
In May 2016, as part of the previously announced collaboration project, Optiscan provided Zeiss with 2 split-
system prototypes. The Company has now received endorsement of these prototypes from Zeiss – a key
step in the aforementioned full commercialisation process.
Page | 7
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Operating and Financial Review (continued)
Financial Results
There was a net loss for the year ended 30 June 2016 of $1,337,056 which was of a similar magnitude to the
result for 2015.
The $749,650 net liability as at 30 June 2016 should be viewed alongside the accrual for unissued share
capital in the amount of $662,000. This reflects share capital subscription amounts received prior to year-
end for the share placement, the shares of which were issued on 6 July 2016. At that time the amount of
$662,000 moved from a liability to equity, improving the net liability position.
Near Term Strategy – 2016/17
The Company has identified three key pillars to its current business model:
• Sales of the second-generation pre-clinical research product
This will include:
o Securing sales from the existing customer base of the predecessor model;
o Pursuing established distribution channels; and
o Developing new distribution channels including direct sales and the appointment of new
distributors.
To ensure results will be achieved, the Company announced the appointment of a General Manager -
Preclinical Research Products to provide dedicated focus in this area.
The second generation pre-clinical research product has been improved and is planned to be launched
in 2016.
This product will deliver a significant improvement to the existing technology offering in the research
market. It is expected that the new product range will secure a significant share of the global market after
launch.
• Developing the Carl Zeiss Meditec (Zeiss) collaboration
Zeiss is a pre-eminent market force in the microsurgical visualisation market and its engagement with
Optiscan is a key endorsement of Optiscan’s technology.
Zeiss believes that CNEM (confocal neuro endomicroscopy) is a significant development enabling new
applications in neurosurgery and related disciplines that will become important tools for diagnostic
visualisation in the operating room.
It remains a key focus of the Company’s board and management to drive towards full commercialisation
of the split system collaboration product in the early part of the 2017 calendar year.
Page | 8
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Operating and Financial Review (continued)
• Exploring new market opportunities for related Optiscan products and services
It is important to balance the need to achieve short-term revenue and market penetration with the
development of new markets and new additions to the suite of Optiscan products.
This includes both a 3.5 mm fixed and flexible probe and sheath and a new 2.4 mm probe which has
generated considerable consumer interest.
Both of these projects continue to be developed further and significant R&D time and resources continue
to be invested into the future Optiscan products and specific applications that will benefit from the
development of the Optiscan’s patented technology and the Company’s experience within this field of
science.
Medium Term Strategy and Outlook
It is important to note that the Company is totally focussed on delivering on its near term strategy for 2016/17
and driving Optiscan towards full commercialisation of its key products.
This is essential to ensure the Company delivers on its mission:
“To create shareholder wealth through the profitable delivery of microscopic imaging and related
technologies into the global market”.
However, it is equally important that the Company future-proofs itself and continues to expand on the
opportunities available through Optiscan’s ownership of world-leading technology.
To that end, the Company has identified a range of medical research and treatment markets well suited to
Optiscan’s technology. These include, but are not limited to:
• Gastrointestinal diagnosis;
• Women’s Health;
• ENT (Ear, Nose and Throat);
• Virtual biopsy through microscopic imaging; and
• Arthroscopy of joints
The Company will continue to pursue opportunities in these fields to build on the success from the near term
strategies for 2016/17 to continue to ensure that Optiscan remains at the forefront of innovation and
technological advancement.
Dividends
No dividends have been paid or declared since the beginning of the financial year by the Company (2015:
Nil).
Significant Changes in the State of Affairs
There have been no significant changes to the state of affairs of the consolidated entity during the year.
Page | 9
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Operating and Financial Review (continued)
Significant Events after Balance Date
The following matters or circumstances have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the consolidated entity, the expected results of those
operations in future years, or the state of affairs of the consolidated entity in future financial years:
• On 6 July, 2016, the company issued 29,980,000 new shares in respect of a capital placement,
raising $749,500 from this placement
• On 6 July 2016, 1,000,000 additional new shares were issued for the costs of the loan facility drawn
down on 29 April 2016.
• On 8 September 2016, the company issued 56.6 million new shares through a fully-underwritten 2
for 9 rights issue. $1.4 million before costs was raised from this rights issue.
• On 22 July 2016, the company announced its intention, subject to shareholder approval, to convert a
$600,000 loan from parties associated with director Mr Ian Mann to equity through the issuance of
24 million shares at a price of $0.025 per share.
Likely Developments and Future Results
The Directors have outlined in the Operating and Financial Review that they expect to derive additional
income from the Zeiss collaboration over the next year, as well as achieving sales of the second-generation
pre-clinical research product. The cost base of the company will increase to reflect the additional resource
being employed to develop these activities. This investment is required to move the Company towards
profitability.
Future Operating and Financial Risk
A successful capital raising in July 2016 and a further successful capital raising in August 2016 has injected
necessary short term funds to assist meeting the immediate strategic objectives of the company.
The board has undertaken a financial risk analysis and review and has identified the primary risks to the
business in this area. These are outlined in the Note 2(a) of the financial statements.
Environmental Regulations
The Group is not subject to significant environmental regulations.
Share Options
Since the end of the financial year, and up to the date of this report, no new shares have been issued as a
consequence of the exercise of options which were on issue at year end. Since the end of the financial year,
and up to the date of this report, no options have expired.
The total number of options outstanding at the date of this report is 3,000,000.
Page | 10
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Operating and Financial Review (continued)
Indemnification and Insurance
During the financial year ended 30 June 2016, the company indemnified its directors, the company secretary
and executive officers in respect of any acts or omissions giving rise to a liability to another person (other
than the company or a related party) unless the liability arose out of conduct involving a lack of good faith. In
addition, the company indemnified the directors, the company secretary and executive officers against any
liability incurred by them in their capacity as directors, company secretary or executive officers in
successfully defending civil or criminal proceedings in relation to the company. No monetary restriction was
placed on this indemnity. The Company has insured its directors, the company secretary and executive
officers for the financial year ended 30 June 2016. Under the company’s Directors’ and Officers’ Liabilities
Insurance Policy, the Company shall not release to any third party or otherwise publish details of the nature
of the liabilities insured by the policy or the amount of the premium. Accordingly, the company relies on
section 300(9) of the Corporations Act 2001 to exempt it from the requirement to disclose the nature of the
liability insured against and the premium amount of the relevant policy.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of
the terms of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial
year.
Page | 11
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Remuneration Report (Audited)
This remuneration report outlines the director and executive remuneration arrangements of the group in
accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this
report, Key Management Personnel (KMP) of the group are defined as those persons having authority and
responsibility for planning, directing and controlling the major activities of the group, directly or indirectly,
including any director (whether executive or otherwise) of the parent company.
Details of Key Management Personnel in office during the year
Alan Hoffman
Ian Mann
Peter Francis
Ian Griffiths
Angus Holt
Patrick
O’Connor
George
Cameron-Dow
Peter Delaney
Bruce Andrew
Archie Fraser
Michael Corry
Non-executive Chairman, appointed 2 May 2016
Non-executive Director, appointed 9 December 2015
Non-executive Director, appointed 2 May 2016
Non-executive Director, appointed 2 May 2016
Executive Chairman, resigned 21 July 2016
Executive Chairman, appointed 21 July 2015, resigned 12 April 2016
Non-executive Director, appointed 21 July 2015, resigned 16 September 2015
Director of Technology, Director (resigned as Director 29 April 2016)
Chief Financial Officer, Director (resigned as Director 9 December 2015. Resigned as
Chief Financial Officer 10 June 2016)
Appointed as Chief Executive Officer 16 May 2016
Appointed as Chief Financial Officer and Company Secretary, 13 June 2016
Remuneration Philosophy
The quality and performance of directors, executives and staff is critical to achieving business success.
Optiscan must foster a remuneration policy that attracts, motivates and retains personnel of the highest
calibre.
In formulating a framework for remuneration policies and practices, the board takes account of the following
factors:
• Capacity to pay;
• Employment market conditions;
• Company performance;
•
•
Identification of appropriate performance benchmarks; and
Individual performance levels.
Objective of Remuneration Policy
The overall objective of the remuneration policy is to ensure maximum stakeholder benefit from the retention
of a high quality board, management and staff at a cost which is commercially realistic and acceptable to
shareholders. This objective seeks to:
• Reward employees for individual performance against appropriate benchmarks.
• Align the interests of management and staff with those of shareholders.
• Provide a link between rewards and the achievement of strategic targets, performance outcomes
and share price.
• Ensure remuneration is competitive by market standards.
Page | 12
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Remuneration Report (Audited) (continued)
Non-executive Director Remuneration
The Constitution of the company and the ASX Listing Rules establish an aggregate or maximum level of
remuneration available to non-executive directors, to be divided amongst the directors as agreed. The
aggregate amount approved by shareholders to be available for remuneration of non-executive directors is
$400,000 per annum.
The Board has determined that non-executive directors shall receive only fixed remuneration by way of
payment of fees. There is no variable, short term incentive remuneration for non-executive directors, nor is
there any entitlement to retiring allowances or payments other than the statutory superannuation required by
law.
Non-executive directors receive an annual fee for all services provided to the company, including being a
director of the company and any of its subsidiaries, and for serving on board sub committees in accordance
with the requirements of the Corporate Governance Policy.
Non-executive directors are encouraged to hold shares in the company which have been purchased on
market or through placements where participation by the directors has been approved by shareholders in
general meeting. It is considered good governance for the directors to have a personal financial stake in the
company.
The remuneration of directors for the years ended 30 June 2016 and 30 June 2015 is detailed in Table 1 and
Table 2 on page 16 of this report.
Executive Remuneration
The Remuneration Committee (currently comprising the board) is responsible for establishing the structure
and amount of remuneration.
Remuneration may consist of fixed and variable components, incorporating both short term incentives (STI)
and long term incentives (LTI), as follows:
Remuneration Component
Fixed remuneration
Variable remuneration, (STI)
Variable remuneration, (LTI)
Form of Settlement
Base salary and superannuation
Performance bonus
Employee options
Fixed Remuneration
Objective
The level of fixed remuneration is set so as to provide a base level of remuneration, which is both
appropriate to the position and competitive in the market.
Structure
Fixed remuneration is reviewed annually by the Remuneration Committee, and the process consists of a
review of company and individual performance, and comparative remuneration in the market. All employees
are provided with the opportunity to receive their fixed remuneration in both cash and benefits, subject to
there being no change in overall cost to the company. Compulsory superannuation contributions are
included in the determination of fixed remuneration.
Page | 13
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Remuneration Report (Audited) (continued)
Executive Remuneration (continued)
The fixed remuneration component of executives for the years ended 30 June 2016 and 30 June 2015 is
detailed in Table 1 and Table 2 on page 16 of this report.
Variable Remuneration
The objectives and structure of the Group’s policy on Variable Remuneration is set out below. This policy is
currently suspended, and will be re-activated when economic circumstances permit (refer Suspension of
STI).
Variable Remuneration - Short Term Incentive (STI)
Objective
The objective of the STI program is to link the achievement of the group’s operational targets with the
remuneration received by key management personnel with prime responsibility for meeting those targets.
The total potential STI available is set at a level so as to provide sufficient incentive to the key management
personnel to achieve the operational targets and such that the cost to the company is reasonable in the
circumstances.
Structure
Actual STI payments granted to key management personnel depend on the extent to which specific
operating targets set at the beginning of the financial year are met. The operational targets consist of a
number of Key Performance Indicators (KPI’s) covering both financial and non-financial measures of
performance. Typically included are such measures as achievement of budgeted financial outcomes and key
milestones, for example, demonstrating clinical efficacy, achieving quality accreditation, obtaining regulatory
clearance or measures such as control of expenditure or achievement of sales targets. The Board or
Remuneration Committee establishes clear performance benchmarks, which must be met in order to trigger
payments under the short term incentive scheme.
The aggregate amount of annual STI payments available for key management personnel and other
executives is subject to the approval of the Remuneration Committee. Payments made are usually delivered
as a cash bonus.
Variable Remuneration - Long Term Incentive (LTI)
Long term incentives are delivered to executives and employees by way of grant of options under the
Employee Share Option Plan.
Objective
The objective of the long term incentive plan is to reward executives and employees in a manner which
aligns this element of remuneration with the creation of shareholder wealth.
Structure
LTI grants to employees, including executives, are delivered in the form of options. The Remuneration
Committee is responsible for the allocation of options, and determines the quantum of grants by reference to
group and individual performance against targets.
Suspension of STI Arrangements
STI arrangements are suspended until achievement of financial improvement is achieved. As a result of this
position, no STI entitlements were accrued and no payments were made to key management personnel
during the 2015/2016 financial year.
Page | 14
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Remuneration Report (Audited) (continued)
Incentives and Company Performance
The link between incentive structure and company performance is an important aspect of remuneration
philosophy. The purpose of the remuneration policies of the Group is to create an effective and transparent
link between the incentives provided and the performance of the Group.
The group is in the process of transition from a business predominantly engaged in research and
development (“R&D”) to one increasingly focussed on commercialisation of its technology. Whilst substantial
progress has been made, the transition from loss making R&D activities to profit making trading has not yet
been completed. As a consequence, performance to date cannot appropriately be determined with
conventional financial measurement tools. As the group has expensed all R&D expenditure incurred to date,
losses have been reported so conventional earnings measures such as profit growth, EPS or dividend yield
and payout are not applicable.
In view of the limited relevance of financial measurement tools, the Board of Directors has determined that
the performance of the group is best reviewed in the context of achievement of key milestones. During the
period, no additional remuneration was paid based on milestones.
Incentive Payments and Performance Conditions 2015/2016
During the year ended 30 June 2016, no STI incentive payments were made to staff.
An LTI incentive was granted to the CEO, Mr Archie Fraser. An options package comprising 4 tranches
875,000 options and 2 tranches of 2,000,000 share options (a total of 7,500,000 options) were issued
pursuant to the terms of his employment contract. Further details are set out below in Table 3: Share
Options Movements for current period ending 30 June 2016
Employment Contracts
All staff including executives are engaged under rolling employment agreements. The contracts continue
indefinitely subject to satisfactory performance, and provide one months notice. Under the terms of the
agreements:
• The company may terminate the employment agreement by providing the requisite period of written
notice or by providing payment in lieu of notice, based on the fixed component of remuneration. Any
unvested options at the expiry of the notice period will be forfeited.
• On resignation any unvested options are forfeited.
• The company may terminate the agreement at any time without notice if serious misconduct has
occurred, in which case the executive is only entitled to that portion of remuneration that is fixed, and
only up to the date of termination.
Page | 15
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Remuneration Report (Audited) (continued)
Compensation of Key Management Personnel
Table 1: Compensation of Key Management Personnel for the year ended 30 June 2016
Short-Term
Long Term
Post
Employment
Total $
Total
Performance
Related %
30 June
2016
Salary
& fees
Director
fees
Termination
Share
Based
Incentives
Long
Service
Leave
Superannuation
89,000
-
32,418
B. Andrew
G. Cameron
Dow
M. Corry
12,500
P. Delaney
150,000
-
8,054
-
-
P. Francis
-
6,667
A. Fraser
22,030
-
I. Griffiths
-
11,212
A. Holt
32,284
A. Hoffman
I. Mann
P. O’Connor
-
-
-
305,814
-
12,500
6,667
29,723
74,823
-
-
-
-
-
7,571
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,418
7,571
-
-
-
-
-
-
-
-
-
-
-
-
8,787
130,205
765
8,819
-
12,500
14,250
164,250
-
1,539
-
732
1,188
633
-
6,667
31,140
11,212
33,016
13,688
7,300
29,723
27,894
448,520
-
-
-
-
-
-
-
-
-
-
-
-
Table 2: Compensation of Key Management Personnel for the year ended 30 June 2015
Short-Term
Long Term
Post
Employment
Total $
Total Performance
Related %
30 June 2015
A. Holt
P. Delaney
B. Andrew
Salary
& fees
Directors
fees
52,500
103,417
52,500
208,417
40,000
40,000
40,000
120,000
Long
Service
Leave
2,106
31
2,106
4,243
Superannuation
8,788
12,508
8,788
30,084
103,394
155,956
103,394
362,744
-
-
-
-
Page | 16
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Remuneration Report (Audited) (continued)
Compensation Options Granted and Vested During the Year
During the current financial year options were granted to the CEO, Mr Archie Fraser as equity compensation
benefits under a long-term incentive plan. Further details are set out below in Table 3 of remuneration report.
Table 3: Options awarded, vested and lapsed during the year ended 30 June 2016
Name
Financial
Year
Options
awarded
during the
year(no.)
Archie
Fraser
2016
2016
2016
2016
875,000
875,000
875,000
875,000
2016
2,000,000
2016
2,000,000
Grant
Date
12 May
2016
12 May
2016
12 May
2016
12 May
2016
12 May
2016
12 May
2016
Total
7,500,000
Fair
value
per
option
at
grant
date ($)
Vesting Date
Exercise
Price ($)
Expiry Date
Options
Vested
during
year (No.)
Options
Lapsed
during
year (No.)
Value of
options
granted
during the
year ($)
Value of
options
exercised
during the
year ($)
-
-
-
-
$0.025
16 Nov 2016
$0.05
16 Nov 2019
$0.025
16 May 2017
$0.05
16 May 2020
-
-
-
-
$0.025
16 Nov 2017
$0.05
16 Nov 2020
$0.025
16 May 2018
$0.05
16 May 2021
$0.025
16 May 2019
$0.05
16 May 2022
$0.025
16 May 2020
$0.05
16 May 2023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The fair value of options granted during the year, as included in the above table, was determined using a bi-
nominal simulation based model. A bi-nominal simulation based model simulates the path of the share price
according to a probability distribution assumption. After a large number of simulations, the arithmetic average
of the outcomes, discounted to the valuation date, is calculated to represent the option value. This model can
accommodate complex exercise conditions when the number of options exercised depends on some
function of the whole path followed by the share price.
The following table list the inputs to the binominal model used for the above share option plan during the
year ended 30 June 2016:
Dividend yield
(%)
Expected
volatility (%)
Risk-free interest
rate (%)
Expected life of
share options
(years)
Weighted
average share
price ($)
30-Jun-16
0%
80%
2%
3 years
$0.025
The expected volatility used was based on market based factors and stage of development of the Group.
The risk free rate was based on the yields available on High Quality Corporate Bonds with a similar life as
the options.
Page | 17
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Remuneration Report (Audited) (continued)
Shares Issued on Exercise of Compensation Options
No shares have been issued as a result of the exercise of options granted as compensation to key
management personnel during the years ended 30 June 2016 and 30 June 2015.
Option holdings of Key Management Personnel
Options holdings of Key Management Personnel for the year ended 30 June 2016
There were no option holdings by key management personnel at 30 June 2015.
As part of a remuneration package announced on 13 May 2016 and subject to approval at the Annual
General Meeting for the incoming CEO, Mr Archie Fraser will be issued with up to 7,500,000 options.
Further details are set out above in Table 3 of remuneration report.
Shareholdings of Key Management Personnel
Shares held in Optiscan Imaging Limited for the year ended 30 June 2016 (number)
30 June 2016
Balance at
beginning of
period 01-Jul-15
Holding at
Date of
joining KMP
Purchased
Disposed
Holding at Date
Ceased to be part of
KMP
Balance at end of
period
30-Jun-16
Directors
I. Mann
-direct
-indirect
A. Holt
-direct
-indirect
P. Delaney
-direct
-indirect
B. Andrew
-indirect
-
-
-
15,000,000
3,730,000
8,251,383
4,231,259
270,090
1,090,000
-
-
-
-
-
Total
17,572,732
15,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000,000
(3,730,000)
(8,251,383)
-
-
-
-
4,231,259
270,090
(1,090,000)
-
(13,071,383)
19,501,349
All equity transactions with Key Management Personnel have been entered into under terms and
conditions no more favourable than those the Group would have adopted if dealing at arm’s length.
Page | 18
Optiscan Imaging Limited
Annual Report 2016
Directors’ Report (continued)
Remuneration Report (Audited) (continued)
Other transactions and balances with KMP and their related parties
Loans
In December 2015, an entity associated with Non-executive Director, Mr. Ian Mann, provided a loan of
$300,000 having a first charge over the company and interest charge of 15% which was subsequently
restructured on 29 February 2016. Another entity, also associated with Mr Ian Mann, refinanced that loan at
10% on 29th February 2016, injected an additional $200,000 on that date with a further $100,000 advanced
on 27 April 2016. The first charge over the company of the second facility was made subordinate to the 29
April 2016 R&D facility. No establishment, penalty or any other kind of fees were charged on either related
party loan.
Page | 19
Optiscan Imaging Limited
Annual Report 2016
Auditor Independence and Non-Audit Services
Non-Audit Services
The following non-audit services were provided by Ernst & Young. The directors are satisfied that the
provision of non-audit services is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001. The nature and scope of non-audit services provided means that auditor
independence was not compromised.
Ernst & Young received the following amount for the provision of non-audit services:
R&D tax services - $12,980
Auditor Independence
The directors received the following declaration from the auditor of Optiscan Imaging Limited.
This report has been made in accordance with a resolution of directors on Friday 23rd September 2016.
Alan Hoffman
Chairman
27 September 2016
Page | 20
Optiscan Imaging Limited
Annual Report 2016
Corporate Governance Statement
Optiscan is committed to ensuring that its policies and practices reflect good corporate governance.
This statement reports against the key governance principles as outlined in the Australian Stock Exchange
Corporate Governance Council’s “Principles of Good Corporate Governance and Best Practice
Recommendations”.
The Board of Directors of Optiscan Imaging Limited is responsible for the corporate governance of the
consolidated entity. The Board guides and monitors the business and affairs of Optiscan Imaging Limited on
behalf of the shareholders by whom they are elected and to whom they are accountable.
Details of the directors, current at the time of this report, and their term in office are:
Director
Alan Hoffman
Ian Mann
Peter Francis
Ian Griffiths
Status
Non Executive
Non Executive
Non Executive
Non Executive
Term in office
5 months
9 months
5 months
5 months
The skills, experience and expertise of each director is included in the Directors’ Report. Directors of
Optiscan Imaging Limited are considered to be independent when they are independent of management and
free from any business or other relationship that could materially interfere with, or could reasonably be
perceived to materially interfere with, the exercise of their independent judgement.
A consequence of this small board is that there is no meaningful case for board committees, so there is no
Nomination, Audit, Risk or Remuneration Committee in place at present, and these roles are performed by the
full board. The directors will regularly monitor the issues of the board composition, skills, diversity and
independence.
The Corporate Governance Policy Statement covers issues such as the procedure for nomination, selection
and appointment of new directors, performance evaluation and the re-election of directors. An evaluation of
the Board did not take place during the period.
The functions reserved to the Board, and those delegated to senior executives are clearly distinguished and
set out in the Corporate Governance Policy Statement. Prior to the appointment of the Chief Executive
Officer in May 2016, matters otherwise delegated to that role were assumed by the board. The process for
evaluating the performance of senior executives is also set out in the Corporate Governance Policy
Statement. An evaluation of senior executives did not take place during the year due to the restructuring
within the Group.
Diversity
The company has not established a policy on diversity at this time and the company has not established
measurable objectives for achieving gender diversity. The board considers that adoption of a policy on
diversity at this time is impractical for a small organisation comprising less than ten full time equivalent (FTE)
staff. The company’s policy on equal opportunity provides relevant guidance on issues of diversity in the
current circumstances of the company.
Remuneration
The Board is responsible for determining and reviewing compensation arrangements for the directors,
management and staff. There is no scheme to provide retirement benefits, other than statutory
superannuation, to non-executive directors. Full details of the remuneration of key management personnel
and all directors are included in the Directors’ Report.
Page | 21
Statement of Financial Position
AS AT 30 JUNE 2016
Optiscan Imaging Limited
Annual Report 2016
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Notes
CONSOLIDATED
2016
$
2015
$
9
10
11
954,805
268,893
780,792
693,004
28,500
37,048
28,500
829
Total Current Assets
1,801,145
991,226
Non-current Assets
Plant and equipment
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Interest bearing loans and borrowings
Provisions
Total Current Liabilities
Non-current Liabilities
Provisions
Total Non-current Liabilities
TOTAL LIABILITIES
NET LIABILITIES
EQUITY
Contributed equity
Accumulated losses
Reserves
TOTAL DEFICIENCY
12
19,691
26,985
19,691
26,985
1,820,836
1,018,211
13
14
16
16
1,211,810
420,553
1,124,358
510,533
231,477
242,824
2,567,645
1,173,910
2,841
2,841
19,512
19,512
2,570,486
1,193,422
(749,650)
(175,211)
17
17
17
49,362,778
48,684,716
(51,687,388)
(50,350,332)
1,574,960
1,490,405
(749,650)
(175,211)
The above statement of financial position should be read in conjunction with the accompanying notes.
Page | 22
Statement of Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2016
Optiscan Imaging Limited
Annual Report 2016
Sale of goods
Other revenue
Revenue
Cost of sales
Gross Profit
Other income
Research & development expenses
Administrative expenses
Other expenses
Notes
CONSOLIDATED
2016
$
2015
$
6(a)
309,697
3,702
46,092
12,030
313,399
58,122
(94,826)
(12,835)
218,573
45,287
6(b)
1,054,716
983,717
(1,265,884)
(1,070,373)
(1,331,357)
(1,315,783)
(13,104)
(38,247)
Loss before income tax
(1,337,056)
(1,395,399)
Income tax expense
7
-
-
Net profit (loss) for the year
(1,337,056)
(1,395,399)
Other comprehensive income
Items that may be subsequently recycled through profit and loss:
Foreign currency translation of net investment in
foreign subsidiary
Other comprehensive income for the period net of tax
44
44
27
27
TOTAL COMPREHENSIVE INCOME (LOSS) FOR PERIOD
(1,337,012)
(1,395,372)
Earnings (loss) per share (cents per share)
- basic earnings (loss) per share for the year
- diluted earnings (loss) per share for the year
8
(0.61)
(0.61)
(0.72)
(0.72)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
Page | 23
Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2016
Optiscan Imaging Limited
Annual Report 2016
CONSOLIDATED
Ordinary
shares
Accumulated
Losses
$
$
Share
Based
Payments
$
Foreign
Currency
Translation
Reserve
$
Total
$
At 1 July 2015
48,684,716
(50,350,332)
1,485,661
4,744
(175,211)
Loss for the year
Other comprehensive income
Total comprehensive income (loss) for the year
-
-
-
(1,337,056)
-
(1,337,056)
Transactions with owners in their capacity as
owners:
Loan facility fee settled by issue of shares
Shares issued for cash
Underwriting fee settled by issue of options
Transaction costs of share issues
111,000
690,073
(84,510)
(38,500)
-
-
-
-
-
-
-
-
-
84,510
-
-
(1,337,056)
44
44
44
(1,337,012)
-
-
-
-
111,000
690,073
-
(38,500)
At 30 June 2016
49,362,779
(51,687,388)
1,570,171
4,788
(749,650)
At 1 July 2014
47,279,893
(48,954,933)
1,485,661
4,717
(184,662)
Loss for the year
Other comprehensive income
Total comprehensive income (loss) for the year
-
-
-
(1,395,399)
-
(1,395,399)
Transactions with owners in their capacity as
owners:
Shares based payments
Shares issued for cash
Shares issued on conversion of notes
Transaction costs of share issues
15,000
574,500
849,199
(33,876)
-
-
-
-
-
-
-
-
-
-
-
-
(1,395,399)
27
27
27
(1,395,372)
-
-
-
-
15,000
574,500
849,199
(33,876)
At 30 June 2015
48,684,716
(50,350,332)
1,485,661
4,744
(175,211)
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Page | 24
Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Royalties received
Interest received
Receipt of government grants
Optiscan Imaging Limited
Annual Report 2016
Notes
CONSOLIDATED
2016
$
2015
$
604,375
306,654
(1,801,308)
(2,490,057)
4,094
3,918
6,500
5,569
679,675
711,690
Net cash used in operating activities
9
(509,246)
(1,459,644)
Cash flows from investing activities
Purchase of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from issue of convertible notes, net of transaction costs
Proceeds from short term loan
Transaction costs relating to share issues
Repayment of short term loan and interest
Repayment of convertible notes
Net cash flows from financing activities
Net decrease in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of period
12
(2,757)
(14,507)
(2,757)
(14,507)
17
14
14
6
14
14
690,074
574,500
-
754,196
1,100,000
500,000
(38,500)
(33,876)
(553,539)
-
-
(126,466)
1,198,035
1,668,354
686,032
194,203
(120)
(252)
268,893
74,942
Cash and cash equivalents at end of period
9
954,805
268,893
The above statement of cash flows should be read in conjunction with the accompanying notes.
Page | 25
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
1 CORPORATE INFORMATION
The consolidated financial statements of Optiscan Imaging Limited and its subsidiaries (collectively the
Group) for the year ended 30 June 2016 was authorised for issue in accordance with a resolution of the
directors on 23 September 2016.
Optiscan Imaging Limited is a company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Stock Exchange. The nature of the operations and principal activities of
the Group are described in the directors’ report. Information on the Group’s structure is provided in Note
19.
The Group’s functional and presentational currency is Australian Dollars (AUD$).
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Table of contents
Basis of preparation
a)
Changes in accounting policy, disclosures, standards and interpretations
b)
Basis of consolidation
c)
Revenue recognition
d)
Government grants
e)
Leases
f)
Cash and cash equivalents
g)
Trade and other receivables
h)
Inventories
i)
Derivative financial instruments and hedging
j)
Foreign currency translation
k)
l)
Income tax
m) Other taxes
n)
o)
p)
q)
r)
s)
t)
u)
v)
w)
Plant and equipment
Investments and other financial assets
Intangible assets
Trade and other payables
Interest bearing loans and borrowings
Provisions and employee leave benefits
Share-based payment transactions
Contributed equity
Earnings (Loss) per share
Segment reporting
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 is presented in
Australian dollars and has been prepared on a historical cost basis, except for derivative financial
instruments which have been measured at fair value. Optiscan Imaging Limited is, for the purposes of
preparing these financial statements, a for-profit entity.
Compliance with IFRS
The financial report complies with Australian Accounting Standards and International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
Page | 26
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
a) Basis of preparation (continued)
Going Concern (Significant Uncertainty as at 30 June 2016)
In common with many entities in the medical technology sector, the company’s operations are subject to
an element of risk due to the nature of the development and commercialisation being undertaken. A part
of this risk relates to funding of the Company’s activities and related issues including the conditions
prevailing in local and international financial markets. In the context of this operating environment, the
company may need to raise additional capital in order to execute its near term and medium term plans
for expansion of its product portfolio. Whilst there is an element of risk surrounding the Company’s
ability to continue as a going concern without additional capital, the directors believe the Company has
the ability to raise additional capital should it be required and has a successful track record in doing so.
With the aim of improving the Company’s performance, a new board was appointed on 2 May 2016,
bringing with it a significant level of expertise and a newfound confidence of the ability of the Company
to trade is way into a positive profit and earnings environment, with sufficient cash flows available to
meet working capital requirements and the group’s obligations and liabilities as they fall due.
As at 30 June 2016, the financial position of the consolidated entity as disclosed in the financial
statements reflects a net asset deficiency position of $749,650 (2015: net asset deficiency position of
$175,211). This balance has been determined after a consolidated net loss for the year of $1,337,012
(2015: $1,395,399), and a net cash outflow from operations of $509,246 (2015: $1,459,644).
The accounts have been prepared on a going concern basis, which includes the presumption that
sufficient funds will be available to finance the operations of the consolidated entity. In adopting this
position, the directors have had regard to:
• Cash on hand at 30 June 2016 is $954,805 (2015: $268,893);
• Additional fundraising in subsequent to balance date as highlighted in Note 22;
• Additional cashflow is expected to be received in the 2016 financial year under the agreement
with Carl Zeiss;
• Revenue is expected to increase from the sale of systems to Carl Zeiss and the sale of second
generation pre-clinical research product;
• The directors believe the Company has the ability to raise additional capital from existing and
new investors;
• The Company has a successful track record in raising capital to fund its operations;
• The Company may have the ability to raise additional income, or accelerate forecasted cash
flows if required.
The directors plan to continue the Company and the consolidated entity’s operations on the basis
outlined above, and believe there will be sufficient funds for the Group to meet its obligations and liability
for at least twelve months from the date of this report.
Page | 27
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
b) Changes in accounting policy, disclosures, standards and interpretations
The Group has adopted the following new and amended Australian Accounting Standards and AASB
Interpretations as of 1 July 2015.
• AASB 2012 – 3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and
Financial Liabilities
• AASB 2013 -4 Amendments to Australian Accounting Standards – Novation of Derivatives and
Continuation of Hedge Accounting [AASB 139]
• AASB 1031 Materiality
• AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual
Framework, Materiality and Financial Instruments
• AASB 2014-1 Part A -Annual Improvements 2010–2012 Cycle
• AASB 2014-1 Part A -Annual Improvements 2011–2013 Cycle
• AASB CF 2013-1 Amendments to the Australian Conceptual Framework
The above new and amended Australian Accounting Standards and AASB Interpretation did not have any
material impact on the accounting policies, financial position or performance of the Group.
The following new Australian Accounting Standards have been issued by the AASB but are not yet effective
for the period ended 30 June 2016. They have not been adopted by the Group for the year ended 30 June
2016.
• AASB 9 Financial instruments: this replaces AASB 139. AASB 9 is effective for annual periods
beginning on or after 1 January 2018.
• AASB 15 Revenue from Contracts with Customers: this replaces the existing revenue recognition
standards. AASB 15 is effective for annual reporting periods commencing on or after 1 January 2018.
• AASB 16 Leases: supersedes AASB 117. AASB 16 will be effective for annual periods beginning on
or after 1 January 2019.
• AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB
1031 Materiality
The potential effects of adoption of the above standards are currently being assessed. The Company has not
decided whether to early adopt any or all of these standards at this point in time.
In addition, the following amendments to existing standards (issued but not yet effective) are not expected to
result in significant changes to the Company’s accounting policies in the future:
• AASB 2014-4 - Clarification of Acceptable Methods of Depreciation and Amortisation
• AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to
Australian Accounting Standards 2012–2014 Cycle
• AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments
to AASB 101
• AASB 2015-5 Amendments to Australian Accounting Standards – Investment Entities: Applying the
Consolidation Exception
• AASB 2015-9 Amendments to Australian Accounting Standards – Scope and Application Paragraphs
[AASB 8, AASB 133 & AASB 1057]
• AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax
Assets for Unrealised Losses
• AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments
to AASB 107
Page | 28
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
c) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its
subsidiaries as at 30 June 2016. Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee. Specifically, the Group controls an investee if and only if the Group
has:
• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee, and
• The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the
year are included in the statement of comprehensive income from the date the Group gains control until
the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity
holders of the parent of the Group and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with the Group’s accounting
policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary, it:
• De-recognises the assets (including goodwill) and liabilities of the subsidiary
• De-recognises the carrying amount of any non-controlling interests
• De-recognises the cumulative translation differences recorded in equity
• Recognises the fair value of the consideration received
• Recognises the fair value of any investment retained
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be required if the Group had directly disposed of the
related assets or liabilities.
Page | 29
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
d) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognised:
(i) Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to
the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods
to the customer.
(ii) Rendering of services
Revenue from service and product support activities is recognised by reference to the stage of
completion of a contract. Stage of completion is measured by reference to labour hours incurred to date
as a percentage of total estimated labour hours for each contract. When the contract outcome cannot be
estimated reliably, revenue is recognised only to the extent of the expenses recognised that are
recoverable.
(iii) Royalty revenue
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant
licensing agreement.
(iv) Interest revenue
Interest revenue is recognised as interest accrues using the effective interest method. This is a method
of calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
e) Government grants
When the grant relates to an expense item, it is recognised as income over the periods necessary to
match the grant on a systematic basis to the costs that it is intended to compensate. Where expenditure
has been incurred that gives rise to an entitlement under a grant agreement, the grant income is
accrued. Revenue is recognised only to the extent that there is reasonable assurance that the grant will
be received and conditions attached will be complied with.
f) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of
the arrangement and requires an assessment of whether the fulfillment of the arrangement is
dependent on the use of a specific asset or assets and the arrangement conveys a right to use the
asset.
Group as lessor
(i)
Leases in which the Group retains substantially all the risks and benefits of ownership are classified as
operating leases. Rental income is recognised in profit or loss in accordance with the term of the lease.
Group as lessee
(ii)
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over
the lease term.
Page | 30
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
g) Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand
and short term deposits with an original maturity of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and
short term deposits are stated at nominal values.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above.
h) Trade and other receivables
Trade receivables and other receivables, both of which generally have 30 to 60 day terms, are non
interest bearing and are recognised and carried at original invoice amount less an allowance for any
uncollectible amounts. Impairment of receivables is assessed by reference to ageing of receivables and
the Group’s knowledge of the profile and status of the debtors.
An allowance for doubtful debts is made when there is objective evidence that the Group will not be able
to collect the debts. Bad debts are written off when identified.
i)
Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as
follows:
- Raw materials – purchase cost on a first-in, first-out basis; cost comprises the purchase price,
import duties and other taxes (other than those subsequently recoverable by the entity from the
taxing authorities), and transport, handling and other costs directly attributable to acquisition
- Finished goods and work-in-progress – cost of direct materials and labour and a proportion of
manufacturing overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated
costs of completion and the estimated costs necessary to make the sale.
Page | 31
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
j) Derivative financial instruments and hedging
The Group sometimes uses derivative financial instruments in the form of forward currency contracts to
economically hedge its risks associated with foreign currency fluctuations. 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 to fair value. Derivatives are carried as assets when their fair value is
positive and as liabilities when their fair value is negative. The fair value of forward currency contracts is
calculated by reference to current forward exchange rates for contracts with similar maturity profiles.
As the Group economically hedges but does not meet the strict criteria for hedge accounting under
AASB 139 Financial Instruments: Recognition and Measurement, any gains or losses arising from
changes in the fair value of derivatives are taken directly to profit or loss for the year. For information on
the Group's financial risk management objectives and policies with respect to its economic hedging
program, refer to Note 3.
k) Foreign currency translation
Both the functional and presentation currency of Optiscan Imaging Limited and its Australian subsidiary
is Australian dollars ($). Each entity in the Group determines its own functional currency and items
included in the financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at balance date.
All transactional exchange differences are recognised in profit or loss. Exchange variations arising on
consolidation from the translation of the net investment in foreign subsidiaries, including loans forming
part of the net investment, are recognised in the foreign currency translation reserve in equity.
l)
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by balance date.
Deferred income tax is provided on all temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at balance date.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or
interests in joint ventures, and the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Page | 32
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
l)
Income tax (continued)
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax credits
and unused tax losses can be utilised. Exceptions to this position arise:
• when the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates
or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that
it is probable that the temporary difference will reverse in the foreseeable future and taxable profit
will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date to determine
whether it is probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised. The carrying amount of deferred tax assets is reduced to the extent that
it is not probable that sufficient taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to
the extent that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the
year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or
loss.
If deferred tax assets and deferred tax liabilities are recorded in the accounts, they are offset only if a
legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred
tax assets and liabilities relate to the same taxable entity and the same taxation authority.
Tax consolidation
Optiscan Imaging Limited and its 100% owned Australian resident subsidiary have elected not to form a
tax consolidated group.
m) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
•
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the Statement of Financial Position.
Page | 33
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
m) Other taxes (continued)
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities, which is recoverable from, or payable to, the
taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed
net of the amount of GST recoverable from, or payable to, the taxation authority.
n) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets. The
depreciation rates applied to the main classes of plant and equipment are:
Class of plant and equipment
Depreciation rate
Office furniture & equipment
Production equipment
R&D equipment
20% - 40%
20%
30% - 40%
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
Disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year
the asset is derecognised.
o)
Investments and other financial assets
Other financial assets consist of investments in controlled entities, which are carried at cost less any
impairment in the parent company's financial statements.
The carrying values of investments in controlled entities are reviewed for impairment at each reporting
date.
p)
Intangible assets
The only intangible assets recognised by the group are software assets. The amounts capitalised
represent the acquisition cost of software used in the design, development and administrative activities
of the group. These amounts are amortised over a period of no more than three years, and are
assessed for impairment on an annual basis. At present intangible software assets are fully written
down, with zero carrying value.
Page | 34
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
p)
Intangible assets (continued)
Research and development costs
Research costs are expensed as incurred. An intangible asset arising from development expenditure on
an internal project is recognised only when the Group can demonstrate the technical feasibility of
completing the intangible asset so that it will be available for use or sale, its intention to complete and its
ability to use or sell the asset, how the asset will generate future economic benefits, the availability of
resources to complete the development and the ability to measure reliably the expenditure attributable to
the intangible asset during its development. Following the initial recognition of the development
expenditure, a review of activity will be conducted on a project by project basis, and the cost model will
be applied, requiring the development asset to be carried at cost less any accumulated amortisation and
accumulated impairment losses. Any expenditure so capitalised is to be amortised over the period of
expected benefits from the related project. No such expenditure has yet been capitalised by the Group.
q) Trade and other payables
Trade payables and other payables are non interest bearing and are carried at amortised cost. They
represent liabilities for goods and services provided to the Group prior to the end of the financial year
that are unpaid and arise when the Group becomes obliged to make future payments in respect of the
purchase of these goods and services. The amounts are unsecured and are generally paid on 30 day
terms.
r)
Interest bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less
directly attributable transaction costs.
After initial recognition, the carrying value of interest bearing loans and borrowings are approximate fair
value. Any fees paid on the establishment of loan facilities that are yield related are included as part of
the carrying amount of the loans and borrowings. Costs of borrowing facilities are treated as
prepayments and allocated over the term of the facility.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after balance date.
The consideration received from the issue of convertible notes is allocated between equity and liabilities.
The equity component is that part of the consideration that relates to the value of the option to convert to
equity. The balance of the consideration received is the fair value of the convertible note liability.
s) Provisions and employee leave benefits
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented in profit or loss net of any
reimbursement.
Page | 35
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
s) Provisions and employee benefits (continued)
Provisions (continued)
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at balance date using a discounted cashflow methodology. If the
effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects the time value of money and the risks specific to the liability.
Employee leave benefits
(i) Wages, salaries, superannuation, and annual leave
Liabilities for wages and salaries, including non-monetary benefits, superannuation and annual leave
expected to be settled within 12 months of the reporting dates are recognised in respect of employees'
services up to the reporting date. They are measured at the amounts expected to be paid when the
liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken
and are measured at the rates paid or payable.
(ii) 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 corporate bonds with terms to maturity and currencies that match, as
closely as possible, the estimated future cash outflows.
(iii) Warranty
A provision for warranty at the rate of 3% of sales has been provided and the incidence of warranty claims is
monitored on an ongoing basis to assess adequacy of the provision.
t) Share-based payment transactions
(i)
Equity settled transactions with employees
The Group provides benefits to employees (including key management personnel) in the form of share-
based payments, whereby employees render services in exchange for shares or rights over shares
(equity-settled transactions).
There is an Employee Share Option Plan (ESOP) in place, which provides benefits to employees.
The cost of these equity-settled transactions with employees is measured by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined using a
Black Scholes valuation model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of Optiscan Imaging Limited (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled (the vesting period),
ending on the date on which the relevant employees become fully entitled to the award (the vesting
date).At each reporting date until vesting the cumulative charge to profit or loss is the product of (i) the
grant date fair value of the award; (ii) the current best estimate of the number of equity instruments that
will ultimately vest, taking into account such factors as the likelihood of employee turnover during the
vesting period, and the likelihood of non market performance conditions being met, and (iii) the expired
portion of the vesting period. The charge to profit or loss for the period is the cumulative amount as
calculated above less the amounts already charged in previous periods. There is a corresponding entry
to equity.
Page | 36
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
t) Share-based payment transactions (continued)
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer
awards vest than were originally anticipated to do so. Any award subject to a market condition is
considered to vest irrespective of whether or not that market condition is fulfilled, provided all other
conditions are satisfied. If the terms of an equity-settled award are modified, as a minimum an expense
is recognised as if the terms had not been modified. An additional expense is recognised for any
modification that increases the total fair value of the share-based payment arrangement, or is otherwise
beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original award, as
described in the previous paragraph.
(ii)
Equity settled transactions with parties other than employees
The Group may from time to time enter into arrangements with parties other than employees which
involve consideration in the form of equity-settled transactions by way of allotment of shares and or
options.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the service is provided.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings / (loss) per share (see note 8).
u) 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 from the proceeds (net of tax).
The consideration received from the issue of convertible notes is allocated between equity and liabilities.
The equity component is that part of the consideration that relates to the value of the option to convert to
equity.
v) Earnings (Loss) per share
Basic earnings (loss) per share is calculated as net profit (loss) attributable to members of the parent,
adjusted to exclude any costs of servicing equity (other than dividends) divided by the weighted average
number of ordinary shares.
Diluted earnings (loss) per share is calculated as net profit (loss) attributable to members of the parent,
adjusted for:
•
costs of servicing equity (other than dividends) and interest associated with dilutive potential
ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result
from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares.
Page | 37
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
w) Segment reporting
An operating segment is a component of an entity that engages in business activities from which it may
earn revenues and incur expenses (including revenues and expenses relating to transactions with other
components of the same entity), whose operating results are regularly reviewed by the entity's chief
operating decision maker to make decisions about resources to be allocated to the segment and assess
its performance and for which discrete financial information is available.
Operating segments have been identified based on the information provided to the chief operating
decision makers, being the board of directors.
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's principal financial instruments comprise receivables, payables, cash and short-term
deposits, loans and, from time to time, convertible notes and derivatives.
In the context of the Group’s overall risk profile, financial instruments do not represent the most
significant exposure. Commercial risk associated with our business partnerships, technology risk around
future development and market risk relating to adoption of the technology will have considerably more
impact on our risk profile than the risks relating to financial instruments.
The Group monitors its exposure to key financial risks, principally currency and liquidity risk, with the
objective of achieving the Group's financial targets whilst protecting future financial security.
The Group enters into derivative transactions from time to time, mainly forward currency contracts. The
purpose is to manage the currency risks arising from the Group's operations. These derivatives provide
economic hedges, but do not qualify for hedge accounting and are based on limits set by the Board. It is,
and has been throughout the period under review, the Group’s policy that no trading in financial
instruments shall be undertaken.
The main risks arising from the Group's financial instruments are foreign currency risk, liquidity risk,
interest rate risk and credit risk. The Group uses different methods to measure and manage different
types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and
foreign exchange risk and assessments of market forecasts for interest and foreign exchange rates.
Liquidity risk is monitored through the development of future rolling cash flow forecasts and regular
internal reporting. There is a lesser degree of risk management in relation to interest rate risk and credit
risk, as these are considered to have less capacity to materially impact the Group’s financial position at
the present time.
The Board reviews and agrees policies for managing each of these risks as summarised below. Primary
responsibility for identification and control of financial risks rests with the Board. It reviews and agrees
policies for managing each of the risks, including the use of derivatives, hedging cover of foreign
currency, credit allowances, and future cash flow forecast projections.
Details of the significant accounting policies and methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which income and expenses are recognised, in respect of
each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the
financial statements.
Page | 38
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Risk Exposures and Responses
Interest rate risk
The Group's exposure to market interest rates relates primarily to the Group's borrowings and cash and
cash equivalents. The impact of movements in interest rates is not material in the context of the Group’s
operations or trading results.
At balance date, the Group had the following financial assets exposed to Australian variable interest rate
risk that are not designated in cash flow hedges:
Financial Assets
Cash and cash equivalents *
Consolidated
2016
$
951,963
2015
$
255,435
Financial Liabilities
-
-
Net exposure
951,963
255,435
*These amounts differ from the balance sheet due to non- interest bearing cash on hand and foreign
currency balances and loans with fixed interest rates.
The following sensitivity analysis is based on the interest rate risk exposures in existence at balance
date:
At 30 June 2016, if interest rates had moved throughout the year, as illustrated in the table below, with
all other variables held constant, post tax loss and equity would have been affected as follows:
Judgements of reasonably
possible movements in
interest rates:
Net Profit
Higher (Lower)
Other Comprehensive
Income
Higher (Lower)
Consolidated
+0.50% (50 basis points)
-0.25% (25 basis points)
2016
$
4,760
(2,380)
2015
$
1,062
(531)
2016
$
-
-
2015
$
-
-
Interest rates during 2015/2016 continued a downward trend, with official rates remaining at historical
lows at year end. At balance date, the economic outlook in Australia is similarly steady, with sentiment
on future interest rates remaining flat, suggesting the prospect of modest increases in the medium term.
On this basis, a possible movement in rates from -0.25% to +0.50% has been adopted as a reasonably
possible movement in rates. The movements in net loss are due to higher and lower amounts of interest
received from interest bearing cash balances. There is no movement in other comprehensive income as
there are no derivative instruments designated as cash flow hedges.
Page | 39
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Foreign currency risk
As nearly all of the Group’s sales revenue, as well as some expenses and inventory purchases, are
denominated in United States Dollars and Euro, the Group's statement of financial position can be
affected by significant movements in these exchange rates. At 30 June 2016, there were no economic
hedges in place in respect of net foreign currency exposures, as there were no bank facilities in place.
At 30 June 2016, the Group had the following exposure to foreign currency (US$ and Euro) that is not
designated in cash flow hedges:
Consolidated
Financial Assets
Cash and cash equivalents US$
Cash and cash equivalents Euro
Trade and other receivables US$
Trade and other receivables Euro
Financial Liabilities
Trade and other payables US$
Net exposure US$
Net exposure Euro
2016
$
2015
$
2,197
10
4,077
-
-
6,274
10
1,452
3,941
3,390
-
(2,171)
2,671
3,941
^ Not hedged at balance date as no bank facility available
The following sensitivity is based on the foreign currency risk exposures in existence at balance date:
At 30 June 2016, had the Australian Dollar moved by the same amount illustrated in the table below,
with all other variables held constant, post tax loss and equity would have been affected as follows:
Judgements of reasonably possible
movements in A$ exchange rates:
Consolidated
Net Loss
(Higher) Lower
2016
$
2015
$
Equity
Higher (Lower)
2016
$
2015
$
AUD/USD +10.0%, (2015, 10%)
AUD/USD -10.0%, (2015, 10%)
(627)
627
AUD/EURO + 0.6% (2015, 0.6%)
AUD/EURO – 0.6% (2015, 0.6%)
Parent Entity
AUD/USD +1.5%
AUD/USD - 1.5%
-
-
-
-
(316)
316
33
(33)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Management believe the balance date risk exposures are representative of the risk exposure inherent in
the financial instruments.
Page | 40
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Optiscan Imaging Limited
Annual Report 2016
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents,
trade and other receivables and derivative instruments. The Group's exposure to credit risk arises from
potential default of the counter party, with a maximum exposure equal to the carrying amount of these
instruments. Exposure at balance date is addressed in each applicable note. The Group does not hold
any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy
third parties, and as such collateral is not requested nor is it the Group's policy to securitise its trade and
other receivables. It is the Group's policy that all customers who wish to trade on credit terms are
subject to credit verification procedures including an assessment of their independent credit rating,
financial position, past experience and industry reputation. Risk limits are set for each individual
customer, and are regularly monitored. In addition, receivable balances are monitored on an ongoing
basis with the result that the Group's exposure to bad debts is not significant. There is no significant
concentration of credit risk in the Group’s current trading position. With respect to credit risk arising from
the other financial assets of the Group, which comprise cash and cash equivalents, the Group’s
exposure to credit risk arises from the possibility of default of the counter party. This is considered
unlikely as the Group places cash and cash equivalents only with recognised Australian trading banks.
Liquidity risk and capital management
The Group's objective is to maintain adequate funding of its activities. Prior to May 2009, all capital
financing has been derived from issues of equity. Since May 2009, the Group has from time to time,
issued convertible notes, introducing debt finance to the funding mix. Capital management is a process
of monitoring cash reserves and forecast cash requirements, and there are no externally imposed
capital requirements. The table below reflects all contractually fixed pay-offs and receivables for
settlement from recognised financial assets and liabilities, as of 30 June 2016. Cash flows for financial
assets and liabilities without fixed amount or timing are based on the conditions existing at 30 June
2016.
<6 months
Consolidated
1-5 years
Total
Year ended 30 June 2016
Liquid financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Short term loans
Callable bank guarantee
Net maturity
Year ended 30 June 2015
Liquid financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Convertible notes
Callable bank guarantee
Net maturity
954,805
780,792
(1,211,810)
(1,124,358)
(45,500)
(646,071)
268,893
693,004
(420,553)
(510,533)
(45,500)
(14,689)
-
-
-
-
-
-
-
-
-
-
-
-
954,805
780,792
(1,211,810)
(1,124,358)
(45,500)
(646,071)
268,893
693,004
(420,553)
(510,533)
(45,500)
(14,689)
Page | 41
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Liquidity risk and capital management (continued)
The contractual maturities of the Group's and parent entity's financial assets and liabilities set out in the
table are equivalent to the maturity analysis of financial assets and liability based on management's
expectation.
The risk implied from the values in the table reflects a balanced view of cash inflows and outflows. Trade
payables and other financial liabilities mainly originate from investments in working capital, principally
inventories and trade receivables. These assets are considered in the Group's overall liquidity risk,
which is monitored through review of forecasts of liquidity reserves on the basis of expected cash flow.
The cash and cash equivalent balance classified as being capable of settlement within 90 days includes
term deposits which are secured by the bank (refer note 15). These amounts could be released within
six months upon cancellation of the underlying bank facilities, or upon a re-negotiation of the security
arrangements, for example, by providing a charge over assets other than cash.
The Group’s activities are funded from its cash reserves and convertible notes. There are no unused
credit facilities. Bank facilities are non credit lines, details of which are disclosed in note 15.
Fair value of financial assets and liabilities
The methods for estimating fair value are outlined in the relevant notes to the financial statements, and
unless specifically stated, carrying value approximates fair value for all financial instruments.
The fair value of 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
transaction. Management has assessed that the fair value of cash and short term deposits, trade
receivables, and trade payables approximate their carrying amount due to the short term nature of the
instruments.
Fair value measurement of convertible notes (2015)
Convertible notes are carried at fair value. The valuation at balance date was based on an exit price
established by reference to significant observable units (level 2 under AASB 13), being the note paid
shortly after balance date to extinguish the liability (refer note 15).
Page | 42
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Optiscan Imaging Limited
Annual Report 2016
In applying the Group’s accounting policies, management continually evaluates judgements, estimates
and assumptions based on historical experience and other factors, including expectations of future
events that may have an impact on the Group. All judgements, estimates and assumptions made are
believed to be reasonable based on the most current set of circumstances available to management.
Actual results may differ from the judgements, estimates and assumptions. The more significant
judgements, estimates and assumptions made by management in the preparation of these financial
statements are outlined below:
Net realisable value of inventory
Most of the inventory held by the Group is materials for second generation processors, scanners and
probes. Inventory relating to the first generation confocal imaging platform, including FIVE 1 products
and accessories, remains on hand but is carried at zero value. The rate of future sales and the usage of
parts for service and support are uncertain, and as a consequence the Group’s ability to realise the
carrying value of inventory is similarly uncertain.
Long service leave provision
The liability for long service leave is recognised and measured at the present value of the estimated
future cash flows to be made in respect of services provided by all employees up to balance date. In
determining the present value of the liability, years of service, attrition rates, future pay increases and
inflation have been taken into account. Expected future payments are discounted using market yields at
the reporting date on high quality corporate bonds with terms to maturity that match, as closely as
practicable, the estimated future cash outflows.
Recognition of grant receivable for R&D Tax Incentive
The Group has established a precedent for entitlement to grant income from the R&D Tax incentive in
prior periods. This experience supports the assumption that eligibility for the grant will continue on the
same basis, and accordingly, it is appropriate to recognise entitlement to the income in the current
period.
Capitalisation of research and development expenditure
The group expenses all research and development expenditure (refer note 2(p)). The group’s
development activities are at a stage where there is not yet adequate probability that the tests for
capitalisation can be met. The matter is kept under regular review.
Recognition of deferred tax assets
The carrying amount of deferred tax assets is dependent upon a judgment as to whether it is probable
that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. In
the light of the continuing expenditure on R&D there is not yet adequate probability of taxable profit in
the future that will enable the utilisation of these deductible temporary differences, which include tax
losses (refer note 2 (l)).
Useful lives of assets
The estimation of the useful lives of assets has been based on historical experience and management
judgment. In addition, the condition of assets is assessed annually and considered in the context of
remaining useful life, and adjustments to useful life are made where necessary. Depreciation charges
are disclosed in note 6(c). Details of useful lives by major asset category are included in note 2(n).
Fair value of financial liabilities
When the fair values of financial liabilities recorded in the statement of financial position cannot be
measured based on quoted prices in active markets, their fair value is measured using valuation
techniques including the DCF model. The inputs to these models are taken from observable markets
where possible, but where this is not feasible, a degree of judgment is required in establishing fair
values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility and
other external inputs. Changes in assumptions about these factors could affect the reported fair value of
financial instruments.
Page | 43
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
5 SEGMENT INFORMATION
The Group has identified its operating segments based on the internal reports that are reviewed and
used by management and the board (the chief decision makers) in assessing performance and in
determining the allocation of resources. The operating segments are identified by management based on
the activities undertaken. Financial information about each of these operating activities is reported to
management on a monthly basis. The group has two separate business segments, being product
realisation (trading), where activities comprise manufacturing and sales of confocal imaging products,
and research and development, where activities include design and development of new products and
technologies, including related income from customers. Unallocated amounts relate mainly to central
costs and overheads, and include unallocated revenues and other income. The accounting policies used
by the group in reporting segments internally are the same as those contained in note 2 to the accounts
and in the prior period.
Major customers
There is no significant concentration of customers in the Group’s trading activities, which are limited in
scope at present. The major customer in the Group’s primary activity, research and development, is Carl
Zeiss, where income is received under the terms of a collaboration agreement.
Page | 44
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
5
SEGMENT INFORMATION (continued)
Year ended 30 June 2016
Revenue
Sales to external customers
Inter segment revenue
Total segment revenue
Other revenues
Total consolidated revenue
Result
Net profit (loss) for year by segment
Unallocated items
Consolidated net profit (loss)
Assets and liabilities
Segment assets *
Segment liabilities
Segment net liabilities
Cash flow
Segment net cash flow from operating activities
Investing cash flows
Financing cash flows
Net cash flow for year
Other Segment information
Non cash expenses
Depreciation and amortisation
Loan facility fees settled by issue of shares
Share based payment to Chief Executive Officer
Foreign exchange differences
Revenue by geographic segment (location of customer)
Asia
Australia
Europe
USA & Canada
Total
Trading
$
R&D
$
Unallocated
$
Total
$
309,697
-
309,697
-
309,697
-
-
-
-
-
-
-
-
3,702
3,702
309,697
-
309,697
3,702
313,399
9,565
-
9,565
(15,657)
-
(15,657)
-
(1,330,964)
(1,330,964)
(6,092)
(1,330,964)
(1,337,056)
28,500
(13,638)
14,862
726,504
(149,930)
576,574
1,065,832
(2,406,918)
(1,341,086)
1,820,836
(2,570,486)
(749,650)
591,512
-
-
591,512
(91,884)
-
-
(91,884)
(1,008,874)
(2,757)
1,198,035
186,404
(509,246)
(2,757)
1,198,035
686,032
-
-
-
-
-
-
309,697
-
309,697
-
-
-
-
-
-
-
-
-
(10,052)
111,000
7,571
44
(10,052)
111,000
7,571
44
-
3,702
-
-
3,702
-
3,702
309,697
-
313,399
* Unallocated segment assets include cash balances unrelated to the operating segments
Page | 45
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
5
SEGMENT INFORMATION (continued)
Optiscan Imaging Limited
Annual Report 2016
Trading
$
R&D
$
Unallocated
$
Total
$
Year ended 30 June 2015
Revenue
Sales to external customers
Total segment revenue
Other revenues
Total consolidated revenue
46,092
46,092
-
46,092
-
-
-
-
-
-
12,030
12,030
46,092
46,092
12,030
58,122
Result
Net profit (loss) for year by segment
Unallocated items
Consolidated net profit (loss)
9,565
-
9,565
(86,655)
-
(86,655)
-
(1,318,309)
(1,318,309)
(77,090)
(1,318,309)
(1,395,399)
Assets and liabilities
Segment assets *
Segment liabilities
Segment net liabilities
Cash flow
34,179
(41,716)
(7,537)
663,800
(149,889)
513,911
320,232
(1,001,817)
(681,585)
1,018,211
(1,193,422)
(175,211)
Segment net cash flow from operating
activities
Investing cash flows
Financing cash flows
Net cash flow for year
38,266
-
-
38,266
(98,128)
-
-
(98,128)
(1,399,782)
(14,507)
1,668,354
254,065
(1,459,644)
(14,507)
1,668,354
194,203
Other Segment information
Non cash expenses
Depreciation and amortisation
Amortised cost adjustment of convertible notes
Impairment of inventory
Share based payments
Foreign exchange differences
Revenue by geographic segment (location of customer)
Asia
Australia
Europe
USA & Canada
Total
-
-
23,692
-
-
-
23,659
5,561
16,872
46,092
-
-
-
-
-
-
-
-
-
-
12,144
59,732
-
15,000
279
6,500
5,530
-
-
12,030
12,144
59,732
23,692
15,000
279
6,500
29,189
5,561
16,872
58,122
* Unallocated segment assets include cash balances unrelated to the operating segments
Page | 46
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
6 REVENUE AND EXPENSES
Optiscan Imaging Limited
Annual Report 2016
(a) Other revenue
Royalty revenue
Finance revenue – bank interest received
Total Other revenue
(b) Other income
Design and development income
Government grants – R&D Tax incentive
Total Other income
(c) Depreciation and amortisation
Depreciation included in administration expenses
(d) Employee benefits expense
Wages and salaries
Workers’ compensation costs
Superannuation contribution expense
Annual leave (credit)/expense
Long service leave expense
(e) Cost of inventories recognised as an expense
Consumed in R&D
Write down inventory to net realisable value
(f)
Finance costs
Shares issued on deferred settlement of loan
Fair value adjustment of loans and convertible notes
Amortised cost adjustment on short term loan
Other interest costs
(g) Share based payment expense
Share-based payments expense – non-employees
– funding facility costs
CONSOLIDATED
2016
$
2015
$
-
3,702
6,500
5,530
3,702
12,030
312,337
742,379
260,643
723,074
1,054,716
983,717
10,052
10,052
12,144
12,144
1,088,922
4,693
96,365
(9,999)
10,063
1,190,044
1,028,515
9,960
97,753
15,084
17,328
1,168,640
94,826
-
94,826
-
23,692
23,692
84,510
43,006
24,358
2,420
-
95,003
10,533
5,481
154,294
111,017
38,500
38,500
15,000
15,000
Page | 47
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
7
INCOME TAX
Optiscan Imaging Limited
Annual Report 2016
The components of income tax expense are:
Income Statement
Current income tax
Current income tax charge
Adjustments in respect of current income tax of previous
year:
Withholding tax deducted from royalty revenue
Deferred income tax
Relating to origination and reversal of temporary
differences
Income tax (expense) benefit reported in the income
statement
CONSOLIDATED
2016
$
2015
$
-
-
-
-
-
-
-
-
-
-
Tax Losses
The Group has unconfirmed, unrecouped tax losses in Australia of $41,044,477 (2015: $40,693,930)
which have not been brought to account. The ability to be able to recognise a deferred tax asset in
respect of these tax losses will be dependent upon the probability that future taxable profit will be
available against which the unused tax losses can be utilised and the conditions for deductibility
imposed by Australian tax authorities will be complied with.
Tax Consolidation
Optiscan Imaging Limited and its 100% owned Australian resident subsidiary have elected not to form a
tax consolidated group.
Page | 48
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
7
INCOME TAX (continued)
A reconciliation between tax expense and the product
of accounting loss before income tax multiplied by the
Group’s applicable income tax rate is as follows:
Optiscan Imaging Limited
Annual Report 2016
CONSOLIDATED
2016
$
2015
$
Accounting loss before income tax
(1,337,012)
(1,395,399)
Prima facie income tax (benefit) at the Parent entity’s
statutory income tax rate of 30% (2015: 30%)
Adjustments in respect of current income tax of
previous years
Non assessable gains
Share based payments not deductible
R&D Tax Incentive deductions foregone for tax offset
Expenditure not allowable for income tax purposes
Other deductible expenditure
Deferred tax assets recognised /( not recognised)
Income tax expense
Deferred income tax - not brought to account
Deferred income tax at 30 June relates to the
following items and has not been brought to account
Refer note 2(l):
CONSOLIDATED
Deferred tax assets
Undeducted patent costs
Employee benefit & warranty provisions
Expenses not yet deductible
Inventory impairment provision
Tax Losses available
Foreign tax credits
Gross deferred income tax assets
Less amounts not recognised in accounts
Gross deferred income tax assets
Deferred tax income/ (expense) incurred
Less deferred income tax (expense) not recognised in
accounts
Deferred tax income/ (expense)
(401,104)
(418,620)
-
(222,714)
5,625
484,336
23,171
4,576
106,110
39,516
(216,922)
5,625
451,449
16,794
(21,240)
143,398
-
-
Statement of financial
position
Statement of comprehensive
income
2016
$
2015
$
2016
$
2015
$
223,979
70,295
9,930
468,296
12,313,343
-
13,085,843
(13,085,843)
-
214,658
78,701
9,900
468,296
12,208,179
-
12,979,734
(12,979,734)
-
9,320
(8,406)
32
-
105,164
-
465
9,723
540
201
132,469
-
106,110
143,398
(106,110)
-
(143,398)
-
Page | 49
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
8 EARNINGS (LOSS) PER SHARE
The following reflects the income and share data used in the basic and
diluted loss per share computations:
Net loss
Optiscan Imaging Limited
Annual Report 2016
CONSOLIDATED
2016
$
2015
$
(1,337,012)
(1,395,399)
2016
2015
Number
Number
Weighted average number of ordinary shares for basic earnings per share
220,999,687 193,843,018
Effects of dilution:
Share options
-
-
Weighted average number of ordinary shares adjusted for the effect of dilution
220,999,687 193,843,018
Weighted average number of converted, lapsed or cancelled potential ordinary
shares included in diluted earnings per share
-
-
Options on issue have been determined to be not dilutive, as the exercise prices
exceed current market price, making the prospect of exercise highly unlikely.
There have been no other transactions involving ordinary shares or potential
ordinary shares between the reporting date and the date of completion of these
financial statements, other than:
•
•
•
A placement of share capital in July 2016
The issuance of shares in respect of a loan facility fee in July 2016 and
A rights issue undertaken in August 2016
Page | 50
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
9 CASH AND CASH EQUIVALENTS
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for
varying periods of between one day and three months, depending on the immediate cash requirements of the
Group, and earn interest at the respective short-term deposit rates. At balance date the bank balance interest rate is
between 0.0% and 1.25% (2015: 2.45%), and the balances are at call. The fair value of cash at bank approximates
the carrying amount.
At balance date the term deposit interest rate is 2.25%, and the weighted average term to maturity is 36 days. The
fair value of cash deposit approximates the carrying amount, in view of the short term to maturity. Term deposits
amounting to $65,500 are subject to a charge which secures banking facilities made available to the group (refer
note 15).
Reconciliation to Statement of Cash Flows
For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at 30 June:
Cash at bank and in hand
Short-term deposits
CONSOLIDATED
2016
$
2015
$
889,305
65,500
203,393
65,500
954,805
268,893
Reconciliation of net profit (loss) after tax to net cash
flows from operations
Net profit (loss)
(1,337,012)
(1,395,399)
Adjustments for:
Depreciation and amortisation
Fair value adjustment of loans and convertible notes
Impairment of assets
Net exchange differences
Shares based payments expensed
Changes in assets and liabilities
10,052
43,006
-
117
92,352
12,144
105,536
23,692
279
15,000
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Increase)/decrease in prepayments
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
(87,788)
-
(36,219)
834,264
(28,018)
(35,840)
(8,492)
15,095
(224,071)
32,412
Net cash used in operating activities
(509,246)
(1,459,644)
.
Page | 51
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
10 TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
GST refund receivable
Interest receivable
R&D Tax incentive grant receivable
Other`
CONSOLIDATED
2016
$
2015
$
17,893
28,895
-
726,504
7,500
5,679
23,310
215
663,800
-
Net carrying amount
780,792
693,004
Ageing Analysis of Receivables
Total
0-30 Days
31-60
Days
61-90
Days
PDNI*
90+
Days
PDNI*
Consolidated – 2016
780,792
762,899
Consolidated – 2015
693,004
688,590
-
-
-
-
17,893
4,414
* Past due not impaired (“PDNI”)
(i) All receivables shown as past due are the subject of follow up action by the company.
(ii) Trade receivables are non-interest bearing and are generally on 30-60 day terms. An allowance for doubtful
debts will be made if there is objective evidence that a trade receivable is impaired. No such allowance has yet
been made. Receivables other than cash on term deposit are also non-interest bearing.
(iii) The fair value of receivables approximates the carrying amount, in view of the short term nature of the trading
terms.
(iv) The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it
the Group’s policy to transfer or on sell receivables to special purpose vehicles.
(v) Details regarding foreign exchange risk exposure of current receivables are disclosed in note 3.
Page | 52
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
11 INVENTORIES
Raw materials (at net realisable value)
CONSOLIDATED
2016
$
28,500
2015
$
28,500
Total inventories at net realisable value
28,500
28,500
Write down to net realisable value
-
23,692
12 PLANT AND EQUIPMENT
YEAR ENDED 30 JUNE 2016
Opening balance, net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
At 30 June 2016, net of accumulated depreciation
At 30 June 2016
Cost
Accumulated depreciation
Office
Furniture &
Equipment
2016
$
26,985
2,758
-
(10,052)
19,691
Production
Equipment
2016
$
R&D
Equipment
2016
$
-
-
-
-
-
Total Plant &
Equipment
2016
$
26,985
2,758
-
(10,052)
19,691
-
-
-
-
-
701,593
(681,902)
258,483
(258,483)
364,905
(364,905)
1,324,981
(1,305,290)
Net carrying amount
19,691
-
-
19,691
At 1 July 2015
Cost
Accumulated depreciation
698,835
(671,850)
258,483
(258,483)
364,905
(364,905)
1,322,223
(1,295,238)
Net carrying amount
26,985
-
-
26,985
Page | 53
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
12 PLANT AND EQUIPMENT (continued)
Optiscan Imaging Limited
Annual Report 2016
YEAR ENDED 30 JUNE 2015
Opening balance, net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
At 30 June 2015, net of accumulated depreciation
At 30 June 2015
Cost
Accumulated depreciation
Office
Furniture &
Equipment
2015
$
24,622
14,507
-
(12,144)
26,985
Production
Equipment
2015
$
R&D
Equipment
2015
$
-
-
-
-
-
Total Plant &
Equipment
2015
$
24,622
14,507
-
(12,144)
26,985
-
-
-
-
-
698,835
(671,850)
258,483
(258,483)
364,905
(364,905)
1,322,223
(1,295,238)
Net carrying amount
26,985
-
-
26,985
At 1 July 2014
Cost
Accumulated depreciation
684,327
(659,705)
258,483
(258,483)
364,905
(364,905)
1,307,715
(1,283,093)
Net carrying amount
24,622
-
-
24,622
13 TRADE AND OTHER PAYABLES
Current
Trade payables (i)
Accrued expenses
Share subscriptions received in advance (ii)
Deferred income
Other creditors
CONSOLIDATED
2016
$
2015
$
252,405
129,818
662,000
166,786
801
213,165
201,617
-
-
5,771
1,211,810
420,553
(i) Trade payables are non-interest bearing and are normally settled on 30-day terms. The fair value of trade
payables approximates the carrying amount due to the short term nature of the trading terms.
(ii) Share subscriptions received in advance relates to cash received in respect of the share placement that was
concluded on 6 July 2016 and the shares issued on that date.
Page | 54
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
14 INTEREST BEARING LOANS AND BORROWINGS
Optiscan Imaging Limited
Annual Report 2016
Current
Short term loans
CONSOLIDATED
2016
$
2015
$
1,124,358
1,124,358
510,533
510,533
Movement in interest bearing loans and borrowings was as
follows:
Short term loan
Opening balance
Payment of loan principal and capitalized interest
Proceeds from short term loans
Amortised cost adjustment
Closing balance
510,533
(510,533)
1,100,000
24,358
1,124,358
-
-
500,000
10,533
510,533
Short term loans are summarised as follows:
External loan facility
External loan facility
Other short term loan
Reference
(Loan 1)
(Loan 2)
(Loan 3)
2016
$
-
495,456
628,902
1,124,358
2015
$
510,533
-
-
510,533
(a) Fair value
Short term loans on issue are accounted for at fair value.
(b)
Interest rate
Details regarding interest rate and liquidity risk are detailed in Note 3. The interest rate on loan 1 and loan 2 was
15% and loan 3 was 10%.
(c) Assets pledged as security
For loan 2, the loan is secured by a charge over the assets of Optiscan Imaging Ltd and by a first charge over
the R&D Tax Incentive government rebate.
(d) Terms and conditions of short term loan
Loan 1
The short term loan was drawn on 9 June 2015, and was repayable on 30 November 2015. A facility fee by way
of the allotment of 1,000,000 shares was expensed in July 2015 for a value $50,000. In the event of late
repayment of the loan, Optiscan was liable for a further facility fee of 1,000,000 shares per month until
repayment was made. The outstanding loan was repaid in full in January 2016 and a total of 2,000,000 shares
for a value of $84,510 was expensed in the period.
Loan 2
The external loan is in the amount of $500,000 and was drawn on 29 April 2016. It is repayable on the earlier of
the R&D Tax Incentive government rebate (the Rebate) and 30 December 2016. The interest rate on the loan is
15% pa, and the loan is secured by a registered charge over Optiscan Imaging Limited and by a first charge
over the Rebate. A facility fee of 1,000,000 shares was settled in July 2016 by the allotment of these shares for
a value of $25,000. In the event of late repayment of the loan, Optiscan will incur a further monthly facility fee of
1,000,000 shares until repayment is made.
Page | 55
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
14 INTEREST BEARING LOANS AND BORROWINGS (continued)
Loan 3
The third short term loan is in the amount of $600,000 and is payable to parties associated with a director of the
entity, Mr Ian Mann. Directors have announced their intent, subject to shareholder approval, to convert this loan
to equity at the company’s annual general meeting. Refer to note 22.
15 FINANCING FACILITIES
Bank Facilities
- credit cards
- bank guarantees and indemnities
Facilities used at reporting date:
- credit cards
- bank guarantees and indemnities
Facilities unused at reporting date:
- credit cards
- bank guarantees and indemnities
Total bank facilities
Facilities used at reporting date
Facilities unused at reporting date
CONSOLIDATED
2016
$
2015
$
20,000
45,500
65,500
801
45,500
46,301
19,199
-
19,199
65,500
46,301
19,199
20,000
45,500
65,500
2,766
45,500
48,266
17,234
-
17,234
65,500
48,266
17,234
Assets pledged as security
The bank facilities are secured by charges over specific term
deposits
65,500
65,500
These facilities have no specific expiry date.
Page | 56
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
16 PROVISIONS
Optiscan Imaging Limited
Annual Report 2016
At 30 June 2015
Arising during the year
Utilised
At 30 June 2016
Current 2016
Non-current 2016
Current 2015
Non-current 2015
Annual
Leave
$
Long
Service
Leave
$
Warranty
$
Total
$
92,090
88,584
(98,583)
82,091
82,091
-
82,091
92,090
-
142,162
10,065
-
152,227
149,386
2,841
152,227
122,650
19,512
28,084
(28,084)
-
-
-
-
-
262,336
70,565
(98,583)
234,318
231,477
2,841
234,318
28,084
-
242,824
19,512
92,090
142,162
28,084
262,336
Annual Leave Provision
The annual leave provision is for the unused entitlements to annual leave for employees. Staff are encouraged to take
leave when due or entitled, but workflow considerations sometimes prevent all entitlements being utilised.
Long Service Leave
Long service leave provision provides for the future entitlements of employees to long service leave or, where
sanctioned by legislation, entitlement to pro rata payment upon termination. Some employees have reached
entitlement to pro rata payment upon termination.
Warranty
A provision for warranty at the rate of 3% of sales has been provided and the incidence of warranty claims is monitored
on an ongoing basis to assess adequacy of the provision. This provision has been released in the current year as all
warranties have expired.
Page | 57
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
17 CONTRIBUTED EQUITY AND RESERVES
Optiscan Imaging Limited
Annual Report 2016
Movement in ordinary shares on issue
At 1 July 2014
Issued for cash in placement
Shares issued upon conversion of notes
Shares issued for facility costs and interest
Transaction costs of share issues
At 30 June 2015
Issued for cash in placement
Loan facility fees settled by issue of shares
Transaction costs of share issues
At 30 June 2016
CONSOLIDATED
No of Shares
$
167,225,501
19,991,938
18,554,950
1,250,000
-
47,279,893
574,500
849,199
37,500
(56,376)
207,022,389
48,684,716
13,801,493
3,000,000
-
223,823,882
690,074
111,000
(123,011)
49,362,778
Issuance of ordinary shares
1,000,000 shares, equating to $25,000, were issued on 6 July 2016 in respect of a loan facility fee.
Ordinary shares
Effective 1 July 1998, the Corporations legislation abolished the concepts of authorised capital and par value of
shares. Accordingly, the Parent does not have authorised capital or par value in respect of its issued shares. Fully
paid ordinary shares carry one vote per share and carry the right to dividends.
Share options
The company has a share based payment option plan under which options to subscribe for the company’s shares
have been granted to employees (refer note 20).
Accumulated losses
Movements in accumulated losses were as follows:
Balance 1 July
Net loss for the year
Balance 30 June
CONSOLIDATED
2016
$
2015
$
(50,350,332)
(48,954,933)
(1,337,056)
(1,395,399)
(51,687,388)
(50,350,332)
Page | 58
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
17
CONTRIBUTED EQUITY AND RESERVES (continued)
Optiscan Imaging Limited
Annual Report 2016
CONSOLIDATED
2016
$
2015
$
Reserves
Movements in reserves were as follows:
Share Based Payments Reserve
Balance 1 July
Underwriting fee settled by issue of option
1,485,661
84,510
1,485,661
-
Balance 30 June
1,570,171
1,485,661
Foreign Currency Translation Reserve
Balance 1 July
4,744
4,717
Foreign currency translation difference
44
27
Balance 30 June
Total reserves
4,788
4,744
1,574,959
1,490,405
Nature and purpose of reserves
Share based payments reserve
This reserve is used to record the value of equity benefits provided to employees and other parties in consideration
for services rendered. Refer to note 20 for further details of the employee share option plan and other share based
payments.
Foreign currency translation reserve
This reserve is used for foreign currency translation differences arising on the consolidation of the USA subsidiary,
Optiscan Inc.
Page | 59
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
18 PARENT ENTITY INFORMATION
Optiscan Imaging Limited
Annual Report 2016
Information relating to Optiscan Imaging Ltd:
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Accumulated losses
Share based payments reserve
2016
$
2015
$
879,236
1,044,558
1,794,208
1,794,208
3,889
383,822
559,033
559,033
49,362,779
48,684,716
(51,687,388)
(50,345,588)
1,574,959
1,485,661
Total deficiency
(749,650)
(175,211)
Loss of the parent entity
Other comprehensive income of the parent entity
(1,344,585)
(1,395,372)
Total comprehensive income of the parent entity
(1,344,585)
(1,395,372)
Parent entity guarantees for debts of subsidiaries
Contingent liabilities of parent entity
Contractual commitments of parent entity
-
-
-
-
-
-
19 RELATED PARTY DISCLOSURE
The consolidated financial statements include the financial statements of Optiscan Imaging Limited and the
subsidiaries listed in the following table:
Name
At cost:
Optiscan Pty Ltd
Optiscan Inc
Accumulated impairment
Country of incorporation
% Equity interest
2015
2016
Investment $
2016
2015
Australia
United States
100
100
100
100
6,605,396
6,605,396
2,002
2,002
(6,607,398)
(6,607,398)
-
-
Optiscan Imaging Limited is the ultimate Australian parent entity.
Transactions with Subsidiaries
Inter-company transactions between the parent entity, Optiscan Imaging Limited and subsidiary, Optiscan Pty Ltd
amounted to $1,554,388 (2015: $1,554,388). Outstanding balances at year-end are unsecured, interest free and
settlement occurs in cash. The balances are classified current by the parent entity. An impairment assessment is
undertaken each financial year by examining the financial position of the subsidiaries to determine whether there is
objective evidence that a related party receivable is impaired. When such objective evidence exists, an impairment
loss is recognised.
Page | 60
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
19 RELATED PARTY DISCLOSURE (continued)
Transactions with Directors
In December 2015, an entity associated with Non-executive Director, Mr. Ian Mann, provided a loan of $300,000
having a first charge over the company and interest charge of 15% which was subsequently restructured on 29
February 2016. Another entity, also associated with Mr Ian Mann, refinanced that loan at 10% on 29th February
2016, injected an additional $200,000 on that date with a further $100,000 advanced on 27 April 2016. The first
charge over the company of the second facility was made subordinate to the 29 April 2016 R&D facility. No
establishment, penalty or any other kind of fees were charged on either related party loan.
FAL Lawyers, a law firm of which Director Mr. Peter Francis is a principal, has received fees for the provision of
legal services to the entity totaling $2,700 for the period between Mr. Francis’ appointment as a Director and the
end of the reporting period. The underlying services were provided at arms’ length terms.
Compensation of Key Management Personnel
Table 1: Compensation of Key Management Personnel for the year ended 30 June 2016
CONSOLIDATED
2015
2016
$
$
Short term employee benefits
376,093
328,417
Post Employment benefits
Other short term benefits
Severance pay
Other long term benefits
27,894
4,545
32,418
30,083
-
-
305
4,243
441,255
362,743
Apart from those matters referred to above, there were no transactions and balances with Key Management
Personnel
Page | 61
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
20 SHARE-BASED PAYMENTS
Types of share based payments
Issue of shares in relation to Finance Facilities
The following costs associated with finance facilities were settled by way of share based payments:
Finance facility fees
Interest
CONSOLIDATED
2015
2016
$
$
111,000
-
111,000
37,500
17,948
55,448
Finance facility fees include the costs associated with the 1,000,000 shares issued on 6 July 2016
The following table illustrates the movement in the number and weighted average exercise prices (WAEP) of share
options issued to parties other than employees during the year:
Options issued to parties other than employees
No. Options
WAEP
No. Options
WAEP
Outstanding at the beginning of the year
Granted during the year
Expired during the year
Outstanding at the end of the year
2016
-
3,000,000
-
3,000,000
Exercisable at the end of the year
3,000,000
2016
-
-
-
-
-
2015
1,900,000
-
(1,900,000)
-
-
2015
0.166
-
-
-
-
On 13 July 2015, the company issued 3,000,000 options over fully paid ordinary shares at an exercise price of
ten cents per option, and an expiry date of 12 June 2017 in part consideration of the underwriting of a rights issue.
(a) Employee Share-Based Payment Plans
The Company provides benefits to nominated employees and non-executive directors in the form of share-based
payment transactions, whereby employees and non-executive directors render services in exchange for shares or rights
over shares.
On 13 May 2016, the company announced its commitment to issue 7,500,000 options over fully paid ordinary shares to
incoming Chief Executive Officer, Mr Archie Fraser, at an exercise price to be determined and as explained in Note
20(b).
The expense recognised in the Statement of Comprehensive Income for the years ended 30 June 2016 and 30 June
2015 were $7,571 and $NIL, respectively.
(b) Share-Based Payments for the year ended 30 June 2016
During the 2016 financial year, on 13 May 2016, an options package compromising 4 tranches of 875,000 options and 2
tranches of 2,000,000 share options (a total of 7,500,000 options), were granted to the CEO, Mr Archie Fraser, pursuant
to the terms of his employment contract.
Page | 62
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
20
SHARE-BASED PAYMENTS (continued)
No other share option plans were issued to Directors or other Key Management Personnel during the period or in the
year to 30 June 2015.
Vesting is subject to Mr Fraser’s continued employment with the Company. The exercise price is calculated as $0.025
plus the 10 day volume weighted average price of the Company’s ordinary shares on the Australian Securities Exchange
from the period commencing on the first day of trading after the Company is removed from its Suspension from Official
Quotation that commenced on 19 February, 2016.
The expense relating to the incentive scheme shares during the 2016 financial year was $7,571. The options will expire
and not be capable of being exercised on the date three years from the vesting date.
2016
Balance
at 1
July
2015
Archie
Fraser
-
Granted as
compensation
Options
exercised
Net
change
(forfeited,
lapsed,
expired)
Balance
at 30
June
2016
Total
vested
at end
of the
year
Total
exercisable
at end of
the year
Total not
exercisable
at end of
the year
Total
vested
during
the
year
Share
based
payment
expense
7,500,000
-
-
7,500,000
-
-
7,500,000
-
$7,571
The fair value of options granted during the year, as included in the above table, was determined using a bi-nominal
simulation based model. A bi-nominal simulation based model simulates the path of the share price according to a
probability distribution assumption. After a large number of simulations, the arithmetic average of the outcomes,
discounted to the valuation date, is calculated to represent the option value. This model can accommodate complex
exercise conditions when the number of options exercised depends on some function of the whole path followed by the
share price.
The following table list the inputs to the binominal model used for the above share option plan during the year ended 30
June 2016:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of share options (years)
Weighted average share price ($)
30 June 2016
0%
80%
2%
3 years
$0.025
The expected volatility used was based on market based factors and stage of development of the Group. The risk free
rate was based on the yields available on High Quality Corporate Bonds with a similar life as the options.
21 COMMITMENTS AND CONTINGENCIES
Operating lease commitments – Group as lessee
The previous property lease over the premises occupied by the Group expired in September 2007. The Group
currently occupies the premises on a monthly tenancy. There are no future minimum rentals payable under non-
cancellable operating leases as at 30 June 2016.
Capital commitments
At 30 June 2016 there were no material capital commitments outstanding (2015: Nil).
Contingent Liabilities
The group has contingent liabilities in relation to bank guarantees on issue at balance date amounting to $45,500
(2015: $45,500).
Page | 63
Optiscan Imaging Limited
Annual Report 2016
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2016
22 EVENTS AFTER THE BALANCE SHEET DATE
The directors are not aware of any events after balance date that would have a material impact on the financial
statements at 30 June 2016, other than:
•
•
•
•
On 6 July, 2016, the company issued 29,980,000 new shares in respect of a capital placement, raising
$749,500 from this placement
On 6 July 2016, 1,000,000 additional new shares were issued for the costs of the loan facility drawn down on 29
April 2016.
On 28 June 2016, the company announced its intention to raise approx $1.4 million through the issue of 56.6
million shares through a fully underwritten 2 for 9 rights issue. This issue was completed and shares issued on
8 September 2016.
On 22 July 2016, the company announced its intention, subject to shareholder approval, to convert a $600,000
loan from parties associated with director Mr Ian Mann to equity through the issuance of 24 million shares at a
price of $0.025 per share.
23 AUDITORS’ REMUNERATION
The auditor of Optiscan Imaging Limited is Ernst & Young (Australia).
Amounts received or due and receivable by Ernst &
Young (Australia) for:
•
An audit or review of the financial report of the
entity and any other entity in the consolidated
group
• Other services in relation to the entity and any
other entity in the consolidated group
- R&D tax services
CONSOLIDATED
2015
2016
$
$
63,051
53,385
12,500
12,875
75,551
66,260
Page | 64
Directors’ Declaration
Optiscan Imaging Limited
Annual Report 2016
In accordance with a resolution of the directors of Optiscan Imaging Limited, I state that:
1
In the opinion of the directors:
(a) the financial report, and remuneration report included in the directors’ report of the company and of the group
are in accordance with the Corporations Act 2001, including:
i
ii
giving a true and fair view of the company's and group's financial position as at 30 June 2016 and of their
performance for the year ended on that date; and
complying with Australian Accounting Standards and Corporations Regulations 2001 and International
Financial Reporting Standards (IFRS) as disclosed in note 2(a) of the financial statements; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
2 This declaration has been made after receiving the declarations required to be made to the directors in
accordance with sections 295A of the Corporations Act 2001 for the financial year ended 30 June 2016.
On behalf of the Board
Alan Hoffman
Chairman
27 September 2016
Page | 65
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Optiscan Imaging Limited
Annual Report 2016
Independent auditor's report to the members of Optiscan Imaging
Limited
Report on the financial report
We have audited the accompanying financial report of Optiscan Imaging Limited, which comprises the
consolidated statement of financial position as at 30 June 2016, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the year's end or from time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and
fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page | 66
Opinion
In our opinion:
a.
the financial report of Optiscan Imaging Limited is in accordance with the Corporations Act
2001, including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June 2016
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.
Material uncertainty regarding continuation as a going concern
Without qualification to the opinion expressed above, attention is drawn to the following matter. As a
result of matters described in Note 2 ‘Going Concern’ to the financial report, there is material uncertainty
whether the consolidated entity will be able to continue as a going concern and therefore whether it will
realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated
in the financial report. The financial report does not include adjustments relating to the recoverability and
classification of recorded asset amounts nor to the amounts and classification of liabilities that might be
necessary should the consolidated entity not continue as a going concern.
Report on the remuneration report
We have audited the Remuneration Report included in pages 12 to 19 of the directors' report for the year
ended 30 June 2016. The directors of the company are responsible for the preparation and presentation
of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Optiscan Imaging Limited for the year ended 30 June 2016,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
Joanne Lonergan
Partner
Melbourne
27 September 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page | 67
Optiscan Imaging Limited
Annual Report 2016
Countries Granted
Patents
2340332
UK
6967772
USA
2341943
UK
8047985
USA
759742
Australia
7010978
USA
1192497
France
1192497
UK
Italy
1192497
Germany 60040223.1
4171597
Japan
2363025
UK
6567585
USA
7695431
USA
UK
USA
Japan
Japan
USA
Japan
2411071
7123790
4718184
5044027
7248390
4475912
Expiry Date
15 Jul 2018
16 Jul 2018
25 Aug 2019
3 Aug 2024
8 Jun 2020
3 Apr 2021
1 Apr 2025
29 Oct 2023
10 Jun 2023
17 Oct 2023
USA
7330305
15 Jan 2024
Patent Information
Summary of Key Optiscan Patents
Patent Title
Scanning Microscope with
Miniature Head
Compact Confocal Endoscope
and Endomicroscope
Electrically Operated
Tuning Fork
Countries Pending
Applications
Germany 19882512.9
Germany 19940421.6
Germany 10393608.4
USA
2005/0052753
Z Sharpening for Fibre
Confocal Microscopes
Objective Lens Unit For
Endoscope *
Scanning Method & Apparatus
Light Scanning Device *
Condensing Optical System,
Confocal Optical System and
Scanning Type Confocal System *
Laser Scanning Confocal
Microscope with Fibre Bundle
Return
Method & Apparatus for Providing
Depth Control
for Z Actuation *
Tuning Fork-Type Scanning
Apparatus with a Counterweight
Optical Fibre Scanning Apparatus
Fibre Bundle Confocal
Endomicroscope
Optical Connector *
Objective Lens Unit *
Japan
4320184
Confocal Optical Systems *
Confocal Endoscope *
Optical Element
A scanner for an Endoscope
P2003-314204
P2003-357896
Japan
Japan
Germany 102004043049.7
Japan
2005-182150
USA
Australia
Europe
Japan
USA
10/585565
2011316479
11831848.4
2013-533054
13/878729
Germany 102004018110.1
USA
Japan
7294102
4842518
13 Apr 2024
14 Apr 2024
Germany 11200500322.2
USA
7532375
23 Sep 2025
2012-262961
Japan
Hong Kong 11108509.4
07116499.0
Europe
10185839.7
Europe
06704775.3
Europe
Germany 102004024396.4
USA
Japan
7920312
5371222
17 Nov 2028
13 Sep 2027
USA
8057083
29 March 2027
USA
Japan
Japan
USA
7401984
4603816
5232826
7695431
23 Mar 2026
14 May 2024
14 May 2024
13 April 2024
USA
7338439
11 Feb 2030
*
Indicates patents that have been filed in the joint names of Optiscan Pty Ltd and Pentax Corporation.
Patent applications that are in earlier stages of filing or where the specifications have not been
published have not been included in the above list.
Page | 68
Optiscan Imaging Limited
Annual Report 2016
ASX Additional Information
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as
follows. The information is current as at 22 September 2016.
(a) Distribution of equity securities
311,428,800 fully paid ordinary shares are held by 3,507 individual shareholders. All issued ordinary shares carry one
vote per share and carry the rights to dividends.
The numbers of shareholders, by size of holding, in each class are:
Total Holders
No of Fully paid ordinary shares
F
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Holding less than a marketable parcel
Option
(b) Substantial shareholders aid
O
Name
None
(c) Twenty largest holders of quoted equity securities
Ordinary shareholders
762
1,069
389
932
355
3,507
2,469
1.
Ibsen Pty Ltd
2. Peters Investments Pty Ltd
3. Mr Chris Graham & Mrs Diane Graham
4. Circadian Technologies Limited
5. Dixson Trust Pty Limited
Mr Alfred Winkelmeier & Mrs Christine Winkelmeier
6.
7. Project Management Pty Ltd
8. Citycastle Pty Ltd
9. Scintilla Strategic Investments Limited
10. Mr Peter Maxwell Delaney
11. Portorose Pty Ltd
12. Kebin Nominees Pty Ltd
13. Mr Andrew John Fisher
14.
IT IS Consulting Pty Ltd
15. Sash Pty Ltd
16. National Nominees Limited
17. Carlisle Lavelle Pty Ltd
18. Semblance Pty Ltd
19. CGS Holdings Pty Ltd
20. Harech Pty Ltd
433,024
2,999,017
3,188,354
33,853,570
270,954,835
311,428,800
9,951,273
Number
Percentage
-
-
Fully Paid
Number
Percentage
15,472,000
15,031,112
11,000,000
8,285,151
8,279,850
6,111,112
5,891,112
5,703,705
5,700,000
5,451,259
5,380,767
4,330,405
4,200,000
4,000,000
3,422,223
3,330,000
3,327,695
3,300,000
3,200,000
3,055,556
4.97
4.83
3.53
2.66
2.66
1.96
1.89
1.83
1.83
1.75
1.73
1.39
1.35
1.28
1.10
1.07
1.07
1.06
1.03
0.98
124,471,947
39.97
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