Optiscan Imaging Limited
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
Optiscan Imaging Limited
81 077 771 987
For the year ended 30 June 2018
For the year ended 30 June 2017
2. Results for announcement to the market
$
Revenues from ordinary activities
up
62.9%
to
2,197,548
Loss from ordinary activities after tax attributable to the owners of
Optiscan Imaging Limited
down
30.8%
to
(2,035,328)
Loss for the year attributable to the owners of Optiscan Imaging Limited
down
30.8% to
(2,035,328)
Dividends
There were no dividends paid, recommended or declared during the current financial period.
Comments
The loss for the consolidated entity after providing for income tax amounted to $2,035,328 (30 June 2017: $2,942,925).
Financial performance
During the financial year, the consolidated entity generated ordinary revenue of $1,928,283 from the sale of systems and
components to Carl Zeiss Meditech (CZM), compared to revenue for the year ended 30 June 2017 of $1,333,263. The total
revenue from ordinary activities including the sale of ViewnVivo systems increased by 63% to $2,197,548. The consolidated
entity also recorded research and development incentive income for the financial year of $781,758, a decrease of $198,499
from the previous financial year (2017: $980,257). The increase in expenses during the financial year was as a result of an
increase in administration expenditure, including higher staff and marketing costs. Research and development costs
decreased by $233,053 to $1,974,733 (2017: $2,207,786).
Financial Position
The net assets increased by $1,536,066 to $3,201,425 at 30 June 2018 (30 June 2017: $1,665,359). The working capital
position of the consolidated entity as at 30 June 2018 was an excess of current assets over current liabilities of $2,806,936
(30 June 2017: $1,512,755).
The increase in the net asset position of the consolidated entity was a result of the capital raised during the financial year of
$3,500,000 (before costs) plus $380,000 from the proceeds of the exercise of options less the Loss from Operating Activities.
3. Net tangible assets
Net tangible assets per ordinary security
4. Control gained over entities
Not applicable.
Reporting
Previous
period
Cents
period
Cents
0.74
0.44
Optiscan Imaging Limited
Appendix 4E
Preliminary final report
5. Loss of control over entities
Not applicable.
6. Dividends
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
7. Dividend reinvestment plans
Not applicable.
8. Details of associates and joint venture entities
Not applicable.
9. Foreign entities
Details of origin of accounting standards used in compiling the report:
Not applicable.
10. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unqualified opinion has been issued.
11. Attachments
Details of attachments (if any):
The Annual Report of Optiscan Imaging Limited for the year ended 30 June 2018 is attached.
Optiscan Imaging Limited
Appendix 4E
Preliminary final report
12. Signed
Signed ___________________________
Darren Lurie
Executive Chair
Date: 31 August 2018
Optiscan Imaging Limited
ABN 81 077 771 987
Annual Report - 30 June 2018
Optiscan Imaging Limited
Corporate directory
30 June 2018
Directors
Mr Darren Lurie (Executive Chair)
Dr Philip Currie (Non-executive Director)
Mr Graeme Mutton (Non-executive Director)
Company secretary
Mr Justin Mouchacca
Registered office
Principal place of business
16 Miles Street
Mulgrave, Victoria, 3170
Phone No.: (03) 9598 3333
Fax No.: (03) 9562 7742
16 Miles Street
Mulgrave, Victoria, 3170
Phone No.: (03) 9598 3333
Fax No.: (03) 9562 7742
Share register
Auditor
Computershare Investor Registry Services
Yarra Falls
452 Johnston Street
Abbotsford, Victoria, 3067
Phone No.: (03) 9415 5000
Ernst & Young
8 Exhibition Street
Melbourne, Victoria, 3000
Stock exchange listing
Optiscan Imaging Limited shares are listed on the Australian Securities Exchange
(ASX code: OIL)
Website
www.optiscan.com
1
Optiscan Imaging Limited
Directors' report
30 June 2018
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity') consisting of Optiscan Imaging Limited (referred to hereafter as the 'company' or 'parent entity') and
the entities it controlled at the end of, or during, the year ended 30 June 2018.
Directors
The following persons were directors of Optiscan Imaging Limited during the whole of the financial year and up to the date
of this report, unless otherwise stated:
Mr Darren Lurie - Executive Chair (appointed as Director 20 April 2018, appointed Chair 8 May 2018, appointed Executive
Chair 31 May 2018)
Dr Philip Currie - Non-executive Director (appointed 17 July 2017)
Mr Graeme Mutton - Non-executive Director (appointed 20 April 2018)
Mr Alan Hoffman - Non-executive and Executive Chair (appointed Executive Chair 16 February 2018, resigned 17 April
2018)
Mr Peter Francis - Non-executive Director (resigned 23 April 2018)
Dr Ian Griffiths - Non-executive Director (resigned 23 April 2018)
Mr Ian Mann - Non-executive Director (ceased 10 May 2018)
Principal activities
The principal activities of the consolidated entity during the year were the development and commercialisation of confocal
microscopes. The consolidated entity carries out its principal activities through its collaboration with Carl Zeiss Meditech and
the marketing of the ViewnVivo system in the pre-clinical market.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $2,035,328 (30 June 2017: $2,942,925).
Following determination of the composition of the board at the general meeting in May 2018, a review was conducted of
the current activities and cost base of the company’s operations. Following this review, the company’s key objectives
remain:
a)
b)
c)
the continuation of the collaboration with Carl Zeiss Meditec AG (CZM);
initiatives for the growth in sales for ViewnVivo; and
the development of new applications for Optiscan products and services.
As part of the review and as announced in June 2018, recurring costs were reduced by in excess of $500,000 per annum.
Costs have subsequently been further reduced by in excess of $500,000 per annum, as noted in the ‘Matters subsequent
to the end of the financial year’ section of this report, with total savings now exceeding $1,000,000 per annum. Despite the
necessary tightening in expenditure the company will continue to invest in sales and marketing, customer support initiatives
and improved manufacturing processes.
CZM Agreement
The collaboration with CZM remains a key pillar of the Optiscan business. During the 2018 financial year (FY18), the
supply of systems and components generated revenue of $1.93m. Revenue for FY19 pursuant to the CZM Agreement is
expected to be in the order of A$1.5m, comprising sales of systems, probes, research and development support and other
services. Optiscan has been informed by CZM that the regulatory pathway is progressing. Further details regarding the
CZM regulatory pathway will be released as authorised by CZM.
2
Optiscan Imaging Limited
Directors' report
30 June 2018
ViewnVivo (FIVE 2)– Preclinical market
During FY18, the Company entered into an exclusive distribution agreement with China based China Gate Scientific
(Shanghai) Co Ltd for the distribution of the ViewnVivo in China which followed the appointment of Scintica Instrumentation
Inc as the North American distributor for ViewnVivo in June 2017. The company has continued to actively engage with our
North American and Chinese distributors in order to develop the sales pipeline in both markets.
The company is working closely with a Melbourne based University in order to increase its sales support and applications
resources for distributors and potential customers. A number of Chinese, North American and European institutions have
submitted or expressed their intention to submit funding applications for the purchase of ViewnVivo systems. The
marketing of ViewnVivo will incorporate the name FIVE2 reflecting its development as the next generation of the FIVE1
system.
As an enhancement to the ViewnVivo offering, the company is developing a sterilisable sheath option in order to support
the undertaking of longitudinal studies in the pre-clinical market.
New Applications
Optiscan is pleased to advise that it has received in principle ethics approval from an Australian based hospital for a pilot
study of ex-vivo specimens specific to women’s health, being initiated and led by director, Dr Philip Currie. The company
looks forward to providing further details as the study progresses.
Optiscan continues to explore additional applications and markets.
Other
Optiscan has completed its assessment of its research and development tax incentive for FY18 for approximately
$780,000 and expects to lodge its claim for this incentive within the next 60 days.
Financial position
The net assets increased by $1,536,066 to $3,201,425 at 30 June 2018 (30 June 2017: $1,665,359). The working capital
position of the consolidated entity as at 30 June 2018, was an excess of current assets over current liabilities of $2,806,936
(30 June 2017: $1,512,755).
The increase in the net asset position of the consolidated entity was a result of the capital raised during the financial year of
$3,500,000 (before costs) plus $380,000 from the proceeds of the exercise of options less the Loss from Operating Activities.
Significant changes in the state of affairs
During the half-year ended 31 December 2017 a total of 5,300,000 fully paid ordinary shares were issued upon the exercise
of 5,300,000 unlisted options, exercisable at $0.025 (2.5 cents) per option raising $132,500. A further 850,000 fully paid
ordinary shares were issued upon the exercise of 850,000 unlisted options, exercisable at $0.05 (5 cents) per option raising
$42,500.
On 23 August 2017, the consolidated entity announced that a Share Purchase Plan (SPP) was to be offered to eligible
shareholders for the opportunity to apply for new fully paid ordinary shares in the company at an issue price of $0.08 (8
cents) per share. The SPP was underwritten by Patersons Securities Limited (Patersons) up to the amount of $2,500,000
(31,250,000 shares). The company also advised that it had received commitments from professional and sophisticated
investors to participate in a Placement of $1 million.
On 26 September 2017, the consolidated entity announced that it had received applications for a total of $1,188,000
(14,850,000 shares at an issue price of $0.08 per share) from Eligible Shareholders. Pursuant to the terms of the
underwriting, Patersons placed the shortfall amount of $1,312,000 (16,400,000 shares at an issue price of $0.08 per share).
On 4 October 2017, the consolidated entity issued 31,250,000 fully paid ordinary shares pursuant to the underwritten Share
Purchase Plan (SPP), which closed on 22 September 2017. The total amount raised through the Share Purchase Plan was
$2,500,000. The consolidated entity also issued 12,500,000 pursuant to the commitments received from professional and
sophisticated investors raising a total of $1,000,000.
3
Optiscan Imaging Limited
Directors' report
30 June 2018
On 22 January 2018, Archie Fraser resigned with immediate effect as Chief Executive Officer (CEO) of the company.
On 29 January 2018, the consolidated entity issued 3,700,000 fully paid ordinary shares upon the exercise of unlisted options
at $0.025 (2.5 cents) per option raising $92,500. The consolidated entity also issued 1,500,000 fully paid ordinary shares
upon the exercise of another class of unlisted options at $0.05 (5 cents) per option raising $75,000.
On 16 February 2018, the consolidated entity announced that Mr Alan Hoffman had been appointed as the Executive Chair
for an interim period whilst the Board continued to search for a new CEO.
During April and May 2018, Mr Alan Hoffman, Mr Peter Francis, Mr Ian Mann and Dr Ian Griffiths left the Board. Mr Darren
Lurie and Mr Graeme Mutton were appointed to the Board during April 2018.
Mr Lurie was appointed Chair on 8 May 2018 and was appointed interim Executive Chair on 31 May 2018.
During June 2018, the consolidated entity issued 1,500,000 fully paid ordinary shares upon the exercise of unlisted options
at $0.025 (2.5 cents) per option raising $37,500.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
During July and August 2018, a total of 6,650,000 remuneration-related options, held by former non-executive directors of
the company, lapsed following the departures of those directors. The options lapsed three months after the former directors'
respective cessation dates, in accordance with the terms and conditions of those options.
During August 2018, the company has reduced its recurring expenditure by in excess of $500,000 per annum through a
reduction in employee numbers and alteration of third party arrangements.
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Likely developments and expected results of operations
The Directors have outlined in the Operating and Financial Review that they expect to continue to derive income from the
CZM agreement over the next year, as well as achieving sales of ViewnVivo, the second-generation pre-clinical research
product. The cost base of the company will reduce to reflect the completion of development work of the ViewnVivo system
and anticipated production volumes given the current level of inventory.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
4
Optiscan Imaging Limited
Directors' report
30 June 2018
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Mr Darren Lurie
Executive Chair (appointed as director 20 April 2018, appointed Chair 8 May 2018,
appointed Executive Chair 31 May 2018)
B.Comm (Hons), B.LLB (Hons)
Darren Lurie is an experienced leader of boards and management teams as Chair,
CEO and CFO. He has experience working across a range of industries operating both
domestically and internationally. Prior to joining Optiscan, Darren was the Group CFO
and Head of Corporate Development for EduCo International Group, an investee
company of Baring Private Equity Asia and a leading provider of education and related
services with campuses in the USA, Australia, Canada and Ireland, across the Higher
Education, Career and English sectors. Darren is a former chair and non-executive
director of ASX listed Farm Pride Foods Ltd (ASX:FRM), one of Australia’s leading
agribusinesses. He has fifteen years’ experience as a corporate advisor leading
finance, strategy and merger and acquisition assignments across a range of industries.
Other current directorships:
None
Former directorships (last 3 years): None
None
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Dr Philip Currie
Non-executive Director (appointed 17 July 2017)
MBBS (Hons), FRACP, MBA
Dr Currie is a cardiologist with more than 35 years in cardiology both in the United
States and in Australia with extensive experience in medical research, clinical
cardiology and business. He has a medical degree, MBBS (Hons) from Monash
University and an MBA from the University of Michigan.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
14,687,500 fully paid ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Mr Graeme Mutton
Non-executive Director (appointed 20 April 2018)
Certified Practicing Accountant (retired)
After graduating in Accounting in 1968, Graeme managed a public accounting practice
for CP Bird and Associates at Bruce Rock in Western Australia for approximately five
years. During this time, he purchased City Plating Company, an electroplating business
which he successfully managed for 30 years until it was sold in 2000. This background
exposed him to many businesses and provided a practical knowledge of all aspects
required to successfully operate a small to medium enterprise. Graeme is a long
standing shareholder of Optiscan and has a deep understanding of Optiscan`s
technology and applications.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
9,997,696 fully paid ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Mr Alan Hoffman
Non-executive Chair, appointed Executive Chair 16 February 2018 (resigned 17 April
2018)
MAICD
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.
None
Other current directorships:
Former directorships (last 3 years): Rision Limited (ASX: RNL)
Interests in shares:
N/A - no longer a director of the company
5
Optiscan Imaging Limited
Directors' report
30 June 2018
Name:
Title:
Qualifications:
Experience and expertise:
Mr Peter Francis
Non-executive Director (resigned 23 April 2018)
B Juris, LLB, Grad Dip IP law
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.
Benitec Biopharma Limited (ASX: BLT)
Other current directorships:
Former directorships (last 3 years): Rision Limited (ASX: RNL)
Interests in shares:
N/A - no longer a director of the company
Name:
Title:
Qualifications:
Experience and expertise:
Mr Ian Mann
Non-executive Director (ceased 10 May 2018)
B. Comm, GAICD
Mr Mann has twenty years’ experience as a private company director in industries
including textiles, garments, investments, foodstuffs and construction materials.
Through the shareholding of related entities, Mr Mann is a Substantial Shareholder in
the company.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
N/A - no longer a director of the company
Name:
Title:
Qualifications:
Experience and expertise:
Dr Ian Griffiths
Non-executive Director (resigned 23 April 3018)
BSc, PhD
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.
None
Other current directorships:
Former directorships (last 3 years): None
Interests in shares:
N/A - no longer a director of the company
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Mr Justin Mouchacca, CA
Mr Mouchacca holds a Bachelor of Business majoring in Accounting. Justin became a Chartered Accountant in 2011 and
since July 2013 has been a principal of chartered accounting firm, Leydin Freyer Corp Pty Ltd, specialising in outsourced
company secretarial and financial duties. Justin has over 11 years’ experience in the accounting profession including 5 years
in the Corporate Secretarial professions and is a company secretary and finance officer for a number of entities listed on the
Australian Securities Exchange.
6
Optiscan Imaging Limited
Directors' report
30 June 2018
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2018, and
the number of meetings attended by each director were:
Peter Francis
Alan Hoffman
Ian Mann
Ian Griffiths
Phil Currie
Darren Lurie
Graeme Mutton
Full Board
Remuneration and
Nomination Committee
Attended
Held
Attended
Held
13
13
12
12
14
2
2
13
13
13
13
14
2
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held: represents the number of meetings held during the time the director held office.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward
governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy
is to attract, motivate and retain high performance and high quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
●
●
having profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
7
Optiscan Imaging Limited
Directors' report
30 June 2018
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors 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.
Executive remuneration
The Remuneration Committee (currently comprising the board) is responsible for establishing the structure and amount of
remuneration.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
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.
Fixed remuneration is reviewed as required 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.
Variable Remuneration
The objectives and structure of the Group’s policy on Variable Remuneration is set out below.
Variable Remuneration - Short Term Incentive (STI)
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.
8
Optiscan Imaging Limited
Directors' report
30 June 2018
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. No cash bonuses
were paid during the year ended 30 June 2018.
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.
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.
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.
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 STI or LTI
remuneration was awarded based on milestones.
Employment Contracts
All staff including executives are engaged under rolling employment agreements. The contracts continue indefinitely subject
to satisfactory performance, and provide one month’s 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.
Voting and comments made at the company's 24 November 2017 Annual General Meeting ('AGM')
At the 2017 AGM, 98.35% of the votes received supported the adoption of the remuneration report for the year ended 30
June 2017. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
9
Optiscan Imaging Limited
Directors' report
30 June 2018
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
Mr Darren Lurie - Executive Chair
Dr Philip Currie - Non-executive Director
Mr Graeme Mutton - Non-executive Director
Mr Alan Hoffman - Non-executive and Executive Chair
Mr Peter Francis - Non-executive Director
Dr Ian Griffiths - Non-executive Director
Mr Ian Mann - Non-executive Director
The key management personnel of the consolidated entity consisted of the following directors of Optiscan Imaging Limited:
●
●
●
●
●
●
●
And the following persons:
●
●
●
Mr Archibald Fraser - Chief Executive Officer
Mr Peter Delaney – Chief Technology Officer
Mr Justin Mouchacca - Company Secretary/Chief Financial Officer
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Optiscan Imaging Limited
Directors' report
30 June 2018
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Super-
Long
service
Cessation
payment
Share-
based
payments
Equity-
settled
$
Total
$
expense
$
annuation
$
leave
$
(10)
$
Annual
leave
Cash salary
and fees
$
Other
Allowances
(11)
$
2018
Non-Executive
Directors:
Philip Currie (2)
Graeme Mutton
(3)
Alan Hoffman (4)
Peter Francis (5)
Ian Mann (6)
Ian Griffiths (7)
Executive
Directors:
Darren Lurie (1)
Other Key
Management
Personnel:
Archie Fraser (8)
Peter Delaney
Justin Mouchacca
(9)
38,279
8,753
95,663
33,333
33,333
33,333
41,041
-
-
-
-
-
-
-
-
-
-
-
-
-
3,623
832
5,938
3,167
3,167
3,167
-
3,956
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41,902
9,585
101,601
36,500
36,500
36,500
-
44,997
112,328
131,358
(41,593)
-
11,768
13,310
10,671
12,479
(252)
1,332
257,280
-
(9,874)
-
340,328
158,479
78,000
605,421
-
(41,593)
-
25,078
-
47,000
-
1,080
-
257,280
-
(9,874)
78,000
884,392
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Appointed director 20 April 2018. Served as Executive Chair from 31 May 2018. All remuneration for the year
included under Executive Directors.
Appointed 17 July 2017.
Appointed 20 April 2018.
Served as Executive Chair from 16 February 2018 to 17 April 2018. All remuneration for the year included under
Non-Executive Directors. Resigned 17 April 2018.
Resigned 23 April 2018.
Ceased 10 May 2018.
Resigned 23 April 2018.
Resigned 22 January 2018. The negative share based payment amount comprises executive options amortisation
expense of $60,126 relating to Mr Fraser's options, offset by a reversal of executive options amortisation expense of
$70,000 arising on the forfeiture of his executive options upon which expenses had previously been recognised.
Refer Note 33.
Fees paid to Leydin Freyer Corp Pty Ltd, of which Justin Mouchacca is a director, in respect of Company Secretarial,
Chief Financial Officer and Accounting services.
(10) Upon his resignation on 22 January 2018, Archie Fraser received a cessation payment of $257,280 comprising:
Salary (6 months' notice) of $100,000 and a further agreed payment of $157,280.
(11) Relates to repayment of other allowances received in the current and prior period.
11
Optiscan Imaging Limited
Directors' report
30 June 2018
2017
Non-Executive Directors:
Alan Hoffman
Peter Francis
Ian Mann
Ian Griffiths
Other Key Management
Personnel:
Archie Fraser
Michael Corry
Peter Delaney
Justin Mouchacca
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
Cash
and fees
$
bonus
$
Annual
leave
expense*
$
Super-
Long
service
annuation
$
leave
$
Equity-
settled
$
Total
$
75,000
40,000
40,000
40,000
-
-
-
-
-
-
-
-
7,125
3,800
3,800
3,800
-
-
-
-
113,190
113,190
113,190
113,190
195,315
156,990
156,990
156,990
235,000
71,615
150,000
30,500
682,115
20,852
25,000
-
-
- 13,310
-
-
34,162
25,000
16,625
-
14,250
-
49,400
286
-
818
-
1,104
211,922
-
-
-
509,685
71,615
178,378
30,500
664,682 1,456,463
*
Annual leave was presented in 2017 as the movement in accrual during the year; however, has been updated to disclose
the annual leave expense for the period.
The proportion of remuneration linked to performance in STI or LTI and the fixed remuneration proportion are as follows:
Name
Non-Executive Directors:
Darren Lurie
Philip Currie
Graeme Mutton
Alan Hoffman
Peter Francis
Ian Mann
Ian Griffiths
Other Key Management
Personnel:
Archie Fraser
Peter Delaney
Justin Mouchacca
Michael Corry
Fixed remuneration
2017
2018
At risk - STI
At risk - LTI
2018
2017
2018
2017
100%
100%
100%
100%
100%
100%
100%
103%
100%
100%
-
-
-
-
42%
28%
28%
28%
53%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5%
-
-
-
-
-
-
-
-
-
-
(3%)
-
-
-
-
-
-
58%
72%
72%
72%
42%
-
-
-
12
Optiscan Imaging Limited
Directors' report
30 June 2018
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Darren Lurie
Executive Chair
31 May 2018
No fixed term.
Mr Lurie has been appointed as Executive Chair for an interim period. His
remuneration for the executive role is $1,000 per day in addition to his Non-Executive
Chair's fees. There is no performance-related payment as part of the employment
contract. There is no provision for a specific termination payment.
Allan Hoffman
Executive Chair
16 February 2018, resigned 17 April 2018
No fixed term.
Mr Hoffman was appointed as Executive Chair for an interim period. His remuneration
for the executive role was at a rate of $125 per hour/$250,000 per annum on a pro-rata
basis, based on the amount of time spent on the day to day activities of the company.
There was no performance-related payment as part of the employment contract. There
was no provision for a specific termination payment.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Archie Fraser
Chief Executive Officer
16 May 2016 (resigned 22 January 2018)
No fixed term
Base salary of $200,000 per annum with a 3 month notice period. Contractual
entitlement to termination payment of 6 months' salary.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2018 (2017: Nil).
Options
There were no options issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2018.
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Name
Archie Fraser
Archie Fraser
Archie Fraser
Number of
options
granted
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price at grant date
Fair value
per option
1,500,000 28 Nov 2016
1,500,000 28 Nov 2016
1,500,000 28 Nov 2016
28 Nov 2017
28 May 2018
28 Nov 2019
28 Nov 2020
28 May 2021
28 Nov 2021
$0.050
$0.050
$0.050
$0.044
$0.042
$0.043
Options granted carry no dividend or voting rights.
13
Optiscan Imaging Limited
Directors' report
30 June 2018
The number of options over ordinary shares granted to and vested by directors and other key management personnel as
part of compensation during the year ended 30 June 2018 are set out below:
Name
Alan Hoffman
Peter Francis
Ian Mann
Ian Griffiths
Archie Fraser
Number of
Number of
Number of
Number of
options
granted
options
granted
options
vested
options
vested
during the
during the
during the
during the
year
2018
year
2017
year
2018
year
2017
-
-
-
-
-
3,000,000
3,000,000
3,000,000
3,000,000
7,500,000
-
-
-
-
1,500,000
3,000,000
3,000,000
3,000,000
3,000,000
3,000,000
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel as
part of compensation during the year ended 30 June 2018 are set out below:
Name
Archie Fraser
Value of
options
granted
during the
Value of
options
exercised
during the
Value of
options
forfeited
during the
year
$
year
$
year
$
Remuneration
consisting of
options
for the
year
%
-
200,010
128,820
-
Details of options over ordinary shares granted, vested and lapsed for directors and other key management personnel as
part of compensation during the year ended 30 June 2018 are set out below:
Name
Grant date
Vesting date
Number of Value of
options
granted
options
granted
$
Value of
options
vested
$
Number of Value of
options
forfeited
$
options
forfeited
Archie Fraser
Archie Fraser
Archie Fraser
28-Nov-16
28-Nov-16
28-Nov-16
28-Nov-17
28-May-18
28-Nov-19
-
-
-
-
-
-
67,125
-
- 1,500,000
- 1,500,000
-
63,390
65,430
Additional information
The earnings of the consolidated entity for the five years to 30 June 2018 are summarised below:
2018
$
2017
$
2016
$
2015
$
2014
$
Revenue
Net profit/(loss) before tax
Net profit/(loss) after tax
2,197,548
(2,035,328)
(2,035,328)
1,348,964
(2,942,925)
(2,942,925)
313,399
(1,337,056)
(1,337,056)
58,122
(1,395,399)
(1,395,399)
88,516
(1,417,712)
(1,417,712)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year start ($)
Share price at financial year end ($)
Basic earnings per share (cents per share)
0.10
0.06
(0.61)
0.02
0.10
(0.88)
0.05
0.02
(0.61)
0.03
0.05
(0.72)
0.07
0.03
(0.87)
2018
2017
2016
2015
2014
14
Optiscan Imaging Limited
Directors' report
30 June 2018
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at
Holdings at
date
the start of of appointment
the year
as KMP*
Additions –
shares
received on
exercise of
options
Disposals/
Holdings at
date
Balance at
Additions -
other
of cessation
as KMP**
the end of
the year
-
-
2,000,000
-
41,668,445
-
-
43,668,445
13,200,000
9,997,696
-
-
-
-
-
23,197,696
-
-
-
750,000
1,600,000
1,000,000
4,500,000
7,850,000
1,487,500
-
187,500
-
187,500
-
-
1,862,500
- 14,687,500
9,997,696
-
-
(2,187,500)
-
(750,000)
-
(43,455,945)
(1,000,000)
-
(4,500,000)
(51,893,445) 24,685,196
Ordinary shares
Phillip Currie
Graeme Mutton
Allan Hoffman
Peter Francis
Ian Mann
Ian Griffiths
Archie Fraser
*
**
Holdings as at date of appointment as a member of key management personnel.
Holdings as at date of cessation as a member of key management personnel, except for the amount of 1,000,000
shares for Ian Griffiths, which was a disposal of his shareholding prior to his cessation date.
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out below:
Options over ordinary shares
Alan Hoffman
Peter Francis
Ian Mann
Ian Griffiths
Archie Fraser
Balance at
the start of
the year
Granted
Exercised
Holdings at
date
of cessation
as KMP*
Balance at
the end of
the year
1,000,000
3,000,000
3,000,000
3,000,000
7,500,000
17,500,000
-
-
-
-
-
-
-
(750,000)
(1,600,000)
(1,000,000)
(4,500,000)
(7,850,000)
(1,000,000)
(2,250,000)
(1,400,000)
(2,000,000)
(3,000,000)
(9,650,000)
-
-
-
-
-
-
*
Unexercised options held at date of cessation as a member of key management personnel. The 3,000,000 unexercised
options held by Mr Fraser were forfeited during the year ended 30 June 2018. The other unexercised options lapsed
during July and August 2018, as noted in the ‘Matters subsequent to the end of the financial year’ section of the
accompanying Directors’ report.
Other transactions with key management personnel and their related parties
Information about transactions with key management personnel and their related parties is disclosed in Note 27 Related
party transactions. There were no transactions with non-director key management personnel and their related entities during
the years ended 30 June 2018 and 30 June 2017, with the exception of remuneration-related transactions disclosed in this
remuneration report.
This concludes the remuneration report, which has been audited.
Shares under option
There were no unissued ordinary shares of Optiscan Imaging Limited under option outstanding at the date of this report.
15
Optiscan Imaging Limited
Directors' report
30 June 2018
Shares issued on the exercise of options
The following ordinary shares of Optiscan Imaging Limited were issued during the year ended 30 June 2018 and up to the
date of this report on the exercise of options granted:
Date options granted
28/11/16
28/11/16
Exercise
price
Number of
shares issued
$0.025 10,500,000
2,350,000
$0.050
12,850,000
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the
company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company
or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility
on behalf of the company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 24 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
●
Officers of the company who are former partners of Ernst & Young
There are no officers of the company who are former partners of Ernst & Young.
16
Optiscan Imaging Limited
Directors' report
30 June 2018
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
Ernst & Young continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Darren Lurie
Executive Chair
31 August 2018
17
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of Optiscan Imaging
Limited
As lead auditor for the audit of Optiscan Imaging Limited for the financial year ended 30 June 2018, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Optiscan Imaging Limited and the entities it controlled during the financial
year.
Ernst & Young
Paul Gower
Partner
31 August 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Optiscan Imaging Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
Revenue
Sales revenue
Interest revenue
Cost of sales
Gross profit
Other income
Expenses
Research & development expenses
Share-based payment expenses
Depreciation expense
Other expenses
Administration
Finance costs
Loss before income tax expense
Income tax expense
Note
Consolidated
2018
$
2017
$
2,185,579
11,969
2,197,548
(591,883)
1,333,263
15,701
1,348,964
(506,456)
1,605,665
842,508
781,758
992,361
(1,974,733)
9,874
(88,640)
(35,743)
(2,291,009)
(42,500)
(2,207,786)
(859,482)
(41,773)
(95,713)
(1,500,509)
(72,531)
(2,035,328)
(2,942,925)
-
-
5
6
6
6
7
Loss after income tax expense for the year attributable to the owners of
Optiscan Imaging Limited
20
(2,035,328)
(2,942,925)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
Optiscan Imaging Limited
Basic earnings per share
Diluted earnings per share
-
-
(9,223)
(9,223)
(2,035,328)
(2,952,148)
Cents
Cents
32
32
(0.49)
(0.49)
(0.88)
(0.88)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
19
Optiscan Imaging Limited
Statement of financial position
As at 30 June 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2018
$
2017
$
8
9
10
11
12
13
14
16
17
1,562,494
1,247,329
885,579
26,690
3,722,092
700,666
1,285,944
495,910
25,078
2,507,598
345,402
62,625
408,027
159,120
-
159,120
4,130,119
2,666,718
649,789
265,367
915,156
771,679
223,164
994,843
13,538
13,538
6,516
6,516
928,694
1,001,359
3,201,425
1,665,359
18
19
20
57,987,132 53,870,454
2,425,218
(54,630,313)
1,879,934
(56,665,641)
3,201,425
1,665,359
The above statement of financial position should be read in conjunction with the accompanying notes
20
Optiscan Imaging Limited
Statement of changes in equity
For the year ended 30 June 2018
Consolidated
Issued
capital
$
Foreign
currency
translation
reserve
$
Share based
payments
Accumulated
reserve
$
losses
$
Total equity
$
Balance at 1 July 2016
49,362,779
4,788
1,570,171
(51,687,388)
(749,650)
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity (note 18)
Loan settled by share issue
Share options expense
Shares issued for finance facility fee
Transaction costs of share issues
-
-
-
-
-
(2,942,925)
(2,942,925)
(9,223)
(9,223)
-
-
(9,223)
-
(2,942,925)
(2,952,148)
4,172,623
600,000
-
25,000
(289,948)
-
-
-
-
-
-
-
859,482
-
-
-
-
-
-
-
4,172,623
600,000
859,482
25,000
(289,948)
Balance at 30 June 2017
53,870,454
(4,435)
2,429,653
(54,630,313)
1,665,359
Consolidated
Issued
capital
$
Foreign
currency
translation
reserve
$
Share based
payments
Accumulated
reserve
$
losses
$
Total equity
$
Balance at 1 July 2017
53,870,454
(4,435)
2,429,653
(54,630,313)
1,665,359
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity (note 18)
Share-based payments (note 33)
Transaction costs of share issues (Note 18)
Exercise of options (Note 18)
Forfeit of options (Note 33)
-
-
-
3,880,000
-
(298,732)
535,410
-
-
-
-
-
-
-
-
-
-
(2,035,328)
(2,035,328)
-
-
-
-
(2,035,328)
(2,035,328)
-
60,126
-
(535,410)
(70,000)
-
-
-
-
-
3,880,000
60,126
(298,732)
-
(70,000)
Balance at 30 June 2018
57,987,132
(4,435)
1,884,369
(56,665,641)
3,201,425
The above statement of changes in equity should be read in conjunction with the accompanying notes
21
Optiscan Imaging Limited
Statement of cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Receipt of research and development tax incentive
Note
Consolidated
2018
$
2017
$
2,069,495
(5,386,179)
11,969
980,923
1,132,811
(5,287,827)
15,701
726,504
Net cash used in operating activities
31
(2,323,792)
(3,412,811)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for security deposits
12
(290,523)
(62,625)
(181,202)
-
Net cash used in investing activities
(353,148)
(181,202)
Cash flows from financing activities
Proceeds from issue of shares
Proceeds received for options yet to be converted
Proceeds from short term loan
Repayment of short term loan
Share issue transaction costs
Payment of finance costs
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
18
3,880,000
-
300,000
(300,000)
(298,732)
(42,500)
4,172,623
25,000
-
(506,486)
(289,948)
(61,315)
3,538,768
3,339,874
861,828
700,666
(254,139)
954,805
Cash and cash equivalents at the end of the financial year
8
1,562,494
700,666
The above statement of cash flows should be read in conjunction with the accompanying notes
22
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 1. General information
The financial statements cover Optiscan Imaging Limited as a consolidated entity consisting of Optiscan Imaging Limited
and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars,
rounded to the nearest dollar, which is Optiscan Imaging Limited's functional and presentation currency.
Optiscan Imaging Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
16 Miles Street
Mulgrave, Victoria, 3170
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 31 August 2018. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period including the following
as of 1 July 2017:
• AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle
• AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107
• AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised
Losses
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.
It is noted that AASB 107 Statement of Cash Flows requires a new disclosure on changes in liabilities arising from
financing activities. However, such a note has not been prepared in these financial statements since there were no opening
and closing balances for such liabilities and all cash flows arising from financing activities are clearly presented in the
Statement of Cash Flows.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Going concern
The financial report has been prepared on the going concern basis, which contemplates continuity of normal business
activities and realisation of assets and liabilities in the ordinary course of business. The going concern of the consolidated
entity is dependent upon it maintaining sufficient funds for its operations and commitments.
The working capital position as at 30 June 2018 of the consolidated entity results in an excess of current assets over current
liabilities of $2,806,936 (30 June 2017: $1,512,755). The consolidated entity made a loss after tax of $2,035,328 during the
financial year (2017: $2,942,925) and the net operating cash outflow was $2,323,792 (2017: $3,412,811 net outflow). The
cash balance as at 30 June 2018 was $1,562,494 (30 June 2017: $700,666).
The Directors are of the opinion that the existing cash reserves will provide the company with adequate funds to ensure its
continued viability and operate as a going concern.
23
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 28.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Optiscan Imaging Limited
('company' or 'parent entity') as at 30 June 2018 and the results of all subsidiaries for the year then ended. Optiscan Imaging
Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity' or 'Group'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Optiscan Imaging Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
24
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can
be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the goods, the
risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are net
of sales returns and trade discounts.
Royalty revenue
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant licensing agreement.
Milestone revenue
Milestone revenue is recognised upon confirmation by the customer of successful completion of the relevant milestone per
any underlying agreement.
Interest
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.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
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.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or 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 nor
taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
25
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within
12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities 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.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective
evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade
receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount
and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to
short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a 'first in first
out' basis. Cost comprises direct materials and delivery costs, direct labour, import duties and other taxes, an appropriate
proportion of variable and fixed overhead expenditure based on normal operating capacity, and, where applicable, transfers
from cash flow hedging reserves in equity. Costs of purchased inventory are determined after deducting rebates and
discounts received or receivable.
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
26
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
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:
Office furniture & equipment
Production equipment
R&D equipment
20% - 40%
20%
30% - 40%
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
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 fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end
of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. 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 high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
27
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and
best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable
inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
28
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Optiscan Imaging Limited, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2018. The consolidated
entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the
consolidated entity, are set out below.
AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement.
This standard modifies the classification and measurement of financial assets. It includes:
• A single, principle-based approach for the classification of financial assets, which is driven by cash flow characteristics and
the business model in which an asset is held
• A new expected credit loss impairment model requiring expected losses to be recognised when financial assets are first
recognised;
• A modification of hedge accounting to align the accounting treatment with risk management practices of an entity.
The consolidated entity will adopt this standard from its application date of 1 July 2018. Initial assessment of existing financial
instruments by the consolidated entity has commenced, however we have not fully determined the impact on recognition and
measurement of financial instruments as our analysis is still ongoing.
AASB 15 Revenue from Contracts with Customers
The core principle of AASB 15 is that an entity recognises revenue related to the transfer of promised goods or services
when control of the goods or services passes to the customer. The amount of revenue recognised should reflect the
consideration to which the entity expects to be entitled in exchange for those goods or services.
Assessment of the new standard has focused on identifying the components of the Group’s contractual arrangements to
which AASB 15 would be applicable and understanding the nature of those arrangements, in particular, key terms and
conditions that may impact revenue recognition.
The consolidated entity will adopt this standard from its application date of 1 July 2018. Initial assessment of existing
contracts by the consolidated entity has commenced, however we have not fully determined the revenue recognition impact
as our analysis is still ongoing.
29
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
AASB 16 Leases
AASB 16 sets out a comprehensive model for the identification of lease arrangements and their treatment in the financial
statements of both lessees and lessors. AASB 16 applies a control model for the identification of leases, distinguishing
between leases and service contracts on the basis of whether there is an identified asset controlled by the customer. The
standard requires lessees to account for leases under an on-balance sheet model with the distinction between operating and
finance leases being removed. Lessors continue to classify leases and account for them as operating or finance leases
The consolidated entity will adopt this standard from its application date of 1 July 2019. The consolidated entity is yet to
finalise its assessment and has not quantified any impact.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-
Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts
of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer Note 33.
Capitalisation of labour costs into inventory
The carrying value of inventories includes an allocation of capitalised labour costs relevant to the production of those
inventories. In determining the amount of labour to be capitalised, management makes assumptions regarding the nature
and quantum of the activities undertaken by personnel involved in the production and assembly of inventory.
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimating and judgement. The level of the
provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that
affect inventory obsolescence.
Employee benefits provision
As discussed in note 2, the liability for employee benefits expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases
through promotion and inflation have been taken into account.
30
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 4. Operating segments
Identification of reportable operating segments
The Group operated predominately in the confocal microscope industry. The Group's sales comprise sales of goods within
that segment. AASB 8 requires operating segments to be identified on the basis of internal reports about the components
of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment
and to assess its performance. The board reviews the Group as a whole in the business segment of confocal microscopes
within Australia. The majority of sales revenues are attributed to Germany, being 88.2% (2017: 98.4%), and other overseas
markets 11.8% (2017: Nil%). There are 2 customers that contributed revenues greater than 10%, which totalled all sales
during the financial year. In the year ended 30 June 2017 there was one customer that contributed revenues greater than
10%, which totalled $1.312 million during that year.
All non-current assets are located in Australia.
Note 5. Other income
Government grants - R&D tax incentive
Other income
Other income
Note 6. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Finance costs
Interest and finance charges paid/payable
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense (Note 33)
Employee benefits expense excluding superannuation
Employee benefits expense excluding superannuation
31
Consolidated
2018
$
2017
$
781,758
-
980,257
12,104
781,758
992,361
Consolidated
2018
$
2017
$
88,640
41,773
42,500
72,531
151,107
133,946
158,564
132,256
(9,874)
859,482
2,022,787
1,579,201
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 7. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 27.5% (2017: 30%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
Non assessable gains
R&D Tax Incentive deductions foregone for tax offset
Expenditure not allowable for income tax purposes
Deferred tax assets recognised/(not recognised)
Income tax expense
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary differences attributable to:
Undeducted patent costs
Employee benefit & warranty provisions
Expenses not yet deductible
Tax losses available
Total deferred tax assets not recognised
Consolidated
2018
$
2017
$
(2,035,328)
(2,942,925)
(559,715)
(882,878)
(2,715)
(214,983)
494,215
6,485
276,713
257,845
(294,077)
676,040
2,248
240,822
-
-
Consolidated
2018
$
2017
$
241,319
76,699
43,266
243,153
68,904
16,500
13,242,095 12,998,109
13,603,379 13,326,666
The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised in
the statement of financial position as the recovery of this benefit is uncertain.
Note 8. Current assets - cash and cash equivalents
Cash on hand
Cash on deposit
Consolidated
2018
$
2017
$
1,562,494
-
592,541
108,125
1,562,494
700,666
32
Consolidated
2018
$
2017
$
346,533
230,449
781,092
119,704
900,796
980,257
75,238
1,055,495
1,247,329
1,285,944
Consolidated
2018
$
2017
$
507,363
378,216
-
279,951
140,096
75,863
885,579
495,910
Consolidated
2018
$
2017
$
26,690
25,078
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 9. Current assets - trade and other receivables
Trade receivables
R&D Tax incentive grant receivable
GST refund receivable
Note 10. Current assets - inventories
As stated at the lower of cost or net realisable value:
Raw materials and work in progress
Finished goods
Stock in transit
Cost of sales reflects the value of inventory sold in the period.
No inventory items were impaired at 30 June 2018 (2017: Nil).
Note 11. Current assets - other
Prepayments
33
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 12. Non-current assets - property, plant and equipment
Plant and equipment - at cost
Less: Accumulated depreciation
Production equipment - at cost
Less: Accumulated depreciation
R&D Equipment - at cost
Less: Accumulated depreciation
Consolidated
2018
$
2017
$
1,153,535
(810,152)
343,383
882,488
(723,368)
159,120
260,537
(258,518)
2,019
258,483
(258,483)
-
364,905
(364,905)
-
364,905
(364,905)
-
345,402
159,120
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2016
Additions
Depreciation expense
Balance at 30 June 2017
Additions
Transfers to inventory
Depreciation expense
Balance at 30 June 2018
Note 13. Non-current assets - other
Security deposits
Plant and
equipment equipment
Production
$
$
Total
$
19,691
181,202
(41,773)
159,120
288,470
(15,601)
(88,606)
-
-
-
-
2,053
-
(34)
19,691
181,202
(41,773)
159,120
290,523
(15,601)
(88,640)
343,383
2,019
345,402
Consolidated
2018
$
2017
$
62,625
-
The prior year comparatives for Cash and cash equivalents included a security deposit of $108,125. In the current year
$45,500 was refunded to the consolidated entity and the remainder was transferred to the long term security deposit in place
as at 30 June 2018.
34
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 14. Current liabilities - trade and other payables
Trade payables
Accrued expenses
Other creditors
Refer to note 22 for further information on financial instruments.
Note 15. Current liabilities - borrowings
Consolidated
2018
$
2017
$
326,748
109,172
213,869
566,772
74,475
130,432
649,789
771,679
During the year ended 30 June 2018 the consolidated entity obtained $300,000 in short term loan funds, which was fully
repaid during the year.
During the previous financial year the consolidated entity repaid an external loan amounting to $500,000 on time and in full
upon receipt of the annual R&D Tax Incentive government rebate and no late payment penalties were incurred.
In relation to the previous financial year, included in the short term loan for the amount of $600,000 and was payable to
parties associated with a director of the entity, Mr Ian Mann. Directors received shareholder approval to convert this loan to
equity at the company’s Annual General Meeting on 25 November 2016 and this was executed during the period. Mr Ian
Mann received 24,000,000 shares at $0.025 (2.5 cents) per share on conversion of the loan. The final interest payable of
$26,315 was paid in February 2017.
The total secured current liabilities are as follows:
Consolidated
2018
$
2017
$
-
-
-
-
-
1,124,358
(543,006)
(600,000)
18,648
-
Consolidated
2018
$
2017
$
94,680
170,687
84,985
138,179
265,367
223,164
Opening balance
Payment of loan principal and capitalised interest
Settlement of loans through the issue of shares
Amortised cost adjustment
Note 16. Current liabilities - provisions
Annual leave
Long service leave
35
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 17. Non-current liabilities - provisions
Long service leave
Note 18. Equity - issued capital
Consolidated
2018
$
2017
$
13,538
6,516
Consolidated
2018
Shares
2017
Shares
2018
$
2017
$
Ordinary shares - fully paid
432,678,800 376,078,800 57,987,132 53,870,454
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Share placement
Share issued for loan facility fee*
Shares issued for 2 for 9 rights issue
Shares issued for 2 for 9 rights issue shortfall
Shares issued upon conversion of loan*
Share placement
Exercise of options
Exercise of options
Transaction costs of share issue
1 July 2016
6 July 2016
6 July 2016
19 August 2016
8 September 2016
22 December 2016
28 December 2016
15 March 2017
15 March 2017
Balance
Shares issued on exercise of options
Issue of Share Purchase Plan shares
Issue of Placement shares to professional investors
Shares issued on exercise of options
Shares issued on exercise of options
Shares issued on exercise of options
Shares issued on exercise of options
Shares issued on exercise of options
Shares issued on exercise of options
Shares issued on exercise of options
Shares issued on exercise of options
Transfer from share based payments reserve on
exercise of options
Transaction costs of share issue
30 June 2017
10 August 2017
04 October 2017
04 October 2017
18 October 2017
24 October 2017
24 October 2017
24 November 2017
29 January 2018
29 January 2018
07 June 2018
28 June 2018
Various
223,823,882
29,980,000
1,000,000
22,078,044
34,546,874
24,000,000
38,650,000
1,000,000
1,000,000
-
376,078,800
1,000,000
31,250,000
12,500,000
1,300,000
2,500,000
850,000
500,000
3,700,000
1,500,000
760,000
740,000
49,362,779
749,500
25,000
551,951
863,672
600,000
1,932,500
25,000
50,000
(289,948)
$0.025
$0.025
$0.025
$0.025
$0.025
$0.050
$0.025
$0.050
$0.000
53,870,454
25,000
2,500,000
1,000,000
32,500
62,500
42,500
12,500
92,500
75,000
19,000
18,500
$0.025
$0.080
$0.080
$0.025
$0.025
$0.050
$0.025
$0.025
$0.050
$0.025
$0.025
-
-
$0.000
$0.000
535,410
(298,732)
Balance
30 June 2018
432,678,800
57,987,132
* Transactions relate to non-cash debt to equity transactions issued to satisfy outstanding liabilities.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company
does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
36
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 18. Equity - issued capital (continued)
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current company's share price at the time of the investment. The consolidated entity is not actively
pursuing additional investments in the short term as it continues to integrate and grow its existing operations in order to
maximise synergies.
The capital risk management policy remains unchanged from the 30 June 2017 Annual Report.
Note 19. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Consolidated
2018
$
2017
$
(4,435)
1,884,369
(4,435)
2,429,653
1,879,934
2,425,218
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
37
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 19. Equity - reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2016
Foreign currency translation
Share based payments expense
Balance at 30 June 2017
Share based payments expense
Transfer from share based payments reserve on exercise of options
Forfeiture of options
Balance at 30 June 2018
Note 20. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Accumulated losses at the end of the financial year
Note 21. Equity - dividends
Foreign
currency
transaction
reserve
$
Share based
payments
reserve
$
Total
$
4,788
(9,223)
-
(4,435)
-
-
-
1,570,171
-
859,482
1,574,959
(9,223)
859,482
2,429,653
60,126
(535,410)
(70,000)
2,425,218
60,126
(535,410)
(70,000)
(4,435)
1,884,369
1,879,934
Consolidated
2018
$
2017
$
(54,630,313)
(2,035,328)
(51,687,388)
(2,942,925)
(56,665,641)
(54,630,313)
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 22. Financial instruments
Financial risk management objectives
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.
38
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 22. Financial instruments (continued)
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.
Market risk
Foreign currency risk
As nearly all of the Group’s sales revenue and accounts receivable, 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 2018, 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 2018, 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:
Consolidated - 2018
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
Trade debtors
10%
(34,653)
(34,653)
10%
34,653
34,653
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The Group's exposure to market interest rates relates primarily to the Group's 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.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and other
receivables. 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. 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
The Group's objective is to maintain adequate funding of its activities. Capital management is a process of monitoring cash
reserves and forecast cash requirements, and there are no externally imposed capital requirements.
39
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 22. Financial instruments (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 amounts disclosed in the
financial statements reflect the expected maturity of assets and liabilities.
Trade payables and other financial liabilities mainly originate from investments in working capital, principally inventories.
These liabilities and relevant 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 Group’s activities are funded from its cash reserves.
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.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade payables
Accruals
Other payables
Total non-derivatives
Consolidated - 2017
Non-derivatives
Non-interest bearing
Trade payables
Accruals
Other payables
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
-
326,748
109,172
213,869
649,789
-
-
-
-
-
-
-
-
-
-
-
-
326,748
109,172
213,869
649,789
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
-
566,774
74,475
130,430
771,679
-
-
-
-
-
-
-
-
-
-
-
-
566,774
74,475
130,430
771,679
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
40
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 23. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity
is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Note 24. Remuneration of auditors
Consolidated
2018
$
2017
$
588,906
47,000
1,080
257,280
(9,874)
741,277
49,400
1,104
-
664,682
884,392
1,456,463
During the financial year the following fees were paid or payable for services provided by Ernst & Young, the auditor of the
company:
Audit services - Ernst & Young
Audit or review of the financial statements
Other services - Ernst & Young
R&D tax services
Other professional services
Consolidated
2018
$
2017
$
92,000
78,575
12,500
-
12,500
7,635
12,500
20,135
104,500
98,710
Note 25. Contingent liabilities
The group has contingent liabilities in relation to bank guarantees on issue at balance date amounting to $62,625 (2017:
$108,125).
41
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 26. Commitments
At 30 June 2018 there were no material capital commitments outstanding (2017: Nil).
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2018
$
2017
$
160,268
312,594
155,000
445,625
472,862
600,625
Operating lease commitments includes contracted amounts for offices and plant and equipment under non-cancellable
operating leases expiring within 3 years with an option to extend. The lease has an escalation clause. On renewal, the terms
of the lease are expected to be renegotiated.
Note 27. Related party transactions
Parent entity
Optiscan Imaging Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 29.
Key management personnel
Disclosures relating to remuneration of key management personnel are set out in note 23 and the remuneration report
included in the directors' report.
Transactions with Subsidiaries
Inter-company transactions during the financial year between the parent entity, Optiscan Imaging Limited and subsidiary,
Optiscan Pty Ltd amounted to $2,249,626 (2017: $3,305,357). Outstanding balances at year-end are unsecured, interest
free and settlement occurs in cash. The balances are classified current by the parent entity.
Transactions with Directors
In the prior financial year, during December 2016, a loan of $600,000 provided by an entity associated with non-executive
Director, Mr. Ian Mann, was converted to share capital through the issuance of 24,000,000 shares. Interest of $35,000 in
respect of this loan was paid in August 2016 and the final interest payment of $26,315 was paid in February 2017.
FAL Lawyers, a law firm of which Director Mr. Peter Francis is a principal, received fees for the provision of legal services to
the entity totalling $41,161 for the period (2017: $52,501). The underlying services were provided at commercial rates.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at commercial rates.
42
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 28. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
2018
$
2017
$
(2,035,328)
(2,940,876)
(2,035,328)
(2,940,876)
2018
$
2017
$
1,460,681
220,607
3,201,425
1,690,359
-
-
(25,000)
(25,000)
57,987,132 53,870,453
2,429,654
(54,634,748)
1,884,369
(56,670,076)
3,201,425
1,665,359
The 2017 comparative balances have been restated to present the correct closing balances of the parent entity as at 30
June 2017.
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2018 and 30 June 2017.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2018 and 30 June 2017.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018 and 30 June 2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except
for the following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
43
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 29. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Name
Optiscan Pty Ltd
Optiscan Inc
Principal place of business /
Country of incorporation
Australia
United States
Ownership interest
2017
2018
%
%
100.00%
100.00%
100.00%
100.00%
Note 30. Events after the reporting period
During July and August 2018, a total of 6,650,000 remuneration-related options, held by former non-executive directors of
the company, lapsed following the departures of those directors. The options lapsed three months after the former directors'
respective cessation dates, in accordance with the terms and conditions of those options.
During August 2018, the company has reduced its recurring expenditure by in excess of $500,000 per annum through a
reduction in employee numbers and alteration of third party arrangements.
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(2,035,328)
(2,942,925)
Consolidated
2018
$
2017
$
Adjustments for:
Depreciation and amortisation
Share-based payments
FX movements through equity
Finance costs classified as financing cash outflow
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in inventories
Decrease/(increase) in prepayments
Decrease in trade and other payables
Increase/(decrease) in other provisions
Net cash used in operating activities
88,640
(9,874)
-
42,500
41,773
859,482
(9,223)
-
38,615
(374,068)
(1,612)
(121,890)
49,225
(505,152)
(467,410)
11,970
(396,688)
(4,638)
(2,323,792)
(3,412,811)
44
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 32. Earnings per share
Loss after income tax attributable to the owners of Optiscan Imaging Limited
(2,035,328)
(2,942,925)
Weighted average number of ordinary shares used in calculating basic earnings per share
414,919,238 333,532,439
Weighted average number of ordinary shares used in calculating diluted earnings per share 414,919,238 333,532,439
Number
Number
Consolidated
2018
$
2017
$
Basic earnings per share
Diluted earnings per share
Note 33. Share-based payments
Cents
Cents
(0.49)
(0.49)
(0.88)
(0.88)
The expense recognised in the Statement of Comprehensive Income for the financial year to 30 June 2018 is a negative
expense of $9,874 (30 June 2017: expense of $859,482). This comprises executive options amortisation expense of
$60,126, offset by a reversal of executive options amortisation expense of $70,000 arising on the forfeiture of executive
options upon which expenses had previously been recognised.
During the previous financial year the company granted a total of 12,000,000 unlisted options to Directors and management
following approval at the company’s 2016 Annual General Meeting. During that period the company also granted 7,500,000
unlisted options to the CEO, Mr Archie Fraser and granted 5,000,000 unlisted options in relation to an underwriting fee for
the company rights issues conducted during the financial year.
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.
Set out below are summaries of options granted under the plan:
2018
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
30/06/2018
28/11/2019
28/11/2019
28/05/2020
28/11/2020
28/05/2021
28/11/2021
28/11/2019
$0.025
$0.050
$0.075
$0.025
$0.050
$0.050
$0.050
$0.025
5,000,000
3,000,000
4,000,000
1,500,000
1,500,000
1,500,000
1,500,000
4,500,000
22,500,000
Exercised
-
-
-
-
-
-
-
-
-
(5,000,000)
(850,000)
-
(1,500,000)
(1,500,000)
-
-
(4,000,000)
(12,850,000)
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
(1,500,000)
(1,500,000)
-
(3,000,000)
-
2,150,000
4,000,000
-
-
-
-
500,000
6,650,000
Weighted average exercise price
$0.042
$0.000
$0.029
$0.050
$0.063
The options outstanding as at 30 June 2018 forfeited after year end and were not exercised.
45
Optiscan Imaging Limited
Notes to the financial statements
30 June 2018
Note 33. Share-based payments (continued)
2017
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
13/07/2015
30/06/2018
28/11/2019
28/11/2019
28/05/2020
28/11/2020
28/05/2021
28/11/2021
28/11/2019
12/06/2017
$0.025
$0.050
$0.075
$0.020
$0.050
$0.050
$0.050
$0.025
$0.010
-
-
-
1,500,000
1,500,000
1,500,000
1,500,000
1,500,000
3,000,000
5,000,000
4,000,000
4,000,000
-
-
-
-
4,000,000
-
10,500,000 17,000,000
-
(1,000,000)
-
-
-
-
-
(1,000,000)
-
(2,000,000)
5,000,000
-
3,000,000
-
4,000,000
-
1,500,000
-
1,500,000
-
1,500,000
-
1,500,000
-
4,500,000
-
(3,000,000)
-
(3,000,000) 22,500,000
Weighted average exercise price
$0.010
$0.042
$0.000
$0.021
$0.042
Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
28/11/2016
30/06/2018
28/11/2019
28/11/2019
28/05/2020
28/11/2020
28/05/2021
28/11/2021
28/11/2019
2018
2017
Number
Number
-
2,150,000
4,000,000
-
-
-
-
500,000
5,000,000
3,000,000
4,000,000
1,500,000
1,500,000
1,500,000
1,500,000
4,500,000
6,650,000 22,500,000
The weighted average share price during the financial year was $0.0859.
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.4 years (2017:
3 years).
46
Optiscan Imaging Limited
Directors' declaration
30 June 2018
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at
30 June 2018 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Darren Lurie
Executive Chair
31 August 2018
47
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
Independent Auditor's Report to the Members of Optiscan Imaging
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Optiscan Imaging Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Going Concern
Why significant
For the year ended 30 June 2018, the Group has
recorded a loss after income tax of $2 million
and a net cash outflow from operations of $2.3
million. As at 30 June 2018 the Group had cash
reserves of $1.6 million as disclosed in Note 9.
Notwithstanding the above, the Group has
prepared the financial report on the going
concern basis which assumes continuity of
normal operations into the foreseeable future.
The Group has prepared a cash flow forecast for
the 12 month period to 31 August 2019 which
underpins the Director’s going concern
assessment, including the performance of
sensitivity analysis in respect of key
assumptions. A key assumption underpinning
this forecast is continued recognition of third
party sales and a reduction in operating
expenditure.
Our assessment of the Director’s conclusion that
the Group is a going concern is a key audit
matter given the significant judgement involved
in estimating future cash flows of the Group.
Note 2 of the financial report contain disclosures
with respect to the going concern assumption.
2
How our audit addressed the key audit matter
We determined whether the Group’s going concern
assessment and supporting cash flow forecasts had
been approved by the Board of Directors.
We evaluated the Company’s future cash flow
forecasts and the process by which the cash flows
were prepared. Our procedures included the
following:
We considered the historical reliability of the
Group’s cash flow forecasting process in
assessing the appropriateness of
management’s key cash flow assumptions;
We enquired of key management personnel
regarding the forecast revenue and the
forecast expenditure and considered the
support provided by management for key
revenue and cost assumptions.
We evaluated the revenue expectations made
by the Group by assessing whether these
estimates were supported by enforceable
arrangements with commercial partners.
Support provided by management to support
the revenue forecasts included customer
confirmations of sales orders, and associated
purchase orders.
We evaluated and challenged the expenditure
savings expected by the Group by assessing
whether these estimates were supported by
appropriate rationale with a more than
probable likelihood of occurrence. Support
provided by management to evidence the
expenditure forecasts included redundancy
notification to specific employees, revised
contractual arrangements with contractors
and consultants, and agreed upon policy
changes with reference to other operational
expenditures.
We performed additional sensitivity analysis
adjusting key revenue and cost assumptions.
We considered the adequacy of going concern
related disclosures made in Note 2 of the financial
report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
3
Recognition of Revenue
Why significant
How our audit addressed the key audit matter
The Company has an existing collaboration
contract for the development of and sale of
prototype miniaturised confocal microscope
systems. There is a risk of improper revenue
recognition, particularly in relation to revenue
recognition at period end, given that revenue
from the contract is recognised based on
achieving specified contracted milestones.
Note 2 of the financial statements outlines the
Company’s accounting policy with respect to
revenue recognition.
Our audit procedures included an assessment of the
collaboration contract to understand the terms and
conditions for the Company to deliver services under
the contract and the timing of revenue recognition.
We performed testing to assess whether the
Company had met the performance milestones as
required by the contract and, on a sample basis,
determined whether the revenue was correctly
recognised based on the services delivered as at 30
June 2018.
Revenue recognition was a key audit matter due
to the complexity of the contractual terms.
For the sample selected, we assessed agreed
revenue related cash receipts to bank statements
and customer milestone confirmations.
We assessed whether the Company’s revenue
recognition accounting policy as disclosed in Note 2
has been correctly applied with respect to this
contract and met the requirements of Australian
Accounting Standards.
Inventory existence and valuation
Why significant
How our audit addressed the key audit matter
At 30 June 2018, the Group held inventory of
$0.9 million, which comprised raw materials,
work in progress and finished product. This
inventory is held at a central warehouse.
The existence and valuation of inventory was a
key audit matter given the significance of the
inventory balance at 30 June 2018 and the
judgement required in determining the initial
cost of the inventory and whether it is recorded
at the lower of cost and net realisable value.
We assessed the effectiveness of the inventory stock
takes that occurred at year end.
We selected a sample of inventory items to assess
whether cost, including allocations of labour, was
appropriately calculated.
We analysed inventory gross margins in assessing
whether inventory was carried at the lower of cost
and net realisable value.
We assessed the Group’s consideration of the level of
inventory and associated inventory provisioning.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
4
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2018 Annual Report, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
5
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 15 of the directors' report for the year
ended 30 June 2018.
In our opinion, the Remuneration Report of Optiscan Imaging Limited for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
6
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Paul Gower
Partner
Melbourne
31 August 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Optiscan Imaging Limited
Shareholder information
30 June 2018
The shareholder information set out below was applicable as at 28 August 2018.
Corporate Governance Statement
Refer to the company's Corporate Governance statement at: www.optiscan.com/investors/corporate-governance/.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Number
of holders
of ordinary
shares
753
987
393
911
453
3,497
1,933
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
shares
issued
Number held
PETERS INVESTMENTS PTY LTD
IBSEN PTY LTD (NARULA FAMILY SET NO3 A/C)
HARECH PTY LTD (PORTER SUPER FUND A/C)
MR CHRIS GRAHAM + MRS DIANE GRAHAM (C & D GRAHAM S/F A/C)
LIGHTSTORM PTY LTD (HOTSPICE A/C)
DIXSON TRUST PTY LIMITED
OPTHEA LIMITED
SASH PTY LTD (KNEZEVIC SUPER FUND A/C)
PROJECT MANAGEMENT PTY LTD (D & K CORPS FAMILY S/F A/C)
MR ALFRED JOSEPH WINKELMEIER + MRS CHRISTINE EDITH WINKELMEIER (THE
WINKELMEIER S/F A/C)
MR PETER MAXWELL DELANEY
DR PHILIP JAMES CURRIE + MRS ANNE JENNIFER CURRIE (CURRIE FAMILY
SUPERFUND A/C)
KEBIN NOMINEES PTY LTD
IT IS CONSULTING PTY LTD (THE WYMANT FAMILY A/C)
IBSEN PTY LTD (IBSEN SUPERFUND A/C)
MR CHRISTOPHER JOHN MARTIN
MISS SHIRLEY ELKASSABY
MR JUBRAN WILLIAM TOAK + MR MELHEM WILLIAM TOAK
NATIONAL NOMINEES LIMITED
SEMBLANCE PTY LTD (GRAEME MUTTON RETIRE S/FUND)
43,431,112
38,699,500
12,042,805
11,000,000
10,000,000
8,467,350
8,285,151
6,837,964
6,141,112
6,060,000
5,451,259
4,687,500
4,545,405
4,505,000
4,256,445
4,209,448
3,680,000
3,422,996
3,330,000
3,300,000
10.04
8.94
2.78
2.54
2.31
1.96
1.91
1.58
1.42
1.40
1.26
1.08
1.05
1.04
0.98
0.97
0.85
0.79
0.77
0.76
192,353,047
44.43
Unquoted equity securities
There are no unquoted equity securities.
54
Optiscan Imaging Limited
Shareholder information
30 June 2018
Substantial holders
Substantial holders in the company are set out below:
Peters Investments Pty Ltd
Ibsen Pty Ltd (Narula Family Set No3 A/C)
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
% of total
shares
issued
Number held
43,431,112
41,855,945
10.04
9.67
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
On-market buy-back
There is no current on-market buy-back.
55