A n n u a l R e p o r t 2 0 1 1
Corporate information
ABN 96 006 762 492
Registered office and
Principal place of business
Ground Floor
278 Stirling Highway
Claremont WA 6010
Telephone: +61 8 9286 5300
Facsimile: +61 8 9286 1179
Postal address
PO Box 1135
Nedlands WA 6909
Website and e-mail address
www.resonancehealth.com
Email: info@ferriscan.com
Directors
Dr Martin Blake
Non-executive Chairman
Ms Liza Dunne
Managing Director
Mr Simon Panton
Non-executive Director
Dr Timothy St Pierre
Executive Director
Company secretary
Mr Colin McDonald
Stock exchange listing
Resonance Health Limited
shares are listed on the
Australian Securities Exchange
ASX Code: RHT
Auditors
HLB Mann Judd
Level 4
130 Stirling Street
Perth WA 6000
Share registry
Advanced Share Registry Ltd
150 Stirling Highway
Nedlands WA 6009
Telephone: +61 8 9389 8033
Facsimile: +61 8 9389 7871
Bankers
National Australia Bank Limited
Solicitors
Cole Legal
Unit 9
569 Wellington Street
Perth WA 6000
Resonance Health Limited Annual Report 2011
Resonance Health Limited Annual Report 2011
Our Business.
Resonance Health specialises in the provision of medical imaging diagnostic tools to
aid in the diagnosis and management of human disease. Resonance Health’s expertise
in the liver was established with FerriScan®, now the recognised gold standard for
the assessment of iron overload. The Company is developing new products for the
measurement of fatty liver disease and liver fibrosis using magnetic resonance imaging.
Resonance Health additionally provides comprehensive clinical trial services to
pharmaceutical companies using imaging end points in their clinical trials.
Contents
Chairman and Managing Director’s Report
Year In Review
Directors’ Report
Corporate Governance Statement
Auditor’s Independence Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional ASX Information
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Chairman and managing direCtOr’s repOrt
Resonance Health has concentrated its efforts this year on increasing FerriScan® sales volumes, increasing the number of medical
facilities using FerriScan®, product enhancements, improvements in service delivery and the development of new products.
During the year FerriScan® services have been provided to new markets including Italy, Japan, China, Bangladesh and Brazil and there
has been deeper penetration into existing markets. The number of medical facilities using FerriScan® in the US doubled during the year
to nearly 40, providing broad availability to patients (an important requirement for reimbursement in that market). FerriScan® sales
volumes increased 14% on the prior year, represented by a 105% increase in the UK and a 35% increase in the US. FerriScan® revenue
was $1.75m for the year, down 5% on the previous year. With the majority of the Company’s revenue generated overseas the high
Australian dollar continues to impact negatively on financial returns.
In October 2010, Resonance Health signed a strategic Master Service Agreement with Novartis Pharmaceuticals. As a result, several
new contracts for FerriScan® services were executed during the year. We were pleased to announce the expansion of this agreement
in March to include worldwide FerriScan® services to Novartis for non-clinical trial purposes.
Resonance Health augmented its medical image diagnostic portfolio with the Cardiac T2* test which was cleared for marketing by
the US Food and Drug Administration (FDA) in August 2011 and is now available in the UK, US, Canada and Australia. This additional
service enables an assessment of both liver iron concentration and cardiac iron loading at a single visit and has been well received by
our customers.
Medical insurance for FerriScan® remains a key factor in achieving target growth levels. The Company has experienced challenges
in achieving reimbursement in Australia with a direct link between a diagnostic test and patient outcome not easy to quantify. The
Company is continuing to work through these issues with the Australian Medical Services Advisory Committee (MSAC) and is working
with private and public payers in the US to gain insurance coverage for FerriScan® in that market. The Board and management remain
confident they will achieve success with FerriScan® reimbursement, which together with access to new markets using distributors, will
enable it to achieve FerriScan® growth expectations.
The Board has committed to bringing new diagnostic tests for the liver to market and has made a significant investment in research
and development activities to expand its portfolio of products. These activities have primarily been focussed on the development of
diagnostic tools for the assessment of fatty liver disease and liver fibrosis.
Resonance Health’s test for measuring fatty liver (called HepaFat Scan™) produced results that are superior to all other available
diagnostic tests. The Company is currently working on a submission to the FDA for HepaFat Scan™. Fatty liver disease is a large and
growing medical condition. Up to 30% of people in developed countries and nearly 10% of people in developing countries have fatty
liver disease, making it the most common liver condition in the world. Fatty liver disease is often undiagnosed until it has progressed
to a more serious state of liver damage. HepaFat Scan™ provides a quick, non-invasive diagnostic test to enable patients to have their
diagnosis of fatty liver made at an early stage.
We were delighted to commence a project with Pfizer to further develop the Company’s liver fibrosis diagnostic test in collaboration
with the liver transplant unit at the Austin Hospital in Melbourne. This project is on schedule and we look forward to reporting the
outcome to shareholders in the first quarter 2012. The current gold standard diagnostic test for liver fibrosis is a liver biopsy which
presents considerable risks to a patient. The Company’s MRI-based liver fibrosis test would enable repeat measurements of a patient’s
liver fibrosis to be made, enabling the progress of the patient and their therapy to be tracked.
The Board and Management are confident that the investment it is making in the development of new diagnostic products and
strategies to grow awareness, acceptance and use of its products will provide a strong future for Resonance Health.
Liza Dunne
Managing Director
Dr Martin Blake
Director Chairman
2
Year in review
Resonance Health Limited Annual Report 2011
Resonance Health Limited Annual Report 2011
FerriScan® has become the method of choice for clinicians worldwide in the assessment of iron
overload. FerriScan® sales volumes increased by 14% on the previous year, with 125 medical
facilities now offering the service globally.
FerriScan® Sales Growth
FerriScan® Worldwide
The UK had a 105% increase in volume growth over the previous
year and there are now 35 medical facilities in Europe providing
FerriScan® to their patients. Clinical guidelines and patient
management protocols incorporating FerriScan® have assisted in
demonstrating the clinical value of the FerriScan® service.
FerriScan® is being used in approximately 40 facilities in North
America in the clinical management of patients and within clinical
trials. FerriScan® sales volumes in the USA increased 35% over the
The unique delivery of FerriScan® as a quality-assured image analysis
previous year despite economic cutbacks across all sectors of the
service provides consistently reliable results to clinicians and has
economy. A Health Technology Assessment (HTA) was completed
afforded the Company a considerable competitive advantage.
during the year to provide detailed information regarding the
Resonance Health conducted a survey of clinicians using
private healthcare payers and providers as the Company seeks
FerriScan® in late 2010 which confirmed the importance of the
to have FerriScan® included in health benefit plans and disease
clinical utility of FerriScan®. It is being presented to public and
robust scientific validation of the test and its proven accuracy
management programs.
in their adoption of FerriScan®. The survey also indicated that
FerriScan® had reduced the number of liver biopsies being
A network of distributors is being established to target the Asia
performed in 85% of respondents’ centres, consolidating the
Pacific and the Middle East regions which have a high prevalence
test’s status as the new gold standard. These factors have
of the medical conditions which can result in iron overload,
contributed to a 23% increase in the number of doctors referring
providing a cost-effective marketing channel in these countries.
patients for FerriScan® over the year.
UK -
105% increase
in sales volume
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•
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•
North America -
doubling of number
of FerriScan® sites
and 35% increase
in sales volume
•••
•
South America -
establishment of first
FerriScan® sites
•
•
•
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•
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•
•
•
• ••
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•
•
•
•
•
•
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• Existing FerriScan® locations
•
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The Global FerriScan® Footprint
3
Year in review (cont)
Australia
Expanding Role of FerriScan®
The Company was disappointed that the Australian Medical
FerriScan® continues to be in demand in clinical trials. It has
Services Advisory Committee (MSAC) declined to recommend
been used by Novartis Pharmaceuticals for over six years in their
reimbursement for FerriScan®. The Company was advised that
clinical trials for iron chelation therapy. Resonance Health has
the technical evidence for the technology was robust but
also contracted to provide FerriScan® to FerroKin BioSciences, a
additional data was required to further demonstrate a direct
US-based pharmaceutical company developing an iron chelator
link between the use of FerriScan® and improved patient
drug.
outcomes, whilst acknowledging this is difficult to demonstrate
for a diagnostic test of this type. In early 2011, MSAC announced
significant changes to its framework and procedures for
assessing medical devices for public funding. These changes
have confounded the Company’s ability to address the specific
issues identified by MSAC in a timely fashion, requiring the
FerriScan® has been chosen in a NIH funded study in the United
States to assess treatment alternatives for sickle cell patients
involving 25 medical facilities. FerriScan®’s technical leadership,
together with the Company’s ability to provide services to large
clinical trials were primary reasons why FerriScan® was chosen
Company to progress its application for reimbursement under
in this study.
the new framework. The Company is currently working through
these issues with MSAC and is constrained by the limited
number of scheduled MSAC meetings.
Extract from:
Australian Guidelines for the assessment of iron
overload and iron chelation in transfusion-dependent
thalassaemia major, sickle cell disease and other
congenital anaemias.
“The quantitation of liver iron by MRI is one of the most
significant recent advances in iron monitoring.
FerriScan® was also selected in a study on the occurrence of iron
loading in renal disorders. Chronic kidney disease is commonly
accompanied by the development of anaemia and intravenous
iron therapy is often used to maintain adequate iron stores
for dialysis patients. However, these patients can develop iron
overload. This published study demonstrated that conventional
blood markers such as serum ferritin were inadequate in
identifying and measuring iron overload in many of these
patients. It concluded that dialysis patients would benefit from
FerriScan® to determine if iron overload is present and if iron
administration should be withheld. These conclusions indicate a
promising new clinical application for FerriScan®.
Product Pipeline – Investing for the Future
Resonance Health is progressing a number of research and
development projects to bring pipeline products to market and
expand revenue opportunities for the company. During the year,
these projects have included the following:
The most widely adopted method is based on the
• A Cardiac T2* test for the assessment of cardiac iron overload
measurement of tissue proton transverse relaxation rates
• An MRI test for the measurement of fatty liver
(R2)[FerriScan®], showing excellent correlation with liver
iron concentration (LIC) measured by biopsy.
• An MRI test for the staging of liver fibrosis
The expert panel considers it to be a very useful method of
during the year for the Company’s Cardiac T2* test for the
monitoring liver iron load and in directing iron chelation”.
assessment of cardiac iron overload. Cardiac T2* is a widely
FDA clearance and Health Canada approvals were achieved
accepted method of assessing cardiac
iron
loading and
in combination with FerriScan® provides clinicians with a
comprehensive evaluation of a patient’s iron overload status.
4
Resonance Health Limited Annual Report 2011
• There are 50 million obese Americans with BMI over 30
• Up to 30% of the US population has Fatty Liver Disease
• 9-15 million Americans have non-alcoholic steatohepatitis (NASH)
• 8 million Americans have liver fibrosis (scarring)
• Fatty liver disease is often asymptomatic and difficult to diagnose
• Liver biopsy is the recommended gold standard of diagnostic tests but causes complications
• Early diagnosis and intervention can prevent the onset of cirrhosis
Fatty Liver Disease
of the population, rising to 50-90% of the obese population,
and approximately 50% of diabetic patients. The US Centers
Resonance Health completed a study to develop and assess its
for Disease Control (CDC) predicts that by 2025 nearly 40% of
MRI technology, called HepaFat Scan™, for the assessment of
Americans will be obese including 20-30% of American children.
fatty liver. The study involved 60 patients and demonstrated
excellent results from low to high levels of fat in the liver, and
Fatty liver disease can be asymptomatic and is often undiagnosed.
outperformed all published data of similar research in the field.
Currently, the gold standard is a liver biopsy with a visual estimate
of the fat by a pathologist. These estimates are subjective, usually
Fatty liver disease can lead to an increase in liver cancer,
unrepresentative of the whole liver and require an invasive and
cardiovascular death and liver cirrhosis, reduces the effectiveness
potentially dangerous liver biopsy. As a result, the liver biopsy is
of antiviral therapy and can lead to the onset of diabetes. Non-
rarely used. HepaFat Scan™ will provide a non-invasive diagnostic
alcoholic fatty liver disease (NAFLD) is considered the most
tool to the clinical community and to pharmaceutical companies
common liver disease in the western world affecting 20-30%
developing therapies to address this market.
Progression of Fatty Liver to End Stage
Fatty Liver
Liver fibrosis
Cirrhosis
Deposits of fat
Scar tissue forms. Scar tissue
cause liver
More liver cell
makes liver hard
enlargement.
injury occurs.
and unable to
work properly.
What causes fatty liver disease?
The liver helps to break down and remove fat, cholesterol, and lipids from the body. However, when a person becomes
seriously overweight and develops insulin resistance, the liver becomes less efficient and begins to store fat. Stored fat in
the liver can lead to inflammation, which in turn can cause permanent scarring and cirrhosis.
5
Year in review (cont)
Liver Fibrosis
Articles and Presentations
Resonance Health is collaborating with Pfizer and the Liver
Resonance Health has maintained a prominent profile through
Transplant Unit at the Austin Hospital in Melbourne, to investigate
presentations, publications and participation in events within
and further develop the Company’s MRI technology for assessing
the clinical community. These have included:
liver fibrosis. The recruitment of patients into the study is on
schedule and results are expected in early 2012.
• 3rd International Conference on Thalassemia in China and the
2nd Asia Pacific Iron Academy Conference, Nanning, China 3-6
Liver fibrosis is primarily caused by fatty liver disease, hepatitis,
November 2010. Professor Tim St Pierre was invited to present
iron overload or excessive alcohol consumption. Viral hepatitis
on: Novel technologies in detecting and monitoring tissue iron.
affects 170m people worldwide and fatty liver disease affects one
in three American adults. The progression of liver fibrosis can be
• Sickle Cell Disease Association of America Meeting, Washington
slowed, stopped and potentially reversed if detected and treated
DC, USA 21-24 September 2010.
early. However, if left untreated, liver fibrosis can progress to liver
cirrhosis where treatment options are limited and may require a
liver transplant. Liver cirrhosis is one of the top 10 causes of death
by disease in America. Cirrhosis of the liver has been shown to
be a significant predictor of hepatocellular carcinoma, the most
common form of liver cancer.
An accurate, non-invasive diagnostic tool for assessing the
severity of liver fibrosis will enable more regular monitoring
of patients at risk of developing liver fibrosis. It also provides a
better alternative to a liver biopsy for patients participating in
clinical trials for liver fibrosis related therapies where repeat
measurements are usually required.
Resonance Health gained the exclusive worldwide licence for a
new imaging technology being developed at University College
London called Equilibrium Contrast Imaging. The technology
has potential applications in the non-invasive measurement of
diffuse fibrosis in the liver and the heart and in the monitoring
of amyloid deposits in amyloidosis disease. This technology
• 52nd American Society of Hematology (ASH) Annual Meeting
and Exposition, Florida, USA 4-7 December 2010. Professor Tim
St Pierre presented a poster on: Multicenter validation of Spin-
Density Projection-Assisted R2-MRI (FerriScan®) for the Non-
invasive Measurement of Liver Iron Concentration.
• Sickle Cell Research & Education Meeting, Florida, 22-25
February 2011.
• Global Iron Summit, Istanbul Turkey, 11-14 March 2011, trade
exhibition.
• Monitoring and Management of Iron Overload Conditions: A
Regional Conference London, UK 28 January 2011. Professor
Tim St Pierre was invited to present on: Monitoring Liver and
Cardiac Iron Using MRI.
• 1st Emirates Hematology Conference, Dubai, 24-27 March 2011,
trade exhibition.
is complementary to Resonance Health’s research interests
• 12th
International Conference on Thalassaemia and
in clinical imaging technologies and positions the Company
Haemoglobinopathies, Antalya, Turkey 11-14 May 2011.
to provide its expertise in this field to companies researching
Professor Tim St Pierre was invited to present on: Validation
potential therapies for these disease groups. The Company is
of spin-density projection-assisted R2-MRI (FerriScan®) for the
currently evaluating the commercial potential of this opportunity.
non-invasive measurement of liver iron concentration; and
Monitoring of iron overload in heart and liver.
• 16th Congress of the European Haematology Association
Conference, London 10-12 June 2011.
• Sickle Cell in Focus, London, UK 16-18 June 2011.
6
Resonance Health Limited Annual Report 2011
direCtOrs’ repOrt
The Directors present their report on the consolidated entity, consisting of Resonance Health Limited and the entities it controlled,
together with the annual financial report for the financial year ended 30 June 2011. In order to comply with the provisions of the
Corporations Act, the directors report as follows:
Directors
The names, qualifications and experience of directors in office during the financial year and until the date of this report are as follows.
Directors were in office for this entire period unless otherwise stated.
Dr Martin Blake
MBBS, FRANZCR, MBA, GAICD
Position:
Chairman —
Independent and Non-Executive
(appointed as Director 4 October
2007 and as Chairman 16 December
2010)
Experience:
Dr Blake is a Radiologist and Nuclear Physician and brings
significant technical and industry experience to Resonance
Health. He has been a Partner of Perth Radiological Clinic since
Ms Liza Dunne
B.Bus, GDipAppFin, GAICD
Position:
Managing Director — Executive
(appointed 23 October 2008)
Experience:
Ms Dunne joined Resonance Health in
October 2003 and has been actively involved in all aspects of the
business including business development, commercialisation of
FerriScan®, developing alliances with pharmaceutical industry
partners and obtaining regulatory approval in various countries.
1997 and is currently the Chairman of that company.
Ms Dunne has in-depth experience in senior positions across
Dr Blake has an MBA from Melbourne University, is a Graduate
of the Australian Institute of Company Directors and holds
directorships on a number of private company boards.
Other current directorships:
None
Former directorships in last 3 years:
None
Special responsibilities:
Chairman of the Audit Committee
industry. She worked for IBM for eleven years in financial,
marketing and management positions and spent five years with
KPMG Consulting working across a broad spectrum of industry
and project areas that focused on improved business processes
and implementation of new technology.
Ms Dunne holds a Business Degree, a Graduate Diploma in
Applied Finance and is a Graduate of the Australian Institute of
Company Directors.
Other current directorships:
None
Chairman of the Remuneration Committee (from 16 December
2010)
Former directorships in last 3 years:
None
7
direCtOrs’ repOrt (cont)
Mr Simon Panton
Position:
Dr Timothy St Pierre
B.Sc(Hons), PhD
Director — Non-Executive (appointed
Position:
5 October 2009)
Experience:
Mr Panton has been a strong
supporter of the Company and the
FerriScan® technology over a number
Director — Executive (appointed
21 August 2006)
Experience:
Dr St Pierre is widely published in the
field of iron in medicine and biology
of years and is a major shareholder of Resonance Health. Mr
and has built a reputation as a physicist with an outstanding
Panton brings skills in business and marketing having run his
understanding of the fundamental properties of the
iron
own successful business.
Other current directorships:
None
Former directorships in last 3 years:
None
Special responsibilities:
Member of the Audit Committee
Member of the Remuneration Committee
Dr Stewart Washer
B.Sc(Hons), PhD
Position:
deposits that occur in iron overload diseases. Dr St Pierre, a
Professor at The University of Western Australia, led the team
which developed the FerriScan® technology. Dr St Pierre has
strong links with international key opinion leaders in the field of
iron overload diseases and regularly participates in international
research collaborations. Dr St Pierre recently won a Clunies Ross
Award from the Australian Academy of Technological Sciences
and Engineering for his work on non-invasive measurement of
tissue iron deposits.
Other current directorships:
None
Former directorships in last 3 years:
None
Special responsibilities:
Chairman — Independent and Non-
None
Executive (appointed 16 February
2009, resigned 16 December 2010)
Special responsibilities:
Chairman of the Remuneration
Committee (resigned 16 December 2010)
Member of the Audit Committee (resigned 16 December 2010)
Company Secretary
Mr Colin McDonald
B.Com, CA
Position:
Company Secretary
(appointed 16 December 2010)
Experience:
Mr McDonald has eighteen years experience in managing the
financial obligations of ASX listed corporations across a diverse
range of industries.
8
Resonance Health Limited Annual Report 2011
Interests in the Shares of the Company
certification and is being used in over 20 countries. FerriScan®
this report.
Directors
Dr T St Pierre
Dr S Washer
(resigned 16
Dec 2010)1
Total
Executives
The following relevant interests in shares of the company were
held by the directors during the period. There has been no
change in directors’ and executives shareholdings to the date of
Balance
1.7.10
Received as
Remuneration
Net Change
Other
Balance
30.6.11
is provided to the market through the Company’s central image
analysis facility which also offers a range of Imaging services for
clinical trials in the pharmaceutical and biotechnology industries.
The Company is also developing imaging tools for the non-
invasive assessment of liver fat and liver fibrosis to address a
large clinical need for patients with fatty liver disease and viral
hepatitis.
6,224,677
Financial Summary:
Dr M Blake
6,224,677
-
Ms L Dunne
2,593,795
559,590
Mr S Panton
65,960,972
-
-
-
-
3,153,385
65,960,972
9,078,750
9,078,750
451,422
-
-
-
(451,422)
-
84,309,616
559,590
(451,422) 84,417,784
to increase.
Revenue for the year ended 30 June 2011 was $1,745,864,
representing a decrease of 5% from the previous year’s
result of $1,837,795. Revenue was negatively impacted by
the strengthening of the Australian dollar with over 80% of
the Company’s revenue received in US dollars. The revenue
associated with the routine clinical use of FerriScan® continues
Mr C McDonald
Total
-
-
-
-
-
-
-
-
Sales volumes increased 14% over the prior year, as measured
by the number of image analyses performed by the Company
during the year. Sales growth was particularly strong in the UK
1 Excludes shares held as disclosed in the final director’s notice
which saw a 105% growth on the prior year and was enhanced by
on Dr Washer’s resignation as director.
the launch of the Cardiac T2* test in that market. The US market
Incentive Shares and Options
The company does not have an option plan. Accordingly, no
options were issued as part of remuneration to directors or
specified executives during the current or previous financial year.
Dividends Paid or Recommended
had a strong 35% growth in sales volume over the prior year. The
Cardiac T2* test was cleared for marketing by the FDA in August
2011 and is now available in the US.
A net loss was recorded for the year of $316,829 compared to a
net loss of $102,335 in the previous financial year. This was largely
due to the strength of the Australian dollar and the investment
No dividend was paid or declared for the financial year.
the company is making into the development of new products.
Principal Activities
The company’s business
involves the development and
commercialisation of
technologies and services
for
the
quantitative analysis of radiological images in a regulated and
quality controlled environment.
The company’s core product is FerriScan®, a non-invasive liver
diagnostic technology used for the measurement of iron in the
liver.
Review of Operations
Research and development expenditure during the year totalled
$455,266. This comprised capitalised development costs of
$314,634 that are recognised as an intangible asset on the
Statement of Financial Position and expenditure recognised in the
Statement of Comprehensive Income of $140,632. Research and
development expenditure was associated with the development
of a liver fibrosis test, a liver fat test and improvements to the
FerriScan® technology.
The Company’s development of a magnetic resonance imaging
assessment of liver fat is now progressing to an FDA application,
Resonance Health Limited is an Australian healthcare listed
which the Company plans to submit in late 2011.
company located in Perth, Western Australia, specialising in the
provision of image analysis services and the development of
quantitative MRI diagnostic technology, with a sub-specialty
in the liver. All services are provided under a ISO:9001 certified
quality management system.
The development of a magnetic resonance imaging test to assess
liver fibrosis represents a significant commercial opportunity for
the Company. A non-invasive imaging test that has the potential
to replace the need for a liver biopsy has strong appeal to both
the clinical community and to pharmaceutical companies
Resonance Health’s FerriScan®
technology
for accurately
developing therapies for this market. Resonance Health has
measuring liver iron concentration has FDA, CE Mark and TGA
collaborated with Pfizer on a clinical trial to assess the Company’s
9
Directors’ report (cont)
imaging technology for the staging of liver fibrosis and results of
During the financial year the company paid a premium of
this work are expected by end of first quarter 2012.
$13,000 (2010: $14,443) to insure the directors and secretaries
The Company has also been working on gaining greater
efficiencies in the FerriScan® analysis process and is upgrading
the core software platform to support this initiative.
Overall expenditure increased 9% to $2,436,740 from $2,238,461
in the previous financial year. The foreign exchange loss of
of the company and its controlled entities against any liability
incurred in the course of their duties to the extent permitted
by the Corporations Act 2001. It is not possible to apportion the
premium between amounts relating to the insurance against
legal costs and those relating to other liabilities.
$146,160 reflected the volatility and strength of the Australian
REMUNERATION REPORT
dollar against the currencies in which the company invoices its
customers, particularly the US dollar.
Resonance Health has cash at bank of $1,503,479 at the end
of the financial year, compared to $2,133,884 in the previous
financial year and has no debt.
Operating Results
The net loss of the consolidated entity for the financial year after
tax was $316,829 (2010: $102,335).
Significant Changes in State of Affairs
This report outlines the remuneration arrangements in place for
the key management personnel of Resonance Health Limited for
the financial year ended 30 June 2011. The information provided
in this remuneration report has been audited as required by
Section 308 (3C) of the Corporations Act 2001.
The remuneration report details the remuneration arrangements
for key management personnel who are defined as those persons
having authority and responsibility for planning, directing and
controlling the major activities of the Company and the Group,
directly or indirectly, including any director (whether executive
There were no significant changes in the state of affairs of the
or otherwise) of the parent company and the Company Secretary.
company during the financial year.
Significant Events After Balance Date
Key Management Personnel
(i) Directors
No other matters or circumstances have arisen since the end of
the financial year which significantly affected or may significantly
affect the operations of the company and the consolidated
Dr Martin Blake – appointed Chairman 16 December 2010
Dr Stewart Washer – Chairman (resigned 16 December 2010)
entity, the results of those operations, or the state of affairs in
Ms Liza Dunne – Managing Director
future financial years.
Likely Developments and Expected Results of Operations
Comments on expected results of the operations of the
consolidated entity are included in this report under the review
Mr Simon Panton
Dr Timothy St Pierre
(ii) Executives
of operations.
Mr Colin McDonald – Company Secretary (appointed 16
Disclosure of information regarding likely developments in the
December 2010)
operations of the consolidated entity in future financial years
Ms Eva O’Malley – Company Secretary (resigned 16 December 2010)
and the expected results of those operations is likely to result
in unreasonable prejudice to the company. Accordingly, this
Remuneration Policy
information has not been disclosed in this report.
Environmental Legislation
The consolidated entity’s operations are not subject to any
significant environmental legislation.
The Board’s policy for determining the nature and amount of
remuneration for Board members and senior executives of the
consolidated entity is as follows:
• set competitive remuneration packages to attract the
highest calibre of employees in the context of prevailing market
Indemnification and Insurance of Directors and Officers
conditions, particular experience of the individual concerned
The company has agreed to indemnify all the directors and
and the overall performance of the company; and
secretaries of the company for any liabilities to another person
(other than the Company or related body corporate) that
• reward employees for performance that results in long-term
growth in shareholder wealth, with the objective of ensuring
may arise from their position as directors of the Company and
maximum stakeholder benefit from the retention of a high
its controlled entities, except where the liability arises out of
quality board and executive team.
conduct involving a lack of good faith.
10
Resonance Health Limited Annual Report 2011
The Board of Resonance Health Limited believes the remuneration
internally and, where appropriate, external advice on policies and
policy to be appropriate and effective in its ability to attract and
practices. The Committee has access to external, independent
retain the best executives and directors to run and manage the
advice where necessary.
consolidated entity, as well as create goal congruence between
directors, executives and shareholders.
Remuneration Committee
The Remuneration Committee of the Board of Directors of
the company is responsible for determining and reviewing
All executives (except Dr St Pierre) receive a base salary (which
is based on factors such as length of service and experience),
superannuation and fringe benefits. The performance of
executives is measured against criteria agreed annually with each
executive.
compensation arrangements for directors and the executive team.
Executives receive a superannuation guarantee contribution
The remuneration policy, setting the terms and conditions for the
executive directors and other senior executives, was developed
required by the government, which is currently 9%, and do not
receive any other retirement benefits.
by the remuneration committee and approved by the Board.
(ii) Variable Remuneration
The remuneration committee reviews executive packages
All bonuses and
incentives are
linked to predetermined
annually by reference to the consolidated entity’s performance,
performance criteria. The Board may, however, exercise its
executive performance and comparable
information from
discretion in relation to approving incentives and bonuses, and
industry sectors and other listed companies in similar industries.
can recommend changes to the committee’s recommendations.
The assistance of an external consultant or remuneration surveys
Any changes must be justified by reference to measurable
are used where necessary.
Remuneration Structure
In accordance with best practice Corporate Governance, the
performance criteria.
During the year, the Directors used their discretion to approve a
bonus to Ms Dunne for her services to the company.
structure of non-executive director and executive remuneration
All remuneration paid to directors and executives is valued at the
is separate and distinct.
Non-executive Director Remuneration
cost to the company and expensed. Securities given to directors and
executives are valued as the difference between the market price of
those shares and the amount paid by the director or executive.
The Board seeks to set aggregate remuneration at a level that
provides the company with the ability to attract and retain
Executive Officer’s Employment Agreements
directors of the highest calibre, whilst incurring a cost that is
Ms Dunne was appointed to the role of Managing Director of
acceptable to shareholders.
Non-executive directors’ fees not exceeding an aggregate of
$250,000 per annum have been approved by the Company in a
general meeting.
The amount of aggregate remuneration sought to be approved
by shareholders and the manner in which it is apportioned
amongst directors is reviewed annually. The Board considers fees
paid to non-executive directors of comparable companies when
undertaking the annual review process.
Each of the non-executive directors receives a fixed fee for their
services as directors. There is no direct link between remuneration
paid to any of the directors and corporate performance.
Executive Remuneration
Remuneration consists of fixed remuneration and variable
remuneration.
(i) Fixed Remuneration
Fixed remuneration is reviewed annually. The process consists of
a review of relevant comparative remuneration in the market and
Resonance Health Ltd on 23 October 2008. Her employment
agreement provides for a salary of $250,000 pa inclusive of
superannuation and the provision of one months notice for
termination or resignation without cause.
Mr McDonald was appointed to the role of Company Secretary
of Resonance Health Ltd on 16 December 2010. His employment
agreement provides for an equivalent full time salary of $141,700
pa inclusive of superannuation for at least 22.5 hours per week
and the provision of one months notice for termination or
resignation without cause.
Consultancy Services Agreement for Executive Director Dr
Tim St Pierre
The company has an agreement with The University of Western
Australia (UWA) for consulting services provided by Dr St Pierre.
Under this agreement consulting services provided for duties of
Chief Scientific Officer totalling $127,407 (2010 $112,767) and a
fixed fee for his services as a director of $40,000 (2010: $40,000)
were incurred during the financial year. These amounts are included
in Dr Tim St Pierre’s remuneration disclosed in the following table.
11
Directors’ report (cont)
Details of Remuneration for Year Ended 30 June 2011 (This information has been audited)
The remuneration for each director and for the executive officers of the consolidated entity receiving the highest remuneration during
the year was as follows:
Remuneration of directors and executives
Short-term employee
benefits
Salary & Fees
Bonus
Non-Executive Directors’ remuneration
$
Dr S Washer1
Dr M Blake
Mr S Panton2
Total
Total
2011
2010
2011
2010
2011
2010
2011
2010
28,361
64,220
46,636
36,697
36,697
27,029
111,694
127,946
$
-
-
-
-
-
-
-
-
Post employment benefits
Equity
Total
Superannuation
Contributions
Termination
Benefits
Shares
Performance
Related
$
$
$
$
%
2,552
5,780
4,197
3,303
3,303
2,432
10,052
11,515
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,913
70,000
50,833
40,000
40,000
29,461
121,746
139,461
-
-
-
-
-
-
N/A
N/A
1 Dr Washer resigned on 16 December 2010.
2 Mr Panton was appointed as a Director on 5 October 2009.
Short-term employee
benefits
Salary & Fees
Bonus
Post employment benefits
Equity
Total
Superannuation
Contributions
Termination
Benefits
Shares
Performance
Related
$
$
$
$
$
$
Executive Directors’ remuneration
Ms L Dunne3
Dr T St Pierre4
2011
2010
2011
2010
217,396
201,834
167,407
152,767
Other Executives’ remuneration
Mr C McDonald5
2011
50,667
Ms E O’Malley6
Total
Total
2010
2011
2010
2011
2010
-
45,802
76,458
481,272
431,059
-
-
-
-
-
-
-
-
-
19,566
18,165
-
-
4,560
-
3,187
6,881
27,313
25,046
-
-
-
-
-
-
-
-
-
-
10,000
10,000
-
-
-
-
-
-
-
10,000
246,962
229,999
167,407
152,767
55,227
-
48,989
83,339
518,585
466,105
3 Ms Dunne was given fully vested shares to the value of $10,000 in recognition of her performance to the Company.
4 Dr St Pierre’s remuneration represents directors’ fees earned during the financial year and consulting fees for duties as
Chief Scientific Officer.
5 Mr McDonald was appointed Company Secretary on 16 December 2010.
6 Ms O’Malley resigned as Company Secretary on 16 December 2010.
%
4.0
4.3
-
-
-
-
-
-
N/A
N/A
12
Resonance Health Limited Annual Report 2011
Meetings of Directors
The number of meetings of the company’s Board of directors and each Board committee held during the year ended 30 June 2011, and
the numbers of meetings attended by each director were:
Director Meetings
Audit Committee Meetings
Remuneration Committee
Meetings
Number eligible
Number
Number eligible
Number
Number eligible
Number
To attend
attended
To attend
attended
To attend
attended
Dr M Blake
Ms L Dunne
Mr S Panton
Dr T St Pierre
Dr S Washer
8
8
8
8
4
Corporate Governance
8
8
8
7
4
3
-
3
-
2
3
-
3
-
2
-
-
-
-
-
-
-
-
-
-
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Resonance Health Limited
support and adhere to the principles of corporate governance. The company’s corporate governance statement is contained in the
following section of this annual report.
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which
the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The
company was not a party to any such proceedings during the year.
Auditor Independence and Non-audit Services
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the Company with an
Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 18 and forms
part of this directors’ report for the year ended 30 June 2011.
Non-audit Services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 22
to the financial statements. The directors are satisfied that the provision of non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit services have been
reviewed 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 Code of Conduct APES 110 Code of Ethics for Professional Accountants issued
by the Accounting Professional & Ethical Standards Board.
This report is made in accordance with a resolution of the Board of Directors.
Dr Martin Blake
Chairman
Perth, Western Australia
Dated this 27 September 2011
13
corporate governance statement
Resonance Health Limited is committed to protecting and enhancing shareholder value and adopting best practice governance
policies and practices. This Corporate Governance Statement outlines the main Corporate Governance practices that were in place
throughout the financial year, which comply with the Australian Securities Exchange (‘ASX’) Corporate Governance Council published
guidelines as well as its corporate governance principles and recommendations unless otherwise stated. Where a recommendation
has not been followed, this is clearly stated along with an explanation for the departure.
Principle 1
Lay solid foundations for management and oversight
The Board is the governing body of the Company. The Board and the Company act within a statutory framework – principally the
Corporations Act and also the Constitution of the Company. Subject to this statutory framework, the Board has the authority and the
responsibility to perform the functions, determine the policies and control the affairs of Resonance Health Limited.
The Board must ensure that Resonance Health Limited acts in accordance with prudent commercial principles, and satisfies shareholders
– consistent with maximising the Company’s long term value.
The Company has established the functions reserved to the Board. The Board Charter summarises the role, responsibilities, policies
and processes of the Board of Resonance Health Limited and comments on the Board’s approach to corporate governance.
The primary responsibilities of the Board include:
• Charting the direction, strategies and financial objectives of the company and ensuring appropriate resources are available
• Monitoring the implementation of those policies and strategies and the achievement of those financial objectives
• Monitoring compliance with control and accountability systems, regulatory requirements and ethical standards
• Ensuring the preparation of accurate financial reports and statements
• Reporting to shareholders and the investment community on the performance and state of the company
• Appoint and monitor the performance of senior executives
• Establish proper succession plans for management of the company
The Company has established the functions delegated to senior executives. The Board Charter summarises the role and responsibilities
of the Managing Director and the Company Secretary.
The Board delegates responsibility for day to day management of the Company to the Managing Director. However, the Managing
Director must consult the Board on matters that are sensitive, extraordinary or of a strategic nature. The Company Secretary supports
the effectiveness of the Board.
Separate functions of the Board and management existed and were practised throughout the year.
ASX Corporate Governance Council Principle 1 recommendation 1.2 requires companies to disclose the process for evaluating the
performance of senior executives.
The performance of executives is measured against criteria agreed annually with each executive and is based predominantly on the
achievement of agreed milestones. Performance criteria were set and evaluated for the Managing Director during the financial year.
Details of matters reserved to the Board and delegated to senior executives are outlined in the Board Charter. A copy of the Board
Charter is publically available on the Company’s website.
The Board complied with the ASX Corporate Governance Council Principle 1 at all times during the year except as noted above.
Principle 2
Structure the Board to add value
The composition of the Board has been determined on the basis of providing the Company with the benefit of a broad range of
technical, commercial and financial skills, combined with an appropriate level of experience at a senior corporate level. Details of each
Director’s skills and experience are set out in the Directors’ report.
14
Resonance Health Limited Annual Report 2011
The ASX guidelines recommend that a listed company should have a majority of Directors who are independent. The Board did not
comply with the ASX Corporate Governance Council Principle 2 Recommendation 2.1 throughout the year. As a result of director
resignations the Board did not have a majority of independent Directors at all times during the financial year.
A Director is considered independent when the Director does not have any relationship with the Company that would be considered
to affect the independent status as outlined in the ASX Corporate Governance Council Principle 2 Recommendation 2.1.
In the context of director independence, ‘materiality’ is considered from both the company and individual director perspective.
The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be
quantitatively immaterial if it is equal or less than 5% of the appropriate base amount. It is presumed to be material (unless there is
evidence to the contrary) if it is equal or greater than 10% of the appropriate base amount. Qualitative factors considered include
whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other
arrangements governing it and other factors which point at the actual ability in question to shape the direction of the company’s loyalty.
Directors during the financial year were:
• Dr Stewart Washer – Independent – Chairman (resigned 16 December 2010)
• Dr Martin Blake – Independent – Chairman (appointed Chairman 16 December 2010)
• Ms Liza Dunne – Executive – Not independent – Managing Director
• Mr Simon Panton – Not independent – substantial shareholder
• Dr Tim St Pierre – Executive – Not independent – Chief Scientific Officer
A description of the skills and experience of each director and their period of office is disclosed in the Directors’ Report. The ASX
Corporate Governance Council Principle 2 Recommendation 2.2 recommends that the Chairman should be an independent director.
The role of Chairman was performed by an independent director at all times during the financial year. The ASX Corporate Governance
Council Principle 2 Recommendation 2.3 recommends that the roles of Chairman and Managing Director be exercised by different
individuals. The company complied with this recommendation at all times during the financial year.
The roles of Chairman and Managing Director are exercised by different individuals, providing for clear division of responsibility at the
head of the company. Their roles and responsibilities, and the division of responsibilities between them, are clearly understood and
there is regular communication between them.
Directors are subject to re-election by rotation at annual general meetings as stipulated in the Corporations Act and the Company’s
Constitution. There is no maximum term for non-executive director appointments. Newly elected Directors must seek re-election at
the first general meeting of shareholders following their appointment.
The remuneration of the Directors is determined by the Nomination and Remuneration Committee. Further information and the
components of remuneration for Directors are set out in the Directors’ Report.
ASX Corporate Governance Council Principle 2.4 recommends that the Nomination Committee should consist of a majority of
independent Directors, be chaired by an independent Director and have at least three members.
The members of the Nomination and Remuneration Committee during the financial year were:
• Dr Stewart Washer (Chairman) – Independent (resigned 16 December 2010)
• Dr Martin Blake – (Chairman) - Independent
• Mr Simon Panton – Not Independent
The number of meetings attended by each member of the Nomination and Remuneration Committee are detailed in the Directors’
Report.
ASX Corporate Governance Council Principle 2.5 recommends that the performance of the Board should be reviewed regularly against
appropriate measures. The Company does not have a formal process for evaluating the performance of the Board, its Committees
or individual Directors. Accordingly, there was no formal evaluation of the Board, its Committees or individuals Directors during the
reporting period.
15
corporate governance statement (cont)
The Company has a procedure in place for Directors to take independent professional advice at the expense of the Company.
Prior to the appointment of a new director the Nomination and Remuneration Committee assesses the skills represented on the
Board by the non-executive Directors and determines whether those skills meet the skills identified as required. The Committee will
then implement a process to identify suitable candidates for appointment. The Committee makes recommendations to the Board
on candidates it considers appropriate for appointment. Induction procedures are in place to ensure new Directors are able to
participate fully and actively in Board decision-making at the earliest opportunity. Directors have access to continuing education
and are encouraged to update and enhance their skills and knowledge. Directors meet regularly to discuss the performance of the
company and to attend to regulatory requirements. The company secretary distributes information before each Board meeting to
enable Directors to discharge their duties effectively.
The Company’s Constitution requires a director of the Company to not hold office without re-election past the third annual general
meeting following the director’s appointment or three years, whichever is longer.
The Company discloses its Nomination and Remuneration Committee Charter on the Company’s website.
The Board complied with the ASX Corporate Governance Council Principle 2 at all times during the year except as noted above.
Principle 3
Promote ethical and responsible decision-making
The Board places great emphasis on ethics and integrity in all its business dealings.
In regards to Principle 3.1 the Board considers the business practices and ethics exercised by individual Board members and key
executives to be of the highest standards.
The Company has a code of conduct as to the:
• practices necessary to maintain confidence in the company’s integrity;
• practices necessary to take into account their legal obligations and the expectations of shareholders; and
• responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
These practices are outlined in the Company’s Board Charter, Communication Policy, Continuous Disclosure Charter, Share Trading
Policy, Audit and Risk Charter and Nomination and Remuneration Charter. These documents are disclosed on the Company’s website.
Trading in the company’s shares
The company’s policy restricts Directors and employees from acting on material information until it has been released to the market
and adequate time has been given for this to be reflected in the securities’ prices. Statutory provisions of the Corporations Act dealing
with insider trading have been strictly complied with.
The Board complied with the ASX Corporate Governance Council Principle 3 Recommendations at all times during the year.
The Company’s Share Trading Policy is disclosed on the Company’s website.
Principle 4
Safeguard integrity in financial reporting
The Board has established an Audit and Risk Committee that operates in accordance with the Company’s Audit and Risk Charter.
It is the Board’s responsibility to ensure that an effective internal control framework exists within the entity. This includes internal
controls to deal with both the effectiveness and efficiency of significant business processes, including the safeguarding of assets, the
maintenance of proper accounting records, and the reliability of financial information. The Board has delegated responsibility for the
establishment and framework of internal controls and ethical standards for the management of the consolidated entity to the Audit
Committee.
The Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the
financial reports. All members of the Audit Committee are non-executive Directors.
16
Resonance Health Limited Annual Report 2011
ASX Corporate Governance Council Principle 4.2 recommends that the Audit Committee should consist only of non-executive with
a majority of independent Directors, be chaired by an independent director who is not chair of the Board and have at least three
members.
The members of the Audit and Risk Committee during the financial year were:
• Dr Martin Blake (Chairman) - Independent
• Mr Simon Panton – Not independent
• Dr Stewart Washer – Independent (resigned 16 December 2010)
The qualifications of each member of the Audit and Risk Committee and the number of meetings attended are detailed in the Directors’
Report.
The Audit and Risk Committee generally invites the Managing Director, Company Secretary, and external auditors to attend meetings.
The Company discloses its Audit and Risk Committee Charter on the Company’s website.
The Company’s external auditors have a policy for the rotation of audit engagement partners. A new Audit Partner was assigned to the
Company with effect for the 2009 financial year in line with this policy.
The Board has not complied with the ASX Corporate Governance Council Principle 4 Recommendations at all times during the year.
Due to there being only 2 non-executive directors on the Board from 16 December 2010, it was not possible to have three members on
the committees at all times. The Chairman of the Board is also Chairman of the committees which is not in accordance with Principle
4.2, and this is also a result of having only 2 non-executive directors.
Principle 5
Make timely and balanced disclosure
The Company complies with all disclosure requirements to ensure that Resonance Health manages the disclosure of price sensitive
information effectively and in accordance with the requirements as set out by regulatory bodies. All market disclosures are approved
by the Board. The Managing Director and Company Secretary are authorised to communicate with shareholders and the market in
relation to Board approved disclosures.
The Company has a written policy designed to ensure compliance with ASX Listing Rule disclosures and accountability at a senior
executive level for that compliance. The details of this policy are outlined in the Company’s Continuous Disclosure Charter which is
displayed on the Company’s website.
All announcements made to the ASX are placed on the Company’s web site immediately after public release.
The Board complied with the ASX Corporate Governance Council Principle 5 Recommendations at all times during the year.
Principle 6
Respect the rights of shareholders
The Company has a Communications Policy that details the Company’s strategy to communicate with shareholders and actively
promote shareholder involvement in the Company. It aims to continue to increase and improve the information available to
shareholders on its website. All company announcements, presentations to analysts and other significant briefings are posted on the
company’s website after release to the Australian Securities Exchange.
The Board complied with the ASX Corporate Governance Council Principle 6 Recommendations at all times during the year.
Principle 7
Recognise and manage risk
The Board oversees the establishment, implementation and ongoing review of the Company’s risk management and internal control
system. Recommendation 7.1 requires that the company has a formal risk management policy and internal compliance and control
system. Resonance Health Limited, through its operating subsidiary Resonance Health Analysis Services Pty Ltd, maintained a Quality
17
Management System (QMS) to international standards ISO9001:2008 and ISO13485:2003 which encompass formal risk analysis
processes.
Recommendation 7.2 requires implementation and review of the company’s risk management and internal control system. The
Company did not have a separately established risk committee. However, the duties and responsibilities typically delegated to such a
committee are expressly included in the role of the Audit and Risk Committee and the main Board. The Board does not believe that any
marked efficiencies or enhancements would be achieved by the creation of a separate risk committee.
In addition, the QMS requires the appointment of a Management Representative that reports directly to the Board of Directors. The
company also has in place classes of insurance at levels which, in the reasonable opinion of the Directors, are appropriate for it size
and operations. Management has reported the effectiveness of the Company’s management of its material business risks to the
Board during the reporting period.
In accordance with Recommendation 7.3 the Managing Director and the Chief Financial Officer provide written statements at each
reporting period regarding the integrity of the financial statements and the company’s risk management and internal compliance and
control systems.
The Company’s Audit and Risk Charter is displayed on the Company’s website.
The Board complied with the ASX Corporate Governance Council Principle 7 Recommendations at all times during the year.
The Company’s external auditor is invited to attend the annual general meeting and questions from shareholders regarding the
conduct of the audit and the preparation and content of the auditor’s report are welcomed.
The Company’s Communication Policy is displayed on the Company’s website.
The Board complied with the ASX Corporate Governance Council Principle 7 Recommendations at all times during the year.
Principle 8
Remunerate fairly and responsibly
The Board has a Nomination and Remuneration Committee. Members of the Committee are outlined under Principle 2 above.
ASX Corporate Governance Council Principles recommend that the Remuneration Committee should consist of a majority of
independent Directors, be chaired by an independent director and have at least three members. Ms Dunne, an executive director,
resigned from the Nomination and Remuneration Committee on 24 March 2010. From this date the Company complied with this
recommendation.
The Nomination and Remuneration Committee regularly review the level and composition of remuneration of non-executive Directors,
executive Directors and senior management with regards to industry best practice, company and individual performance.
From this date the Company has not complied with this recommendation due to the small size of the Board.
The Company pays fees to the University of Western Australia for services provided by Dr St Pierre who is an executive Director of the
Company. This comprises a fixed fee for his services as a Director and a daily fee for his services as Chief Scientific Officer.
All executive employees receive a base salary, superannuation and fringe benefits. The Company does not have a share or option
incentive plan. Accordingly, executive employees do not receive any equity based remuneration unless specifically approved on a
case by case basis at a general meeting.
The members of the Nomination and Remuneration Committee are outlined in Principle 2. Their attendance at Nomination and
Remuneration Committee meetings is detailed in the Directors’ Report. Director disclosure requirements are detailed in the notes to
the financial statements.
The Nomination and Remuneration Committee Charter is displayed on the Company’s website.
The Board complied with the ASX Corporate Governance Council Principle 8 Recommendations at all times during the year except as
detailed above.
18
Resonance Health Limited Annual Report 2011
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Resonance Health Limited for the year ended 30 June 2011, I declare that to the
best of my knowledge and belief, there have been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b)
any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Resonance Health Limited.
Perth, Western Australia
27 September 2011
N G NEILL
Partner, HLB Mann Judd
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
19
statement of comprehensive income
FOr thE yEar EndEd 30 JunE 2011
Revenue
Other Income
Revenue
Employee benefits expense
Consulting and professional services
Research and development
Depreciation
Marketing and travel
Statutory and compliance
Foreign exchange loss
Other expenses
Notes
2(a)
2(b)
2(c)
Consolidated
2011
$
1,745,864
187,447
2010
$
1,837,795
168,477
1,933,311
2,006,272
(1,329,333)
(1,265,675)
(33,022)
(140,632)
(21,169)
(349,380)
(133,900)
(146,160)
(283,144)
(72,857)
(111,360)
(24,582)
(334,073)
(130,572)
(16,380)
(282,962)
(Loss) / profit before income tax benefit
Income tax benefit
(503,429)
(232,189)
3
186,600
129,854
Net (loss) / profit for the year attributable to owners of the parent
(316,829)
(102,335)
Other comprehensive income
Exchange differences arising on translation of foreign operations
Exchange differences arising on translation of foreign loan
Other comprehensive (loss) / income for the year, net of tax
Total comprehensive (loss) / income for the year attributable to owners
of the parent
146,934
(153,048)
(6,114)
35,842
(37,261)
(1,419)
(322,943)
(103,754)
Basic earnings / (loss) per share (cents per share)
5
(0.09)
(0.03)
The accompanying notes form part of these financial statements.
20
Resonance Health Limited Annual Report 2011
statement of financial position
as at 30 JunE 2011
Notes
Consolidated
2011
$
2010
$
7
8
9
10
11
12
13
14
1,503,479
2,133,884
877,619
87,618
789,947
97,011
2,468,716
3,020,842
46,023
957,400
3,004
62,387
642,766
3,004
1,006,427
708,157
3,728,999
3,688,952
427,695
151,886
579,581
494,269
26,225
520,494
579,581
520,494
2,895,562
3,208,505
15(a)
67,534,039
67,524,039
75,875
81,989
(64,714,352)
(64,397,523)
2,895,562
3,208,505
Current Assets
Cash and cash equivalents
Trade and other receivables
Other
Total Current Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Available for sale investments
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Other
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
The accompanying notes form part of these financial statements.
21
76,432
66,888
79,807
(46,478)
(544,383)
(590,861)
(511,054)
-
2,644,938
2,133,884
statement of cash flows
FOr thE yEar EndEd 30 JunE 2011
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Grants received
Interest received
Note
Consolidated
2011
$
2010
$
Inflows/(Outflows)
1,795,564
1,887,772
(2,101,537)
(1,951,285)
109,305
80,120
Net cash provided by / (used in) operating activities
7(i)
(116,548)
Cash flows from investing activities
Payments for plant and equipment
Payments for intangibles
Net cash (used in) investing activities
Net increase (decrease) in cash and cash equivalents
Foreign exchange differences on cash balances
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of the period
7
The accompanying notes form part of these financial statements.
(4,805)
(472,880)
(477,685)
(594,233)
(36,172)
2,133,884
1,503,479
22
Resonance Health Limited Annual Report 2011
statement of changes in equity
FOr thE yEar EndEd 30 JunE 2011
Consolidated
Foreign
Currency
Accumulated
Translation
Losses
Reserve
Option Reserve
Total Equity
$
$
$
$
Issued
Capital
$
Balance at 1 July 2009
67,514,039
(64,295,188)
17,124
66,284
3,302,259
(Loss) for the year
Other comprehensive (loss) for the year
Total comprehensive (loss) for the year
-
-
-
(102,235)
-
-
(1,419)
(102,235)
(1,419)
Shares issued during the year
10,000
-
-
-
-
-
-
(102,235)
(1,419)
(103,754)
10,000
Balance at 30 June 2010
67,524,039 (64,397,523)
15,705
66,284
3,208,505
(Loss) for the year
Other comprehensive (loss) for the year
Total comprehensive (loss) for the year
-
-
-
(316,829)
-
-
(6,114)
(316,829)
(6,114)
Shares issued during the year
10,000
-
-
-
-
-
-
(316,829)
(6,114)
(322,943)
10,000
Balance at 30 June 2011
67,534,039 (64,714,352)
9,591
66,284
2,895,562
The accompanying notes form part of these financial statements.
23
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
NOTE 1: Statement of significant accounting policies
(a) Basis of preparation
The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the
Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the law.
The financial report has been prepared on a historical cost basis, except for available-for-sale investments, which have been
measured at fair value. Cost is based on the fair values of the consideration given in exchange for assets.
The financial report is presented in Australian dollars. The company is a listed public company, incorporated and operating in
Australia and the United States of America. The entity’s principal activities are the development of magnetic resonance imaging
related technology, specifically the provision of non-invasive imaging tests for use by health care professions.
(b) Adoption of new and revised standards
In the year ended 30 June 2011, the Group has reviewed all of the new and revised Standards and Interpretations issued by the
AASB that are relevant to its operations and effective for the current annual reporting period.
It has been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards and
Interpretations on its business and, therefore, no change is necessary to Group accounting policies.
The Group has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year
ended 30 June 2011. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the
new and revised Standards and Interpretations on its business and, therefore, no change necessary to Group accounting policies.
(c) Statement of compliance
The financial report was authorised for issue on 29 September 2011.
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial
Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and
notes thereto, complies with International Financial Reporting Standards (IFRS).
(d) Basis of consolidation
The consolidated financial statements comprise the separate financial statements of Resonance Health Limited (“company” or
“parent entity”) and its subsidiaries as at 30 June each year (“the Group”). Control is achieved where the company has the power
to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit
and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date
on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the
Group. Control exists where the company has the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities.
Business combinations have been accounted for using the acquisition method of accounting [refer Note 1(ab)].
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are
presented separately in the statement of comprehensive income and within equity in the consolidated statement of financial
position. Losses are attributed to the non-controlling interest even if that results in a deficit balance.
(e) Critical accounting judgements and key sources of estimation uncertainty
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets
and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
24
Resonance Health Limited Annual Report 2011
NOTE 1: Statement of significant accounting policies (cont.)
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which
the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
Impairment of intangibles with indefinite useful lives
The Group determines whether intangibles with indefinite useful lives are impaired at least on an annual basis. This requires
an estimation of the recoverable amount of the cash generating units to which the intangibles with indefinite useful lives
are allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of intangibles with
indefinite useful lives are discussed in Note 11.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted.
The Group measures the cost of cash-settled share-based payments at fair value at the grant date.
(f) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors of Resonance Health Limited.
(g) Foreign currency translation
Both the functional and presentation currency of Resonance Health Limited and its Australian subsidiaries is Australian dollars.
Each entity in the Group determines its own functional currency and items included in the financial statements of each entity
are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange ruling at the statement of financial position date.
All exchange differences in the consolidated financial report are taken to profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate
as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date the fair
value was determined.
(g) Foreign currency translation (continued)
The functional currency of the foreign operation Resonance USA Inc. is United States dollars (US$). As at the reporting date
the assets and liabilities of this subsidiary are translated into the presentation currency of Resonance Health Limited at the
rate of exchange ruling at the statement of financial position date and the statement of comprehensive income is translated
at the average exchange rate for the year. The exchange differences arising on the translation are taken directly to a separate
component recognised in the foreign currency translation reserve in equity. On disposal of a foreign entity, the deferred
cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss.
(h) Revenue recognition
Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
(i) Sale of Goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the
costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are
25
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
NOTE 1: Statement of significant accounting policies (cont.)
considered passed to the buyer at the time of delivery of the goods to the customer.
(ii) Rendering of services
Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
(iii) Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
(i) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
(j) Lease
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards if ownership
to the lessee. All other leases are classified as operating leases.
Assets held under finance lease are initially recognised at their fair value or, if lower, the present value of the minimum lease
payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of
financial position as a finance lease obligation.
Lease payments are apportioned between finance charges and the reduction of the lease obligation so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are charged directly against income unless they are
directly attributable to qualifying assets, in which case they are capitalised in accordance with the general policy on borrowing
costs.
Finance lease assets are depreciated on a straight line basis over the estimated useful life of the asset.
Operating lease payments, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased
items, are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more
representative of the time pattern in which economic benefits from the lease asset are consumed.
(k) Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary difference
and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially
enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is
not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures,
and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will
not reverse in the foreseeable future.
26
Resonance Health Limited Annual Report 2011
NOTE 1: Statement of significant accounting policies (cont.)
(k) Income Tax (cont.)
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused
tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences
and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit, nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures,
in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in
the foreseeable future and taxable profit will be available against with the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it is has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
(l) Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST) except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST
is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(m) Impairment of assets
The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists,
or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An
asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets
and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as
part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to
continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the
asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).
27
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
NOTE 1: Statement of significant accounting policies (cont.)
(k) Impairment of assets (cont.)
An assessment is also made at each balance date as to whether there is any indication that previously recognised impairment losses
may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised
impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since
the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount,
in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods
to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(n) Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within
borrowings in current liabilities in the statement of financial position.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.
(o) Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the
effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within
periods ranging from 14 days to 90 days.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing
the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to
collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination
include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making
contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of
the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where
receivables are short-term discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade
receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off
against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in
the statement of comprehensive income.
(p) Financial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial
assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments,
as appropriate. Where financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not
at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial
assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end.
All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that the Group commits to
purchase the asset. Regular way purchases or sales of financial assets under contracts that require delivery of the assets within the
period established generally by regulation or convention in the marketplace.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’.
Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Gains or losses on
investments held for trading are recognised in profit or loss.
28
Resonance Health Limited Annual Report 2011
NOTE 1: Statement of significant accounting policies (cont.)
(p) Financial assets (cont.)
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the
Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not
included in this classification.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets that are not quoted in an active market. Gains and losses are recognised
in the profit or loss when the loans and receivables are derecognised or impaired.
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified
as any of the three preceding categories. After initial recognition available-for-sale investments are measured at fair value with
gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is
determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market
bid prices at the close of business on the balance date. For investments with no active market, fair value is determined using
valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market
value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models.
(q) Derecognition of financial assets and liabilities
(i) Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:
• the rights to receive cash flows from the asset have expired;
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without
material delay to a third party under a ‘pass-through’ arrangement; or
• the Group has transferred its rights to receive cash flows from the asset and either:
(a) has transferred substantially all the risks and rewards of the asset, or
(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially
all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s
continuing involvement in the asset.
(ii) Financial liabilities
A financial liability is recognised when the obligation under the liability is discharged or cancelled or expires.When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition
of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(r) Impairment of financial assets
The Group assess at each balance date whether a financial asset or group of financial assets is impaired.
(i) Financial assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the
amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future
29
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
NOTE 1: Statement of significant accounting policies (cont.)
(r) Impairment of financial assets (cont.)
cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest
rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or
through use of an allowance account. The amount of the loss is recognised in profit or loss.
The group first assesses whether objective evidence of impairment exists individually for financial assets that are individually
significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no
objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included
in a group of financial assets with similar credit risk characteristics and that group of financial asset is collectively assessed for
impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised
are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of
an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised
cost at the reversal date.
(ii) Financial assets carried at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at
fair value (because its fair value cannot be reliably measured), the amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for a
similar financial asset.
(iii) Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its
cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in
profit or loss, is transferred from equity to the income statement. Reversals of impairment losses for equity instruments classified
as available-for-sale are not recognised in profit. Reversals of impairment losses for debt instruments are reversed through profit
or loss if the increase in an instrument’s fair value can be objectively related to an event occurring after the impairment loss was
recognised in profit or loss.
(s) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:
Plant and equipment 3 – 5 years
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being
estimated when events or changes in circumstances indicate that the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating
unit to which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount.
The asset or cash-generating unit is then written down to its recoverable amount. Impairment losses for plant and equipment are
recognised in the statement of comprehensive income.
30
Resonance Health Limited Annual Report 2011
NOTE 1: Statement of significant accounting policies (cont.)
(s) Property, plant and equipment (cont.)
(ii) Derecognition and disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from
its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
(t) Intangible assets
Internally generated intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally-generated
intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred.
An intangible asset arising from development expenditure on an internal project is recognised if, and only if, all of the following
has been demonstrated:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale;
• The intention to complete the intangible asset and use or sell it;
• How the intangible asset will generate probable future economic benefits;
• The availability of adequate technical, financial and other resources to complete development and to use or sell the intangible
asset; and
• The ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date
when the intangible asset first meets the recognition criteria listed above.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and
accumulated impairment losses. The amortisation period is the period of expected benefits from the related project.
(u) Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the
Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in
respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.
(v) Interest-bearing loans and borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit
or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred
to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit
or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting period.
(w) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation. Provisions are not recognised for future operating losses.
31
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
NOTE 1: Statement of significant accounting policies (cont.)
(w) Provisions (cont.)
Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present
obligation at the end of the reporting period.
(x) Employee benefits
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be
settled within 12 months of the balance date are recognised in sundry creditors in respect of employees’ services up to the balance
date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick
leave are recognised when the leave is taken and are measured at the rates paid or payable.
(y) Share-based payment transactions
(i) Equity-settled transactions
The Group has previously had agreements where payment for services rendered are settled by the issuance of fully paid shares or
options in the company.
The cost of these equity-settled transactions is measured by reference to the fair value of the equity instruments at the date they
are granted and is recognised, together with a corresponding increase in equity, over the period in which the service is provided.
(z) 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.
(aa) Earnings per share (“EPS”)
Basic EPS is calculated as net profit/loss attributable to members of the parent, adjusted to exclude any costs of servicing equity
(other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for
any bonus element.
Diluted EPS is calculated as net profit/loss attributable to members of the parent, adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as
expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
(ab) Business combinations
The acquisition method of accounting is used to account for all business combinations, including business combinations
involving entities or business under common control, regardless of whether equity instruments or other assets are acquired.
The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities
incurred and the equity interests issued by the group. The consideration transferred also includes the fair value of any contingent
consideration arrangements and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are
expenses as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the
group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate
share of the acquiree’s net identifiable assets.
32
Resonance Health Limited Annual Report 2011
NOTE 1: Statement of significant accounting policies (cont.)
(ab)Business combinations (cont.)
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair
value of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired
is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and
the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified as either equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
Note 2: Revenues and expenses
(a)
Sales revenue
Sales to external customers
(b)
Interest received
Foreign exchange gain
(c)
Expenses
Depreciation of non-current assets
Impairment of trade receivables
Disposals of property, plant and equipment
Impairment of available-for-sale investments
Rental expense on operating leases
Consolidated
2011
$
2010
$
1,745,864
1,837,795
109,305
78,142
21,169
-
-
-
60,494
76,432
92,045
168,477
24,582
33,556
328
(353)
59,534
33
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
Note 3: Income tax benefit
Income tax recognised in profit or loss
The major components of tax benefit are:
Consolidated
2011
$
2010
$
Adjustments recognised in the current year in relation to the current tax of prior
years – R & D tax offset
186,600
129,854
The prima facie income tax benefit on pre-tax accounting profit/(loss) from
operations reconciles to the income tax benefit in the financial statements as
follows:
Accounting profit/(loss) before income tax
Income tax calculated at 30%
Non deductible expenses
Unused tax losses not recognised as deferred tax assets
Benefit of previously unrecognised temporary differences
Non assessable income
Benefit of temporary differences recognised for the first time
Other deferred tax assets and tax liabilities not recognised
R & D tax concessions
Over/(under) provision for income tax in prior year
Tax refund receivable (R & D tax offset)
Income tax benefit reported in the income statement
Unrecognised deferred tax balances
The following deferred tax assets and liabilities have not been brought to account:
Deferred tax assets:
Losses available for offset against future taxable income - revenue
Temporary differences – impairment of investments in subsidiaries
Depreciation timing differences
Business related costs
Unrealised foreign exchange losses
Other temporary differences
Accrued expenses and liabilities
Deferred tax liabilities:
Capitalised research and development costs
Accrued income
(503,429)
(151,028)
83,647
(340,882)
511,703
-
-
(224,769)
121,329
-
186,600
186,600
1,899,549
-
46,045
135,002
107,910
-
70,916
2,259,422
287,220
54,410
341,630
(232,189)
(69,656)
1,343
381,872
-
(11,178)
1,295
(489,500)
185,824
-
129,854
129,854
2,240,430
1,624
-
-
-
339,694
-
2,581,748
190,251
9,437
199,688
Income tax expense not recognised directly in equity
Share issue costs
152,765
152,765
34
Resonance Health Limited Annual Report 2011
Note 4: Segment reporting
Segment information
The chief operating decision maker is considered to be the Company’s Board of Directors. The Group’s operating segments are
determined by differences in the type of service provided. The financial results of the Group’s operating segments are reviewed by
the Board of Directors on a quarterly basis.
Business segments
The following table presents revenue and profit/loss information and certain asset and liability information regarding business
segments for the year ended 30 June 2011.
Segment revenue
Sales to external customers
Grant revenue
Interest revenue
Total segment revenue
Services
Research and
Development
Corporate
Total
$
$
$
$
1,745,864
109,305
-
1,855,169
-
-
-
-
-
-
78,142
78,142
1,745,864
109,305
78,142
1,933,311
Segment profit/(loss)
43,866
45,968
(406,663)
(316,829)
Other segment information included in profit/(loss)
Depreciation
Income tax benefit
Segment assets
Segment liabilities
21,169
-
-
186,600
-
-
21,169
186,600
987,159
366,307
957,400
142,465
1,539,584
3,475,143
70,809
579,581
Other segment cash flow information:
Net cash inflow / (outflow) from operating activities
Net cash (outflow) from investing activities
247,078
(4,805)
-
(363,626)
(472,880)
-
(116,548)
(477,695)
35
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
NOTE 4: Segment reporting (cont.)
The following table presents revenue and profit/loss information and certain asset and liability information regarding business
segments for the year ended 30 June 2011.
Segment revenue
Sales to external customers
Grant revenue
Total segment revenue
Total segment revenue
Segment profit/(loss)
FerriScan®
Research and
Development
Corporate
$
$
$
1,837,795
76,432
-
1,914,227
266,800
-
-
-
-
-
-
92,045
92,045
18,494
(387,629)
Total
$
1,837,795
76,432
92,045
2,006,272
(102,335)
Other segment information included in profit/(loss)
Depreciation
Income tax benefit
Segment assets
Segment liabilities
24,582
-
-
129,854
-
-
24,582
129,854
896,697
277,617
642,766
172,827
2,189,536
3,728,999
70,050
520,494
Other segment cash flow information:
Net cash inflow / (outflow) from operating activities
Net cash (outflow) from investing activities
495,849
(46,478)
-
(416,042)
79,807
(544,383)
-
(590,861)
The consolidated entity derived 71% (2009: 78%) of its external customer sales revenue from one major customer.
Note 5: Earnings per share
Basic profit / (loss) per share (cents)
Consolidated
2011
$
2010
$
(0.09)
(0.03)
(a) Earnings / (loss) used in the calculation of basic and dilutive earnings per share
(316,829)
(102,335)
2011
Number
2010
Number
(b) Weighted average number of ordinary shares for the purposes of basic loss per share
360,769,062
360,246,883
There are no potential ordinary shares on issue.
Note 6: Dividends
No dividend was paid or declared for the current or previous financial year.
36
Resonance Health Limited Annual Report 2011
Note 7: Cash and cash equivalents
Deposits at call
Term deposits
Consolidated
2011
$
503,479
1,000,000
1,503,479
2010
$
633,884
1,500,000
2,133,884
Deposits at call earn interest at floating rates based on daily bank deposit rates.
Term deposits are made for varying periods depending on the immediate cash requirements of the Group and earn interest at the
respective term deposit rates.
(i) Reconciliation of profit / (loss) for the year to net cash flows from operating
activities
Profit/(loss) for the year
Non-cash flows in profit / (loss):
Depreciation
Share issue
Accrued consulting fees
Impairment of trade receivables
Disposal of property, plant and equipment
Impairment of investments
Reclassification to investing activities:
Research and development
Changes in net assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in other assets
Increase/(decrease) in trade creditors and borrowings
Increase/(decrease) in other liabilities
Net cash provided by operating activities
Net cash provided by operating activitiesw
(ii) Financing facilities
Unsecured credit card:
Amount used
Amount unused
Secured credit card:
Amount used
Amount unused
37
(316,829)
(102,335)
21,169
10,000
47,672
-
-
-
24,582
10,000
-
33,556
328
(353)
140,632
90,240
(87,672)
9,393
(66,574)
125,661
(116,548)
(2,216)
-
(2,216)
4,582
15,418
20,000
(106,960)
(19,110)
149,146
713
79,807
(2,178)
-
(2,178)
1,864
18,136
20,000
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
NOTE 7: Cash and cash equivalents (cont.)
Consolidated
(iii) Cash balances not available for use
Security deposits:
Credit card
Lease premises
NOTE 8: Trade and other receivables
Current
Trade receivables
Allowance for impairment
Other receivables
The average credit period on sales of goods and rendering of services is 14 to 90 days.
Aging of past due but not impaired
Up to 30 days
60-90 days
90-120 days
120+ days
Movement in the allowance for impairment
Balance at the beginning of the year
Impairment losses recognised on receivables
Balance at the end of the year
2011
$
20,000
38,120
58,120
453,220
(26,632)
428,688
450,931
877,619
94,548
30,027
39,709
-
164,284
33,556
(6,924)
26,632
2010
$
20,000
38,120
58,120
526,315
(33,556)
492,759
297,188
789,947
6,602
11,768
539
8,096
27,005
-
33,556
33,556
In determining the recoverability of a trade receivable, the Group considers any changes in the credit quality of the trade receivable
from the date credit was granted up to the reporting date. An allowance has been made for estimated irrecoverable trade receivable
amounts arising from the past rendering of services in relation to a specific debtor amount. The concentration of credit risk is
significant with 50% (2010: 72%) of trade receivables relating to one major customer. The remaining trade receivables relate to a large
and unrelated customer base. The directors believe no further credit provision is required in excess of the allowance for impairment.
Note 9: Other assets
Current
Prepayments
Security deposits
29,498
58,120
87,618
38,891
58,120
97,011
38
Resonance Health Limited Annual Report 2011
Consolidated
Note 10: Property, plant and equipment
Fixtures and equipment
At cost
Less: Accumulated depreciation
Total property, plant and equipment
Reconciliation
2011
$
232,381
(186,358)
46,023
Reconciliation of the carrying amount of each class of property, plant and equipment is set out below:
Fixtures and equipment
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at the end of the year
NOTE 11: Intangible assets
Development expenditure
2010
$
227,575
(165,188)
62,387
61,103
26,194
(328)
(24,582)
62,387
62,387
4,805
-
(21,169)
46,023
957,400
642,766
Development expenditure relates to costs incurred in developing MRI tools for the diagnosis and clinical management of human
disease.
During the current financial year this development has related to a faster version of FerriScan, a cardiac iron assessment MRI tool
and the next stage of a liver fibrosis assessment MRI tool.
The recoupment of development expenditure is dependent on the successful development and commercialisation or sale of the
technology developed. The directors are required to assess at each reporting date whether there is an indication that an asset may
be impaired. If any such indication exists an estimate is made of the asset’s recoverable amount. Where the asset’s carrying value
exceeds the estimated recoverable amount a provision for impairment is recognised.
In making this assessment the directors had regard to the market and sales penetration to date of the existing FerriScan technology
and the developed products, the likely period over which these revenues are expected to be generated and the likelihood of any
technological obsolescence.
Note 12: Available for sale investments
Current – Carried at fair value
Shares in listed corporations
Less: Impairment
14,337
(11,333)
3,004
14,337
(11,333)
3,004
39
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
Note 13: Trade and other payables
Current
Trade payables (i)
Related party payables (ii)
Sundry creditors and accruals
Consolidated
2011
$
79,675
61,005
287,105
427,695
2010
$
126,966
132,183
235,120
494,269
(i) Trade payables are non-interest bearing and are normally settled on 30 day terms.
(ii) For terms and conditions relating to related party payables refer to Note 18.
Information regarding the effective interest rate and credit risk of current payables is set out in Note 16.
Note 14: Other liabilities
Current
Unearned income
151,886
26,225
Note 15: Issued Capital
2011
2010
Number
$
Number
$
(a) Issued and paid up capital
360,991,365
67,534,039
360,431,775
67,524,039
Movements during the period
Ordinary shares
Number of shares
Issue Price
Balance at the beginning of the financial year
360,431,775
Shares issued to Managing Director
559,590
$0.01787
Balance at the end of the financial year
360,991,365
$
67,524,039
10,000
67,534,039
(b) Shares issued to Managing Director
The issue price of shares issued to the Managing Director was equal to the volume weighted average price of the Company’s shares
as traded on ASX over the 20 trading days prior to the date of issue of the shares.
40
Resonance Health Limited Annual Report 2011
NOTE 16: Financial instruments
(a) Capital risk management
The Group controls the capital of the Company in order to maintain an appropriate debt to equity ratio and to ensure that the
Company can fund its operations and continue as a going concern. The Group’s overall strategy remains unchanged from the
previous financial year. The capital structure of the group consists of cash and cash equivalents and equity attributable to equity
holders of the parent, comprising issued capital, reserves and retained earnings. None of the Group’s entities are subject to
externally imposed capital requirements. Operating cash flows are used to maintain and expand operations, as well as to make
routine expenditures.
(b) Categories of financial instruments
Financial assets
Cash and cash equivalents
Loans and receivables
Available for sale financial assets
Financial liabilities
Payables
Consolidated
2011
$
1,561,599
877,619
3,004
2010
$
2,192,004
789,947
3,004
346,725
418,080
The net fair values of all financial assets and liabilities approximate their carrying value.
(c) Financial risk management objectives
The Group is exposed to market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and
cash flow interest rate risk. The Group seeks to minimise the effects of these risks. The Group does not enter into or trade financial
instruments, including derivative financial instruments, for speculative purposes.
(d) Market risk
The Group’s activities expose it primarily to the financial risk of changes in foreign currency exchange rates. There has been no
change in the Group’s exposure to market risks or the manner in which it manages and measures the risk from the previous period.
(e) Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise.
Exchange rate exposures are managed within approved policy parameters. The Group does not engage in forward exchange
contracts.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date
is as follows:
United States Dollars
Great British Pounds
European Euros
2011
$
6,431
-
7,022
Liabilities
Assets
2011
$
690,372
46,734
20,662
2010
$
545,346
69,111
11,799
2010
$
30,259
995
23,410
41
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
Note 16: Financial instruments (cont.)
(Foreign currency sensitivity analysis
The Group is exposed to United States Dollar (USD), Great British Pound (GBP) and European Euro (EUR) currency fluctuations.
The following table illustrates the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant
foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts
their translation at the period end for a 10% change in foreign currency rates. A negative number indicates a decrease in profit
and other equity where the Australian dollar strengthens against the respective currency. For a weakening of the Australian
dollar against the respective currency there would be an equal and opposite impact on the profit and other equity and the
balances below would be positive.
Profit or loss impact:
- USD
- GBP
- EUR
(f) Interest rate risk management
2011
$
(62,176)
(4,249)
(1,240)
2010
$
(46,826)
(6,192)
1,056
All financial assets and financial liabilities are non-interest bearing except for cash and cash equivalent balances. The following
table details the Group’s expected maturities for cash and cash equivalent financial assets.
Cash and cash equivalent financial assets
Less than one month
One to three months
Total
2010
Weighted average effective interest rate
2009
Weighted average effective interest rate
$1,503,479
4.18%
$2,133,884
4.22%
$58,120
6,14%
$58,120
3.65%
$1,561,599
$2,192,004
The Group is exposed to fluctuations in interest rates as it has deposited monies at floating and fixed interest rates.
The impact of a 10% change in interest rates will not have a material impact on the result for the year.
(g) Credit risk management
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Group is exposed to credit risk from its operating activities (primarily from customer receivables) and
from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Outstanding customer receivables are regularly monitored and any credit concerns highlighted to senior management. At 30
June 2010, the Group had one customer that accounted for 72% of all trade receivables (2009: 81%).
The maximum exposure to credit risk, excluding the value of any collateral or other security at balance date in relation to
each class of recognised financial assets is the carrying amount, net of any allowance for impairment recorded in the financial
statements. The Group does not hold any collateral as security for any trade receivable.
(h) Equity price risk
The Group is exposed to equity price risks arising from available-for-sale financial assets. The Group’s investments are publicly
traded.
The impact of a 10% increase or decrease in the equity price will not have a material impact on the result for the year.
42
Resonance Health Limited Annual Report 2011
Note 16: Financial instruments (cont.)
(i) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of directors, who have built an appropriate liquidity risk
management framework for the management of the Group’s short, medium and long-term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining adequate reserves by continually monitoring forecast and actual
cash flows and matching the maturity profiles of financial assets and liabilities. Included in Note 7 is a listing of additional undrawn
facilities that the Group has at its disposal to further reduce liquidity risk.
The following table details the Group’s expected maturity for its financial liabilities.
Less than one month
$
One month to three
Three months to one
months
$
year
$
Total
$
2011
Non-interest bearing
258,162
73,697
14,866
346,725
2010
Non-interest bearing
358,580
45,000
14,500
418,080
(j) Fair value of financial instruments
The net fair value of all financial assets and liabilities approximate their carrying values. No financial assets or financial liabilities,
except for listed shares are readily traded on organised markets in standardised form.
The aggregate net fair values and carrying amounts of all financial assets and liabilities are disclosed in the financial statements.
Note 17: Commitments for expenditure
Operating lease commitments
Commitments for minimum lease payments in relation to non-cancellable
operating leases for office premises are payable as follows:
Within one year
Later than 1 year but no later than 5 years
Total commitments not recognised in the financial statements
Note 18: Related party disclosure
Consolidated
2011
$
5,527
-
5,527
2010
$
22,108
-
22,108
The consolidated financial statements include the financial statements of Resonance Health Limited and the subsidiaries listed in
the following table.
Name of entity
Country of
incorporation
Class of
shares
Equity
holding
Resonance Health Analysis Services Pty Ltd (formerly Inner Vision
Biometrics Pty Ltd)
Australia
Ordinary
WA Private Health Care Services Pty Ltd
Australia
Ordinary
IVB Holdings Pty Ltd
ResonanceUSA Inc
Australia
Ordinary
USA
Ordinary
Resonance Health Limited is the ultimate Australian entity and ultimate parent of the Group.
100%
100%
100%
100%
43
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
Note 18: Related party disclosure (cont.)
Transactions with related parties
Transactions with related parties are on normal commercial terms and conditions no more favourable than those available to other
parties unless otherwise stated.
Transactions with related parties in the wholly owned group
During the year the company provided interest free loans to Resonance Health Analysis Services Pty Ltd totalling $388,163 with no
fixed repayment date. During the previous year the company provided interest free loans to Resonance Health Analysis Services Pty
Ltd totalling $621,555.
During the year the company provided interest free loans to ResonanceUSA Inc totalling $223,285 with no fixed repayment date (2010:
$109,820).
A cumulative impairment of these loans amounting to $4,545,135 was recorded up to balance date (2010: $4,401,373).
During the year expenses were paid by Resonance Health Analysis Services Pty Ltd totalling $125,746 (2010: $140,800) on behalf of the
company. During the year expenses were paid by ResonanceUSA Inc totalling $214,762 (2010: $111,846) on behalf of the company.
During the year expenses were paid by the company on behalf of Resonance Health Analysis Services Pty Ltd totalling $13,020 (2010:
$41,930).
Note 19: Parent entity disclosures
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Issued capital
Option reserve
Accumulated losses
Total equity
Financial Performance
Profit / (loss) for the year
Total comprehensive income / (loss)
2011
$
1,051,277
856,682
1,907,959
67,021
67,021
2010
$
1,741,324
856,682
2,598,006
70,050
70,050
67,534,039
66,284
(65,296,505)
2,303,819
67,524,039
66,284
(65,062,367)
2,527,956
Year ended
Year ended
30 June 2011
30 June 2010
$
(234,138)
(234,138)
$
(735,186)
(735,186)
44
Resonance Health Limited Annual Report 2011
Note 20: Events subsequent to reporting date
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect
the operations of the company and the consolidated entity, the results of those operations, or the state of affairs in future financial years.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect
the operations of the company and the consolidated entity, the results of those operations, or the state of affairs in future financial years.
Note 21: Auditors’ remuneration
During the year the following fees were paid or payable to the auditor:
Remuneration of the auditor of the company for:
- auditing or reviewing the financial report
- taxation compliance services
Note 23: Directors and executive disclosures
Details of key management personnel
(a)
(i) Directors
Consolidated
2011
$
38,450
47,113
85,563
2010
$
37,450
28,698
66,148
Dr Stewart Washer
Chairman (non-executive)
Resigned 16 December 2010
Ms Liza Dunne
Dr Martin Blake
Mr Simon Panton
Dr Tim St Pierre
(ii) Executives
Mr Colin McDonald
Ms Eva O’Malley
Managing Director (executive)
Chairman (non-executive)
Director (non-executive)
Director (executive)
Chief Financial Officer and Company Secretary
Appointed 16 December 2010
Chief Financial Officer and Company Secretary
Resigned 16 December 2010
Key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report.
(c)
Shareholdings of key management personnel
The numbers of ordinary shares in the company held during the financial year by key management personnel of the consolidated
Group including their personally related entities are set out below.
Directors
Dr S Washer
Dr M Blake
Ms L Dunne
Dr T St Pierre
Mr S Panton
Total
Executives
Mr C McDonald
Ms E O’Malley
Total
Balance 1.7.10
Received as
Remuneration
Net Change Other*
Received during
the year on
exercise of options
Balance 30.6.11
451,422
6,224,677
2,593,795
9,078,750
65,960,972
84,309,616
-
-
-
-
-
559,590
-
-
(451,422)
-
-
-
-
559,590
(451,422)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,224,677
3,153,385
9,078,750
65,960,972
84,417,784
-
-
-
* Excludes shares held as disclosed in the final directors interest notice on Dr Washer resigning as director on 16 December 2010.
45
notes to the financial statements
FOr thE yEar EndEd 30 JunE 2011
Note 23: Directors and executive disclosures (cont.)
(d)
Transactions and balances with directors and other key management personnel
Executive Director – Dr Tim St Pierre
Dr St Pierre is an employee of The University of Western Australia. The Group has an agreement with the University of Western
Australia for the provision of consulting services by Dr St Pierre and others.
Amounts relating to services provided by Dr St Pierre during the year can be found in the Remuneration Report forming part of the
Directors’ Report.
Amounts relating to consulting services provided by others under the agreement with the University of Western Australia during the
financial year totalled $14,945 (2010: $39,859). The amount payable at 30 June 2011 totalled $86,293 (2010: $71,348).
During the year the Group provided FerriScan services totalling $3,575 (2010: $10,311) to the University of Western Australia.
Amounts receivable at 30 June 2011 totalled $Nil (2010: $1,817).
46
Directors’ Declaration
Resonance Health Limited Annual Report 2011
1.
In the opinion of the directors:
a.
the accompanying financial statements, notes and the additional disclosures are in accordance with the Corporations Act
2001 including:
i.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of it’s performance
for the year then ended; and
ii.
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
b.
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable; and
c.
the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by
the International Accounting Standards Board.
2.
This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section
295A of the Corporations Act 2001 for the financial year ended 30 June 2011.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dr Martin Blake
Chairman
Place: Perth, Western Australia
Dated: 27 September 2011
47
INDEPENDENT AUDITOR’S REPORT
To the members of
RESONANCE HEALTH LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Resonance Health Limited (“the company”), which comprises the statement
of financial position as at 30 June 2011, the statement of comprehensive income, the statement of changes in equity and the
statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other
explanatory information, and the directors’ declaration for the consolidated entity. The consolidated entity comprises the company
and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.
In Note 1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the
consolidated financial report complies with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the company’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
the directors, as well as evaluating the overall presentation of the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a worldwide organisation of accounting firms and business advisers.
48
Resonance Health Limited Annual Report 2011
Matters relating to the electronic presentation of the audited financial report
This auditor’s report relates to the financial report and remuneration report of Resonance Health Limited for the financial year ended
30 June 2011 included on Resonance Health Limited’s website. The company’s directors are responsible for the integrity of the
Resonance Health Limited website. We have not been engaged to report on the integrity of this web site. The auditor’s report refers
only to the financial report and remuneration report identified in this report. It does not provide an opinion on any other information
which may have been hyperlinked to/from the financial report. If users of the financial report are concerned with the inherent risks
arising from publication on a website, they are advised to refer to the hard copy of the audited financial report and remuneration
report to confirm the information contained in this website version of the financial report.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s Opinion
In our opinion:
(a)
the financial report of Resonance Health Limited is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance
for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2011. 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.
Auditor’s Opinion
In our opinion, the Remuneration Report of Resonance Health Limited for the year ended 30 June 2011 complies with section 300A
of the Corporations Act 2001.
HLB MANN JUDD
Chartered Accountants
N G NEILL
Partner
Perth, Western Australia
27 September 2011
49
aDDitional information for listeD public companies
The following additional information is disclosed in accordance with Section 4.10 of the Australian Stock Exchange Ltd Listing rules
in respect of listed public companies only.
The following information is supplied as at 23 September 2011.
1. Analysis of Shareholdings
Distribution of Shareholders (ASX Code: RHT)
Ordinary Shares
Number of Ordinary Shares Held
Number of holders
Number of shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
535
187
235
743
342
2,042
120,715
587,947
1,744,174
29,194,879
329,343,650
360,991,365
The number of shareholdings holding less than a marketable parcel of shares are 1,372.
2. Voting Rights
Ordinary shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one
vote on a show of hands.
3. Twenty Largest Shareholders of quoted Ordinary Shares
Name
Number of Ordinary Shares
Percentage of Total
Southam Investments 2003 Pty Ltd
65,414,622
18.12
1.
2.
3.
The University Of Western Australia
Timothy Guy St Pierre
4. Wanida Chau-Anusorn
5. Mr Robert Francis Panton
6.
BNM Holdings Pty Ltd
7. Dr Franklyn Jay Ives
8.
Sean Watkins-Saxon
9. Mr Helmut Rocker
10. Dr Simon Bell
11. Mr William Grove
12. Five Tigers Investment Corporation Ltd
13. Mr Paul Clark
14. Mr Kevin Edward Deeves & Mrs Pauline Mary Deeves 4,000,000
15. Dr Martin Peter Blake
16. Mr Harry Basle
17. Mr Bruce Alan Stevenson
18. Mr Jeremy Hussein Rishani
19. Blake Nominees Pty Ltd
20. Anahein Pty Ltd
3,798,590
3,671,359
2,932,755
2,638,699
2,426,087
2,408,478
164,892,242
45.68
50
9,078,750
9,078,750
8,070,000
7,840,824
6,487,278
6,272,934
6,250,000
6,000,000
5,087,483
4,838,401
4,494,844
4,102,388
2.52
2.52
2.24
2.17
1.80
1.74
1.73
1.66
1.39
1.34
1.25
1.14
1.11
1.05
1.02
0.81
0.73
0.67
0.67
Resonance Health Limited Annual Report 2011
4. Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with sections 709 and 710 of the Corporations
Act 2001 are:
Southam Investments 2003 Pty Ltd
65,414,622 ordinary shares
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Registered office and
Principal place of business
Ground Floor
278 Stirling Highway
Claremont WA 6010
Telephone: +61 8 9286 5300
Facsimile: +61 8 9286 1179
Postal address
PO Box 1135
Nedlands WA 6909
Website and e-mail address
www.resonancehealth.com
Email: info@ferriscan.com