A n n u a l R e p o r t 2 0 1 2
Corporate information
ABN 96 006 762 492
Directors
Dr Martin Blake
Non-executive Chairman
Ms Liza Dunne
Managing Director
Mr Simon Panton
Non-executive Director
Dr Timothy St Pierre
Executive Director
Chief Financial Officer/
Company Secretary
Mrs Naomi Haydari
Stock exchange listing
Resonance Health Limited
shares are listed on the
Australian Securities Exchange
ASX Code: RHT
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
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 2012
OUR BUSINESS.
Resonance Health specialises in the provision of medical imaging diagnostic tools and
services 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 body 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 imaging and data management
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 Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional ASX Information
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48
50
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
FDA clearance was achieved for the
The activities to develop an MRI method
Company’s Cardiac T2* test for assessing
to accurately measure liver fibrosis are
cardiac iron overload and has enabled
continuing with a clinical study in progress
us to expand our offering to our existing
at the liver transplant unit at the Austin
customer base.
The strong Australian dollar negatively
impacted the reported revenues, which
are predominantly received in US dollars.
The 2011-12 financial year saw growth in
Staff numbers remained flat and expenses
the availability and use of FerriScan® and
were reduced compared to the previous
progress in the development of pipeline
year as we remain focused on continually
Hospital in Melbourne, in collaboration
with Pfizer. The study will compare the
level of fibrosis assessed from liver biopsy
with the degree of fibrosis assessed by
MRI. Once the results of the study are
known, a decision regarding the next
phase of development can be made.
products to expand the product and
improving the efficiency of our operations.
The management and staff remain focused
revenue base of the Company.
The overall
image analysis time has
on realising the full potential of FerriScan®
The increased availability of FerriScan®
enabled revenue associated with its use
in clinical practice to grow. This supports
our strategy to reduce the Company’s
reliance on the use of FerriScan® in clinical
trials of new pharmaceuticals. We were
pleased to sign the first contract with a
pharmaceutical company for the supply
of FerriScan® to their patients outside of
a clinical trial. Several new contracts were
decreased by approximately 50% over the
and expanding the Company’s product
last 3 years. A new version of our customer
portfolio, differentiating ourselves as
interface platform was introduced making
leaders in the quantitative measurement
it easier for our customers to do business
of
liver disease
for the clinical and
with us and reduce the error rate on data
pharmaceutical communities.
we receive. Our customer satisfaction
survey confirmed that our customers are
delighted with the service we provide and
that it makes an important contribution to
the effective treatment of their patients.
also signed for the use of FerriScan® in
Research and development activities
clinical trials of iron chelation medicines.
culminated
in
the
completion of
We continue to take steps towards
gaining reimbursement for FerriScan®,
and
the expanded
availability of
FerriScan® within the US is supporting
this strategy. Insurance payers within the
US are currently reviewing the FerriScan®
technology
for potential
coverage.
The growing number of peer reviewed
publications
and
clinical guidelines
that support the use of FerriScan® is
encouraging and adds weight to the
arguments for government and private
insurance funding.
the HepaFat-Scan™ product
for
the
measurement of fatty liver disease. A
patent has been lodged to protect the
HepaFat-Scan™ IP and an FDA submission
has been made for clearance to market
the product. The performance results
of HepaFat-Scan™ are very positive
when compared with other published
methods for assessing fatty liver. Given
the significant and growing problem of
obesity, a non-invasive test for assessing
fatty liver disease presents a promising
opportunity for the Company.
Liza Dunne
Managing Director
Dr Martin Blake
Chairman
2
Resonance Health Limited Annual Report 2012
FerriScan® is making a difference to the lives of
patients with iron overload
FerriScan® provides a safe and reliable
Patients can accumulate excess iron due
measurement of
iron overload
for
to two primary causes:
patients around the world. It is provided
to the international medical community
as an image analysis service, providing
customers a high quality, standardised
and consistent measurement.
• Iron overload
from
repeat blood
transfusions. Some patients require
regular blood transfusions to help
manage their underlying disease, such
as thalassemia, sickle cell anaemia,
FerriScan® is now the recognised gold
myelodysplastic syndrome and some
standard for the assessment of liver iron
cancers.
concentration providing an effective
Preparing for a FerriScan
alternative to a liver biopsy. Based on
Map of liver iron
Patient results are now tracked on the
FerriScan® Report
peer reviewed publications, FerriScan®
is demonstrated to be the most accurate
method
for measuring
liver
iron
concentration.
An accurate measure of a patient’s
iron overload enables the doctor to
determine the correct therapy for that
patient, such as the appropriate dose
of an iron chelation drug to remove the
excess iron. The FerriScan® Report shows
how the patient’s iron levels are trending
over time.
• Excess absorption of iron from the gut
caused by hereditary conditions such as
hereditary haemochromatosis, which
causes the slow accumulation of excess
iron over the life of the patient.
FerriScan® involves a 10 minute MRI scan
of the patient followed by the image
analysis performed by Resonance Health
at our facility in Perth, Western Australia.
A fee is charged for each image analysis
performed. Over 16,000 patient FerriScans
have been performed to date from image
data sent to us from all over the world. The
FerriScan® Report of the patient’s liver iron
The liver stores approximately 80% of the
concentration is usually completed within
body’s excess iron. When iron overload
24 hours.
develops
it can cause
liver damage,
including fibrosis and ultimately cirrhosis.
Excess
iron can also damage other
organs, such as the pancreas where the
accumulation of iron can lead to diabetes.
Quantitative MRI is a specialist field and
the Company’s international standards
accreditation to
ISO 13485 provides
doctors with confidence in the results
they are receiving.
3
Resonance Health Limited Annual Report 2012
YEAR IN REVIEW
Sales volumes increased 14% over the financial year compared to
it faster and easier for customers to interface with us, with less
the previous year. The results were buoyed by the take-up of the
opportunity for error.
Company’s cardiac T2* image analysis service which provides a
surrogate measure of cardiac iron overload. Revenue for the year
was $1,562,242.
Sales volumes in the UK increased by 36% over the previous year
further consolidating FerriScan’s position as the test-of-choice for
clinicians managing iron overload. FerriScan® is also expanding
into the wider European market with new FerriScan® facilities in
Switzerland, Italy and Germany.
Sales volumes in the US increased by 28% over the previous year
and the Cardiac T2* service was successfully launched in the US
following FDA clearance.
Image Analysis Sales Volumes
A customer satisfaction survey of MRI facilities using FerriScan®
indicated that our customers are very happy with the service we
provide. 100% of customers rated the day-to-day support and
communication received from the Company as ‘good’ or ‘excellent’.
“The service that your group offers is first rate and the turnaround of
analysis results is fantastic, your team is to be congratulated.”
Customer comment June 2012.
The Company remains focused on a range of growth initiatives
aimed at increasing the demand for our products and services
and delivering improved financial results.
Education and Awareness Programs
We continue to educate the market on the benefits of FerriScan®
and its differentiation from other techniques for measuring iron
overload. FerriScan® was presented at a range of events during
the year. These included trade exhibits and presentations by
key opinion leaders on the benefits of using FerriScan® in the
management of patients with iron overload conditions.
• FerriScan® Awareness Day, St Mary’s and Hammersmith
Hospitals, London, UK
FerriScan® has now become firmly established as the gold
standard test to measure liver iron concentration (LIC). It is
• Hereditary Haemochromatosis Conference, Royal Free
gaining support in clinical guidelines and continues to be used
Hospital, London, UK
by major pharmaceutical companies in their clinical trials of
chelation therapies. FerriScan® is the only MRI-based method
• Management of Sickle Cell and Anaemia Conference, London,
for measuring liver iron concentration that has the extensive
UK
scientific validation and
international regulatory clearance
demanded by clinicians.
• Haematology Society of Australia and New Zealand joint
scientific meeting (HAA), Sydney, Australia
Pharmaceutical companies have also expanded their use of
FerriScan® to new projects outside of clinical trials to assist
• ASH (American Society of Hematology) Conference, San
clinicians in managing their patients on iron chelation therapies.
Diego, USA
The Company remains focused on continuous improvement
to its service model to reduce costs and deliver a better service
to customers. Over the last three years we have reduced the
time taken to perform a FerriScan® image analysis by 50%.
During the year we introduced a significant upgrade to our
customer interface, called FAST (FerriScan® Analysis Service
• Global Iron Summit, Berlin, Germany
• British Society of Haematology Conference, Glasgow, Scotland
• American Society of Pediatric Hematology / Oncology (ASPHO)
Meeting, New Orleans, USA
Tracking system). This internet based software platform allows
• Sickle Cell in Focus, London, UK
our customers to submit patient image data for analysis from
anywhere in the world and to access results. The upgrade makes
• Scottish Haemoglobinopathy Meeting, Edinburgh, Scotland
4
Resonance Health Limited Annual Report 2012
CANADA
UNITED STATES
OF AMERICA
MEXICO
VENEZUELA
COLOMBIA
UK
GERMANY
IRELAND
POLAND
SWITZERLAND
ITALY
TURKEY
GREECE
LEBANON
EGYPT
UAE
BRAZIL
ARGENTINA
CHINA
JAPAN
BANGLADESH
TAIWAN
THAILAND
SRI LANKA
MALAYSIA
AUSTRALIA
NEW ZEALAND
Global availability of FerriScan®
FerriScan® Countries
Expanded Availability of FerriScan®
cardiac iron overload is a leading cause of death in some medical
conditions. The Dual Analysis Service measuring both a patient’s
We have expanded the availability of FerriScan® with fifteen new
liver and cardiac iron loading enables clinicians to fully assess
facilities established during the year. There are now 44 facilities
their patients’ risks and adjust their treatment accordingly.
in North America providing FerriScan® and 35 facilities in Europe.
FerriScan® became available at MRI facilities in Scotland, Ireland,
Clinical Guidelines and Supporting Evidence
Italy and Switzerland during the year.
FerriScan has also become available to patients in South
FerriScan®, to regularly assess
iron overload have added
America at 10 new MRI facilities in Brazil, Argentina, Colombia
weight to our efforts to gain reimbursement for FerriScan® and
Clinical guidelines recommending the use of MRI, and specifically
and Mexico.
Distributors have been appointed for United Arab Emirates and
Saudi Arabia, where there is a high prevalence of iron overload
conditions.
Growing Referrer Base
In addition to engaging with new facilities, we have also focused
our educational and awareness campaigns on existing FerriScan®
facilities. As a result of these initiatives, the referrer base for
FerriScan® continues to grow with a 28% increase in the number of
clinicians who have referred patients for FerriScan® over the year.
Dual Analysis Service
In addition to FerriScan®, Resonance Health also provides a
Cardiac T2* measurement to assess the level of cardiac iron
overload. While excess body iron is primarily stored in the liver,
broadened its use. FerriScan® is now recommended in patient
management guidelines developed for the clinical management
of thalassaemia, sickle cell disease and other transfusion-
dependent anaemias by respected medical institutions and
patient advocacy organisations.
• Data presented by clinicians from Kings College London at the
2012 British Society of Haematology conference concluded
that “Monitoring LIC (liver iron concentration) with FerriScan®
and appropriate adjustment of therapy will result in improved
clinical outcomes in patients with iron overload.”
• University Health Network, Toronto General Hospital, Canada -
2012 Guidelines for the Care of Patients in the UHN Red Blood
Cells Disorders Program commented: “R2-MRI (FerriScan®)
appears to be the most accurate non-invasive measure of hepatic
iron loading.”…”MRI is the primary tool used to monitor and make
decisions regarding change in chelator dose or strategy.”
5
YEAR IN REVIEW (CONT)
• The Northern California Comprehensive Thalassemia Network
and Children’s Hospital, Oakland - 2012 Thalassemia Standards
of Care Guideline states: “While liver biopsy determination of
LIC has been recommended for years, recent progress with MRI
This application follows the successful completion of a clinical trial
to assess the technology and the development of the HepaFat-
Scan™ product. The outcomes of the study will be presented at
the American Association for the Study of Liver Diseases (AASLD)
imaging provides an expedient and non- invasive way to directly
meeting in November and have been submitted for publication in
measure LIC, as well as iron concentration in multiple organs. A
a peer-reviewed journal. The Company has lodged a provisional
FerriScan® is a commercially available and validated system for
patent application for HepaFat-Scan™ in Australia.
quantitative MRI measurements of iron.”
Reimbursement
The incidence of fatty liver disease is increasing throughout the
world, aff ecting up to one third of the worldwide population
and is now the primary form of liver disease amongst children.
Gaining reimbursement for FerriScan® remains a key objective
Common risk factors include obesity, a high fat diet, lack of
of the Company to ensure access to FerriScan® for all patients.
exercise, high alcohol intake, diabetes and insulin resistance.
Within the US we have held numerous meetings with large
insurance payers within our target markets and have received
positive feedback. The increasing availability of FerriScan® and
published data supporting the use of FerriScan® to improve the
outcome for patients are important steps towards achieving this
milestone.
Changes to the Australian Medical Services Advisory Committee
(MSAC) framework has meant that we have put on hold further
submissions for reimbursement of FerriScan® in Australia until
we can gain more certainty as to the process for evaluation and
decision making. We continue to gain increasing support from
the Australian clinical community, evidenced by the recent release
of the Australian Guidelines for the assessment of iron overload
and iron chelation in transfusion-dependent thalassaemia major,
sickle cell disease and other congenital anaemias, which stated
‘The quantitation of liver iron by MRI is one of the most signifi cant
recent advances in iron monitoring. The most widely adopted
method is based on the measurement of tissue proton transverse
relaxation rates (R2) (FerriScan®), showing excellent correlation with
liver iron concentration (LIC) measured by biopsy.’
Pipeline Products
We continue to invest in research and development activities
within our core strength of quantitative MRI with a specifi c focus
on the liver. HepaFat Scan™ and the measurement of liver fi brosis
represent signifi cant opportunities as valuable diagnostic tools
in the management of patients with conditions that are growing
rapidly in prevalence.
HepaFat-Scan™
An application has been made to the US Food and Drug
Administration (FDA) for HepaFat-Scan™ which provides an
accurate measurement of the amount of fat in the patient’s liver.
Commercialisation of HepaFat-Scan™ off ers an exciting
these patients.
opportunity
to assist clinicians
treating
Pharmaceutical companies are also developing therapies to
meet the needs of this expanding market and require access to
an accurate non-invasive diagnostic tool for their clinical trials.
Liver Fibrosis
Resonance Health
is conducting a
liver fi brosis study
in
collaboration with Pfi zer and the Austin Hospital in Melbourne.
The aim of this study is to develop an MRI-based assessment for
measuring and staging liver fi brosis.
Liver fi brosis is the scarring process that represents the liver’s
response to injury. The liver repairs injury through the deposition
of collagen. This injury may be caused by a number of factors
such as excess fatty deposits, viral hepatitis, iron overload or
excess alcohol consumption. Over time the build-up of fi brotic
tissue can result in liver cirrhosis. Liver disease is now one of the
top fi ve causes of death in middle-age. The progression of liver
fi brosis can however be slowed and the condition potentially
even reversed if detected and treated early.
The recruitment of patients for the liver fi brosis study was
completed in December 2011. The liver biopsy tissue samples
are assessed for fi brosis using two methods; the visual
assessment of fi brosis by a histopathologist and the computer-
assisted assessment using the digitised pathology slides. These
assessments will be compared to the MRI measurements so an
assessment of the MRI technology for measuring liver fi brosis can
be made.
6
Resonance Health Limited Annual Report 2012
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 fi nancial report for the fi nancial year ended 30 June 2012. In order to comply with the provisions of the
Corporations Act, the directors report as follows:
Directors
The names, qualifi cations and experience of directors in offi ce during the fi nancial year and until the date of this report are as follows.
Directors were in offi ce 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
signifi cant 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 fi nancial,
marketing and management positions and spent fi ve 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:
Director — Non-Executive
(appointed 5 October 2009)
Experience:
Mr Panton has been a strong
supporter of the Company and the
FerriScan technology over a number
Dr Timothy St Pierre
B.Sc(Hons), PhD
Position:
Director — Executive
(appointed 21 August 2006)
Experience:
Dr St Pierre is widely published in the
fi eld 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
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 fi eld of
iron overload diseases and regularly participates in international
research collaborations. Dr St Pierre 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:
None
Chief Financial Offi cer/
Company Secretary
Mrs Naomi Haydari
B.Bus, B SSc, CPA
Position:
Chief Financial Offi cer/
Company Secretary
(appointed 19 March 2012)
Experience: Mrs Haydari has experience in managing the
fi nancial obligations of ASX listed corporations across a diverse
range of industries.
Mrs Haydari holds a Business Degree (Accounting), a Social
Science Degree, is a qualifi ed CPA and is currently completing
her MBA at Deakin University.
8
88
Resonance Health Limited Annual Report 2012
Interests in the Shares of the Company
large clinical need for patients with fatty liver disease and viral
The following relevant interests in shares of the Company were
hepatitis.
held by the directors during the period. There has been no
Financial Summary:
change in directors’ and executives shareholdings to the date of
Number of fully paid ordinary shares
result of $1,745,864. Revenue was negatively impacted by the
this report.
Directors
Dr M Blake
Ms L Dunne
Mr S Panton
Dr T St Pierre
Total
Executives
Mrs N Haydari
Total
6,224,677
3,153,385
65,960,972
9,078,750
84,417,784
-
-
Incentive Shares and Options
The Company does not have an option plan. Accordingly, no
options were issued as part of remuneration to directors or
specifi ed executives during the current or previous fi nancial year.
Dividends Paid or Recommended
Revenue for the year ended 30 June 2012 was $1,562,242
representing a decrease of 11% from the previous year’s
strengthening of the Australian dollar with approximately 80%
of the Company’s revenue received in US dollars. Revenue
associated with the clinical use of FerriScan® continues to
increase and now represents over 40% of sales revenue, reducing
the Company’s reliance on sales contracts with pharmaceutical
companies.
Total sales volumes for FerriScan® and Cardiac T2* image analysis
increased by 14% over the previous year. Volumes in the UK and
USA grew by 36% and 28% respectively and in Canada by 6%. The
Company’s Cardiac T2* test to assess iron overload in the heart
was launched in the US following marketing clearance from the
US Food and Drug Administration (FDA). Growth in volumes and
revenues were also attributable to contracts signed with fi fteen
new customers during the year.
A net loss was recorded for the year of $268,601 compared
to a net loss of $316,829 in the previous fi nancial year. Overall
No dividend was paid or declared for the fi nancial year.
expenditure decreased 9% to $2,222,314 from $2,436,740 in the
Principal Activities
previous year.
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
Resonance Health Limited is an Australian healthcare listed
Company located in Perth, Western Australia, specialising in
Resonance Health has cash at bank of $1,180,174 at the end
of the fi nancial year, compared to $1,503,479 in the previous
fi nancial year and has no debt. Net cash provided by operating
activities was $83,211.
Research and development expenditure during the year totalled
$508,649. This comprised capitalised development costs of
$334,144 that are recognised as an intangible asset on the
Statement of Financial Position and expenditure of $80,408
recognised in Research and Development in the Statement of
Comprehensive Income and $94,097 recognised in Employee
Benefi ts.
the provision of image analysis services and the development
Research and development expenditure was primarily associated
of quantitative MRI diagnostic technology, with a sub-specialty
with the development of an MRI-based liver fi brosis test and an
in the liver. All services are provided under an ISO 13485:2003
MRI-based liver fat test. The Company’s HepaFat-Scan™ software
certifi ed quality management system.
Resonance Health’s FerriScan®
technology
for accurately
measuring liver iron concentration has FDA, CE Mark and TGA
certifi cation and is being used in over 20 countries. FerriScan®
is provided to the market through the Company’s central image
analysis facility which also off ers a range of services for clinical
trials in the pharmaceutical and biotechnology industries.
product to measure liver fat has been submitted to the FDA for
marketing clearance. This follows the successful completion
of a clinical study to assess the performance of HepaFat-Scan™
compared to the results obtained from a liver biopsy and the
development of a software tool to perform the quantifi cation
of liver fat from magnetic resonance images. A patent has
been submitted for the HepaFat-Scan™ IP which has produced
very positive results compared to other imaging techniques for
The Company is also developing imaging tools for the non-
invasive assessment of liver fat and liver fi brosis to address a
assessing liver fat.
9
DIRECTORS’ REPORT (CONT)
The development of a magnetic resonance imaging test to
the Corporations Act 2001. It is not possible to apportion the
assess liver fi brosis is continuing and represents a signifi cant
premium between amounts relating to the insurance against
commercial opportunity for the Company. Resonance Health has
legal costs and those relating to other liabilities.
collaborated with Pfi zer on a clinical trial to assess the Company’s
imaging technology for the staging of liver fi brosis. Patient
recruitment has been completed for the study together with all
MRI measurements. The project has experienced some delays in
gaining the liver fi brosis measurements from liver biopsy. Once
these have been received a determination of the success of the
project can be made.
Operating Results
The net loss of the consolidated entity for the fi nancial year after
tax was $268,601 (2011: $316,829).
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for
the key management personnel of Resonance Health Limited for
the fi nancial year ended 30 June 2012. 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 defi ned as those persons
having authority and responsibility for planning, directing and
controlling the major activities of the Company and the Group,
Signifi cant Changes in State of Aff airs
directly or indirectly, including any director (whether executive or
There were no signifi cant changes in the state of aff airs of the
otherwise) of the parent Company and the Company Secretary.
Company during the fi nancial year.
Key Management Personnel
Signifi cant Events After Balance Date
(i) Directors
No other matters or circumstances have arisen since the end of
Dr Martin Blake – Chairman
the fi nancial year which signifi cantly aff ected or may signifi cantly
aff ect the operations of the Company and the consolidated
Ms Liza Dunne – Managing Director
entity, the results of those operations, or the state of aff airs in
Mr Simon Panton
future fi nancial years.
Likely Developments and Expected Results of Operations
Dr Timothy St Pierre
(ii) Executives
Comments on expected results of the operations of the
Mrs Naomi Haydari - Company Secretary (appointed 19 March
consolidated entity are included in this report under the review
2012)
of operations.
Mr Colin McDonald – Company Secretary (resigned 19 March
Disclosure of information regarding likely developments in the
2012)
operations of the consolidated entity in future fi nancial years
and the expected results of those operations is likely to result
Remuneration Policy
in unreasonable prejudice to the Company. Accordingly, this
The Board’s policy for determining the nature and amount of
information has not been disclosed in this report.
remuneration for Board members and senior executives of the
Environmental Legislation
consolidated entity is as follows:
The consolidated entity’s operations are not subject to any
signifi cant environmental legislation.
Indemnifi cation and Insurance of Directors and Offi cers
The Company has agreed to indemnify all the directors and
secretaries of the Company for any liabilities to another person
(other than the Company or related body corporate) that
may arise from their position as directors of the Company and
its controlled entities, except where the liability arises out of
conduct involving a lack of good faith.
During the fi nancial year the Company paid a premium of
$13,000 (2011: $13,000) to insure the directors and secretaries
of the Company and its controlled entities against any liability
incurred in the course of their duties to the extent permitted by
• set competitive remuneration packages to attract the
highest calibre of employees in the context of prevailing market
conditions, particular experience of the individual concerned
and the overall performance of the Company; and
•
reward employees for performance that results in long-term
growth in shareholder wealth, with the objective of ensuring
maximum stakeholder benefi t from the retention of a high
quality board and executive team.
The Board of Resonance Health Limited believes the remuneration
policy to be appropriate and eff ective in its ability to attract and
retain the best executives and directors to run and manage the
consolidated entity, as well as create goal congruence between
directors, executives and shareholders.
10
Resonance Health Limited Annual Report 2012
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 benefi ts.
compensation arrangements for directors and the executive
Executives receive a superannuation guarantee contribution
team.
The remuneration policy, setting the terms and conditions for the
required by the government, which is currently 9%, and do not
receive any other retirement benefi ts.
executive directors and other senior executives, was developed
(ii) Variable Remuneration
by the remuneration committee and approved by the Board.
All bonuses and
incentives are
linked to predetermined
The remuneration committee reviews executive packages
performance criteria. The Board may, however, exercise its
annually by reference to the consolidated entity’s performance,
discretion in relation to approving incentives and bonuses, and
executive performance and comparable
information from
can recommend changes to the committee’s recommendations.
industry sectors and other listed companies in similar industries.
Any changes must be justifi ed by reference to measurable
The assistance of an external consultant or remuneration surveys
performance criteria.
are used where necessary.
Remuneration Structure
In accordance with best practice Corporate Governance, the
structure of non-executive director and executive remuneration
is separate and distinct.
Non-executive Director Remuneration
The Board seeks to set aggregate remuneration at a level that
provides the Company with the ability to attract and retain
directors of the highest calibre, whilst incurring a cost that is
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.
All remuneration paid to directors and executives is valued at
the cost to the Company and expensed or capitalised. Securities
given to directors and executives are valued as the diff erence
between the market price of those shares and the amount paid
by the director or executive. There are currently no securities on
issue.
Executive Offi cer’s Employment Agreements
Ms Dunne was appointed to the role of Managing Director of
Resonance Health Ltd on 23 October 2008. Her employment
agreement provides for a salary of $272,500 pa inclusive of
superannuation and the provision of one months notice for
termination or resignation without cause. The amount listed on
Page 8 of $234,770 is due to a reduction in working hours for a
period throughout the current fi nancial year.
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.
Mrs Haydari was appointed to the role of Company Secretary
of Resonance Health Ltd on 19 March 2012. Her employment
agreement provides for an equivalent full time salary of $136,250
pa inclusive of superannuation for 22.5 hours per week and the
provision of one months notice for termination or resignation
Each of the non-executive directors receives a fi xed fee for their
without cause.
services as directors. There is no direct link between remuneration
Consultancy Services Agreement for Executive Director Dr
paid to any of the directors and corporate performance.
Tim St Pierre
Executive Remuneration
Remuneration consists of fi xed remuneration and variable
remuneration.
(i) Fixed Remuneration
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 Scientifi c Offi cer totalling $108,844 (2011: $127,407)
and a fi xed fee for his services as a director of $10,000 (2011:
Fixed remuneration is reviewed annually. The process consists of
$40,000) were incurred during the fi nancial year. These amounts
a review of relevant comparative remuneration in the market and
are included in Dr Tim St Pierre’s remuneration disclosed in the
internally, and where appropriate, external advice on policies and
following table.
practices. The Committee has access to external, independent
advice where necessary.
11
DIRECTORS’ REPORT (CONT)
Details of Remuneration for Year Ended 30 June 2012
The remuneration for each key management personnel of the consolidated entity during the year was as follows:
Remuneration of directors and executives
Short-term employee
benefi ts
Salary & Fees
$
Post employment
benefi ts
Superannuation
Contributions
$
Non-Executive Directors’ remuneration
Dr M Blake
Mr S Panton
55,046
21,407
Total
76,453
Executive Directors’ remuneration
215,385
Ms L Dunne
Dr T St Pierre 1
118,844
Total
334,229
Other Executives’ remuneration
Mrs N Haydari 2
Mr C McDonald 3
20,962
61,455
Total
82,417
4,954
1,927
6,881
19,385
-
19,385
1,887
5,507
7,394
Equity
Total
Shares
$
-
-
-
-
-
-
-
-
-
$
60,000
23,334
83,334
234,770
118,844
353,614
22,849
66,962
89,811
Performance
Related
%
-
-
-
-
-
-
-
-
1 Dr St Pierre’s remuneration represents directors’ fees earned during the fi nancial year and consulting fees for duties as Chief Scientifi c Offi cer paid to
The University of Western Australia in full.
2 Mrs Naomi Haydari was appointed Company Secretary on 19 March 2012.
3 Mr Colin McDonald resigned as Company Secretary on 19 March 2012.
Details of Remuneration for Year Ended 30 June 2011
The remuneration for each key management personnel of the consolidated entity during the year was as follows:
Remuneration of directors and executives
Short-term employee
benefi ts
Salary & Fees
$
Post employment
benefi ts
Superannuation
Contributions
$
Non-Executive Directors’ remuneration
Dr S Washer 1
Dr M Blake
Mr S Panton
28,361
46,636
36,697
Total
111,694
Executive Directors’ remuneration
Ms L Dunne 2
217,396
Dr T St Pierre 3
167,407
Total
384,803
Other Executives’ remuneration
Ms E O’Malley 4
Mr C McDonald 5
45,802
50,667
Total
96,469
2,552
4,197
3,303
10,052
19,566
-
19,566
3,187
4,560
7,747
Equity
Total
Shares
$
-
-
-
-
10,000
-
-
-
-
-
$
30,913
50,833
40,000
121,746
246,962
167,407
414,369
48,989
55,227
104,216
Performance
Related
%
-
-
-
-
4.0
-
-
-
-
1 Dr Washer resigned on 16 December 2010.
2 Ms Dunne was given fully vested shares to the value of $10,000 in recognition of her performance to the Company.
3 Dr St Pierre’s remuneration represents directors’ fees earned during the fi nancial year and consulting fees for duties as Chief Scientifi c Offi cer.
4 Ms O’Malley resigned as Company Secretary on 16 December 2010.
5 Mr McDonald was appointed Company Secretary on 16 December 2010.
12
Resonance Health Limited Annual Report 2012
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 2012,
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
7
7
7
7
Corporate Governance
7
7
7
6
2
-
2
-
2
2
2
1
-
-
-
-
-
-
-
-
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 19 and forms
part of this directors’ report for the year ended 30 June 2012.
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 fi nancial statements. The directors are satisfi ed 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 28 September 2012
13
Resonance Health Limited Annual Report 2012
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 fi nancial 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 aff airs of Resonance Health Limited.
The Board must ensure that Resonance Health Limited acts in accordance with prudent commercial principles, and satisfi es 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 fi nancial objectives of the Company and ensuring appropriate resources are available
• Monitoring the implementation of those policies and strategies and the achievement of those fi nancial objectives
• Monitoring compliance with control and accountability systems, regulatory requirements and ethical standards
• Ensuring the preparation of accurate fi nancial 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 eff ectiveness 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.
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 benefi t of a broad range of
technical, commercial and fi nancial 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 2012
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. The Board did not have a
majority of independent Directors at all times during the fi nancial year.
A Director is considered independent when the Director does not have any relationship with the Company that would be considered
to aff ect 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 fi nancial year were:
• Dr Martin Blake – Independent – Chairman
• Ms Liza Dunne – Executive – Not independent – Managing Director
• Mr Simon Panton – Not independent – substantial shareholder
• Dr Tim St Pierre – Executive – Not independent – Chief Scientifi c Offi cer
A description of the skills and experience of each director and their period of offi ce 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 fi nancial year. The ASX Corporate Governance
Council Principle 2 Recommendation 2.3 recommends that the roles of Chairman and Managing Director be exercised by diff erent
individuals. The Company complied with this recommendation at all times during the fi nancial year.
The roles of Chairman and Managing Director are exercised by diff erent 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 fi rst 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 fi nancial year were:
• Dr Martin Blake – (Chairman) – Independent
• Mr Simon Panton – Not Independent
Due to having only two Non-executive Directors, the two are members of the Nomination and Remuneration Committee.
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.
The Company has a procedure in place for Directors to take independent professional advice at the expense of the Company.
15
Resonance Health Limited Annual Report 2012
CORPORATE GOVERNANCE STATEMENT (CONT)
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 identifi ed 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 are encouraged to engage in 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 eff ectively.
The Company’s Constitution requires a director of the Company to not hold offi ce 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 confi dence 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 refl ected in the securities’ prices. Statutory provisions of the Corporations Act dealing
with insider trading have been strictly complied with.
The Company’s Share Trading Policy is disclosed on the Company’s website.
Diversity Policy
The Board currently does not have a Diversity Policy. Gender Diversity is demonstrated within the Company as follows:
Resonance Health currently has one female member of a four member board. The Managing Director, CFO/Company Secretary and
three Managers of the Company are women.
Currently, Resonance Health has women hold 25% of total Board membership. Additionally 38.5% of the all current employees are
women and 38.5% of all Management/Executive roles are fi lled by women.
The Board currently has no measurable objectives on achieving greater gender diversity within the Company.
The Board complied with the ASX Corporate Governance Council Principle 3 Recommendations at all times during the year.
16
Resonance Health Limited Annual Report 2012
Principle 4
Safeguard integrity in fi nancial 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 eff ective internal control framework exists within the entity. This includes internal controls to
deal with both the eff ectiveness and effi ciency of signifi cant business processes, including the safeguarding of assets, the maintenance
of proper accounting records, and the reliability of fi nancial 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 fi nancial information for inclusion in the
fi nancial reports. All members of the Audit Committee are non-executive Directors.
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 fi nancial year were:
• Dr Martin Blake (Chairman) - Independent
• Mr Simon Panton – Not independent
The qualifi cations 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 eff ect for the 2009 fi nancial 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 two 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 committee which is not in accordance with Principle
4.2, and this is also a result of having only two 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 eff ectively and in accordance with the requirements as set out by regulatory bodies. 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 signifi cant briefi ngs 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.
17
Resonance Health Limited Annual Report 2012
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
Management System (QMS) to international standards ISO13485:2003 for the whole fi nancial year 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 effi ciencies 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 its size
and operations. Management has reported the eff ectiveness 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 Offi cer provide written statements at each
reporting period regarding the integrity of the fi nancial 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 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 has not complied with
this recommendation due to the small size of the Board.
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. During
Financial year ended 30 June 2012 the Nomination and Remuneration Committee did not meet.
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.
All executive employees receive a base salary and superannuation. The Company does not have a share or option incentive plan.
Accordingly, executive employees do not receive any equity based remuneration unless specifi cally 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 fi nancial 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 2012
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the fi nancial report of Resonance Health Limited for the year ended 30 June 2012, 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.
This declaration is in respect of Resonance Health Limited.
Perth, Western Australia
28 September 2012
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 fi rms and business advisers.
19
Resonance Health Limited Annual Report 2012
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2012
Sales revenue
Other income
Revenue
Employee benefi ts expense
Consulting and professional services
Research and development
Depreciation
Marketing and travel
Statutory and compliance
Foreign exchange gain/(loss)
Other expenses
(Loss) before income tax benefi t
Income tax benefi t
Notes
2(a)
2(b)
Consolidated
2012
$
1,562,242
226,377
2011
$
1,745,864
187,447
1,788,619
1,933,311
(1,444,930)
(1,329,333)
(54,098)
(80,408)
(20,298)
(198,952)
(136,659)
57,042
(344,011)
(33,022)
(140,632)
(21,169)
(349,380)
(133,900)
(146,160)
(283,144)
(433,695)
(503,429)
3
165,094
186,600
Net (loss) for the year attributable to owners of the parent
(268,601)
(316,829)
Other comprehensive income
Exchange diff erences arising on translation of foreign operations
Exchange diff erences arising on translation of foreign loan
Other comprehensive (loss) for the year, net of tax
Total comprehensive (loss) for the year attributable to owners of the
parent
(91,544)
30,599
(60,945)
146,934
(153,048)
(6,114)
(329,546)
(322,943)
Basic (loss) per share (cents per share)
5
(0.1)
(0.1)
The accompanying notes form part of these fi nancial statements.
20
Resonance Health Limited Annual Report 2012
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2012
Note
Consolidated
2012
$
2011
$
7
8
9
10
11
12
9
13
14
15
1,180,174
1,503,479
756,834
26,970
877,619
29,498
1,963,978
2,410,596
37,152
1,291,544
3,004
58,391
46,023
957,400
3,004
58,120
1,390,091
1,064,547
3,354,069
3,475,143
390,051
329,514
719,565
68,488
68,488
427,695
151,886
579,581
-
-
788,053
579,581
2,566,016
2,895,562
16(a)
67,534,039
67,534,039
14,930
75,875
(64,982,953)
(64,714,352)
2,566,016
2,895,562
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Plant and equipment
Intangible assets
Other fi nancial assets
Other assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Other liabilities
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
The accompanying notes form part of these fi nancial statements.
21
Resonance Health Limited Annual Report 2012
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2012
Consolidated
Foreign
Currency
Issued
Capital
$
Translation
Option
Accumulated
Reserve
Reserve
Losses
Total Equity
$
$
$
$
Balance at 1 July 2010
67,524,039
15,705
66,284
(64,397,523)
3,208,505
Total comprehensive (loss) for the year
-
(6,114)
Shares issued during the year
10,000
-
-
-
(316,829)
(322,943)
-
10,000
Balance at 30 June 2011
67,534,039
9,591
66,284
(64,714,352)
2,895,562
Total comprehensive (loss) for the year
Shares issued during the year
-
-
(60,945)
-
-
-
(268,601)
(329,546)
-
-
Balance at 30 June 2012
67,534,039
(51,354)
66,284
(64,982,953)
2,566,016
The accompanying notes form part of these fi nancial statements.
22
Resonance Health Limited Annual Report 2012
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2012
Cash fl ows from operating activities
Receipts from customers
Payments to suppliers and employees
Grants received
Interest received
Income tax received
Note
Consolidated
2012
$
2011
$
Infl ows/(Outfl ows)
1,393,151
1,795,564
(1,727,373)
(2,101,537)
128,106
124,233
165,094
109,305
80,120
-
Net cash provided by / (used in) operating activities
7(i)
83,211
(116,548)
Cash fl ows from investing activities
Payments for plant and equipment
Payments for intangible assets
(11,427)
(414,073)
(4,805)
(472,880)
Net cash (used in) investing activities
(425,500)
(477,685)
Net (decrease) in cash and cash equivalents
Foreign exchange diff erences on cash balances
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of the period
7
(342,289)
18,984
1,503,479
1,180,174
(594,233)
(36,172)
2,133,884
1,503,479
The accompanying notes form part of these fi nancial statements.
23
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
NOTE 1: Statement of signifi cant accounting policies
(a) Basis of preparation
The fi nancial report is a general purpose fi nancial 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 fi nancial 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 fi nancial 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, specifi cally the provision of image analysis services for use by health care professions.
(b) Adoption of new and revised standards
In the year ended 30 June 2012, the Group has reviewed all of the new and revised Standards and Interpretations issued by the
AASB that are relevant to its operations and eff ective for the current annual reporting period.
It has been determined by the Directors 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 eff ective for the year
ended 30 June 2012. 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 fi nancial report was authorised for issue on 28 September 2012.
The fi nancial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial
Reporting Standards (AIFRS). Compliance with AIFRS ensures that the fi nancial report, comprising the fi nancial statements and
notes thereto, complies with International Financial Reporting Standards (IFRS).
(d) Basis of consolidation
The consolidated fi nancial statements comprise the separate fi nancial 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 fi nancial and operating policies of an entity so as to obtain benefi ts from its activities.
The fi nancial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using consistent
accounting policies.
In preparing the consolidated fi nancial statements, all interCompany balances and transactions, income and expenses and profi t
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 fi nancial and operating policies of an entity so as to obtain
benefi ts 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 profi t 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 fi nancial
position. Losses are attributed to the non-controlling interest even if that results in a defi cit 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 diff er from these estimates.
24
Resonance Health Limited Annual Report 2012
NOTE 1: Statement of signifi cant accounting policies (cont.)
(e) Critical accounting judgements and key sources of estimation uncertainty (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 aff ects only that period, or in the period of the revision and future periods if the revision aff ects both
current and future periods.
Impairment of intangibles with indefi nite useful lives
The Group determines whether intangibles with indefi nite 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 indefi nite useful lives
are allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of intangibles with
indefi nite 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 identifi ed 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 fi nancial 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 fi nancial position date.
All exchange diff erences in the consolidated fi nancial report are taken to profi t 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.
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 fi nancial position date and the statement of comprehensive income is translated
at the average exchange rate for the year. The exchange diff erences 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 profi t or loss.
(h) Revenue recognition
Revenue is recognised to the extent that it is probable that economic benefi ts will fl ow to the Group and the revenue can be
reliably measured. The following specifi c recognition criteria must also be met before revenue is recognised:
(i) Sale of Goods
Revenue is recognised when the signifi cant risks and rewards of ownership of the goods have passed to the buyer and the costs
25
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
NOTE 1: Statement of signifi cant accounting policies (cont.)
(h) Revenue recognition (cont.)
incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered
passed to the buyer at the time of delivery of the goods to the customer.
(ii) Rendering of services
Revenue from 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 eff ective yield on the fi nancial asset.
(i) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
(j) Lease
Leases are classifi ed as fi nance leases whenever the terms of the lease transfer substantially all the risks and rewards if ownership
to the lessee. All other leases are classifi ed as operating leases.
Assets held under fi nance 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
fi nancial position as a fi nance lease obligation.
Lease payments are apportioned between fi nance 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 eff ectively retains substantially all of the risks and benefi ts 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 benefi ts from the lease asset are consumed.
(k) Income tax
The income tax expense or benefi t 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 diff erence
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 diff erences at the balance date between the tax bases of assets and liabilities and
their carrying amounts for fi nancial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary diff erences 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, aff ects neither the accounting profi t nor taxable profi t or loss; or
• when the taxable temporary diff erence is associated with investments in subsidiaries, associates or interests in joint ventures,
and the timing of the reversal of the temporary diff erence can be controlled and it is probable that the temporary diff erence will
not reverse in the foreseeable future.
26
Resonance Health Limited Annual Report 2012
NOTE 1: Statement of signifi cant accounting policies (cont.)
(k) Income Tax (cont.)
Deferred income tax assets are recognised for all deductible temporary diff erences, carry-forward of unused tax assets and unused
tax losses, to the extent that it is probable that taxable profi t will be available against which the deductible temporary diff erences
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 diff erence 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, aff ects neither the accounting
profi t, nor taxable profi t or loss; or
• when the deductible temporary diff erence 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 diff erence will reverse in
the foreseeable future and taxable profi t will be available against with the temporary diff erence 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 suffi cient taxable profi t 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 profi t 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 profi t or loss.
Deferred tax assets and deferred tax liabilities are off set 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 fi nancial position.
Cash fl ows are included in the Statement of Cash Flows on a gross basis and the GST component of cash fl ows arising from investing
and fi nancing activities, which is recoverable from, or payable to, the taxation authority are classifi ed as operating cash fl ows.
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 infl ows 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 fl ows are discounted to their present value using a pre-tax discount rate that
refl ects current market assessments of the time value of money and the risks specifi c 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
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
NOTE 1: Statement of signifi cant accounting policies (cont.)
(m) 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 profi t 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 insignifi cant risk of changes in value. Bank overdrafts are shown within
borrowings in current liabilities in the statement of fi nancial position.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defi ned 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
eff ective 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 signifi cant fi nancial diffi culties of the debtor, review of fi nancial information and signifi cant delinquency in making
contractual payments to the Group. The impairment allowance is set equal to the diff erence between the carrying amount of
the receivable and the present value of estimated future cash fl ows, discounted at the original eff ective 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 classifi ed as either fi nancial
assets at fair value through profi t or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments,
as appropriate. Where fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of investments not
at fair value through profi t or loss, directly attributable transaction costs. The Group determines the classifi cation of its fi nancial
assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each fi nancial year-end.
All regular way purchases and sales of fi nancial 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 fi nancial 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 profi t or loss
Financial assets classifi ed as held for trading are included in the category ‘fi nancial assets at fair value through profi t or loss’.
Financial assets are classifi ed 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 profi t or loss.
28
Resonance Health Limited Annual Report 2012
NOTE 1: Statement of signifi cant accounting policies (cont.)
(p) Financial assets (cont.)
(ii) Held-to-maturity investments
Non-derivative fi nancial assets with fi xed or determinable payments and fi xed maturity are classifi ed as held-to-maturity when the
Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefi ned period are not
included in this classifi cation.
(iii) Loans and receivables
Loans and receivables are non-derivative fi nancial assets that are not quoted in an active market. Gains and losses are recognised
in the profi t or loss when the loans and receivables are derecognised or impaired.
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative fi nancial assets that are designated as available-for-sale or are not classifi ed
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 profi t or loss.
The fair value of investments that are actively traded in organised fi nancial 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 fl ow analysis and option pricing models.
(q) Derecognition of fi nancial assets and liabilities
(i) Financial assets
A fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of similar fi nancial assets) is derecognised when:
• the rights to receive cash fl ows from the asset have expired;
• the Group retains the right to receive cash fl ows 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 fl ows 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 fl ows 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 fi nancial liability is recognised when the obligation under the liability is discharged or cancelled or expires.
When an existing fi nancial liability is replaced by another from the same lender on substantially diff erent terms, or the terms of an
existing liability are substantially modifi ed, such an exchange or modifi cation is treated as a derecognition of the original liability
and the recognition of a new liability, and the diff erence in the respective carrying amounts is recognised in profi t or loss.
(r) Impairment of fi nancial assets
The Group assess at each balance date whether a fi nancial asset or group of fi nancial 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 diff erence between the asset’s carrying amount and the present value of estimated future
29
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
NOTE 1: Statement of signifi cant accounting policies (cont.)
(r) Impairment of fi nancial assets (cont.)
cash fl ows (excluding future credit losses that have not been incurred) discounted at the fi nancial asset’s original eff ective interest
rate (i.e. the eff ective 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 profi t or loss.
The group fi rst assesses whether objective evidence of impairment exists individually for fi nancial assets that are individually
signifi cant, and individually or collectively for fi nancial assets that are not individually signifi cant. If it is determined that no
objective evidence of impairment exists for an individually assessed fi nancial asset, whether signifi cant or not, the asset is included
in a group of fi nancial assets with similar credit risk characteristics and that group of fi nancial 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 profi t 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 diff erence between the
asset’s carrying amount and the present value of estimated future cash fl ows, discounted at the current market rate of return for a
similar fi nancial asset.
(iii) Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the diff erence between its
cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in
profi t or loss, is transferred from equity to the income statement. Reversals of impairment losses for equity instruments classifi ed
as available-for-sale are not recognised in profi t. Reversals of impairment losses for debt instruments are reversed through profi t
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 profi t or loss.
(s) 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 fi nancial 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 fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market
assessments of the time value of money and the risks specifi c to the asset.
For an asset that does not generate largely independent cash infl ows, 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.
30
Resonance Health Limited Annual Report 2012
NOTE 1: Statement of signifi cant accounting policies (cont.)
(s) Plant and equipment (cont.)
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.
(ii) Derecognition and disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic benefi ts are expected from
its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the diff erence between the net disposal proceeds and the
carrying amount of the asset) is included in profi t 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 benefi ts;
• The availability of adequate technical, fi nancial 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 fi rst 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 benefi ts from the related project. There is no
amortisation if the useful life is indefi nite.
(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 fi nancial 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 diff erence between the proceeds (net of transaction costs) and the redemption amount is recognised in profi t
or loss over the period of the borrowings using the eff ective interest method.
Borrowings are removed from the statement of fi nancial position when the obligation specifi ed in the contract is discharged,
cancelled or expired. The diff erence between the carrying amount of a fi nancial 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 profi t
or loss as other income or fi nance costs.
Borrowings are classifi ed 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.
31
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
NOTE 1: Statement of signifi cant accounting policies (cont.)
(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 outfl ow of resources embodying economic benefi ts 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.
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 benefi ts
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefi ts, 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
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 classifi ed 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 profi t/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 profi t/loss attributable to members of the parent, adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax eff ect 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. Identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination
32
Resonance Health Limited Annual Report 2012
NOTE 1: Statement of signifi cant accounting policies (cont.)
(ab) Business combinations (cont.)
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 identifi able assets.
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 identifi able assets acquired
is recorded as goodwill. If those amounts are less than the fair value of the net identifi able assets of the subsidiary acquired and
the measurement of all amounts has been reviewed, the diff erence is recognised directly in profi t 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 fi nancier under comparable terms and conditions.
Contingent consideration is classifi ed as either equity or a fi nancial liability. Amounts classifi ed as a fi nancial liability are
subsequently remeasured to fair value with changes in fair value recognised in profi t or loss.
(ac) Parent entity fi nancial information
The fi nancial information for the parent entity, Resonance Health Limited, disclosed in Note 20 has been prepared on the same
basis as the consolidated fi nancial statements, except as set out below.
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s fi nancial statements.
Note 2: Revenues and expenses
(a)
Sales revenue
Sales to external customers
(b)
Other income
Grants received
Interest received
(c)
Expenses
Consolidated
2012
$
2011
$
1,562,242
1,745,864
128,106
98,271
226,377
109,305
78,142
187,447
Rental expense on operating leases
94,571
60,494
33
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
Note 3: Income tax benefi t
Income tax recognised in profi t or loss
The major components of tax benefi t are:
Consolidated
2012
$
2011
$
Adjustments recognised in the current year in relation to the current tax of prior
years – R&D tax off set
165,094
186,600
The prima facie income tax benefi t on pre-tax accounting profi t/(loss) from
operations reconciles to the income tax benefi t in the fi nancial statements as
follows:
Accounting profi t/(loss) before income tax
Income tax calculated at 30%
Eff ect of income that is not deductible in determining taxable profi t
Eff ect of unused tax losses not recognised as deferred tax assets
Eff ect of prior year adjustments
Eff ect of temporary diff erences recognised as deferred tax assets and liabilities
Eff ect of concessions (research and development)
Over/(under) provision for income tax in prior year
Tax refund receivable (research and development tax off set)
Income tax benefi t reported in the income statement
(433,695)
(130,108)
164,386
271,112
(161,915)
(170,059)
26,584
-
165,094
165,094
(503,429)
(151,028)
83,647
(340,882)
511,703
(224,769)
121,329
-
186,600
186,600
Unrecognised deferred tax balances
The following deferred tax assets and liabilities have not been brought to account:
Deferred tax assets:
Losses available for off set against future taxable income - revenue
2,170,661
1,899,549
Temporary diff erences – impairment of investments in subsidiaries
Depreciation timing diff erences
Business related costs
Unrealised foreign exchange losses
Other temporary diff erences
Accrued expenses and liabilities
Deferred tax liabilities:
Capitalised research and development costs
Accrued income
Prepayments
Income tax expense not recognised directly in equity
Share issue costs
34
-
56,060
11,115
112,931
-
64,687
2,415,454
387,463
1,055
8,091
-
46,045
135,002
61,996
-
70,916
2,259,422
287,220
54,410
-
396,609
341,630
152,765
152,765
Resonance Health Limited Annual Report 2012
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 diff erences in the type of activities performed. The fi nancial 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 profi t/loss information and certain asset and liability information regarding business
segments for the year ended 30 June 2012.
Services
Research and
Development
Corporate
Total
$
$
$
$
Segment revenue
Sales to external customers
1,562,242
Grant revenue
Interest revenue
Total segment revenue
-
-
1,562,242
-
-
-
-
-
1,562,242
128,106
98,271
226,377
128,106
98,271
1,788,619
Segment profi t/(loss)
(226,517)
85,074
(127,158)
(268,601)
Other segment information included in profi t/(loss)
Income tax benefi t
-
165,094
-
165,094
Segment assets
Segment liabilities
756,834
616,759
1,291,544
1,305,691
3,354,069
-
171,294
788,053
The consolidated entity derived 51% of its external customer sales revenue from one major customer.
35
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
NOTE 4: Segment reporting (cont.)
The following table presents revenue and profi t/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
$
$
$
1,745,864
109,305
-
1,855,169
-
-
-
-
-
-
78,142
78,142
Total
$
1,745,864
109,305
78,142
1,933,311
Segment profi t/(loss)
43,866
45,968
(406,663)
(316,829)
Other segment information included in profi t/(loss)
Income tax benefi t
-
186,600
-
186,600
Segment assets
Segment liabilities
978,159
366,307
957,400
142,465
1,539,584
3,475,143
70,809
579,581
The consolidated entity derived 50% of its external customer sales revenue from one major customer.
Note 5: Earnings per share
Basic profi t / (loss) per share (cents)
Consolidated
2012
$
2011
$
(0.1)
(0.1)
(a) Earnings / (loss) used in the calculation of basic and dilutive earnings per share
(268,601)
(316,829)
2012
Number
2011
Number
(b) Weighted average number of ordinary shares for the purposes of basic loss per share
360,991,365
360,769,062
The calculation does not include shares under option that could potentially dilute basic earnings per share in the future as the
options on issue are out of the money and the Company has incurred a loss.
Note 6: Dividends
No dividend was paid or declared for the current or previous fi nancial year.
36
Resonance Health Limited Annual Report 2012
Note 7: Cash and cash equivalents
Consolidated
Deposits at call
Term deposits
2012
$
380,174
800,000
1,180,174
2011
$
503,479
1,000,000
1,503,479
Deposits at call earn interest at fl oating 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 profi t / (loss) for the year to net cash fl ows from operating
activities
Profi t/(loss) for the year
Non-cash fl ows in profi t / (loss):
Depreciation
Share issue
Accrued consulting fees
Reclassifi cation to investing activities:
Research and development
Changes in net assets and liabilities:
Decrease/(increase) in receivables
Decrease/(increase) in other assets (current)
(Increase)/decrease in assets (non-current)
Decrease/(increase) in trade creditors and other payables
Decrease/(increase) in other liabilities
Net cash provided by/(used in) operating activities
(ii) Financing facilities
Unsecured credit card:
Amount used
Amount unused
Secured credit card:
Amount used
Amount unused
(iii) Cash balances not available for use
Security deposits:
Credit card
Lease premises
37
(268,601)
(316,829)
20,298
-
-
-
120,785
2,528
(271)
30,844
177,628
83,211
4,362
15,638
20,000
290
19,710
20,000
20,000
38,391
58,391
21,169
10,000
47,672
140,632
(87,672)
9,393
-
(66,574)
125,661
(116,548)
(2,216)
-
(2,216)
4,582
15,418
20,000
20,000
38,120
58,120
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
NOTE 8: Trade and other receivables
Consolidated
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
2012
$
537,179
-
537,179
219,655
756,834
75,915
24,511
9,830
-
110,256
26,632
(26,632)
-
2011
$
346,232
(26,632)
319,600
558,019
877,619
94,548
30,027
39,709
-
164,284
33,556
(6,924)
26,632
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 specifi c debtor amount. The concentration of credit risk is signifi cant
with 51% (2011: 50%) 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 increase is required in excess of the allowance for impairment.
Note 9: Other assets
Consolidated
Current
Prepayments
Non-Current
Deposits
2012
$
26,970
26,970
58,391
58,391
2011
$
29,498
29,498
58,120
58,120
38
Resonance Health Limited Annual Report 2012
Note 10: Plant and equipment
Consolidated
Fixtures and equipment
At cost
Less: Accumulated depreciation
Total property, plant and equipment
Reconciliation
2012
$
243,807
(206,655)
37,152
Reconciliation of the carrying amount of each class of property, plant and equipment is set out below:
Fixtures and equipment
Carrying Amount at the beginning of the year
Additions
Depreciation expense
Carrying amount at the end of the year
46,023
11,427
(20,298)
37,152
2011
$
232,381
(186,358)
46,023
62,387
4,805
(21,169)
46,023
NOTE 11: Intangible assets
Development expenditure
1,291,544
957,400
Development expenditure relates to costs incurred in developing MRI image analysis tools for the diagnosis and clinical management
of human disease.
During the current fi nancial year this development has related to a new version of FerriScan®, a cardiac iron assessment MRI tool
and the next stage of development of a MRI based liver fi brosis tool and liver fat assessment 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 size of the liver fi brosis and liver fat markets, competing products,
experience gained with the FerriScan® technology, 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
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
Note 13: Trade and other payables
Consolidated
Current
Trade payables (i)
Sundry creditors and accruals
2012
$
102,040
288,011
390,051
2011
$
140,680
287,105
427,695
(i) Trade payables are non-interest bearing and are normally settled on 30 day terms.
Information regarding the eff ective interest rate and credit risk of current payables is set out in Note 17.
Note 14: Other liabilities
Current
Unearned income
Note 15: Provisions
Non-current
Long service leave provision
Reconciliation
Balance at the beginning of the year
Arising during the year
Carrying amount at the end of the year
329,514
151,886
68,488
-
68,488
68,488
-
-
-
-
Note 16: Issued Capital
2012
2011
Number
$
Number
$
(a) Issued and paid up capital
360,991,365
67,534,039
360,991,365
67,534,039
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the
number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a
poll each share is entitled to one vote.
Ordinary shares have no par value and the company does not have a limited amount of authorised capital.
Movements during the period
Ordinary shares
Number of shares
Issue Price $
Balance at the beginning of the fi nancial year
Balance at the end of the fi nancial year
360,991,365
360,991,365
67,534,039
67,534,039
40
Resonance Health Limited Annual Report 2012
NOTE 17: 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 fi nancial 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 fl ows are used to maintain and expand operations, as well as to make
routine expenditures.
(b) Categories of fi nancial instruments
Financial assets
Consolidated
Cash and cash equivalents
Loans and receivables
Available for sale fi nancial assets
Other fi nancial assets
Payables
2012
$
1,180,174
756,834
3,004
58,391
390,051
2011
$
1,503,479
877,619
3,004
58,120
346,725
The net fair values of all fi nancial 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 fl ow interest rate risk. The Group seeks to minimise the eff ects of these risks. The Group does not enter into or trade fi nancial
instruments, including derivative fi nancial instruments, for speculative purposes.
(d) Market risk
The Group’s activities expose it primarily to the fi nancial 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 fl uctuations 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
2012
$
18,777
-
-
Liabilities
Assets
2012
$
495,005
52,641
8,186
2011
$
690,372
46,734
20,662
2011
$
6,431
-
7,022
41
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
Note 17: 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 fl uctuations.
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 profi t
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 profi t and other equity and the
balances below would be positive.
Profi t or loss impact:
- USD
- GBP
- EUR
(f) Interest rate risk management
2012
$
(43,293)
(4,786)
(744)
2011
$
(62,176)
(4,249)
(1,240)
All fi nancial assets and fi nancial 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 fi nancial assets.
Cash and cash equivalent fi nancial assets
Less than one month
One to three months
Total
2012
Weighted average eff ective interest rate
2011
Weighted average eff ective interest rate
$1,180,174
3.81%
$1,503,479
4.18%
$58,391
5.76%
$58,120
6.14%
$1,238,565
$1,561,599
The Group is exposed to fl uctuations in interest rates as it has deposited monies at fl oating and fi xed 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 counter party will not meet its obligations under a fi nancial instrument or customer contract, leading
to a fi nancial loss. The Group is exposed to credit risk from its operating activities (primarily from customer receivables) and
from its fi nancing activities, including deposits with banks, foreign exchange transactions and other fi nancial instruments.
Outstanding customer receivables are regularly monitored and any credit concerns highlighted to senior management. At 30
June 2012, the Group had one customer that accounted for 68% of all trade receivables (2011: 50%).
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 fi nancial assets is the carrying amount, net of any allowance for impairment recorded in the fi nancial
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 fi nancial 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 2012
Note 17: 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 fl ows and matching the maturity profi les of fi nancial 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 fi nancial liabilities.
Less than one month
$
One month to three
Three months to one
months
$
year
$
Total
$
2012
Non-interest bearing
222,645
48,246
119,160
390,051
2011
Non-interest bearing
258,162
73,697
14,866
346,725
(j) Fair value of fi nancial instruments
The net fair value of all fi nancial assets and liabilities approximate their carrying values. No fi nancial assets or fi nancial liabilities,
except for listed shares are readily traded on organized markets in standardized form.
The aggregate net fair values and carrying amounts of all fi nancial assets and liabilities are disclosed in the fi nancial statements.
Note 18: Commitments for expenditure
Consolidated
Operating lease commitments
Commitments for minimum lease payments in relation to non-cancellable
operating leases for offi ce premises are payable as follows:
Within one year
Later than 1 year but no later than 5 years
Total commitments not recognised in the fi nancial statements
A lease over new premises was entered into eff ective 1 August 2011.
Note 19: Related party disclosure
2012
$
113,152
127,511
240,663
2011
$
5,527
-
5,527
The consolidated fi nancial statements include the fi nancial statements of Resonance Health Limited and the subsidiaries listed in
the following table.
Name of entity
Resonance Health Analysis Services Pty Ltd (formerly Inner Vision
Biometrics Pty Ltd)
Country of
incorporation
Class of
shares
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.
Equity
holding
100%
100%
100%
100%
43
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
Note 19: 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 key management personnel
Refer to Note 23 for details of transactions with key management personnel.
During the year Resonance Health Analysis Services Pty Ltd repaid interest free loans to the Company totalling $229,942. During the
previous year the Company provided interest free loans to Resonance Health Analysis Services Pty Ltd totalling $388,163.
During the year ResonanceUSA Inc repaid interest free loans to the Company totalling $205,005 (2011: $223,285).
A cumulative impairment of these loans of $4,545,135 was recorded up to balance date (2011: $4,545,135).
During the year expenses were paid by Resonance Health Analysis Services Pty Ltd totalling $118,318 (2011: $112,725) on behalf of the
Company. During the year expenses were paid by the Company on behalf of ResonanceUSA Inc totalling $197,252 (2011: $214,762).
Note 20: 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
Profi t / (loss) for the year
Other comprehensive income / (loss)
Total comprehensive income / (loss)
2012
$
1,034,009
856,682
1,890,691
49,768
49,768
2011
$
1,051,277
856,682
1,907,959
67,021
67,021
67,534,039
66,284
(65,449,616)
2,150,707
67,534,039
66,284
(65,296,505)
2,303,819
Year ended
30 June 2012
Year ended
30 June 2011
$
(153,111)
-
(153,111)
$
(234,138)
-
(234,138)
44
Resonance Health Limited Annual Report 2012
Note 21: Events subsequent to reporting date
No other matters or circumstances have arisen since the end of the fi nancial year which signifi cantly aff ected or may signifi cantly aff ect
the operations of the Company and the consolidated entity, the results of those operations, or the state of aff airs in future fi nancial years.
Note 22: Auditors’ remuneration
Consolidated
2012
$
45,500
45,250
90,750
2011
$
38,450
47,113
85,563
During the year the following fees were paid or payable to the auditor:
Remuneration of the auditor of the company for:
Auditing/reviewing fi nancial report
Taxation compliance services
Note 23: Directors and executive disclosures
Details of key management personnel
(a)
(i) Directors
Dr Martin Blake
Chairman (non-executive)
Ms Liza Dunne
Managing Director (executive)
Mr Simon Panton
Director (non-executive)
Dr Tim St Pierre
Director (executive)
ii) Executives
Mrs Naomi Haydari
Chief Financial Offi cer and Company Secretary
Appointed 19 March 2012
Mr Colin McDonald
Chief Financial Offi cer and Company Secretary
Resigned 19 March 2012
Key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report.
(b)
Shareholdings of key management personnel
The numbers of ordinary shares in the Company held during the fi nancial year by key management personnel of the consolidated
Group including their personally related entities are set out below.
Directors
Dr M Blake
Ms L Dunne
Dr T St Pierre
Mr S Panton
Total
Executives
Mrs N Haydari
Mr C McDonald
Total
Balance 1.7.11
Received as
Remuneration
Net Change Other*
Received during
the year on
exercise of options
Balance 30.6.12
6,224,677
3,153,385
9,078,750
65,960,972
84,417,784
-
-
-
-
-
-
-
-
-
45
-
-
-
-
-
-
-
-
-
-
-
-
-
6,224,677
3,153,385
9,078,750
65,960,972
84,417,784
-
-
Resonance Health Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
Note 23: Directors and executive disclosures (cont.)
(c)
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
fi nancial year totalled $11,583 (2011: $14,945). The amount payable at 30 June 2012 totalled $13,226 (2011: $86,293).
During the year the Group provided FerriScan® services totalling $2,630 (2011: $3,575) to the University of Western Australia.
Amounts receivable at 30 June 2012 totalled $2,630 (2011: $Nil).
46
DIRECTORS’ DECLARATION
Resonance Health Limited Annual Report 2012
1.
In the opinion of the directors:
a.
the accompanying fi nancial 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 fi nancial position as at 30 June 2012 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 fi nancial 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 fi nancial year ended 30 June 2012.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dr Martin Blake
Chairman
Place: Perth, Western Australia
Dated: 28 September 2012
47
Resonance Health Limited Annual Report 2012
INDEPENDENT AUDITOR’S REPORT
To the members of
RESONANCE HEALTH LIMITED
Report on the Financial Report
We have audited the accompanying fi nancial report of Resonance Health Limited (“the company”), which comprises the
consolidated statement of fi nancial position as at 30 June 2012, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash fl ows for the year then ended, notes comprising
a summary of signifi cant 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
fi nancial year.
Directors’ responsibility for the fi nancial report
The directors of the company are responsible for the preparation of the fi nancial 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 fi nancial report that is free from material misstatement, whether due to fraud or error.
In Note 1(c), the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that
the consolidated fi nancial report complies with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the fi nancial 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 fi nancial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
fi nancial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation and fair presentation of the fi nancial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the entity’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 fi nancial 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 suffi cient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
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 fi rms and business advisers.
48
Resonance Health Limited Annual Report 2012
Matters relating to the electronic presentation of the audited fi nancial report
This auditor’s report relates to the fi nancial report and remuneration report of Resonance Health Limited for the fi nancial year ended
30 June 2012 published in the annual report and included on the company’s website. The company’s directors are responsible for
the integrity of the company’s website. We have not been engaged to report on the integrity of this website. The auditor’s report
refers only to the fi nancial report and remuneration report. It does not provide an opinion on any other information which may have
been hyperlinked to/from the fi nancial report and remuneration report. If users of the fi nancial report and remuneration 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
fi nancial report and remuneration report to confi rm the information contained in this website version of the fi nancial report and
remuneration report.
Auditor’s Opinion
In our opinion:
(a)
the fi nancial 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 fi nancial position as at 30 June 2012 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 fi nancial report also complies with International Financial Reporting Standards as disclosed in Note 1(c).
Report on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June 2012. 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 2012 complies with section 300A
of the Corporations Act 2001.
Perth, Western Australia
28 September 2012
HLB MANN JUDD
Chartered Accountants
N G NEILL
Partner
49
Resonance Health Limited Annual Report 2012
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 28 September 2012.
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
532
182
228
725
334
2,001
121,017
576,122
1,687,083
28,813,332
329,793,811
360,991,365
The number of shareholdings holding less than a marketable parcel of shares are 1,498.
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
1. Southam Investments 2003 Pty Ltd
65,414,622
18.12
2. The University Of Western Australia
3. Timothy Guy St Pierre
4. Wanida Chau-Anusorn
5. Mr Robert Panton
6. Dr Simon Bell
7. Dr Franklyn Ives
8. Mr Sean Watkins-Saxon
9. Mr Helmut Rocker
10. Mr William Grove
11. Mr Kevin Deeves and Mrs Pauline Deeves
12. Walker Trusco Pty Ltd
13. Dr Martin Peter Blake
14. Mr Harry Basle
15. Dr Paul Clark
16. Mr Kevin Deeves
17. Mr Bruce Stevenson
18. Mr Jeremy Hussein Rishani
19. Blake Nominees Pty Ltd
20. Anahein Pty Ltd
9,078,750
9,078,750
8,070,000
7,840,824
6,307,252
6,272,934
6,250,000
6,000,000
4,838,401
4,500,000
4,494,844
3,798,590
3,671,359
3,075,388
3,000,000
2,932,755
2,638,699
2,426,087
2,408,478
162,097,733
2.52
2.52
2.24
2.17
1.75
1.74
1.73
1.66
1.34
1.25
1.24
1.05
1.02
0.85
0.83
0.81
0.73
0.67
0.67
44.91
50
Resonance Health Limited Annual Report 2012
4. Substantial shareholders
The names of substantial shareholders who have notifi ed 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
51
Resonance Health Limited Annual Report 2012
This page has been left bank intentionally
52
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