A n n u a l R e p o r t 2 0 1 3
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
Dr Jason Loveridge
Non-executive Director
Company Secretary
Mrs Naomi Haydari
Securities 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
Our Business
Resonance Health specialises in the development and
delivery of medical imaging diagnostic tools and services. The
Company’s MRI-based technologies are used by clinicians in
the diagnosis and management of human disease and by
pharmaceutical companies in their clinical trials. Resonance
Health has demonstrated its expertise in liver imaging
technologies with FerriScan®, now globally recognised as
the gold standard in the measurement of liver iron overload.
Further pipeline products for the measurement of fatty liver
disease and liver fibrosis are in development.
Table of Contents
Chairman and Managing Director’s Report
2012/2013 Snapshot
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 information for listed public companies
2
3
4
7
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23
24
48
49
51
1
Resonance Health Limited Annual Report 2013 Chairman and Managing Director’s Report
The financial year to 30 June 2013 has seen
FerriScan® gained a second clearance
provide an important tool to assist medical
a considerable expansion in the global
from the US FDA during the year as a
practitioners in the diagnosis of fatty liver
FerriScan® market and progress towards
‘companion diagnostic device’ for the safe
and offers a non-invasive alternative to a
bringing pipeline products to market. While
and effective use of iron chelation therapy
liver biopsy in clinical trials for therapies to
the company has not reported a profit there
in patients with non-transfusion-dependent
address fatty liver disease. The FDA review
have been significant achievements during
thalassemia.
FDA decisions are closely
of HepaFat-Scan® is currently on hold as we
the year which we believe will result in
monitored by regulators and clinicians in
compile some additional information they
further growth in the use of our technology
many countries and this approval provides
have requested.
and a profitable return to shareholders.
further endorsement of the important role
We have been pleased to see FerriScan®
volumes
increase consistently
in our
primary markets. The US and the UK markets
FerriScan® plays in providing an accurate
diagnostic
for patients who have
iron
overload and require iron chelation therapy.
An MRI test to assess liver fibrosis presents a
large commercial opportunity for Resonance
Health and its development continues to
be a priority. During the year the Company
have benefitted from our investment in
We were pleased to sign several new multi-
concluded a study in collaboration with
local representation, returning growth rates
year contracts for FerriScan® to be used in
Pfizer and the Austin Hospital to further
of over 30%. We believe there are still strong
clinical trials. This included contracts with a
develop its liver fibrosis test. While the
opportunities yet to be exploited in these
major European pharmaceutical company
results were promising, the Company is now
markets for FerriScan®.
who has now entered the iron chelation
conducting further analysis of the image
In the US, patients with sickle cell disease
represent the
largest transfusional
iron
overload market with approximately 15,000
market and commenced clinical studies
data collected with the aim of achieving a
using FerriScan® as the primary measure of
better degree of accuracy and sensitivity to
their drug’s effectiveness.
enable it to take the test to market.
patients on chronic transfusion therapy.
During the year we continued to invest
Significantly, our
loss and cash burn
Currently, 3 out of the 10 National Institutes
in projects
focused on new product
were less than the prior year as a result
of Health (NIH) funded “Sickle Cell Centers of
innovations and improvements to existing
of sales growth, control of expenses and
Excellence” offer FerriScan® to their patients
products. A new version of the FerriScan®
the prepayment of some contracts. The
and only 5% of patients with Sickle Cell
software was rolled out in January and has
Board and Management remain strongly
Disease are being evaluated annually with
enabled the company to deliver substantially
committed to the potential of the Company
FerriScan®. In the UK, approximately 15% of
more FerriScan® analyses at our central
and its diagnostic tools to benefit patients
the target population is currently having an
facility without increasing staff numbers.
and provide a strong financial return.
annual FerriScan®.
During the year we announced the peer
reviewed publication of a large validation
study of FerriScan involving 233 patients,
providing strong differentiation to other
products for assessing iron overload.
It was also announced that three national US
insurers have agreed to provide coverage for
FerriScan® and several additional reviews are
in progress with private insurers and state
Medicaid offices. Reimbursement remains
the main obstacle to growth for FerriScan®
and these positive reimbursement decisions
are a significant step
towards more
widespread insurance coverage.
New product development is focused on
MRI tests for accurately measuring liver fat
and liver fibrosis. The aim is to ensure long-
term growth primarily through projects
aligned with our current expertise and
addressing large target markets.
Development has been completed
for
the Company’s HepaFat-Scan® product
and a submission has been made to the
FDA for marketing clearance of the test.
HepaFat-Scan® is a software technology
for the measurement of fat in the liver
utilising MRI medical images and it has
demonstrated excellent results compared
Liza Dunne
Managing Director
with other published data. As the rate of
Dr Martin Blake
obesity and the associated health care costs
Chairman
continue to increase, HepaFat-Scan® will
2
2012/2013 Snapshot
Annual Volume Growth
2012
14%
2011
14%
2010
29%
2009
2013
11%
FerriScan® is now
available at more than
160 centres in over 25
countries across six
continents
Total sales volumes increase of 11% compared to the prior year, with substantial
growth in the two major markets of USA and UK, which achieved growth of 33%
and 30% respectively.
• Expansion in FerriScan® availability
Over thirty new sites established in 2012/13
• New FDA marketing authorisation for
FerriScan®
FerriScan® now approved as an imaging
companion diagnostic device in non-
transfusion-dependent thalassaemia
• Publication of a significant new FerriScan®
paper
Newly published data confirms FerriScan’s
accuracy and reliability
• US Insurance reimbursement for FerriScan®
Insurance payers grant policy coverage for
FerriScan®
• Five new contracts for the use of FerriScan®
in clinical trials
The test-of-choice in clinical trials of drug
therapies for iron overload
• Increase in referrers
17% more doctors referred patients for a
FerriScan® than in the previous year
3
Resonance Health Limited Annual Report 2013
Year in Review
Canada 25%
UK 30%
USA 33%
Chart illustrates sales volume
increase in major markets in
2012/13 over previous year
An important new publication in 2013
confirmed the accuracy of FerriScan®
measurements across different MRI
centres and scanners, unaffected by the
age of the patient, the presence of liver
fibrosis or inflammation.
Multicenter Validation of Spin-Density
Projection-Assisted
R2-MRI
for
the
Noninvasive Measurement of Liver
Iron
Concentration. St Pierre et al, Magnetic
Resonance in Medicine, 2013.
In January 2013, the U.S. Food and Drug
Administration
(FDA) authorised
the
marketing of FerriScan® as an imaging
companion diagnostic in patients with
FerriScan® -
Forging ahead in iron
overload imaging
FerriScan® is the gold standard method-
of-choice for the measurement of liver
iron concentration in the management
of patients with iron overload conditions
and in clinical trials of pharmaceutical
therapies. FerriScan®
is provided as a
centralised image analysis service and is
Iron overload can arise from two main
non-transfusion-dependent thalassemia
causes. Primary iron overload occurs as a result
(NTDT). This new FDA authorisation is
of
inherited genetic traits that cause
in addition to the existing clearance of
more iron to be absorbed from the diet
FerriScan® for the measurement of liver
than is required by the body. Secondary
iron concentration across all clinical
iron overload results from the regular
conditions, gained in 2005.
transfusion of red blood cells to treat
diseases such as thalassaemia, sickle cell
disease and myelodysplastic syndrome.
The iron carried in the transfused red
blood cells accumulates, causing overload.
Non-transfusion-dependant thalassemia
is estimated to affect at least three-
quarters of a million people worldwide
but the actual number of patients is
likely to be much larger as the condition
highly respected by clinicians around the
Liver biopsy was previously the gold
is often undiagnosed until serious
world, providing accurate and reliable
standard method of measuring liver iron
symptoms develop. Blood tests such as
information on which to base their
concentration. However, it is an invasive,
serum ferritin are poor indicators of iron
treatment decisions.
painful procedure that carries some
loading in NTDT and FerriScan® can play a
Iron Overload
inherent risk and provides a result that
critical role in the early diagnosis of these
is not necessarily representative of iron
patients.
The accumulation of excess body iron is
loading across the entire organ. For these
a potentially life-threatening condition
reasons, MRI has proved to be the ideal
affecting a large number of people in
non-invasive solution.
different parts of the world. The liver is
the primary site of excess iron storage.
FerriScan®
An assessment of liver iron concentration
FerriScan® continues to be internationally
provides the best indication of body iron
recognised as
the method against
loading.
which other MRI methods of liver iron
therapy, and
“…its [FerriScan®] use in Exjade
clinical studies to select patients
to manage
for
therapy, defined its role as an
image
companion diagnostic
necessary for Exjade’s safe and
effective use.”
measurement are compared.
Excerpt from FDA News Release, 23 January
2013
4
Resonance Health also offers a cardiac T2*
During the year, five new multi-year
image analysis service to measure cardiac
contracts were signed. In addition to
• American Society for Pediatric
Hematology and Oncology (ASPHO)
iron loading, provided in conjunction
major pharmaceutical companies using
annual meeting
with a FerriScan® analysis.
FerriScan® in clinical trials, the European
Union has funded its use in a trial across a
number of EU and non-EU countries.
During
the
year,
the
company
implemented a new
image analysis
workstation
and
update
to
the
FerriScan® software which has delivered
considerable improvements in efficiency.
This has enabled the company to deliver
growth without any additional staff.
FerriScan® and cardiac T2*
sales growth in 2012/13
• FerriScan® is now available at over
160 centres in more than 25 countries
• Year on year total sales volume
increase of 11%
USA
• 17% increase in numbers of referring
clinicians over the previous year
• Sales volumes increased
33%
Over 30 new FerriScan® centres were
• Revenue increased 35%
established
in 2012/13
expanding
FerriScan® into new markets. For the
first time, FerriScan® is now available to
• 5 new US hospitals now
using FerriScan®
• American Gastroenterology Association
annual meeting
• American Society of Hematology
annual meeting
In addition, a number of prestigious
U.S.
institutions have
issued Clinical
Practice Guidelines
supporting
the
use of FerriScan®, contributing to its
growth in the market. While FerriScan’s
market penetration in the management
of thalassemia and sickle cell disease
continues
to
expand,
significant
untapped potential still remains. Further
opportunities also exist in other patient
populations, such as myelodysplastic
syndrome, bone marrow transplant and
hereditary hemochromatosis.
FerriScan® is currently used in 8
of the top 10 hospitals listed in
patients outside clinical trials in countries
Several U.S.
insurers have agreed to
the ‘Best Children’s Hospitals
such as Vietnam, United Arab Emirates,
Oman, Norway, Sweden and Cyprus.
provide health
insurance coverage
for FerriScan®. A FerriScan® Medical
Honor Roll’ in the U.S. This is a
In addition, a number of prestigious
U.S.
institutions have
issued Clinical
Practice Guidelines supporting the use
of FerriScan®, contributing to its growth
in the market. This includes patients
in developing countries who have not
previously had access to FerriScan®.
New contracts for the use of
FerriScan® in clinical trials
FerriScan® is the method-of-choice used
by pharmaceutical companies in their
clinical trials of iron chelation therapies.
Policy was published in October 2012
significant achievement and
by Medical Mutual of Ohio and several
additional reviews are in progress with
recognition of the important
private
insurers and State Medicaid
role of FerriScan®
in
the
offices. The company has also applied to
the American Medical Association for a
management of patients with
unique Common Procedural Terminology
iron overload.
(CPT) reimbursement code for FerriScan®,
an important step towards gaining more
widespread reimbursement in the United
States.
The benefits of FerriScan® were presented
at several meetings to further raise its
profile in the U.S. clinical community.
5
Resonance Health Limited Annual Report 2013
Year in Review (CONT)
UK and Ireland
• Sales volumes increased
30%
• Two new FerriScan®
customers established
during the year
FerriScan® is currently used at 17 hospitals
Pipeline
HepaFat-Scan®
HepaFat-Scan® is an MRI test developed
by Resonance Health to provide an
accurate assessment of a patient’s liver
fat. Results of clinical studies demonstrate
HepaFat-Scan’s superior sensitivity and
overload, affecting millions of people
throughout the world. Liver fibrosis can
lead to liver cancer if left untreated - one
of the top ten causes of death by disease
in America. The current gold standard
diagnostic for assessing liver fibrosis is a
liver biopsy.
in the UK and Ireland, representing about
specificity to other published methods.
50% of the specialist thalassaemia and
sickle cell disease hospitals. Only about
15% of the target patient population is
currently having an annual FerriScan®.
Considerable opportunity exists
to
grow this market and also expand
the use of FerriScan® to patients with
myelodysplastic syndromes and other
A submission has been made to the U.S.
Food and Drug Administration (FDA)
for approval to market HepaFat-Scan®.
The FDA has requested some additional
information which
is currently being
compiled and is due for submission by
the 3rd of November 2013.
iron loading conditions. The first FerriScan
Up to 30% of the U.S. population has fatty
centre has now been established
in
liver disease, yet it is often asymptomatic
In 2012 a study was completed to further
Ireland for the diagnosis and monitoring
and difficult to diagnose with current
progress the Company’s research into
of hereditary haemochromatosis.
diagnostic tools. The early diagnosis
the ability of MRI technology to detect
Resonance Health participated in a number
of conferences to present the benefits of
FerriScan® as an accurate and necessary
diagnostic tool for the management of
patients with iron overload.
• 6th Annual Sickle Cell and
Thalassaemia Advanced Conference
• European Haematology Association
Conference
• Global Iron Summit
• Thalassaemia International Federation
Conference
Data on the positive impact of FerriScan®
on patient outcomes was presented at
the European Haematology Association
Conference
in
June by a
leading
clinician in the field. The risk profile
of a group of patients monitored by
FerriScan® was shown to improve over
and treatment of fatty liver disease can
and measure liver fibrosis. This study
significantly improve the outcome for
was completed
in collaboration with
patients. Non-alcoholic fatty liver disease
Pfizer and the Victorian Liver Transplant
is considered the most common liver
Unit at the Austin Hospital. Each patient
disease in the western world and affects
underwent MRI examinations of their liver
approximately 50% of diabetic patients.
and these parameters were compared
A provisional patent application
for
HepaFat-Scan® has been
lodged
in
Australia.
HepaFat-Scan® represents an exciting
commercial opportunity for the Company
to deliver an accurate, non-invasive test for
use in clinical trials to assess the efficacy
of new therapies under development and
to assist clinicians in diagnosing patients
with fatty liver disease.
Liver Fibrosis Diagnostic
Resonance Health
is continuing
to
explore ways to measure liver fibrosis
with
independent measurements of
fibrosis from liver biopsy.
Some of the MRI measurements showed
good results in distinguishing between
low and high stage
liver fibrosis.
However, the results were equivocal
at distinguishing the other stages of
liver fibrosis. Further work is in progress
to utilise more advanced methods
of analysing the MRI data. The initial
results of this work have shown promise
representing a
further step towards
achieving our objective of bringing to
market an MRI test to accurately assess
liver fibrosis.
subsequent scans as a result of greater
compliance to therapy motivated by an
with MRI.
accurate knowledge of their liver iron
Liver fibrosis is primarily caused by fatty
concentration.
liver, viral hepatitis, excess alcohol or iron
6
Directors’ Report
The Directors present their report on the consolidated entity, consisting of Resonance Health Limited and the entities it
controlled, together with the annual financial report for the financial year ended 30 June 2013. In order to comply with the
provisions of the Corporations Act, the directors report as follows:
Directors
The names, qualifications and experience of directors in office during the financial year and until the date of this report are as follows.
Directors were in office for this entire period unless otherwise stated.
Dr Martin Blake
MBBS,FRANZCR, FAANMS, MBA, GAICD
Ms Liza Dunne
B.Bus, GDipAppFin, GAICD
Position:
Position:
Mr Simon Panton
Position:
Director – Non-Executive
Chairman – Independent and Non-Executive
Managing Director – Executive
(appointed 5 October 2009)
(appointed as Director 4 October 2007 and
(appointed 23 October 2008)
as Chairman 16 December 2010)
Experience:
Experience:
Mr Panton has been a strong supporter
Experience:
Ms Dunne joined Resonance Health in
of the Company and the FerriScan®
Dr Blake is a Radiologist and Nuclear
October 2003 and has been actively
technology over a number of years and is
Physician and brings significant technical
involved in all aspects of the business
a major shareholder of Resonance Health.
and industry experience to Resonance
including business development,
Mr Panton brings skills in business and
Health. Dr Blake received FAANMS as a
commercialisation of FerriScan®,
marketing having run his own successful
post nominal this year in recognition of
developing alliances with pharmaceutical
business.
his Nuclear Medicine Specialist training
industry partners and obtaining regulatory
undertaken in 1994 and 1995.
approval in various countries.
Other current directorships:
None
He has been a Partner of Perth Radiological
Ms Dunne has in depth experience in
Clinic since 1997 and is currently the
senior positions across industry. She
Chairman of that Company.
worked for IBM for eleven years in financial,
Former directorships in last 3 years:
None
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
Chairman of the Remuneration Committee
(from 16 December 2010)
marketing and management positions
and spent five years with KPMG Consulting
Special responsibilities:
Member of the Audit Committee
Member of the Remuneration Committee
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
Former directorships in last 3 years:
None
7
Resonance Health Limited Annual Report 2013
Directors’ Report (CONT)
Dr Timothy St Pierre
B.Sc(Hons), PhD
Position:
Director – Executive
(appointed 21 August 2006)
Dr Jason Loveridge
B.SC(Hons), PhD, FRSM
Position:
Director – Non-Executive
(appointed 7 February 2013)
Mrs Naomi Haydari
B.Bus, B SSc, CPA
Position:
Company Secretary
(appointed 19 March 2012)
Experience:
Experience:
Experience:
Dr St Pierre is widely published in the field
Dr Loveridge FRSM has a PhD in
Mrs Haydari has experience in managing
of iron in medicine and biology and has
Biochemistry, a B.Sc in Biochemistry and
the financial obligations of ASX listed
a reputation as a key opinion leader in
Microbiology (Class II/I Honours) and is a
corporations across a diverse range of
the understanding of the fundamental
Fellow of the Royal Society of Medicine.
industries.
Mrs Haydari holds a Business Degree
(Accounting), a Social Science Degree, is a
qualified CPA and is currently completing
her MBA at Deakin University.
properties of the iron deposits that occur
Dr Loveridge has been working with
in iron overload diseases. Dr St Pierre, a
young, growth orientated businesses in
Professor at The University of Western
the biotech and medtech industries for
Australia, led the team which developed
over 20 years. As an active venture investor
the FerriScan® technology. Dr St Pierre has
he established a lengthy track record of
strong links with international key opinion
successful participation in European, US
leaders in the field of iron overload diseases
and Israeli based healthcare companies.
and regularly participates in international
Based in Europe he also has considerable
research collaborations. Dr St Pierre won
international experience at board level
a Clunies Ross Award from the Australian
and a particular interest in business
Academy of Technological Sciences and
development, mergers and acquisitions.
Engineering for his work on non-invasive
measurement of tissue iron deposits.
Other current directorships:
CEO Parvulus Suisse SA
Other current directorships:
CEO Genable Technologies Ltd.
None
Former directorships in last 3 years:
None
Special responsibilities:
None
Gerant WARAMBI Sarl
JDS Biopharma Pty. Ltd
Anaconda Pharma SAS
Parvulus Medical SAS
Former directorships in last 3 years:
None
Special responsibilities:
Member of the Audit Committee
Member of the Remuneration Committee
88
Resonance Health Limited Annual Report 2013
Interests in the Shares of the Company
within two days. Resonance Health also provides a range of core lab
The following relevant interests in shares of the Company were held
by the directors during the period. There has been no change in
services to the pharmaceutical industry to support their use of the
Company’s technology in clinical trials.
directors’ and executives shareholdings to the date of this report.
Resonance Health
is also developing
imaging tools for the
Number of fully paid ordinary shares
Directors
Dr M Blake
Ms L Dunne
Mr S Panton
6,224,677
3,153,385
65,960,972
Dr J Loveridge -
Dr T St Pierre
Total
Executives
9,078,750
84,417,784
Mrs N Haydari -
quantification of liver fat and liver fibrosis using MRI technology.
These activities are focused on developing pipeline products
that address unmet needs in the significant markets of fatty liver
disease and viral hepatitis where an invasive liver biopsy is currently
considered the gold standard.
During the year the Board and management continued to evaluate
opportunities external to the operations of the Company to
enhance shareholder value.
Financial Summary:
Total -
During the year sales volumes increased 11% over the previous
Incentive Shares and Options
The Company does not have an option plan. Accordingly, no
options were issued as part of remuneration to directors or specified
executives during the current or previous financial year.
Dividends Paid or Recommended
No dividend was paid or declared for the financial year.
Principal Activities
financial year. Growth rates of over 30% were achieved in both
the UK and USA markets where the company achieved further
success in gaining reimbursement for FerriScan® and expanding
the customer base. Sales volumes increased by 45% in the Germany
market over the period, from a lower base. Collaborative programs
with pharmaceutical companies have also expanded availability of
the FerriScan® services to new regional markets.
Sales revenue for the year ended 30 June 2013 was $1,527,188
representing a decrease of 2% from the previous year’s result of
$1,562,242. Revenue continued to be negatively impacted by the
The Company’s business
involves
the development and
strong Australian dollar with approximately 80% of the Company’s
commercialisation of technologies and services for the quantitative
revenue received in US dollars. Revenue associated with the routine
analysis of radiological images in a regulated and quality controlled
clinical use of FerriScan® to manage patients with iron overload
environment.
The Company’s core product is FerriScan®, a non-invasive liver
continues to increase. Revenue associated with clinical trials reduced
year on year as some contracts for services came to a conclusion.
diagnostic technology used for the measurement of iron in the liver.
Receipts from customers were $1,860,846 up 34% from the previous
Review of Operations
year’s result.
The Company’s main product is FerriScan® which provides an
accurate measurement of
liver
iron concentration. FerriScan®
has gained regulatory clearance and approvals in key markets
A net loss was recorded for the year of $204,481 compared to a net
loss of $268,601 in the previous financial year. Overall expenditure
decreased 7% to $2,070,540 from $2,222,314 in the previous year.
including the USA, Europe, Canada and Australia. FerriScan®
Resonance Health has cash at bank of $1,092,943 at the end of the
gained an additional FDA clearance in January 2013 as a Liver
financial year, compared to $1,180,174 in the previous financial year
Iron Concentration imaging companion diagnostic for Deferasirox
and has no debt. Net cash provided by operating activities was
intended to aid in the identification and monitoring of non-
$137,028.
transfusion dependant thalassemia patients receiving therapy with
deferasirox.
Research and development expenditure during the year totalled
$343,047. This comprised capitalised development costs of $205,337
FerriScan® is provided to the medical community as an image
that are recognised as an intangible asset on the Statement of
analysis service through the Company’s central image analysis
Financial Position and expenditure of $34,677 amortisation expense,
facility in Perth. Patient image data is sent to Resonance Health via a
$56,212 recognised in Research and Development in the Statement
secure web portal from radiology facilities in more than 20 countries
of Comprehensive Income and $46,821 recognised in Employee
and a liver iron concentration report is returned to our customers
Benefits.
PB
9
Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
Directors’ Report (CONT)
Research and development expenditure was primarily associated
(other than the Company or related body corporate) that may arise
with the development of an MRI-based liver fibrosis test and an
from their position as directors of the Company and its controlled
MRI-based liver fat test (HepaFat-Scan®). The HepaFat-Scan® product
entities, except where the liability arises out of conduct involving a
was submitted to the FDA for marketing clearance in 2012 and the
lack of good faith.
Company is currently compiling its response to some additional
information requirements of the FDA due by November 2013.
During the financial year the Company paid a premium of $13,000
(2012: $13,000) to insure the directors and secretaries of the
The development of an MRI test to assess liver fibrosis continues
Company and its controlled entities against any liability incurred
to be a priority for the Company due to the significant commercial
in the course of their duties to the extent permitted by the
opportunity it presents. During the year the Company concluded
Corporations Act 2001. It is not possible to apportion the premium
a study in collaboration with Pfizer and the Austin Hospital to
between amounts relating to the insurance against legal costs and
further develop its liver fibrosis test in a cohort of 28 subjects with
those relating to other liabilities.
liver disease due to chronic hepatitis C infection. The results were
promising but require a better degree of accuracy and sensitivity to
REMUNERATION REPORT (AUDITED)
take to market. The Company is now conducting further analysis of
This report outlines the remuneration arrangements in place for the
the data collected in this study to improve the product’s ability to
key management personnel of Resonance Health Limited for the
detect liver fibrosis. This work is currently in progress.
financial year ended 30 June 2013. The information provided in this
Operating Results
The net loss of the consolidated entity for the financial year after tax
was $204,481 (2012: $268,601).
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the
Company during the financial year.
remuneration report has been audited as required by Section 308
(3C) of the Corporations Act 2001.
The remuneration report details the remuneration arrangements
for key management personnel who are defined as those persons
having authority and responsibility for planning, directing and
controlling the major activities of the Company and the Group,
directly or indirectly, including any director (whether executive or
otherwise) of the parent Company and the Company Secretary.
Significant Events After Balance Date
Key Management Personnel
No other matters or circumstances have arisen since the end of the
(i) Directors
financial year which significantly affected or may significantly affect
the operations of the Company and the consolidated entity, the
results of those operations, or the state of affairs in future financial
years.
Dr Martin Blake - Chairman
Ms Liza Dunne - Managing Director
Mr Simon Panton
Dr Timothy St Pierre
Likely Developments and Expected Results of Operations
Dr Jason Loveridge (appointed 7th February 2013)
Comments on expected results of the operations of the consolidated
entity are included in this report under the review of operations.
Disclosure of information regarding likely developments in the
operations of the consolidated entity in future financial years
and the expected results of those operations is likely to result
(ii) Executives
Mrs Naomi Haydari - Company Secretary
Remuneration Policy
The Board’s policy for determining the nature and amount of
remuneration for Board members and senior executives of the
in unreasonable prejudice to the Company. Accordingly, this
consolidated entity is as follows:
information has not been disclosed in this report.
Environmental Legislation
The consolidated entity’s operations are not subject to any
significant environmental legislation.
Indemnification and Insurance of Directors and Officers
• 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
The Company has agreed to indemnify all the directors and
maximum stakeholder benefit from the retention of a high quality
secretaries of the Company for any liabilities to another person
board and executive team.
10
11
Resonance Health Limited Annual Report 2013
The Board of Resonance Health Limited believes the remuneration
(i) Fixed Remuneration
policy to be appropriate and effective 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.
Fixed remuneration is reviewed annually. The process consists of
a review of relevant comparative remuneration in the market and
internally, and where appropriate, external advice on policies and
practices. The Committee has access to external, independent
Remuneration Committee
advice where necessary.
The Remuneration Committee of the Board of Directors of
All executives (except Dr St Pierre) receive a base salary (which
the Company
is responsible for determining and reviewing
is based on factors such as length of service and experience),
compensation arrangements for directors and the executive team.
superannuation and fringe benefits.
The remuneration policy, setting the terms and conditions for the
Executives receive a superannuation guarantee contribution
executive directors and other senior executives, was developed by
required by the government, which for the year was 9%, and do
the remuneration committee and approved by the Board.
not receive any other retirement benefits.
The remuneration committee reviews executive packages annually
(ii) Variable Remuneration
by reference to the consolidated entity’s performance, executive
performance and comparable information from industry sectors
and other listed companies in similar industries. The assistance of
an external consultant or remuneration surveys are used where
necessary.
Remuneration Structure
All bonuses and incentives are linked to predetermined performance
criteria. The Board may, however, exercise its discretion in relation to
approving incentives and bonuses, and can recommend changes to
the committee’s recommendations. Any changes must be justified
by reference to measurable performance criteria.
All remuneration paid to directors and executives is valued at the
In accordance with best practice corporate governance, the
cost to the Company and expensed or capitalised. Securities given
structure of non-executive director and executive remuneration is
to directors and executives are valued as the difference between the
separate and distinct.
market price of those shares and the amount paid by the director or
Non-executive Director Remuneration
The Board seeks to set aggregate remuneration at a level that
executive. There are currently no securities on issue.
Executive Officer’s Employment Agreements
provides the Company with the ability to attract and retain directors
Ms Dunne was appointed to the role of Managing Director of
of the highest calibre, whilst incurring a cost that is acceptable to
Resonance Health Ltd on 23 October 2008. Her employment
shareholders.
Non-executive directors’ fees not exceeding an aggregate of
$250,000 per annum have been approved by the Company in a
general meeting.
The amount of aggregate remuneration sought to be approved by
shareholders and the manner in which it is apportioned amongst
directors is reviewed annually. The Board considers fees paid to non-
executive directors of comparable companies when undertaking
the annual review process.
Each of the non-executive directors receives a fixed fee for their
services as directors. There is no direct link between remuneration
agreement provides for a salary of $272,500 pa inclusive of
superannuation and the provision of three months notice for
termination or resignation without cause.
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 three months notice for termination or resignation
without cause.
Consultancy Services Agreement for Executive Director Dr
Tim St Pierre
paid to any of the directors and corporate performance.
The Company has an agreement with The University of Western
Executive Remuneration
Remuneration consists of fixed
remuneration and variable
remuneration.
Australia (UWA) for consulting services provided by Dr St Pierre.
Under this agreement consulting services provided for duties of
Chief Scientific Officer totalling $94,544 (2012: $108,844) and no
fixed fee for his services as a non-executive director (2012: $10,000)
were incurred during the financial year. These amounts are included
in Dr Tim St Pierre’s remuneration disclosed in the following table.
10
11
Resonance Health Limited Annual Report 2013 Directors’ Report (CONT)
Details of Remuneration for Year Ended 30 June 2013
The remuneration for each key management personnel of the consolidated entity during the year was as follows:
Remuneration of directors and executives
Resonance Health Limited Annual Report 2013
Short-term employee
benefits
Salary & Fees
$
Post employment
benefits
Superannuation
Contributions
$
Non-Executive Directors’ remuneration
Dr M Blake
Mr S Panton
55,046
33,639
12,500
Dr J Loveridge
Total
101,185
Executive Directors’ remuneration
250,000
Ms L Dunne
Dr T St Pierre 1
94,544
Total
Other Executives’ remuneration
Mrs N Haydari 2
Total
75,000
75,000
344,544
4,954
3,028
-
7,982
22,500
-
22,500
6,750
6,750
Equity
Total
Shares
$
-
-
-
-
-
-
-
-
-
$
60,000
36,667
12,500
109,167
272,500
94,544
367,044
81,750
81,750
Performance
Related
%
-
-
-
-
-
-
-
-
-
1 Dr St Pierre’s remuneration represents directors’ fees earned during the financial year and consulting fees for duties as Chief Scientific Officer paid to The
University of Western Australia in full.
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
benefits
Salary & Fees
$
Post employment
benefits
Superannuation
Contributions
$
Non-Executive Directors’ remuneration
Dr M Blake
Dr S Panton
55,046
21,407
Total
76,453
Executive Directors’ remuneration
215,385
Ms L Dunne
Dr T St Pierre 1
Total
Other Executives’ remuneration
Mrs N Haydari 2
Mr C McDonald 3
Total
20,962
61,455
118,884
334,229
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
118,884
353,614
22,849
66,962
89,811
Performance
Related
%
-
-
-
-
-
-
-
-
1 Dr St Pierre’s remuneration represents directors’ fees earned during the financial year and consulting fees for duties as Chief Scientific Officer 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.
12
13
Resonance Health Limited Annual Report 2013
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 2013, and the
numbers of meetings attended by each director were:
Director Meetings
Audit Committee Meetings
Remuneration Committee
Meetings
Number eligible
Number
Number eligible
Number
Number eligible
Number
To attend
attended
To attend
attended
To attend
attended
Dr M Blake
Ms L Dunne
Mr S Panton
Dr T St Pierre
Dr J Loveridge
6
6
6
6
3
Corporate Governance
6
6
5
6
3
3
3
3
3
1
3
3
3
2
1
3
3
3
3
1
3
3
3
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 2013.
Non-audit Services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 22
to the financial statements. The directors are satisfied that the provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit services have been
reviewed to ensure that they do not impact the integrity and objectivity of the auditor and none of the services undermine the general
principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by
the Accounting Professional & Ethical Standards Board.
This report is made in accordance with a resolution of the Board of Directors.
12
13
Dr Martin Blake
Chairman
Perth, Western Australia
Dated this 26 September 2013
Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Corporate Governance Statement
Resonance Health Limited is committed to protecting and enhancing shareholder value and adopting best practice governance policies
and practices. This Corporate Governance Statement outlines the main Corporate Governance practices that were in place throughout the
financial year, which comply with the Australian Securities Exchange (‘ASX’) Corporate Governance Council published guidelines as well as
its corporate governance principles and recommendations unless otherwise stated. Where a recommendation has not been followed, this
is clearly stated along with an explanation for the departure.
Principle 1
Lay solid foundations for management and oversight
The Board is the governing body of the Company. The Board and the Company act within a statutory framework – principally the Corporations
Act and also the Constitution of the Company. Subject to this statutory framework, the Board has the authority and the responsibility to
perform the functions, determine the policies and control the affairs of Resonance Health Limited.
The Board must ensure that Resonance Health Limited acts in accordance with prudent commercial principles, and satisfies shareholders –
consistent with maximising the Company’s long term value.
The Company has established the functions reserved to the Board. The Board Charter summarises the role, responsibilities, policies and
processes of the Board of Resonance Health Limited and comments on the Board’s approach to corporate governance.
The primary responsibilities of the Board include:
• Charting the direction, strategies and financial objectives of the Company and ensuring appropriate resources are available
• Monitoring the implementation of those policies and strategies and the achievement of those financial objectives
• Monitoring compliance with control and accountability systems, regulatory requirements and ethical standards
•
Ensuring the preparation of accurate financial reports and statements
• Reporting to shareholders and the investment community on the performance and state of the Company
• Appointing and monitoring the performance of senior executives
•
Establishing proper succession plans for management of the Company
The Company has established the functions delegated to senior executives. The Board Charter summarises the role and responsibilities of
the Managing Director and the Company Secretary.
The Board delegates responsibility for day to day management of the Company to the Managing Director. However, the Managing
Director must consult the Board on matters that are sensitive, extraordinary or of a strategic nature. The Company Secretary supports the
effectiveness of the Board.
Separate functions of the Board and management existed and were practised throughout the year.
ASX Corporate Governance Council Principle 1 recommendation 1.2 requires companies to disclose the process for evaluating the
performance of senior executives.
The performance of executives is measured against criteria agreed annually with each executive and is based predominantly on the
achievement of agreed milestones.
Details of matters reserved to the Board and delegated to senior executives are outlined in the Board Charter. A copy of the Board Charter is
publically available on the Company’s website.
The Board complied with the ASX Corporate Governance Council Principle 1 at all times during the year except as noted above.
Principle 2
Structure the Board to add value
The composition of the Board has been determined on the basis of providing the Company with the benefit of a broad range of technical,
commercial and financial skills, combined with an appropriate level of experience at a senior corporate level. Details of each Director’s skills
and experience are set out in the Directors’ report.
14
15
Resonance Health Limited Annual Report 2013
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 financial year.
A Director is considered independent when the Director does not have any relationship with the Company that would be considered to
affect the independent status as outlined in the ASX Corporate Governance Council Principle 2 Recommendation 2.1.
In the context of director independence, ‘materiality’ is considered from both the Company and individual director perspective. The
determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively
immaterial if it is equal or less than 5% of the appropriate base amount. It is presumed to be material (unless there is evidence to the
contrary) if it is equal or greater than 10% of the appropriate base amount. Qualitative factors considered include whether a relationship is
strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it
and other factors which point at the actual ability in question to shape the direction of the Company’s loyalty.
Directors during the financial year were:
• Dr 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 Scientific Officer
• Dr Jason Loveridge - Independent- Non-executive Director
A description of the skills and experience of each director and their period of office is disclosed in the Directors’ Report. The ASX Corporate
Governance Council Principle 2 Recommendation 2.2 recommends that the Chairman should be an independent director. The role of
Chairman was performed by an independent director at all times during the financial year. The ASX Corporate Governance Council Principle
2 Recommendation 2.3 recommends that the roles of Chairman and Managing Director be exercised by different individuals. The Company
complied with this recommendation at all times during the financial year.
The roles of Chairman and Managing Director are exercised by different individuals, providing for clear division of responsibility at the head
of the Company. Their roles and responsibilities, and the division of responsibilities between them, are clearly understood and there is regular
communication between them.
Directors are subject to re-election by rotation at annual general meetings as stipulated in the Corporations Act and the Company’s
Constitution. There is no maximum term for non-executive director appointments. Newly elected Directors must seek re-election at the first
general meeting of shareholders following their appointment.
The remuneration of the Directors is determined by the Nomination and Remuneration Committee. Further information and the components
of remuneration for Directors are set out in the Directors’ Report.
ASX Corporate Governance Council Principle 2.4 recommends that the Nomination Committee should consist of a majority of independent
Directors, be chaired by an independent Director and have at least three members.
The members of the Nomination and Remuneration Committee during the financial year were:
• Dr Martin Blake – (Chairman) – Independent
• Mr Simon Panton – Not Independent
• Dr Jason Loveridge-Independent (appointed 20th June 2013)
Due to having only two Non- executive Directors for the majority of the year, 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.
14
15
Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
Corporate Governance Statement (CONT)
The Company has a procedure in place for Directors to take independent professional advice at the expense of the Company.
Prior to the appointment of a new director, the Nomination and Remuneration Committee assesses the skills represented on the
Board by the non-executive Directors and determines whether those skills meet the skills identified as required. The Committee will
then implement a process to identify suitable candidates for appointment. The Committee makes recommendations to the Board on
candidates it considers appropriate for appointment. Induction procedures are in place to ensure new Directors are able to participate
fully and actively in Board decision-making at the earliest opportunity. Directors 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 effectively.
The Company’s Constitution requires a director of the Company to not hold office without re-election past the third annual general meeting
following the director’s appointment or three years, whichever is longer.
The Company discloses its Nomination and Remuneration Committee Charter on the Company’s website.
The Board complied with the ASX Corporate Governance Council Principle 2 at all times during the year except as noted above.
Principle 3
Promote ethical and responsible decision-making
The Board places great emphasis on ethics and integrity in all its business dealings.
In regards to Principle 3.1 the Board considers the business practices and ethics exercised by individual Board members and key executives
to be of the highest standards.
The Company has a code of conduct as to the:
• practices necessary to maintain confidence in the Company’s integrity;
• practices necessary to take into account their legal obligations and the expectations of shareholders; and
•
responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
These practices are outlined in the Company’s Board Charter, Communication Policy, Continuous Disclosure Charter, Share Trading Policy,
Audit and Risk Charter and Nomination and Remuneration Charter. These documents are disclosed on the Company’s website.
Trading in the Company’s shares
The Company’s policy restricts Directors and employees from acting on material information until it has been released to the market and
adequate time has been given for this to be reflected in the securities’ prices. Statutory provisions of the Corporations Act dealing with
insider trading have been strictly complied with.
The 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 five member board. The Managing Director, CFO/Company Secretary and three
Managers of the Company are women.
Currently, Resonance Health has women hold 20% of total Board membership. Additionally 50% of the all current employees are women and
28% of all Management/Executive roles are filled 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
17
Resonance Health Limited Annual Report 2013
Principle 4
Safeguard integrity in financial reporting
The Board has established an Audit and Risk Committee that operates in accordance with the Company’s Audit and Risk Charter. It is the
Board’s responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal
with both the effectiveness and efficiency of significant business processes, including the safeguarding of assets, the maintenance of proper
accounting records, and the reliability of financial information. The Board has delegated responsibility for the establishment and framework
of internal controls and ethical standards for the management of the consolidated entity to the Audit Committee.
The Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the
financial reports. All members of the Audit Committee are non-executive Directors.
ASX Corporate Governance Council Principle 4.2 recommends that the Audit Committee should consist only of non-executive with a
majority of independent Directors, be chaired by an independent director who is not chair of the Board and have at least three members.
The members of the Audit and Risk Committee during the financial year were:
• Dr Martin Blake (Chairman) - Independent
• Mr Simon Panton – Not independent
• Dr Jason Loveridge - Independent (appointed 20th June 2013)
The qualifications of each member of the Audit and Risk Committee and the number of meetings attended are detailed in the Directors’
Report.
The Audit and Risk Committee generally invites the Managing Director, Company Secretary, and external auditors to attend meetings.
The Company discloses its Audit and Risk Committee Charter on the Company’s website.
The Company’s external auditors have a policy for the rotation of audit engagement partners. A new Audit Partner was assigned to the
Company with effect for the 2009 financial year in line with this policy.
The Board has not complied with the ASX Corporate Governance Council Principle 4 Recommendations at all times during the year. Due
to there being only 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 effectively 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 significant briefings are posted on the Company’s website after
release to the Australian Securities Exchange.
The Board complied with the ASX Corporate Governance Council Principle 6 Recommendations at all times during the year.
16
17
Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
Corporate Governance Statement (CONT)
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 financial 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 efficiencies
or enhancements would be achieved by the creation of a separate risk committee.
In addition, the QMS requires the appointment of a Management Representative that reports directly to the Board of Directors. The Company
also has in place classes of insurance at levels which, in the reasonable opinion of the Directors, are appropriate for its size and operations.
Management has reported the effectiveness of the Company’s management of its material business risks to the Board during the reporting
period.
In accordance with Recommendation 7.3 the Managing Director and the Chief Financial Officer provide written statements at each reporting
period regarding the integrity of the financial statements and the Company’s risk management and internal compliance and control systems.
The Company’s Audit and Risk Charter is displayed on the Company’s website.
The 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. Dr Jason Loveridge was appointed to the Remuneration committee on 20 June 2013 as an independent
Director.
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 2013 the Nomination and Remuneration Committee met three times.
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 specifically approved on a case by case basis at a general meeting.
The members of the Nomination and Remuneration Committee are outlined in Principle 2. Their attendance at Nomination and
Remuneration Committee meetings is detailed in the Directors’ Report. Director disclosure requirements are detailed in the notes to the
financial statements.
The Nomination and Remuneration Committee Charter is displayed on the Company’s website.
The Board complied with the ASX Corporate Governance Council Principle 8 Recommendations at all times during the year except as
detailed above.
18
19
Resonance Health Limited Annual Report 2013
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Resonance Health Limited for the
year ended 30 June 2013, 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 and the entities it controlled during the
year.
This declaration is in respect of Resonance Health Limited.
Perth, Western Australia
26 September 2013
N G NEILL
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
18
19
Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
Notes
2(a)
2(b)
Consolidated
2013
$
1,527,188
181,959
2012
$
1,562,242
226,377
1,709,147
1,788,619
(1,376,376)
(1,444,930)
(61,068)
(56,212)
(18,475)
(34,677)
(218,641)
(146,186)
156,584
(315,488)
(54,098)
(80,408)
(20,298)
-
(198,952)
(136,659)
57,042
(344,011)
3
(361,392)
(433,695)
156,911
165,094
(204,481)
(268,601)
Statement of Comprehensive Income
FOR THE yEAR ENDED 30 JUNE 2013
Sales revenue
Other income
Revenue
Employee benefits expense
Consulting and professional services
Research and development
Depreciation expense
Amortisation expense
Marketing and travel
Statutory and compliance
Foreign exchange gain
Other expenses
Loss before income tax benefit
Income tax benefit
Net loss for the year attributable to owners of the parent
Other comprehensive income
Items that may be reclassified to profit and loss
Exchange differences arising on translation of foreign operations
Exchange differences 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
5
(59,079)
(61,495)
(120,574)
(325,055)
(91,544)
30,599
(60,945)
(329,546)
Basic (loss) per share (cents per share)
(0.1)
(0.1)
The accompanying notes form part of these financial statements.
20
21
Statement of Financial Position
AS AT 30 JUNE 2013
Resonance Health Limited Annual Report 2013
Note
Consolidated
2013
$
2012
$
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Plant and equipment
Intangible assets
Other financial assets
Other assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Current tax liability
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
7
8
9
10
11
12
9
13
3
14
15
1,092,943
1,180,174
388,631
24,524
756,834
26,970
1,506,098
1,963,978
44,302
37,152
1,462,204
1,291,544
3,004
59,099
3,004
58,391
1,568,609
1,390,091
3,074,707
3,354,069
407,985
31,734
313,805
753,524
390,051
-
329,514
719,565
80,222
80,222
68,488
68,488
833,746
788,053
2,240,961
2,566,016
16(a)
67,534,039
67,534,039
(105,644)
14,930
(65,187,434)
(64,982,953)
2,240,961
2,566,016
The accompanying notes form part of these financial statements.
20
21
Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
Statement of Changes in Equity
FOR THE yEAR ENDED 30 JuNE 2013
Consolidated
Foreign
Currency
Issued
Capital
$
Translation
Option
Accumulated
Reserve
Reserve
Losses
Total Equity
$
$
$
$
Balance at 1 July 2011
67,534,039
9,591
66,284
(64,714,352)
2,895,562
Loss for the year
Other comprehensive income
Shares issued during the year
-
-
-
-
(60,945)
-
-
-
-
(268,601)
(268,601)
-
-
(60,945)
-
Balance at 30 June 2012
67,534,039
(51,354)
66,284
(64,982,953)
2,566,016
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Shares issued during the year
-
-
-
-
-
(120,574)
(120,574)
-
-
-
-
-
(204,481)
-
(204,481)
(120,574)
(204,481)
(325,055)
-
-
Balance at 30 June 2013
67,534,039
(171,928)
66,284
(65,187,434)
2,240,961
The accompanying notes form part of these financial statements.
22
23
Statement of Cash Flows
FOR THE yEAR ENDED 30 JUNE 2013
Resonance Health Limited Annual Report 2013
Note
Consolidated
2013
$
2012
$
Inflows/(Outflows)
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Grants received
Interest received
Income tax received
Net cash provided by operating activities
7(i)
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Net cash used in investing activities
Net decrease in cash and cash equivalents
Foreign exchange differences on cash balances
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of the period
7
The accompanying notes form part of these financial statements.
1,860,846
(2,096,671)
146,051
38,157
188,645
137,028
(25,625)
(205,337)
(230,962)
(93,934)
6,703
1,180,174
1,092,943
1,393,151
(1,727,373)
128,106
124,233
165,094
83,211
(11,427)
(414,073)
(425,500)
(342,289)
18,984
1,503,479
1,180,174
22
23
Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 1: Statement of significant accounting policies
(a) Basis of preparation
The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the
Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the law.
The financial report has been prepared on a historical cost basis, except for available-for-sale investments, which have been measured
at fair value. Cost is based on the fair values of the consideration given in exchange for assets.
The financial report is presented in Australian dollars. The Company is a listed public Company, incorporated and operating in Australia
and the United States of America. The entity’s principal activities are the development of magnetic resonance imaging related
technology, specifically the provision of image analysis services for use by health care professions.
(b) Adoption of new and revised standards
In the year ended 30 June 2013, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB
that are relevant to the Group’s operations and effective 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 the Group’s business and, therefore, no change is necessary to Group accounting policies.
The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year
ended 30 June 2013. 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 the Group’s business and, therefore, no change necessary to Group accounting policies.
(c) Statement of compliance
The financial report was authorised for issue on 26 September 2013.
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial
Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes
thereto, complies with International Financial Reporting Standards (IFRS).
(d) Basis of consolidation
The consolidated financial statements comprise the separate financial statements of Resonance Health Limited (“Company” or “parent
entity”) and its subsidiaries as at 30 June each year (“the Group”). Control is achieved where the Company has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using consistent
accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and
losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Control
exists where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its
activities.
Business combinations have been accounted for using the acquisition method of accounting (refer Note 1(ab)).
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented
separately in the statement of comprehensive income and within equity in the consolidated statement of financial position. Losses are
attributed to the non-controlling interest even if that results in a deficit balance.
(e) Critical accounting judgements and key sources of estimation uncertainty
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience
and other factors that are considered to be relevant. Actual results may differ from these estimates.
24
25
Resonance Health Limited Annual Report 2013
NOTE 1: Statement of significant 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 affects only that period, or in the period of the revision and future periods if the revision affects both current
and future periods.
Impairment of intangibles
The Group determines whether intangibles with indefinite useful lives are impaired at least on an annual basis. This requires an
estimation of the recoverable amount of the cash generating units to which the intangibles with indefinite useful lives are allocated.
The assumptions used in this estimation of recoverable amount and the carrying amount of intangibles with indefinite useful lives
are discussed in Note 11.
Additionally, the Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the
Group that may indicate impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations
which incorporate various key assumptions.
With respect to cash flow projections growth rates have been factored into valuation models for the next five years on the basis
of management’s expectations regarding the Group’s continued ability to increase market share based on contractual obligations
already in place and historical sales growth rates.
Historic Group averages have been used to reflect projected cash flow growth rates in year 1 and year 2. In subsequent periods a
consistent growth rate has been attached as a conservative estimate for use in the impairment calculation.
Pre-tax discount rate of 3.5%, adjusted for risk has been used throughout the value in use model.
Development expenditure is considered to be sensitive to these assumptions as they are not ready for use. Therefore sensitivity
analysis of 5% and 10% reduction in revenue and the use of a pre-tax discount rate of 5%, 10% and 15% have been calculated and
did not indicate an impairment.
Share-based payment transactions
The Group measures the cost of cash-settled share-based payments at fair value at the grant date.
(f) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors of Resonance Health Limited.
(g) Foreign currency translation
Both the functional and presentation currency of Resonance Health Limited and its Australian subsidiaries is Australian dollars.
Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are
measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling
at the statement of financial position date.
All exchange differences in the consolidated financial report are taken to profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as
at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date the fair value
was determined.
The functional currency of the foreign operation Resonance USA Inc. is United States dollars (US$). As at the reporting date the
24
25
Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 1: Statement of significant accounting policies (cont.)
(g) Foreign currency translation (cont.)
assets and liabilities of this subsidiary are translated into the presentation currency of Resonance Health Limited at the rate of exchange
ruling at the statement of financial position date and the statement of comprehensive income is translated at the average exchange rate
for the year. The exchange differences arising on the translation are taken directly to a separate component recognised in the foreign
currency translation reserve in equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to
that particular foreign operation is recognised in profit or loss.
(h) Revenue recognition
Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognised:
(i) Sale of Goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred
or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the
buyer at the time of delivery of the goods to the customer.
(ii) Rendering of services
Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
(iii) Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
(i) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
(j) Lease
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards if ownership to the
lessee. All other leases are classified as operating leases.
Assets held under finance lease are initially recognised at their fair value or, if lower, the present value of the minimum lease payments,
each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position
as a finance lease obligation.
Lease payments are apportioned between finance charges and the reduction of the lease obligation so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance charges are charged directly against income unless they are directly
attributable to qualifying assets, in which case they are capitalised in accordance with the general policy on borrowing costs.
Finance lease assets are depreciated on a straight line basis over the estimated useful life of the asset.
Operating lease payments, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased items,
are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative
of the time pattern in which economic benefits from the lease asset are consumed.
(k) Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary difference and
to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
26
27
Resonance Health Limited Annual Report 2013
NOTE 1: Statement of significant accounting policies (cont.)
(k) Income tax (cont.)
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by
the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not
a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the
timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the
carry-forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit, nor
taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures,
in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the
foreseeable future and taxable profit will be available against with the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it is has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
(l) Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST) except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and
financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
26
27
Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 1: Statement of significant accounting policies (cont.)
(m) Impairment of assets
The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, or
when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the
asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s value in
use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit
to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-
generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing
operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at
revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each balance date as to whether there is any indication that previously recognised impairment losses
may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised
impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since
the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in
which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to
allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(n) Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings
in current liabilities in the statement of financial position.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.
(o) Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective
interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within periods ranging from
14 days to 90 days.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing
the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to collect
all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include
known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual
payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and
the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term
discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade
receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off
against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the
statement of comprehensive income.
28
29
Resonance Health Limited Annual Report 2013
NOTE 1: Statement of significant accounting policies (cont.)
(p) Financial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets
at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate.
Where financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through
profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition
and, when allowed and appropriate, re-evaluates this designation at each financial year-end.
All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that the Group commits to purchase
the asset. Regular way purchases or sales of financial assets under contracts that require delivery of the assets within the period
established generally by regulation or convention in the marketplace.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value through
profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Gains or
losses on investments held for trading are recognised in profit or loss.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the
Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not
included in this classification.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets that are not quoted in an active market. Gains and losses are recognised in the
profit or loss when the loans and receivables are derecognised or impaired.
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as
any of the three preceding categories. After initial recognition available-for-sale investments are measured at fair value with gains or
losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined
to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid
prices at the close of business on the balance date. For investments with no active market, fair value is determined using valuation
techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another
instrument that is substantially the same; discounted cash flow analysis and option pricing models.
(q) Derecognition of financial assets and liabilities
(i) Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:
• the rights to receive cash flows from the asset have expired;
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material
delay to a third party under a ‘pass-through’ arrangement; or
• the Group has transferred its rights to receive cash flows from the asset and either:
(a)
has transferred substantially all the risks and rewards of the asset, or
(b)
has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
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Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 1: Statement of significant accounting policies (cont.)
(q) Derecognition of financial assets and liabilities (cont.)
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all
the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing
involvement in the asset.
(ii) Financial liabilities
A financial liability is recognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(r) Impairment of financial assets
The Group assess at each balance date whether a financial asset or group of financial assets is impaired.
(i) Financial assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount
of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the
effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an
allowance account. The amount of the loss is recognised in profit or loss.
The group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and
individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar
credit risk characteristics and that group of financial asset is collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment
loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
(ii) Financial assets carried at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value
(because its fair value cannot be reliably measured), the amount of the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset.
(iii) Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its cost
(net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or
loss, is transferred from equity to the income statement. Reversals of impairment losses for equity instruments classified as available-for-
sale are not recognised in profit. Reversals of impairment losses for debt instruments are reversed through profit or loss if the increase
in an instrument’s fair value can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.
(s) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:
Plant and equipment
3 – 5 years
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.
30
31
Resonance Health Limited Annual Report 2013
NOTE 1: Statement of significant accounting policies (cont.)
(s) Plant and equipment (cont.)
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated
when events or changes in circumstances indicate that the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit
to which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset
or cash-generating unit is then written down to its recoverable amount.
Impairment losses for plant and equipment are recognised in the statement of comprehensive income.
(ii) Derecognition and disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use
or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in profit or loss in the year the asset is derecognised.
(t) Intangible assets
Internally generated intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally-generated
intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred.
An intangible asset arising from development expenditure on an internal project is recognised if, and only if, all of the following has been
demonstrated:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale;
• The intention to complete the intangible asset and use or sell it;
• How the intangible asset will generate probable future economic benefits;
• The availability of adequate technical, financial and other resources to complete development and to use or sell the intangible asset;
and
• The ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the
intangible asset first meets the recognition criteria listed above.
(u) Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group
prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of
the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.
(v) Interest-bearing loans and borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the
period of the borrowings using the effective interest method.
30
31
Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 1: Statement of significant accounting policies (cont.)
(v) Interest-bearing loans and borrowings (cont.)
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled
or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another
party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other
income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting period.
(w) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. Provisions are not recognised for future operating losses.
Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present obligation
at the end of the reporting period.
(x) Employee benefits
Wages, salaries, annual leave, sick leave and long service leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave, long service 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 uses agreements where payment for services rendered are settled by the issuance of fully paid shares or options in the
Company.
The cost of these equity-settled transactions is measured by reference to the fair value of the equity instruments at the date they are
granted and is recognised, together with a corresponding increase in equity, over the period in which the service is provided.
(z) Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds.
(aa) Earnings per share (“EPS”)
Basic EPS is calculated as net profit/loss attributable to members of the parent, adjusted to exclude any costs of servicing equity (other
than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted EPS is calculated as net profit/loss attributable to members of the parent, adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses;
and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary
shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
32
33
Resonance Health Limited Annual Report 2013
NOTE 1: Statement of significant accounting policies (cont.)
(ab)Business combinations
The acquisition method of accounting is used to account for all business combinations, including business combinations involving
entities or business under common control, regardless of whether equity instruments or other assets are acquired. The consideration
transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity
interests issued by the group. The consideration transferred also includes the fair value of any contingent consideration arrangements
and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expenses as incurred. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling
interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair
value of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired is
recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the
measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value
as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing
could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified as either equity or a financial liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in profit or loss.
(ac)Parent entity financial information
The financial information for the parent entity, Resonance Health Limited, disclosed in Note 20 has been prepared on the same basis as
the consolidated financial 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 financial statements.
NOTE 2: Revenues and expenses
(a)
Sales revenue
Sales to external customers
(b)
Other income
Grants received
Interest received
(c)
Expenses
Consolidated
2013
$
2012
$
1,527,188
1,562,242
146,051
35,908
181,959
128,106
98,271
226,377
Rental expense on operating leases
98,074
94,571
32
33
Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 3: Income tax benefit
Income tax recognised in profit or loss
The major components of tax benefit are:
Current taxation
Adjustments recognised in the current year in relation to the current tax of prior years
– R&D tax offset
The prima facie income tax benefit on pre-tax accounting loss from operations
reconciles to the income tax benefit in the financial statements as follows:
Accounting loss before income tax
Consolidated
2013
$
2012
$
(31,734)
188,645
156,911
-
165,094
165,094
(361,392)
(433,695)
Income tax calculated at 30%
Effect of income that is not deductible in determining taxable profit
Effect of unused tax losses not recognised as deferred tax assets
Effect of prior year adjustments
Effect of temporary differences not recognised as deferred tax assets and liabilities
Effect of concessions (research and development)
Tax refund receivable (research and development tax offset)
Income tax benefit reported in the income statement
108,418
(170,727)
(30,229)
(16,340)
77,144
-
188,645
156,911
130,108
(164,386)
(271,112)
161,915
170,059
(26,584)
165,094
165,094
Unrecognised deferred tax balances
The following deferred tax assets and liabilities have not been brought to account:
Deferred tax assets:
Losses available for offset against future taxable income - revenue
2,200,889
2,170,661
Depreciation timing differences
Business related costs
Unrealised foreign exchange losses
Accrued expenses and liabilities
Deferred tax liabilities:
Capitalised research and development costs
Accrued income
Prepayments
Income tax benefits not recognised directly in equity
Share issue costs
Current tax liability
Income tax payable
45,423
3,160
88,292
80,565
56,060
11,115
112,931
64,687
2,418,329
2,415,454
438,661
380
7,357
446,398
387,463
1,055
8,091
396,609
152,765
152,765
31,734
-
34
35
Resonance Health Limited Annual Report 2013
NOTE 4: Segment reporting
Segment Information
The chief operating decision maker is considered to be the Company’s Board of Directors. The Group’s operating segments are
determined by differences in the type of activities performed. The financial results of the Group’s operating segments are reviewed by the
Board of Directors on a quarterly basis.
Business Segments
The following table presents revenue and profit/loss information and certain asset and liability information regarding business segments
for the year ended 30 June 2013.
Segment revenue
Sales to external customers
Grant revenue
Interest revenue
Total segment revenue
Services
Research and
Development
Corporate
$
$
$
1,527,188
146,051
-
1,673,279
-
-
-
-
-
-
35,908
35,908
Total
$
1,527,188
146,051
35,908
1,709,147
Segment profit/(loss)
70,641
24,868
(299,990)
(204,481)
Other segment information included in (loss)
Income tax benefit
-
156,911
-
156,911
Segment assets
Segment liabilities
388,631
590,816
1,462,204
1,223,872
3,074,707
48,599
194,331
833,746
The consolidated entity derived 38% of its external customer sales revenue from one major customer.
34
35
Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 4: Segment reporting (cont.)
The following table presents revenue and profit/loss information and certain asset and liability information regarding business segments
for the year ended 30 June 2012.
Segment revenue
Sales to external customers
Grant revenue
Interest revenue
Total Segment revenue
FerriScan
Research and
Development
Corporate
$
$
$
Total
$
1,562,242
-
-
1,562,242
-
-
-
-
-
1,562,242
128,106
98,271
226,377
128,106
98,271
1,788,619
Segment profit/(loss)
(226,517)
85,074
(127,158)
(268,601)
Other segment information included in (loss)
Income tax benefit
-
165,094
-
165,094
Segment assets
Segment liabilities
756,834
616,759
1,291,544
-
1,305,691
171,294
3,354,069
788,053
The consolidated entity derived 51% of its external customer sales revenue from one major customer.
NOTE 5: Earnings per share
Basic profit / (loss) per share (cents)
Consolidated
2013
$
2012
$
(0.1)
(0.1)
(a) Loss used in the calculation of basic earnings per share
(204,481)
(268,601)
2013
Number
2012
Number
(b) Weighted average number of ordinary shares for the purposes of basic loss per share
360,991,365
360,991,365
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 financial year.
36
37
Resonance Health Limited Annual Report 2013
NOTE 7: Cash and cash equivalents
Consolidated
Deposits at call
Term deposits
2013
$
492,943
600,000
1,092,943
2012
$
380,174
800,000
1,180,174
Deposits at call earn interest at floating rates based on daily bank deposit rates.
Term deposits are made for varying periods depending on the immediate cash requirements of the Group and earn interest at the
respective term deposit rates
(i) Reconciliation of profit / (loss) for the year to net cash flows from operating
activities
Profit/(loss) for the year
Non-cash flows in profit / (loss):
Depreciation
Amortisation of intangible assets
Changes in net assets and liabilities:
Decrease in receivables
Decrease in other assets (current)
(Increase) in assets (non-current)
Decrease in trade creditors and other payables
Increase in current tax liabilities
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
(204,481)
(268,601)
18,475
34,677
240,927
2,446
(708)
29,669
31,734
(15,711)
137,028
12,834
7,166
20,000
493
19,507
20,000
20,000
39,099
59,099
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
36
37
Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 8: Trade and other receivables
Consolidated
Current
Trade receivables
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
2013
$
342,203
46,428
388,631
159,789
31,751
15,281
-
206,821
-
-
-
2012
$
537,179
219,655
756,834
75,915
24,511
9,830
-
110,256
26,632
(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. No allowance has been made for estimated irrecoverable trade receivable amounts
arising from the past rendering of services in relation to a specific debtor amount. The concentration of credit risk is significant with 29%
(2012: 51%) 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
Current
Prepayments
Non-Current
Deposits
Consolidated
2013
$
2012
$
24,524
26,970
59,099
58,391
38
39
Resonance Health Limited Annual Report 2013
NOTE 10: Plant and equipment
Consolidated
Fixtures and equipment
At cost
Less: Accumulated depreciation
Total property, plant and equipment
Reconciliation
2013
$
269,432
(225,130)
44,302
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
NOTE 11: Intangible assets
Development expenditure
At cost
Less: Accumulated amortisation
Total development expenditure
Reconciliation
Reconciliation of the carrying amount of intangible assets is set out below:
Development expenditure
Carrying Amount at the beginning of the year
Additions
Amortisation expense
Carrying amount at the end of the year
2012
$
243,807
(206,655)
37,152
46,023
11,427
(20,298)
37,152
37,152
25,625
(18,475)
44,302
1,496,881
(34,677)
1,462,204
1,291,544
-
1,291,544
1,291,544
205,337
(34,677)
1,462,204
957,400
334,144
-
1,291,544
Development expenditure relates to costs incurred in developing MRI image analysis tools for the diagnosis and clinical management
of human disease.
During the current financial 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 fibrosis 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 fibrosis 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.
38
39
Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 11: Intangible assets (cont.)
The recoverable amount of development expenditure detailed above is determined based on value - in - use calculations.
Value-in-use is calculated based on the present value of cash flow projections over a five year period. The cash flows are discounted using
the yield of a 10 year government bond at the beginning of the budget period.
The following assumptions were used in the value-in -use calculations:
• Growth rate was based on contractual obligations already in place and historical sales growth rates.
• Costs are calculated taking into account historical growth margins as well as estimated weighted average inflation rates over the
period, which are consistent with inflation rates appropriate to historic company rates.
• Discount rate was based on the market risk free rate of 10 year government bond rate.
NOTE 12: Available for sale investments
Available for sale - carried at fair value
Shares in listed corporations
Less: impairment
NOTE 13: Trade and other payables
Current
Trade payables (i)
Sundry creditors and accruals
2013
$
14,337
(11,333)
3,004
256,494
151,491
407,985
2012
$
14,337
(11,333)
3,004
102,040
288,011
390,051
Consolidated
(i) Trade payables are non-interest bearing and are normally settled on 30 day terms.
Information regarding the effective 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
313,805
329,514
80,222
68,488
68,488
11,734
80,222
-
68,488
68,488
40
41
Resonance Health Limited Annual Report 2013
NOTE 16: Issued Capital
2013
2012
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 financial year
Balance at the end of the financial year
360,991,365
360,991,365
67,534,039
67,534,039
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 financial
year. The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent,
comprising issued capital, reserves and retained earnings. None of the Group’s entities are subject to externally imposed capital
requirements. Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures.
(b) Categories of financial instruments
Financial assets
Consolidated
Cash and cash equivalents
Loans and receivables
Available for sale financial assets
Other financial assets
Payables
2013
$
1,092,943
388,631
3,004
59,099
407,985
2012
$
1,180,174
756,834
3,004
58,391
390,051
The net fair values of all financial assets and liabilities approximate their carrying value.
(c) Financial risk management objectives
The Group is exposed to market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash
flow interest rate risk. The Group seeks to minimise the effects of these risks. The Group does not enter into or trade financial instruments,
including derivative financial instruments, for speculative purposes.
(d) Market risk
The Group’s activities expose it primarily to the financial risk of changes in foreign currency exchange rates. There has been no change in
the Group’s exposure to market risks or the manner in which it manages and measures the risk from the previous period.
40
41
Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 17: Financial instruments (cont.)
(e) Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations
arise. Exchange rate exposures are managed within approved policy parameters. The Group does not engage in forward exchange
contracts.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is
as follows:
United States Dollars
Great British Pounds
European Euros
Liabilities
Assets
2013
$
14,012
-
3,177
2012
$
18,777
-
-
2013
$
426,416
97,058
20,999
2012
$
495,005
52,641
8,186
Foreign currency sensitivity analysis
The Group is exposed to United States Dollar (USD), Great British Pound (GBP) and European Euro (EUR) currency fluctuations.
The following table illustrates the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant
foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their
translation at the period end for a 10% change in foreign currency rates. A negative number indicates a decrease in profit and other
equity where the Australian dollar strengthens against the respective currency. For a weakening of the Australian dollar against the
respective currency there would be an equal and opposite impact on the profit and other equity and the balances below would be
positive.
Profit or loss impact:
- USD
- GBP
- EUR
(f) Interest rate risk management
2013
$
(37,491)
(8,823)
(1,620)
2012
$
(43,293)
(4,786)
(744)
All financial assets and financial liabilities are non-interest bearing except for cash and cash equivalent balances. The following table
details the Group’s expected maturities for cash and cash equivalent financial assets.
Cash and cash equivalent financial assets
Less than one month
One to three months
Total
2013
Weighted average effective interest rate
2012
Weighted average effective interest rate
$1,092,943
2.16%
$1,180,174
3.81%
$59,099
4.57%
$58,391
5.76%
$1,152,042
$1,238,565
The Group is exposed to fluctuations in interest rates as it has deposited monies at floating and fixed interest rates.
The impact of a 10% change in interest rates will not have a material impact on the result for the year
42
43
Resonance Health Limited Annual Report 2013
NOTE 17: Financial instruments (cont.)
(g) Credit risk management
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a
financial loss. The Group is exposed to credit risk from its operating activities (primarily from customer receivables) and from its financing
activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Outstanding customer receivables are regularly monitored and any credit concerns highlighted to senior management. At 30 June 2013,
the Group had one customer that accounted for 29% of all trade receivables (2012: 68%).
The maximum exposure to credit risk, excluding the value of any collateral or other security at balance date in relation to each class of
recognised financial assets is the carrying amount, net of any allowance for impairment recorded in the financial statements. The Group
does not hold any collateral as security for any trade receivable.
(h) Equity price risk
The Group is exposed to equity price risks arising from available-for-sale financial assets. The Group’s investments are publicly traded.
The impact of a 10% increase or decrease in the equity price will not have a material impact on the result for the year.
(i) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of directors, who have built an appropriate liquidity risk
management framework for the management of the Group’s short, medium and long-term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining adequate reserves by continually monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and liabilities. Included in Note 7 is a listing of additional undrawn facilities
that the Group has at its disposal to further reduce liquidity risk.
The following table details the Group’s expected maturity for its financial liabilities.
Less than one month
One month to
Three months to
three months
one year
$
$
$
Total
$
2013
Non-interest bearing
236,412
42,960
128,613
407,985
2012
Non-interest bearing
(j) Fair value of financial instruments
222,645
48,246
119,160
390,051
The net fair value of all financial assets and liabilities approximate their carrying values. No financial assets or financial liabilities, except
for listed shares are readily traded on organized markets in standardized form.
The aggregate net fair values and carrying amounts of all financial assets and liabilities are disclosed in the financial statements.
42
43
Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 18: Commitments for expenditure
Consolidated
Operating lease commitments
Commitments for minimum lease payments in relation to non-cancellable
operating leases for office premises are payable as follows:
Within one year
Later than 1 year but no later than 5 years
Total commitments not recognised in the financial statements
A lease over new premises was entered into effective 1 August 2011.
NOTE 19: Related party disclosure
2013
$
113,922
9,501
123,492
2012
$
113,152
127,511
240,663
The consolidated financial statements include the financial statements of Resonance Health Limited and the subsidiaries listed in the
following table.
Name of entity
Country of
incorporation
Class of
shares
Resonance Health Analysis Services Pty Ltd
Australia
Ordinary
WA Private Health Care Services Pty Ltd
Australia
Ordinary
IVB Holdings Pty Ltd
Resonance USA Inc
Australia
Ordinary
USA
Ordinary
Resonance Health Limited is the ultimate Australian entity and ultimate parent of the Group.
Transactions with related parties
Equity
holding
100%
100%
100%
100%
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 provided interest free loans to the Company totalling $118,391. During the
previous year the Company repaid interest free loans to Resonance Health Analysis Services Pty Ltd totalling $229,942.
During the year Resonance USA Inc repaid interest free loans to the Company totalling $200,000 (2012: $205,000).
A cumulative impairment of these loans of $4,545,135 was recorded up to balance date (2012: $4,545,135).
During the year expenses were paid by Resonance Health Analysis Services Pty Ltd totalling $145,848 (2012: $118,318) on behalf of the
Company. During the year expenses were paid by the Company on behalf of Resonance USA Inc totalling $193,789 (2012: $197,252).
44
45
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
Profit / (loss) for the year
Other comprehensive income / (loss)
Total comprehensive income / (loss)
Resonance Health Limited Annual Report 2013
2013
$
645,467
1,015,346
1,660,813
94,122
94,122
2013
$
1,034,009
856,682
1,890,691
49,768
49,768
67,534,039
66,284
(66,033,632)
1,566,691
67,534,039
66,284
(65,449,616)
2,150,707
year ended
30 June 2013
year ended
30 June 2012
$
(584,016)
-
(584,016)
$
(153,111)
-
(153,111)
NOTE 21: Events subsequent to reporting date
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the Company and the consolidated entity, the results of those operations, or the state of affairs in future financial years.
NOTE 22: Auditors’ remuneration
Consolidated
During the year the following fees were paid or payable to the auditor:
Remuneration of the auditor of the company for:
Auditing/reviewing financial report
Taxation compliance services
2013
$
48,895
45,400
94,295
2012
$
45,500
45,250
90,750
44
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Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Notes to the Financial Statements
FOR THE yEAR ENDED 30 JuNE 2013
NOTE 23: Key management personnel disclosures
(a)
Details of key management personnel
(i) Directors
Dr Martin Blake
Chairman (non-executive)
Ms Liza Dunne
Managing Director (executive)
Mr Simon Panton Director (non-executive)
Dr Jason Loveridge Director (non-executive) (appointed 7th February 2013)
Dr Tim St Pierre
Director (executive)
ii) Executives
Mrs Naomi Haydari Chief Financial Officer and Company Secretary
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 financial 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
Dr J Loveridge
Mr S Panton
Total
Executives
Mrs N Haydari
Total
Balance 1.7.12
Received as
Remuneration
Net Change Other*
Received during the
year on exercise of
options
Balance 30.6.13
6,224,677
3,153,385
9,078,750
-
65,960,972
84,417,784
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,224,677
3,153,385
9,078,750
-
65,960,972
84,417,784
-
(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
financial year totalled $nil (2012: $11,583). The amount payable at 30 June 2013 totalled $nil (2012: $13,226).
During the year the Group provided FerriScan services totalling $2,618 (2012: $2,630) to The University of Western Australia. Amounts
receivable at 30 June 2013 totalled nil (2012: $2,630).
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Resonance Health Limited Annual Report 2013
NOTE 23: Key management personnel disclosures (cont.)
(d)
Key Management Personnel Compensation
Refer to remuneration report contained in the directors report for details of the remuneration paid or payable to each member of the
Group’s key management personnel (KMP) for the year ended 30 June 2013.
The totals paid to KMP of the Company and the Group during the year are as follows:
Short term employee benefits
Post employment benefits
Share based payments
Total KMP compensation
(e)
KMP Options and Rights Holdings
No Options or rights are held by any member of KMP.
2013
$
520,729
37,232
-
557,961
2012
$
493,099
33,660
-
526,759
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Resonance Health Limited Annual Report 2013 Resonance Health Limited Annual Report 2013
Directors’ Declaration
1.
In the opinion of the directors:
a.
the accompanying financial statements, notes and the additional disclosures are in accordance with the Corporations Act
2001 including:
i.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of it’s performance
for the year then ended; and
ii.
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
b.
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable; and
c.
the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by
the International Accounting Standards Board.
2.
This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section
295A of the Corporations Act 2001 for the financial year ended 30 June 2013.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dr Martin Blake
Chairman
Place: Perth, Western Australia
Dated: 26 September 2012
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Resonance Health Limited Annual Report 2013
INDEPENDENT AUDITOR’S REPORT
To the members of Resonance Health Limited
Report on the Financial Report
We have audited the accompanying financial report of Resonance Health Limited (“the company”), which comprises the consolidated
statement of financial position as at 30 June 2013, the consolidated statement of comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors’ declaration for the consolidated entity. The consolidated entity
comprises the company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1(c), the
directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial report
complies with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements
and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating
the overall presentation of the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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 firms and business advisers.
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Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
Auditor’s Opinion
In our opinion:
(a) the financial report of Resonance Health Limited is in accordance with the Corporations Act
2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June
2013 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001; and
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1(c).
Report on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June
2013. 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 2013
complies with section 300A of the Corporations Act 2001.
HLB MANN JUDD
Chartered Accountants
N G NEILL
Partner
Perth, Western Australia
26 September 2013
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Resonance Health Limited Annual Report 2013
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 2013.
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
530
182
222
697
327
1,958
120,258
576,122
1,636,019
27,481,618
331,177,348
360,991,365
The number of shareholdings holding less than a marketable parcel of shares are 1,347.
2. Voting Rights
Ordinary shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one
vote on a show of hands.
3. Twenty Largest Shareholders of quoted Ordinary Shares
Name Number of Ordinary Shares Percentage of Total
Southam Investments 2003 Pty Ltd
65,414,622
1.
2.
3.
The University Of Western Australia
Timothy Guy St Pierre
4. Wanida Chau-Anusorn
5.
6.
7.
8.
9.
10.
11.
Dr Simon Bell
Mr Robert Panton
Dr Franklyn Ives
Mr Sean Watkins-Saxon
Mr Helmut Rocker
Mr William Grove
Mr Kevin Deeves and Mrs Pauline Deeves
12. Walker Trusco Pty Ltd
13.
14.
15.
16.
17.
18.
19.
Dr Martin Peter Blake
Mr Harry Basle
Mrs Michelle Watkins-Saxon and Mr Sean Saxon
Mr Bruce Stevenson
Mr Russell Mackenzie
Mr Jeremy Hussein Rishani
Blake Nominees Pty Ltd
20.
Anahein Pty Ltd
4. Substantial shareholders
9,078,750
9,078,750
8,070,000
7,932,252
7,840,824
6,272,934
6,250,000
6,000,000
4,838,401
4,550,000
4,494,844
3,798,590
3,671,359
3,238,636
2,932,755
2,870,000
2,638,699
2,426,087
2,408,478
163,805,981
18.12
2.52
2.52
2.24
2.20
2.17
1.74
1.73
1.66
1.34
1.26
1.24
1.05
1.02
0.90
0.81
0.80
0.73
0.67
0.67
45.39
50
51
The names of substantial shareholders who have notified the Company in accordance with sections 709 and 710 of the Corporations
Act 2001 are:
Southam Investments 2003 Pty Ltd
65,414,622 ordinary shares
Resonance Health Limited Annual Report 2013
Resonance Health Limited Annual Report 2013
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52
PB
Resonance Health Limited Annual Report 2013
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