Resonance
Health
Be Better Informed
A global leader in the
development and delivery of
non-invasive diagnostic medical
imaging solutions
Resonance
Health
Be Better Informed
1
Annual Report 2015
HepaFat-Scan®
MRI Measurement of Liver Fat
FerriScan®
MRI Measurement of Liver Iron Concentration
Clinical Trial Services
Imaging Core Lab and Support
www.resonancehealth.com
info@resonancehealth.com
ResonanceHealth CORPORATE INFORMATION
ABN 96 006 762 492
Directors
Dr Martin Blake
Non-executive Chairman
Mr Simon Panton
Non-executive Director
Dr Jason Loveridge
Non-executive Director
Company secretary
Mr Adrian Bowers
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@resonancehealth.com
Auditors
HLB Mann Judd Level 4,
130 Stirling Street
PERTH WA 6000
Share registry
Advanced Share Registry Ltd 110 Stirling Highway
NEDLANDS WA 6009
Tel: +61 8 9389 8033
Fax: +61 8 9389 7871
Bankers
National Australia Bank Limited
Solicitors
Steinepreis Paganin
Level 4, The Reed Building 16 Milligan Street
PERTH WA 6000
3
ResonanceHealth CONTENTS
SECTION ONE
Snap Shot
Chairman’s Report
Year in Review
SECTION TWO
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
5
6
8
14
26
33
34
35
36
37
38
65
66
Our Business
Resonance Health develops and delivers medical imaging software and services to quantify clinical parameters. This
information assists clinicians in their diagnosis and management of disease and pharmaceutical companies in the
development of treatments. The Company’s primary product, FerriScan®, is globally recognised as the gold standard
in measurement of liver iron overload. Resonance Health’s latest product, HepaFat-Scan®, provides a measurement of
liver fat and is generating interest for its possible utility in improving surgical outcomes for patients. A pipeline product
for the measurement of liver fibrosis has made further progress in its development.
4
ResonanceHealth SNAP SHOT
2015 RESULTS HIGHLIGHTS (OVER 2014)
• Net Profit of $463,234 from loss of $72,415
• 14% increase in receipts from customers – FerriScan and
cardiac T2*
• 29% increase in commercial sales volumes in UK market
and significant increases in all other key markets
• 12% increase in referring clinicians
• Prototype tool developed for measurement of liver fibrosis
Increase in commercial sales volumes in key markets
35%
30%
25%
20%
15%
10%
5%
0%
USA
Canada
UK
ANZ
Europe
Net Profit
2014/2015
2013/2014
2012/2013
-200,000 -100,000
0
100,000 200,000 300,000 400,000 500,000
CHAIRMAN’S REPORT
The financial year 2015 saw continued growth in
commercial FerriScan® sales, progress to support
exciting
commercialisation
HepaFat-Scan®
developments in our MRI liver fibrosis test. Resonance
Health has returned a profit in excess of $463,000 in 2015
demonstrating the potential of our innovative products
and total quality-managed services.
and
referring doctors requesting the test. Receipts from
customers were up 14% from the previous year’s
result and the services business unit reported a profit
of $709,671 compared to a profit of $661,665 in the
previous financial year. Total revenue was $2,676,760
(2014: $2,309,036) an increase of 16% or $367,724 from
the prior year.
Management
Following the resignation of Ms Liza Dunne, the company
announced it would search for a new managing director
but we have since decided to operate the company
through a different management model. Whilst not strictly
following a Dual Board system, the board function has
adopted a duality through regular management meetings
bringing the senior managers of the organisation together
with the Australian based board members to drive the
business and to discuss and resolve issues as they
present, coupled with the usual governance and strategic
function undertaken by the full board. This integration of
management and board has improved communication
through the organisation and provided growth and
leadership opportunities for our staff.
Resonance Health draws a lot of similarities with the
German concept of “Mittelstand” companies; the so-called
“hidden champions”. We are a small, highly focussed
company targeting the non-invasive measurement of liver
iron, fat and fibrosis with an aim to extend the reach of our
technology into other organ systems, employing highly
talented individuals and using lean processes.
Iron
During 2015 our lead product FerriScan saw continued
market expansion and growth in the commercial sector,
where the test is used by clinicians for routine patient
management. The FerriScan service also continues to be
strongly supported through the direct purchase of tests by
pharmaceutical companies, who then provide the service
to patients that would otherwise be unable to access the
test due to funding barriers. This enables us to expand
our clinical network and develop new clinical advocates
to increase global access to FerriScan. We have also
been working closely with the Thalassaemia International
Federation (TIF) to explore means of increasing access in
developing countries.
Operationally, the 2015 year delivered growth in the
services business unit with further radiology facilities
providing FerriScan and an increase in the number of
A net profit after tax was recorded for the year of $463,234
compared to a net loss after tax of $72,415 in the previous
financial year. The company increased its cash holdings
to $2.8m at the end of the financial year compared to $2.1
in the previous financial year and has no debt.
for FerriScan as
As a result of our sustained activities to gain global
recognition
the gold standard
measurement of liver iron concentration (LIC) and our
marketing investment to drive market share in core
markets our reliance on pharmaceutical company trials
is reduced. This represents a significant achievement of
our Company’s long-term strategy, underpinned by our
unrivalled expertise in liver iron measurement and service
delivery.
Fat
The adoption of HepaFat-Scan has been slower than the
company would like but we were delighted to be selected
as the WA Innovator of the Year for HepaFat-Scan. We
have been promoting the test to Key Opinion Leaders
in addressable markets and we have commenced some
high profile clinical studies this year. We were particularly
pleased to begin the study at the Children’s Hospital of
Atlanta working with the highly respected Dr Miriam Vos.
We are currently engaging with other hospitals around
the world to provide HepaFat-Scan to their patients on
a trial basis. Our aim in the coming year is to continue
with targeted promotional activities informed by continual
market feedback with a focus on initiating additional
clinical studies. This will drive uptake amongst Key
Opinion Leaders, provide opportunities for inclusion
in drug development trials for fatty liver disease, and
support our longer-term goals of inclusion of HepaFat-
Scan into clinical guidelines. We continue to believe that
diagnosing liver fat accurately is a tool that will bring
significant commercial opportunities in the coming
decade.
This year has also seen significant international interest
in HepaFat-Scan from liver surgeons, as the presence
of liver fat may have serious consequences in the
6
ResonanceHealth CHAIRMAN’S REPORT
outcomes of patients undergoing liver resection for
colorectal metastases. We have initiated an Australian
trial using HepaFat-Scan to assess its utility in pre-
surgical planning to improve post-operative outcomes,
representing a further substantial potential market for the
service where immediate commercial demand is likely.
We are concurrently engaging with liver surgeons in the
US and Europe to consider similar use.
Fibrosis
focussed on moving closer
We have been
to
commercialisation of our Fibrosis test to accurately grade
liver fibrosis in the next year. Our results suggest there
could be two products available to market; one that allows
a screen of the population to determine whether the liver
is normal or has fibrosis present and the other to grade
the degree of fibrosis at clinically relevant boundaries. The
results achieved with our data accumulated in Hepatitis C
patients from our study at the Austin Hospital have been
exciting and a resulting abstract has been accepted for
publication by the American Association for the Study of
Liver Disease in November 2015. In the coming months
we will be investigating the opportunity to apply for CE
mark for this test.
We were also pleased to have formed a partnership with
the Commonwealth Scientific and Industrial Research
Organisation (CSIRO) to leverage their own specialist
expertise in analysing data from our previous clinical
studies using a different set of algorithms and techniques.
We will be seeking to expedite early opportunities
for pharmaceutical trial use of our Fibrosis prototype
alongside HepaFat-Scan. The studies initiated this year,
such as the Children’s Hospital of Atlanta in the US, that
will further validate HepaFat-Scan, also allow us to gather
more data on our Fibrosis prototype which is expected to
deliver significant benefits over the mid-long term.
The coming year will be pivotal in the development and
longer term commercialisation of this test and we have
engaged the highest calibre research and development
expertise necessary to ensure the realisation of its
potential.
Marketing
We have recently put in place additional marketing
resources in the US and Europe to further the growth in our
core markets. We will continue to develop collaborative
programmes with stakeholders to facilitate expansion
into new territories including China, India, SE Asia and
the Middle East and we are exploring new indications
for our products. We have undertaken rebranding and
development of our web-site and are providing regular
communication with our stakeholders.
The outlook for the company continues to be very positive
with a strong and experienced management team in place.
Our marketing team pro-actively maintain our credibility
in the clinical community, engaging with key influencers
in our addressable markets. We have a sophisticated
R&D capability to deliver significant benefits over the
immediate and long-term future. Our service delivery is
of exemplary quality, evidenced by customer feedback.
We continue to use R&D, Marketing and Operational
resources in a sustainable and targeted way to deliver
the best return on investment and achieve our ambitious
targets for all Resonance Health stakeholders. We have
a profitable and growing FerriScan business unit, high
further
profile clinical
clinical engagement for HepaFat-Scan, and our MRI test
for fibrosis is well positioned for further development
towards commercialisation.
trials underway
to generate
We look forward to communicating our results as the year
progresses.
Martin Blake
7
ResonanceHealth the management of patients at risk of iron-induced organ
damage.
FerriScan and Cardiac T2* Sales
While total FerriScan and Cardiac T2* volumes have
shown a modest growth of 1.4%, there has been a further
shift in the source of this business towards routine clinical
use. This is evidenced by an excellent 15% increase in
commercial volumes over last year. The impact of this in
revenue terms is reflected in a 14% increase in receipts
and has contributed towards the generation of the best
profit result in the Company’s history.
Progress towards the achievement of the long-term aim for
FerriScan to be routinely used by the clinical community
is also demonstrated by a further 12% increase in the
number of referring clinicians and the establishment of
24 new sites worldwide.
In conjunction with increased commercial volumes,
support from pharmaceutical companies remains strong
in funding the provision of FerriScan to patient groups
globally, which this year represented 19% of total sales
volumes. This has the potential to provide support for the
funding of FerriScan and Cardiac T2* by public health
authorities in those countries.
YEAR IN REVIEW
FerriScan®
FerriScan is globally recognised in the clinical community
as the gold standard method for measurement of liver iron
concentration (LIC). Resonance Health’s sustained efforts
to achieve this status for FerriScan now positions it for
the next stage of growth.
FerriScan is the LIC measurement relied upon by clinical
Key Opinion Leaders to assist them in determining
the optimal treatment for patients with a range of iron
overload conditions. FerriScan has further substantiated
its reputation as the only method offering a non-invasive,
reliable, accurate and safe measurement of liver iron
concentration, a parameter critical to the wellbeing of a
substantial patient population worldwide.
Our clinical education activities this year have resulted
in a further strengthening of the trend towards uptake
of FerriScan by clinicians, supported by its inclusion
in treatment protocols and guidelines. Commercial
marketing efforts have focussed on regions such as
the UK and parts of Europe where the cost of the test is
supported by the public health system and in trying to
achieve reimbursement in other attractive markets.
to support
Resonance Health has actively pursued
further
pharmaceutical endorsement of FerriScan and developed
collaborative approaches
its provision.
This has resulted in direct purchases of FerriScan by
pharmaceutical partners for patients who require accurate
monitoring but who would otherwise be unable to access
services, catalysing the expansion of FerriScan into
countries such as Qatar and Romania over the year.
2015 has been a transformative year for FerriScan,
capitalising on its recognised superiority over other
methods and laying the strategic foundations to widely
expand the use of the service by clinicians in routine
is working
patient management. Resonance Health
collaboratively with pharmaceutical companies and
respected patient advocacy organisations to achieve
access to FerriScan by all patients for whom accurate
measurement of their liver iron concentration is critical
to their well-being.
The Resonance Health Cardiac T2* service
is an
additional MRI-based test to assess patients’ cardiac iron
when evaluating their risk of potential cardiac failure from
iron overload. This test is being increasingly requested
by clinicians alongside a FerriScan measurement of liver
iron concentration to enable better-informed decisions on
8
ResonanceHealth YEAR IN REVIEW
is
an MRI-based,
HepaFat-Scan®
non-invasive
HepaFat-Scan
measurement of liver fat. This is a test that has potential
utility in the screening, diagnosis, monitoring and
treatment planning of patients for whom elevated liver
fat is likely to impact their prognosis. HepaFat-Scan has
Regulatory clearances in the USA (FDA), EU (CE Mark)
and Australia (TGA). The gold standard for assessment
of liver fat is currently liver biopsy which is painful,
invasive and lacking in sensitivity and specificity due to
its subjective and semi-quantitative nature.
In the first full year of HepaFat-Scan’s availability on the
market, Resonance Health has followed a strategic plan
with four main areas of focus:
1.
2.
3.
4.
the clinical community
Engaging with
to
disseminate information to key clinicians, gaining
their feedback and participation in studies that
aim to generate important data to enhance the
acceptance and uptake of HepaFat-Scan. This may
support incorporation of HepaFat-Scan in clinical
guidelines for patients with fatty liver disease;
Engaging with pharmaceutical companies who are
developing therapies to address fatty liver disease.
The Company’s ISO 13485 certified core lab is
ideally suited to provide services for pharmaceutical
companies conducting clinical
trials where a
determination of the amount of fat in the liver is
required;
Commencing a study in collaboration with the
prestigious Children’s Hospital of Atlanta, with the
dual aims of providing an important independent
validation of the HepaFat-Scan technology, and
identifying the clinical benefits of the test to
patients; and
Commencing an Australian study to assess if a
HepaFat-Scan prior to surgery for the treatment of
colorectal metastases of the liver can provide data
to improve post-surgical outcomes.
Additionally, a number of international conferences were
attended throughout the year, and the Company continues
to have a presence on the international Liver Forum.
This provides an arena for clinicians, pharmaceutical
companies and FDA to hold open discussions on clinical
trials and drug development.
A paper was also submitted to a highly respected peer-
reviewed journal and is currently under review. This
paper describes the validation of HepaFat-Scan against
biopsy steatosis measurements and when published will
significantly contribute to the acceptance of HepaFat-
Scan in the clinical community.
Discussions with clinicians globally have had promising
outcomes, including potential additional studies in Asia
and at further sites in the USA.
Pharmaceutical companies have expressed interest in
the potential use of HepaFat-Scan in their own studies
on prototype treatments and discussions are on-going.
These are all important early steps in establishing
the utility of the test, and gaining data through both
pharmaceutical and independent studies that support the
case for clinical use of HepaFat-Scan.
Pipeline Products
Liver Fibrosis Diagnostic
Resonance Health has made considerable progress over
the period in its research and development work towards
a non-invasive test to accurately diagnose and stage liver
fibrosis. A prototype has been developed, using study
data acquired by Resonance Health in collaboration with
the Austin Hospital for a Hepatitis C patient cohort.
A scientific abstract describing the results was submitted
to the American Association for the Study of Liver Disease
(AASLD) and has since been accepted. The abstract will
be published in the Journal Hepatology and will
be presented at The Liver Meeting® to be held in San
Francisco in November 2015.
The Company is continuing its research to explore the
potential of recent advancements in the field of image
analysis algorithms to accurately interpret MRI image
data for the staging of liver fibrosis
In June 2015, Resonance Health announced a
collaboration with the Commonwealth Scientific and
Industrial Research Organisation (CSIRO) who will apply
their own expertise to the study data to further leverage
the Company’s research capability. This work is ongoing
and the Company is hopeful this will be the beginning of
a long-term partnership in research.
9
ResonanceHealth YEAR IN REVIEW
Innovator of the Year Award
EY Entrepreneur of the Year Award™
Resonance Health, in collaboration with the University
of Western Australia was awarded Western Australian
Innovator of the Year for the HepaFat-Scan product.
The Innovator of the Year Program is an annual event
run by the Western Australian Department of Commerce
that fosters a culture of innovation in Western Australia
and acknowledges the achievements of WA’s leading
innovation enterprises.
The Award provided Resonance Health with a package of
financial and non-financial benefits to assist in HepaFat-
Scan’s global business development efforts.
Resonance Health was proud to receive this accolade
that demonstrates recognition of
future value
of its innovations both socially and economically.
the
Chief Scientific Officer Professor Tim St Pierre was also
nominated for the Western Region EY Entrepreneur of
the Year Award™ in the technology category. He has
since been confirmed as winner of this category and will
compete for the national award in Sydney in late 2015
EY Entrepreneur Of The Year™ is the world’s most
prestigious business award
for entrepreneurs. The
program makes a difference for the way it encourages
entrepreneurial activity among those with potential and
recognises the potential of people who inspire others with
their vision, leadership and achievement.
The Resonance health team receiving the Innovator of the Year Award
Resonance Health Core Operations
Service Provision
Resonance Health is focussed on the provision of world-
leading services to improve the medical outcomes for
patients worldwide, and in so doing to generate value for
all stakeholders.
integrity and maximising
The Company has three major areas of operation, all
of which are underpinned by a commitment to quality,
scientific
the return on
resources. The aims of extending Resonance Health’s
penetration into clinical markets, ensuring the Company’s
products are of the highest quality and conducting
on-going research into potential new products with
significant market potential are the foundation to ensure
strong future growth.
Resonance Health prides itself on its customer-focused,
quality-assured service delivery. The Company has
a strong commitment to monitoring and continually
improving products and services via the ISO - certified
quality management system.
The resulting high level of customer service is regularly
acknowledged and complimented by clients. Survey
feedback is also testament to the effectiveness of the
Company’s efforts in this area.
Targeted projects are undertaken regularly to improve
the processes, procedures and systems in place in the
Service Centre. These are performed on an ongoing basis
to ensure a user-friendly and timely service provision for
customers. It also ensures processes are stream-lined
to improve internal efficiencies and to ensure increasing
volume demands can be constantly met. Such projects
continue to be a strong focus into the next year.
10
ResonanceHealth YEAR IN REVIEW
Marketing
This year our extensive international marketing efforts
have delivered some excellent results in key target
markets including a 29% increase in UK sales volumes
and a significant lift in all other commercial target markets
such as the US, Rest of Europe and ANZ.
Marketing strategy has focussed on Key Opinion Leader
advocacy and clinical education, with targeted profiling
events to launch HepaFat-Scan and gain further exposure
for FerriScan. Further exploration and scoping of markets
in China and US has been undertaken, and we continue
to explore new markets and expand our global network.
Proactive stakeholder relations delivered further pre-paid
FerriScan orders for pharmaceutical company-funded
FerriScan provision.
In response to market demand for further data on HepaFat-
Scan, efforts have focused on proactively seeking study
opportunities and presenting the value proposition of
including HepaFat-Scan in planned trials with pharma in
tandem with commercial approaches. With the exciting
development of our new fibrosis prototype we will seek to
generate further opportunities both in the research setting
and within the pharmaceutical industry.
Corporate re-branding has successfully delivered new
logos and a new website benefitting from improved speed,
design and user-friendliness. As a result, website traffic
has increased 50% since the rebuild, compared to the
same period the previous year. We continue to improve
external communications with our quarterly customer
newsletter and news flow. Ongoing site management in
the field and customer relations activities are continually
undertaken by marketing to maintain and grow existing
business and we have excellent feedback on our customer
service.
To fulfil our ambitious marketing objectives for all our
service offerings over the next financial year we have
recently added capacity to our team with the appointment
of additional strategic resources in the UK, US and
Germany in 2015 to drive growth and market share in key
target markets. During the year a Canadian distributor was
identified who is being engaged to promote Resonance
Health’s products in the Canadian market.
Research and Development
Resonance Health is committed to ongoing research and
the identification of new areas where its expertise can be
applied with the potential to commercialise additional
services. This is in line with the Company’s vision to be
a leader in the development and provision of MRI-based
techniques for the diagnosis and clinical management of
human diseases.
In addition to the significant R&D progress made in
the development of our fibrosis prototype this year, the
Company has also performed research in the area of
bone marrow assessment. Based on this work there have
been subsequent active discussions on providing these
assessments in a small pharmaceutical sponsored clinical
study. With our expertise in this area increasing, the
Company will be looking to engage with pharmaceutical
companies for larger scale studies where this assessment
will add value.
Assessment of bone marrow iron is relevant, for example,
for patients with myelodysplastic syndrome (MDS)
and acute myeloid leukaemia (AML) where the ability
of the patient’s bone marrow to produce healthy blood
cells has been affected. These patients receive blood
transfusions, potentially leading to iron overload and
therefore iron chelation therapies may benefit the patient.
An assessment of bone marrow iron may assist patient
management and clinical treatment decisions.
Resonance Health will also investigate other potential
uses for the technology developed to measure liver
fibrosis. These algorithms have the potential to be more
widely applied and adapted to develop new non-invasive
biomarkers that enable diagnosis of other disease types.
11
ResonanceHealth Resonance
Health
Be Better Informed
A global leader in the
development and delivery of
non-invasive diagnostic medical
imaging solutions
12
HepaFat-Scan®
MRI Measurement of Liver Fat
FerriScan®
MRI Measurement of Liver Iron Concentration
Clinical Trial Services
Imaging Core Lab and Support
www.resonancehealth.com
info@resonancehealth.com
ResonanceHealth Resonance
Health
Be Better Informed
A global leader in the
development and delivery of
non-invasive diagnostic medical
imaging solutions
Resonance
Health
Be Better Informed
CONTENTS
SECTION TWO
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
14
26
33
34
35
36
37
38
65
66
Annual Report 2015
13
HepaFat-Scan®
MRI Measurement of Liver Fat
FerriScan®
MRI Measurement of Liver Iron Concentration
Clinical Trial Services
Imaging Core Lab and Support
www.resonancehealth.com
info@resonancehealth.com
ResonanceHealth DIRECTORS’ REPORT
The Directors present their report on the Group, consisting of Resonance Health Limited (the Company) and the
entities it controlled, together with the annual financial report for the financial year ended 30 June 2015. In order to
comply with the provisions of the Corporations Act 2001, 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
Position:
Chairman — Independent and Non-Executive (appointed as Director 4 October 2007 and as Chairman
16 December 2010)
Experience:
Dr Blake is a Radiologist and Nuclear Physician and brings significant technical and industry experience to
Resonance Health. He is currently the Chairman of Perth Radiological Clinic, one of the largest independent medical
imaging providers in Australia, and negotiated the successful buy-back of this company. He has experience with
radiology mergers and acquisitions as well as joint venture opportunities, and is an active investor in small start-up
companies in biomedical, technological and financial services.
Other current directorships: None
Former directorships in last 3 years: None
Special responsibilities:
Chairman of the Audit Committee
Chairman of the Remuneration Committee
Dr Jason Loveridge B.Sc, PhD, FRSM
Position:
Director — Non-Executive (appointed 7 February 2013)
Experience:
Dr. Loveridge FRSM has a Ph.D. in Biochemistry, a B.Sc. in Biochemistry and Microbiology (Class II/I Honours) and
is a Fellow of the Royal Society of Medicine.
Dr. Loveridge has been working with young, growth orientated businesses in the biotech and medtech industries
for over 20 years. As an active venture investor he established a lengthy track record of successful participation
in European, US and Israeli based healthcare companies. Based in Europe, he also has considerable international
experience at Board level and a particular interest in business development, mergers & acquisitions.
Other current directorships:
Actinogen Medical
Former directorships in last 3 years: None
Special responsibilities:
Member of the Audit Committee
Member of the Remuneration Committee
14
ResonanceHealth DIRECTORS’ REPORT
Mr Simon Panton
Position:
Director — Non-Executive (appointed 5 October 2009)
Experience:
Mr Panton has been a major shareholder of Resonance Health since 2008 and joined the board in 2009 as he is
strong believer in liver health technologies. Mr Panton started and ran his own successful small business for over
15 years and brings skills in business and marketing. He has experience in the property industry, financial markets
and the acquisition and disposal of investments. He currently manages assets and projects associated within family
holdings and is also a Non-Executive Director of 4DS Ltd.
Other current directorships:
Non-Executive Director of 4DS Ltd
Former directorships in last 3 years: None
Special responsibilities:
Member of the Audit Committee
Member of the Remuneration Committee
Professor Timothy St Pierre B.Sc(Hons), PhD
Position:
Director — Executive (appointed 21 August 2006 resigned 29 October 2014)
Chief Scientific Officer
Experience:
Professor St Pierre is widely published in the field of iron in medicine and biology and has a reputation as a Key
Opinion Leader in the understanding of the fundamental properties of the iron deposits that occur in iron overload
diseases.
A Professor at The University of Western Australia, Professor St Pierre led the team which developed the FerriScan
technology. He has strong links with international Key Opinion Leaders in the field of iron overload diseases and
regularly participates in international research collaborations. In 2010 won a Clunies Ross Award from the Australian
Academy of Technological Sciences and Engineering for his work on non-invasive measurement of tissue iron
deposits.
Other current directorships: None
Former directorships in last 3 years: None
Special responsibilities: None
Ms Liza Dunne B.Bus, GDipAppFin, GAICD
Position:
Managing Director (appointed 23 October 2008 resigned 31 January 2015 )
Experience:
Ms Dunne joined Resonance Health in October 2003 and has been actively involved in all aspects of the business
including business development, commercialisation of FerriScan, developing alliances with pharmaceutical industry
partners and obtaining regulatory approval in various countries. Ms Dunne has in depth experience in senior
positions across industry. She worked for IBM for eleven years in financial, marketing and management positions and
spent five years with KPMG Consulting working across a broad spectrum of industry and project areas that focused
on improved business processes and implementation of new technology. Ms Dunne holds a Business Degree, a
Graduate Diploma in Applied Finance and is a Graduate of the Australian Institute of Company Directors. Ms Dunne
resigned from the Company on 31 January 2015
Other current directorships: None
Former directorships in last 3 years: None
15
ResonanceHealth
DIRECTORS’ REPORT
Management
Mr Sander Bangma M.Sc, DipMgt
Position:
General Manager of Operations (appointed 31st January 2015)
Experience:
Mr Bangma joined Resonance Health in 2005 and has recently been appointed General Manager. He holds a Masters
Degree in Computer Science and has completed a Diploma in Management. Throughout his time with Resonance
Health he has gained a wealth of experience in the day-to-day operations of the Company. Mr Bangma previously held
a dual role in the Company as Development Manager and Service Centre Manager. In these roles his responsibilities
included overseeing all software medical device development activities, IT infrastructure and the Company’s
Intellectual Property portfolio, as well as all facets of Resonance Health’s analysis service provision. He continues to
hold overall responsibility for these areas.
Mrs Melanie Baxter BA (Hons)
Position:
Marketing Director UK Based (appointed 31st January 2015)
Experience:
Mrs Baxter is a marketing communication specialist who has worked for multinational clients up to Board level.
Melanie has worked with Resonance Health since 2005.
With 20 years of strategic communication, marketing and sales experience, particularly in the medical sector, Melanie
develops and implements dynamic global marketing and PR strategies. Her international network of contacts in the
clinical and patient communities ideally positions Melanie to develop business opportunities and drive growth in
Resonance Health’s target markets.
Mr Adrian Bowers B.Bus, CPA, Chartered Secretary
Position:
Company Secretary and Chief Financial Officer (appointed 28th November 2013)
Experience:
Mr Bowers has experience in managing the financial affairs of public corporations across a diverse range of
industries.
Mr Bowers holds a Bachelor of Business, is a CPA and qualified Chartered Secretary.
Mrs Celine Royet Pharm. D
Position:
Quality Assurance and Regulatory Affairs Manager (appointed 5th June 2015)
Experience:
Mrs Royet recently joined Resonance Health as the Quality Assurance & Regulatory Affairs Manager. Celine has over
12 years of experience in the pharmaceutical and medical devices industry in Europe (France & UK) and Australia.
She is a Doctor of Pharmacy (France) and holds an additional Masters Degree specialised in QA/QC for cell therapy
and gene therapy products.
16
ResonanceHealth
DIRECTORS’ REPORT
Interests in the Shares of the Company
The following relevant interests in shares of the Company were held by the Directors during the period. There has
been no change in Directors’ and executives’ shareholdings to the date of this report.
Number of fully paid ordinary shares
Directors
Dr M Blake
Dr J Loveridge
Mr S Panton
Total
Management
Professor T St Pierre
Mr S Bangma
Mrs M Baxter
Mr A Bowers
Mrs C Royet
Total
Incentive Shares
6,464,677
-
65,966,163
72,430,840
7,218,500
30,303
30,303
30,303
-
7,309,409
The Company does have an Employee Share Plan (ESP) adopted at the Annual General Meeting held 27th November
2014. In total 363,636 shares were issued to Staff during the year under the ESP. No shares were issued to staff
during the previous financial year.
No shares were issued as part of remuneration to Directors.
Dividends Paid or Recommended
No dividend was paid or declared for the financial year.
Principal Activities
The Company’s business involves the development and commercialisation of technologies and services for the
quantitative analysis of radiological images in a regulated and quality controlled environment.
The Company’s core product is FerriScan, a non-invasive liver diagnostic technology used for the measurement of
iron in the liver.
Review of Operations FerriScan:
FerriScan is a patent-protected software medical device used to assess the amount of iron in the liver through the
analysis of MRI images. The FerriScan software is used at the Company’s ISO 13485 certified central facility to
provide an image analysis and reporting service to hospitals and pharmaceutical companies around the world. We are
currently providing FerriScan analysis and reporting services to clients in over 30 countries, reflecting the continued
interest in FerriScan.
Receipts from customers were $2,489,302, up 14% from the previous year’s result. During the year over 24 new
radiology facilities were set up for FerriScan imaging and collaborative programs with pharmaceutical companies are
ongoing.
17
ResonanceHealth
DIRECTORS’ REPORT
Resonance Health has established a marketing and sales team in Germany, UK and USA focused on strategic long
term growth.
Variations in FerriScan revenue growth depend on changes in the mix of services provided, with a shift towards
commercial use of FerriScan for clinical patient management. Over the period, a number of pharmaceutical company
clinical trials using FerriScan in the assessment of chelation treatments have been completed. Growth in the routine
use of FerriScan by hospitals does not include these additional project related services. However, the shift towards
the adoption of FerriScan into clinical patient management moves the Company towards achievement of its long-term
goal for steady and sustainable global growth of the service.
HepaFat-Scan®
HepaFat-Scan is a software medical device for the measurement of fat in the liver through the analysis of MRI images.
Commercialisation activities have focused on the following activities:
•
•
•
•
•
•
•
Commencement of a HepaFat-Scan validation study with a leading US hospital, Children’s Healthcare of Atlanta.
Commencement of a liver surgery study in Australia to validate HepaFat-Scan and assess its effectiveness for
improving liver surgery outcomes in patients with colorectal liver metastases.
Engaging with the clinical community to participate in studies that aim to generate important data to enhance the
acceptance and uptake of HepaFat-Scan and may support incorporation of HepaFat-Scan in clinical guidelines
for patients with fatty liver disease.
Engaging with pharmaceutical companies developing therapies to address fatty liver disease. The Company’s
ISO 13485 certified core lab is ideally suited to provide services for pharmaceutical companies conducting
clinical trials where a determination of the amount of fat in the liver is required.
Presentation of latest clinical data at European Association for the Study of the Liver (EASL), Vienna and
attendance at other key conferences such as the Liver Meeting for the American Association for the Study of
Liver Diseases (AASLD).
Invitation onto the internationally based Liver Forum. The purpose of the forum is to provide an arena
for clinicians, pharmaceutical companies and FDA to hold open discussions on clinical trials and drug
development.
Submission of a paper to a highly respected peer reviewed journal. This paper describes the validation of
HepaFat- Scan against biopsy steatosis measurements and when published will significantly contribute to the
acceptance of HepaFat-Scan in the clinical community.
Liver Fibrosis
Resonance Health is continuing its development of tools for the quantification of liver fibrosis using MRI technology.
A non-invasive alternative to a liver biopsy to assess the degree of liver fibrosis is a significant unmet need. Activities
have focused on the following:
•
•
•
•
Development of a prototype non-invasive liver fibrosis measurement that distinguishes between low and high
fibrosis scores in a patient cohort with Hepatitis C.
Submission to and acceptance from the American Association for the Study of Liver Disease (AASLD) of an
abstract describing the results of testing of the prototype non-invasive liver fibrosis measurement technology.
The abstract will be published in the Journal Hepatology and will be presented at The Liver Meeting® to be held
in San Francisco in November 2015.
Partnering with CSIRO’s Biomedical Imaging Group to enhance MR image analysis software for the non-
invasive measurement of liver fibrosis.
Continuing research to explore the potential of recent advancements in the field of image analysis algorithms to
accurately interpret MRI image data for the staging of liver fibrosis.
18
ResonanceHealth DIRECTORS’ REPORT
Financial Summary
A net profit after tax was recorded for the year of $463,234 compared to a net loss after tax of $72,415 in the previous
financial year.
Total revenue was $2,676,760 (2014: $2,309,036) an increase of 16% or $367,724 from the prior year. The Company
received an Export Market Development Grant of $86,934 compared to $nil received in the previous year and the WA
Innovator of the Year grant of $75,000. Interest income was $65,518 compared to the prior year of $24,471 due to the
increase of cash on deposit for the full year.
The services business segment reported a profit of $709,671 compared to a profit of $661,665 in the previous
financial year.
Operating expenses (excluding foreign exchange gain) were 10% or $240,618 higher than the prior year. Total
expenditure, excluding foreign exchange gain/loss for the year was $2,571,557 compared to the prior year total
expenditure of $2,330,939.
The operating expenses increase is a result of increased marketing activity as company delegates headed to China,
USA, Austria, United Kingdom and Italy to participate in carefully selected conferences and met with key stakeholders.
These profiling activities increased awareness of HepaFat-Scan and FerriScan in the global clinical community and
generated further opportunities. Year on year increase in marketing and travel expense amounted to $198,501.
The profit for the year was improved significantly by the Company deciding to form a Tax Consolidated Group
resulting in an income tax benefit of $144,316 being recognised as tax liabilities were no longer payable. A Research
and Development Tax Credit of $70,285 was recognised for research and development work undertaken for the
financial year 2013-2014. In total both amounts resulted in a tax benefit of $214,601 compared to the prior year
amount of $3,367.
Resonance Health has cash at bank of $2,797,203 at the end of the financial year compared to $2,097,607 in the
previous financial year and has no debt. Receipts from customers were $2,489,302 up 14% from the previous year’s
result. Cash flows from operating activities generated positive cash of $197,163.
The Company raised $650,000 (less costs) on the 15 September 2014 by issuing 13 million shares at 5 cents per
share. Research and development expenditure focused on the Company’s HepaFat-Scan and fibrosis products
totalled $390,829 during the year (2014: $376,408). This comprised capitalised development costs of
$159,210 (2014: $190,406) that are recognised as an intangible asset on the Statement of Financial Position and
expenditure of $121,052 (2014: $89,326) amortisation expense, $68,665 (2014: $70,874) recognised in research
and development and $41,900 (2014: $25,804) recognised in employee benefits in the Statement of Comprehensive
Income.
Operating Results
The net profit of the Group for the financial year after tax was $463,234 (2014: loss $72,415).
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the Company during the financial year, other than as set out
in this report.
Significant Events After Balance Date
There have been no subsequent events, that require disclosure in this report.
Likely Developments and Expected Results of Operations
18
19
ResonanceHealth DIRECTORS’ REPORT
Comments on expected results of the operations of the Group are included in this report under the review of
operations.
Disclosure of information regarding likely developments in the operations of the Group in future financial years and
the expected results of those operations is likely to result in unreasonable prejudice to the Company. Accordingly, this
information has not been disclosed in this report.
Environmental Legislation
The Group’s operations are not subject to any significant environmental legislation.
Indemnification and Insurance of Directors and Officers
The Company has agreed to indemnify all the Directors and secretaries of the Company for any liabilities to another
person (other than the Company or related body corporate) that may arise from their position as directors of the
Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith.
During the financial year the Company paid a premium to insure the Directors and secretaries of the Company
and its controlled entities against any liability incurred in the course of their duties to the extent permitted by the
Corporations Act 2001. It is not possible to apportion the premium between amounts relating to the insurance against
legal costs and those relating to other liabilities.
Remuneration Report (audited)
This report outlines the remuneration arrangements in place for the key management personnel (KMP) of Resonance
Health Limited for the financial year ended 30 June 2015. The information provided in this remuneration report has
been audited as required by Section 308 (3C) of the Corporations Act 2001.
Key management personnel 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.
Key Management Personnel
(i) Directors
Dr Martin Blake – Chairman
Dr Jason Loveridge
Mr Simon Panton
Ms Liza Dunne
(ii) Management Executives
Professor Timothy St Pierre – Chief Scientific Officer
Mr Sander Bangma – General Manager of Operations
Mrs Melanie Baxter – Marketing Director
Mr Adrian Bowers - Company Secretary & Chief Financial Officer
Mrs Celine Royet – Quality and Regulatory Affairs Manager
Remuneration Policy
The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives
of the Group is as follows:
•
•
set competitive remuneration packages to attract the highest calibre of employees in the context of prevailing
market conditions, particular experience of the individual concerned and the overall performance of the
Company; and
reward employees for performance that results in long-term growth in shareholder wealth, with the objective of
ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team.
20
ResonanceHealth
DIRECTORS’ REPORT
The Board of Resonance Health Limited believes the remuneration policy to be appropriate and effective in its ability
to attract and retain the best executives and Directors to run and manage the Group, as well as create goal congruence
between Directors, executives and shareholders.
Remuneration Committee
The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing
compensation arrangements for Directors and the executive team.
The remuneration policy, setting the terms and conditions for the Directors and other senior executives, was
developed by the Remuneration Committee and approved by the Board.
The Remuneration Committee reviews executive packages annually by reference to the Group’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
In accordance with best practice Corporate Governance, the structure of non-executive Director and executive
remuneration is separate and distinct.
Non-executive Director Remuneration
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and
retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Non-executive Directors’ fees not exceeding an aggregate of $250,000 per annum have been approved by the
Company in a general meeting.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is
apportioned amongst Directors is reviewed annually. The Board considers fees paid to non-executive Directors of
comparable companies when undertaking the annual review process.
Each of the non-executive Directors receives a fixed fee for their services as Directors. There is no direct link between
remuneration paid to any of the Directors and corporate performance.
Executive Remuneration
Remuneration consists of fixed remuneration and variable remuneration.
(i)
Fixed Remuneration
Fixed remuneration is reviewed annually. The process consists of a review of relevant comparative remuneration
in the market and internally, and where appropriate, external advice on policies and practices. The Committee
has access to external, independent advice where necessary.
All executives (except Professor St Pierre) receive a base salary (which is based on factors such as length of
service and experience), superannuation and fringe benefits.
Executives receive a superannuation guarantee contribution required by the government, which for the year is
9.50%, and do not receive any other retirement benefits.
(ii) Variable Remuneration
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 cost to the Company and expensed or
capitalised. Securities given to Directors and executives are valued as the difference between the market price of
those shares and the amount paid by the director or executive. There are currently no securities on issue.
20
21
ResonanceHealth
DIRECTORS’ REPORT
Management Employment Agreements
Ms Dunne was appointed to the role of Managing Director of Resonance Health Ltd on 23 October 2008 and resigned
31 January 2015. Her employment agreement provided for a salary of $272,500 pa inclusive of superannuation and
the provision of three months notice for termination or resignation without cause.
Mr Bowers was appointed to the role of Company Secretary of Resonance Health Ltd on 28 November 2013. His
employment agreement provides for a salary of $140,000 pa exclusive of superannuation and a termination notice of
2 weeks.
Mr Bangma was appointed to the role of General Manager of Operations on 31st January 2015. His employment
agreement provides for a salary of $125,000 pa exclusive of superannuation and a termination notice of 4 weeks.
Mrs Royet was appointed to the role of Quality Assurance and Regulatory Affairs Manager on 5th June 2015. Her
employment agreement provides for a salary of $115,000 pa exclusive of superannuation and a termination notice of
1 week.
Consultancy Services Agreement
The Company has an agreement with The University of Western Australia (UWA) for consulting services provided by
Professor St Pierre. Under this agreement consulting services provided for duties of Chief Scientific Officer totalling
$82,719 (2014: $67,119) and no fixed fee for his services as a non-executive director (2014: $nil) were incurred
during the financial year. These amounts are included in Professor Tim St Pierre’s remuneration disclosed in the
following table.
Mrs Baxter was appointed to the role of Marketing Director on 31st January 2015. The Company has an agreement
with Catalyst Communications Limited for consulting services provided by Mrs Baxter. Under this agreement
consulting services provided totalled $144,133. The agreement can be terminated immediately by mutual agreement.
This amount is included in Mrs Baxter’s remuneration disclosed in the following table.
Details of Remuneration for Year Ended 30 June 2015
The remuneration for key management personnel of the Group during the year was as follows:
Short-term
employee
benefits
Salary
Post
employment
benefits
Equity
Total
Superannuation
Contributions
Shares/
Options
$
$
$
$
Remuneration
Fixed Remuneration
linked to
performance
%
%
Non-Executive Directors’
remuneration
54,795
40,000
36,530
131,325
Dr M Blake
Dr J Loveridge
Mr S Panton
Total
Executive Directors’
remuneration
Ms L Dunne 1
Total
274,007
274,007
5,205
-
3,470
8,675
20,553
20,553
-
-
-
60,000
40,000
40,000
- 140,000
100%
100%
100%
- 294,560
100%
- 294,560
-
-
-
-
22
ResonanceHealth
DIRECTORS’ REPORT
Short-term
employee
benefits
Salary
$
Management Executives’
remuneration
Professor T St Pierre 2,3
82,719
Post
employment
benefits
Equity
Total
Superannuation
Contributions
Shares/
Options
$
-
$
$
-
82,719
Mr S Bangma 5
119,692
11,371
1,000 132,063
Mrs M Baxter 4,5
144,133
-
1,000 145,133
Mr A Bowers 5
131,600
12,502
1,000 145,102
Mrs C Royet 6
Total
1,650
479,794
157
-
1,807
24,030
3,000 506,824
1 Ms L Dunne resigned as Managing Director 31st January 2015.
2 Professor T St Pierre resigned as a Director 29th October 2014.
Remuneration
Fixed Remuneration
linked to
performance
%
%
100 %
99.2%
99.3%
99.3%
100 %
-
0.8%
0.7%
0.7%
-
3 Professor T St Pierre is the Chief Scientific Officer; remuneration represents consulting fees for duties as Chief
Scientific Officer paid to The University of Western Australia. At 30 June 2015 a balance of $45,512 was owing to
The University of Western Australia.
4 At 30 June 2015 a balance of $17,093 was owing to Catalyst Communications Limited for consulting services
provided by Mrs Baxter.
5
Received 30,303 shares in Resonance Health Limited on 31st March 2015. The shares were issued under the
Resonance Health Limited Employee Share Plan – approved by members at the Annual General Meeting held
27th November 2014. The shares were issued for nil consideration. The fair value of the shares issued to each
staff member was $1,000 which was based on the share price at the date of issue.
6 Mrs C Royet commenced employment on 5th June 2015.
Details of Remuneration for Year Ended 30 June 2014
Short-term
employee
benefits
Post
employment
benefits
Equity
Total
Salary Superannuation
Contributions
Shares/
Options
$
$
$
$
Remuneration
Fixed Remuneration
linked to
performance
%
%
22
23
Non-Executive Directors’ remuneration
Dr M Blake
Mr S Panton
Dr J Loveridge
Total
54,920
27,460
45,000
127,380
5,080
2,540
-
7,620
-
-
-
60,000
30,000
45,000
- 135,000
100%
100%
100%
-
-
-
ResonanceHealth
DIRECTORS’ REPORT
Short-term
employee
benefits
Post
employment
benefits
Equity
Total
Salary Superannuation
Contributions
Shares/
Options
$
$
$
$
Remuneration
Fixed Remuneration
linked to
performance
%
%
Executive Directors’
remuneration
Ms L Dunne
250,000
23,125
- 273,125
Professor T St Pierre 1
67,119
-
-
67,119
100%
100%
Total
317,119
23,125
- 340,244
Other Executives’
remuneration
Mrs N Haydari2
Total
59,411
59,411
4,460
4,460
-
-
63,871
63,871
100%
1 Professor St Pierre’s remuneration represents director’s 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 N Haydari resigned effective 28th November 2013.
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.
-
-
-
Balance
1/7/2014
Received as
Remuneration
Net Change
Received during
the year on
Other exercise of options
Dr M Blake
Dr J Loveridge
Mr S Panton
Ms L Dunne 1
Professor T St Pierre
Mr S Bangma
Mrs M Baxter
Mr a Bowers
Mrs C Royet
Total
6,464,677
-
65,960,972
3,253,385
9,078,750
-
-
-
-
84,757,784
-
-
-
-
-
30,303
30,303
30,303
-
90,909
-
-
5,191
-
(1,860,250)
-
-
-
-
(1,855,059)
1. Ms L Dunne holding as at date of resignation 31st January 2015.
-
-
-
-
-
-
-
-
-
-
Balance
30/6/2015
6,464,677
-
65,966,163
3,253,385
7,218,500
30,303
30,303
30,303
-
82,993,634
No options or rights are held by any member of KMP and there were no other transactions with KMP’s during the year.
24
ResonanceHealth
DIRECTORS’ REPORT
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 2015, and the numbers of meetings attended by each director were:
Director Meetings
Audit Committee Meetings Remuneration Committee
Meetings
Number eligible Number
attended
To attend
Number eligible Number Number eligible Number
attended
To attend
To attend
attended
Dr M Blake
Mr S Panton
Dr J Loveridge
Ms L Dunne 1
Professor T St Pierre 2
11
11
10
6
5
11
11
10
6
-
3
3
3
-
-
3
3
3
-
-
2
2
2
-
-
2
2
2
-
-
1 Ms L Dunne resigned as Managing Director 31 January 2015.
2 Professor T St Pierre resigned as a Director 29 October 2014. He was absent from Board meetings as a result of his
appointment as an Institute of Electrical and Electronics Engineers (IEEE) Magnetics Society Distinguished Lectururer,
requiring extensive international travel.
Corporate Governance
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 financial report. This Independence
Declaration is set out on page 33 and forms part of this Directors’ Report for the year ended 30 June 2015.
Non-audit Services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are
outlined in Note 22 to the financial statements. The Directors are satisfied that the provision of non-audit services is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit
services have been reviewed to ensure that they do not impact the integrity and objectivity of the auditor and none of
the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES
110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board.
This report is made in accordance with a resolution of the Board of Directors.
Dr Martin Blake Chairman
Perth, Western Australia. Dated this 24 September 2015
24
25
ResonanceHealth
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. With effect 31st January 2015 the
Company does not have a designated Managing Director nor a CEO. The Managing Director and the CEO job
functions are replaced by Management.
Management – Key Personnel:
•
•
Tim St Pierre – Chief Scientific Officer responsible for Research and Development.
Sander Bangma – General Manager of Operations responsible for day to day management of service delivery
and R&D activities.
• Melanie Baxter – Director of Marketing responsible for the development of sales and marketing.
•
•
Adrian Bowers – Chief Financial Officer and Company Secretary responsible for good administration of the
Company.
Celine Royet – Quality Assurance and Regulatory Affairs Manager responsible for compliance with FDA, TGA
and CE.
26
ResonanceHealth CORPORATE GOVERNANCE STATEMENT
The Board delegates responsibility for day to day management of the Company to Management. However,
Management must consult the Board on matters that are sensitive, extraordinary or of a strategic nature. The
Company Secretary supports the effectiveness of the Board. The Company Secretary is accountable directly to the
board, through the chair, on all matters to do with the proper functioning of the Board.
Separate functions of the Board and management existed and were practised throughout the year.
The performance of Management is measured against criteria agreed annually with each person and is based
predominantly on the achievement of agreed milestones. The Management review was undertaken during reporting
period.
Details of matters referred to the Board and delegated to Management are outlined in the Board Charter. A copy of the
Board Charter is publically available on the Company’s website.
The Company undertakes appropriate checks before appointing a person or putting forward to security holders a
candidate for election, as a director; and provides security holders with all material information in its possession
relevant to a decision on whether or not to elect or re-elect a director.
The Company undertakes a periodical review evaluating the Board members. The Chairman prepares a questionnaire
and asks the Directors and Company Secretary to complete their written response. The Responses are reviewed and
discussed at appropriate Board meetings. The Board review was completed during the reporting period.
The Company provides each Director and management executive a written agreement setting out the terms of their
appointment.
Diversity Policy
The Board currently does not have a Diversity Policy. Gender Diversity is demonstrated within the Company as
follows:
Currently, 32% of all current employees are women and 26% 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 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.
The ASX guidelines recommend that a listed Company should have a majority of Directors who are independent,
Principle 2 Recommendation 2.4. With effect from 31st January 2015 the Board did have a majority of independent
Directors.
A Director is considered independent when the Director does not have any relationship with the Company that would
be considered to affect their independent status as outlined in the ASX Corporate Governance Council Principle 2
Recommendation 2.4.
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
26
27
ResonanceHealth CORPORATE GOVERNANCE STATEMENT
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 (resigned 31 January 2015)
• Mr Simon Panton – Not independent – substantial shareholder
•
•
Professor Tim St Pierre – Executive – Not independent – Chief Scientific Officer (resigned 29 October 2014)
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 2.5 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 2.5 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.
While there is no current encumbent in the role of Managing Director, some of the responsibilities have been assumed
by General Manager of Operations, Sander Bangma. Dr Martin Blake has assumed an Executive Chairman role.
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 2.1 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
Nomination and Remuneration Committee consists of three Non-executive Directors.
The number of meetings attended by each member of the Nomination and Remuneration Committee are detailed in the
Directors’ Report. The Company discloses its Nomination and Remuneration Committee Charter on the Company’s
website.
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
28
ResonanceHealth CORPORATE GOVERNANCE STATEMENT
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 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.
The Board complied with the ASX Corporate Governance Council Principle 3 Recommendations at all times during
the year.
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 Group 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 4.1 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.
28
29
ResonanceHealth CORPORATE GOVERNANCE STATEMENT
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
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 2014 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. The Chairman of the Board is also Chairman of the committee which is not in accordance with
Principle 4.1, however given the size of the company and the Chair’s Independent status the Board’s opinion is that it
is reasonable and acceptable.
In accordance with Recommendation 4.2 the Chief Financial Officer and General Manager of Operations 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.
In accordance with Recommendation 4.3 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.
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
Company Secretary is 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.
30
ResonanceHealth CORPORATE GOVERNANCE STATEMENT
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.
The Company’s Audit and Risk Charter is displayed on the Company’s website.
In regards to Recommendation 7.3 the Company does not have an Internal Audit Function given its size and the
company has maintained a Quality Management System (QMS) to international standards ISO13485:2003 for the
whole financial year which encompass formal risk analysis processes.
In regards to Recommendation 7.4 the Company does not have material exposure to economic, environmental and
social sustainability risks other than normal trading business risks.
Except for Recommendation 7.3 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.
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 2015 the Nomination and Remuneration Committee met
two times.
The Company pays fees to The University of Western Australia for services provided by Professor St Pierre who is the
Chief Scientific Officer the Company.
All Management employees receive a base salary and superannuation. The Company has a share plan. Directors 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 Remuneration Report.
30
31
ResonanceHealth CORPORATE GOVERNANCE STATEMENT
The Nomination and Remuneration Committee Charter is displayed on the Company’s website.
Recommendation 8.3 – The Company does not have a written policy on whether participants are permitted to enter
into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating
in the Share Plan. However the Directors discourage employees from doing so especially if it is a short term trading
activity.
The Board complied with the ASX Corporate Governance Council Principle 8 Recommendations at all times during
the year excepted for Recommendation 8.3 as noted above.
32
ResonanceHealth AUDITOR’S INDEPENDENCE DECLARATION
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 2015, 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.
Perth, Western Australia 24 September 2015
L Di Giallonardo Partner
32
33
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.
ResonanceHealth
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
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/(loss)
Due diligence expense
Other expenses
Notes
2(a)
2(b)
Consolidated
2015
$
2,443,476
2014
$
2,284,565
233,284
24,471
2,676,760
2,309,036
(1,348,506)
(1,307,370)
(94,032)
(68,665)
(13,649)
(121,052)
(371,733)
(159,449)
143,430
(15,264)
(379,207)
(79,540)
(70,874)
(19,242)
(89,326)
(173,232)
(139,345)
(53,879)
(119,573)
(332,437)
Profit/(loss) before income tax benefit
248,633
(75,782)
Income tax benefit
3
214,601
3,367
Net profit/(loss) for the year attributable to
owners of the parent
463,234
(72,415)
Other comprehensive income/(loss)
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
(61,916)
(37,314)
Other comprehensive income/(loss) for the year, net of tax
(99,230)
(9,249)
9,827
578
Total comprehensive income/(loss) for the year
attributable to owners of the parent
364,004
(71,837)
Basic earnings/(loss) per share (cents per share)
5
0.12
(0.02)
The accompanying notes form part of these financial statements.
34
ResonanceHealth
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2015
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
Provisions
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
Notes
Consolidated
2015
$
2014
$
7
8
9
10
11
12
9
13
3
15
14
15
2,797,203
2,097,607
662,177
42,304
499,399
24,602
3,501,684
2,621,608
27,216
1,601,442
-
62,106
29,448
1,563,284
3,004
59,099
1,690,764
1,654,835
5,192,448
4,276,443
329,158
-
44,070
413,932
787,160
460,429
144,316
48,610
244,480
897,835
-
-
40,013
40,013
787,160
937,848
4,405,288
3,338,595
16(a)
16(b)
69,406,199
68,703,510
(204,296)
(105,066)
(64,796,615)
(65,259,849)
4,405,288
3,338,595
The accompanying notes form part of these financial statements.
35
ResonanceHealth
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
Foreign
Currency
Issued Translation
Capital Reserve Reserve
$
Option Accumulated
Losses
$
$
$
Total
Equity
$
Balance at 1 July 2013
67,534,039
(171,928)
66,284
(65,187,434)
2,240,961
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Shares issued
Share issue costs
-
-
-
1,277,521
(108,050)
-
578
578
-
-
-
-
-
-
-
(72,415)
(72,415)
-
578
(72,415)
(71,837)
-
-
1,277,521
(108,050)
Balance at 30 June 2014
68,703,510 (171,350)
66,284 (65,259,849) 3,338,595
Profit for the year
Other comprehensive loss
Total comprehensive income
for the year
-
-
-
(99,230)
-
(99,230)
Shares issued
Shares issue costs
745,039
(42,350)
-
-
-
-
-
-
-
463,234
463,234
-
(99,230)
463,234
364,004
-
-
745,039
(42,350)
Balance at 30 June 2015
69,406,199 (270,580)
66,284 (64,796,615) 4,405,288
The accompanying notes form part of these financial statements.
36
ResonanceHealth
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Due diligence expense
Grants received
Interest received
Notes
Inflows/(Outflows)
Consolidated
2015
$
2014
$
2,489,302
2,179,241
(2,481,556)
(2,134,816)
(42,887)
161,934
70,370
(94,629)
-
19,814
Net cash provided/(used in) by operating activities
7(i)
197,163
(30,390)
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
(11,417)
(159,210)
(4,389)
(190,406)
Net cash used in investing activities
(170,627)
(194,795)
Cash flows from financing activities
Share issues
Share issue costs
650,000
(18,687)
1,277,521
(48,672)
Net cash provided by financing activities
631,313
1,228,849
Net increase in cash and cash equivalents
Foreign exchange differences on cash balances
657,849
1,003,664
41,747
1,000
Cash and cash equivalents at the beginning of period
2,097,607
1,092,943
Cash and cash equivalents at the end of the period
7
2,797,203
2,097,607
The accompanying notes form part of these financial statements.
36
37
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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 Company’s business involves the development and
commercialisation of technologies and services for the quantitative analysis of radiological images in a regulated
and quality controlled environment.
(b) Adoption of new and revised standards
In the year ended 30 June 2015, 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 2015. 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 24 September 2015.
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.
38
ResonanceHealth NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: Statement of significant accounting policies (continued)
(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.
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 10% which includes a risk component, 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 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.
38
39
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: Statement of significant accounting policies (continued)
(g) Foreign currency translation (Continued)
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the
date the fair value was determined.
The functional currency of the foreign operation Resonance USA Inc. is United States dollars (US$). As at
the reporting date the assets and liabilities of this subsidiary are translated into the presentation currency of
Resonance Health Limited at the rate of exchange ruling at the balance 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 the Statement of Comprehensive Income.
(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.
40
ResonanceHealth NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: Statement of significant accounting policies (continued)
(k)
Income tax (continued)
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis
of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantially enacted by the balance date. Deferred income tax is provided on all temporary
differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests
in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable future.
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.
Tax consolidation legislation
Resonance Health Limited and its 100% owned Australian resident subsidiaries have implemented the tax
consolidated legislation. Current and deferred tax amounts are accounted for in each individual entity as if each
entity continued to act as a taxpayer on its own.
40
41
ResonanceHealth NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: Statement of significant accounting policies (continued)
(l) Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST) except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
•
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are
classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(m) Impairment of assets
The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the
asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its
value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets and the asset’s value in use cannot be estimated
to be close to its fair value. In such cases the asset is tested for impairment as part of the cash- generating unit to
which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount,
the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and adjusted risk 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 statement of comprehensive income 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.
42
ResonanceHealth NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: Statement of significant accounting policies (continued)
(o) Trade and other receivables {continued)
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are
written off by reducing the carrying amount directly. An allowance account is used when there is objective
evidence that the Group will not be able to collect all amounts due according to the original contractual terms.
Factors considered by the Group in making this determination include known significant financial difficulties of
the debtor, review of financial information and significant delinquency in making contractual payments to the
Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable
and the present value of estimated future cash flows, discounted at the original effective interest rate. Where
receivables are short-term discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses.
When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a
subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against other expenses in the statement of comprehensive income.
(p) Financial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as
either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or
available-for-sale investments, as appropriate. Where financial assets are recognised initially, they are measured
at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction
costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and
appropriate, re-evaluates this designation at each financial year-end.
All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that the Group
commits to purchase the asset. Regular way purchases or sales of financial assets under contracts that require
delivery of the assets within the period established generally by regulation or convention in the marketplace.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value
through
profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling
in the near term. Gains or losses on investments held for trading are recognised in profit or loss.
(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.
42
43
ResonanceHealth NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: Statement of significant accounting policies (continued)
(q) Derecognition of financial assets and liabilities
(i) Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is derecognised when:
•
•
the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay
them in full without material delay to a third party under a ‘pass-through’ arrangement; or
•
the Group has transferred its rights to receive cash flows from the asset and either:
(a) has transferred substantially all the risks and rewards of the asset, or
(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor
retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is
recognised to the extent of the Group’s continuing involvement in the asset.
(ii) Financial liabilities
A financial liability is recognised when the obligation under the liability is discharged or cancelled or expired.
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. Such impairment loss
should not be reversed in subsequent periods.
44
ResonanceHealth NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: Statement of significant accounting policies (continued)
(r)
Impairment of financial assets (continued)
(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.
(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 the statement of comprehensive income 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 have 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;
44
45
ResonanceHealth NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: Statement of significant accounting policies (continued)
(t)
Intangible assets (continued}
• 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. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months.
(v)
Interest-bearing loans and borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred
or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
(w) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for
future operating losses.
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 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.
46
ResonanceHealth NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: Statement of significant accounting policies (continued)
(z)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
(aa) Earnings per share (“EPS”)
Basic EPS is calculated as net profit/loss attributable to members of the parent, adjusted to exclude any costs of
servicing equity (other than dividends) and preference share dividends, divided by the weighted average number
of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit/loss attributable to members of the parent, adjusted for:
•
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for
any bonus element.
(ab) Business combinations
The acquisition method of accounting is used to account for all business combinations, including business
combinations involving entities or business under common control, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value
of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration
transferred also includes the fair value of any contingent consideration arrangements and the fair value of any pre-
existing equity interest in the subsidiary. Acquisition-related costs are expenses as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group
recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net identifiable assets.
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.
46
47
ResonanceHealth NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 2: Revenues and expenses
(a) Sales revenue
Sales to external customers
2,443,476
2,284,565
Consolidated
2015
$
2014
$
(b) Other income
Grants received
Interest received
Other revenue
(c) Expenses
161,934
65,518
5,832
233,284
-
24,471
-
24,471
Rental expense on operating leases
107,794
101,997
48
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 3: Income tax benefit
Income tax recognised in profit or loss
The major components of tax benefit are:
Consolidated
2015
$
2014
$
Current taxation – reversal of prior year entries
144,316
(112,582)
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:
70,285
214,601
115,949
3,367
Accounting profit/(loss) before income tax
248,633
(75,782)
Income tax benefit calculated at 30%
(74,590)
Effect of expenses that are not deductible in determining taxable profit
(120,113)
Effect of unused tax losses not recognised as deferred tax assets
(292,563)
Effect of prior year adjustments
Effect of temporary differences not recognised as deferred
tax assets and liabilities
Effect of capital raising costs recognised directly in equity
Income tax expense
Income tax benefit reversal of prior year entries
Tax refund receivable (research and development tax offset)
-
474,562
12,704
-
144,316
70,285
Income tax benefit reported in the statement of comprehensive income
214,601
22,735
(110,676)
(480,956)
22,787
513,696
32,415
(112,182)
-
115,549
3,367
48
49
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 3: Income tax benefit (continued)
Consolidated
2015
$
2014
$
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
2,974,408
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
892,813
66,697
1,708
57,621
2,681,845
1,231,243
71,993
106,223
81,331
3,993,247
4,172,635
480,433
321
-
480,754
468,985
1,777
7,380
478,142
Income tax benefits not recognised directly in equity
Share issue costs
12,704
32,415
Recognised balances
Current tax liability
Income tax payable
-
144,316
Deferred tax assets and liabilities have not been recognised in respect of these taxable temporary differences as the
entity is able to control the timing of the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
Tax Consolidation
Resonance Health Limited and its 100% owned Australian resident subsidiaries implemented the tax consolidation
legislation from 1st July 2012. The accounting policy for the implementation of the tax consolidation legislation is set
out in note 1(k).
50
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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 2015.
Services
$
Research and
Development
$
Corporate
$
Total
$
Segment revenue
Sales to external customers
2,605,410
Interest revenue
Other revenue
-
-
Total segment revenue
2,605,410
-
-
-
-
-
2,605,410
65,518
5,832
71,350
65,518
5,832
2,676,760
Segment profit/(loss) before tax
709,671
(110,565)
(350,473)
248,633
Other segment information included in profit
Income tax benefit
-
214,601
-
214,601
Segment assets
Segment liabilities
662,177
743,090
1,601,441
2,928,830
5,192,448
-
44,070
787,160
The Group derived 44% of its external customer sales revenue from one major customer.
The following table presents revenue and profit/loss information and certain asset and liability information regarding
business segments for the year ended 30 June 2014.
Segment revenue
Sales to external customers
Interest revenue
Total segment revenue
Services
$
2,284,565
-
2,284,565
Research and
Development
$
Corporate
$
Total
$
-
-
-
-
2,284,565
24,471
24,471
24,471
2,309,036
Segment profit/(loss) before tax
661,665
(96,678)
(640,769)
(75,782)
Other segment information included in loss
Income tax benefit
-
3,367
-
3,367
50
Segment assets
Segment liabilities
499,399
849,225
1,563,282
2,213,761
4,276,443
-
88,623
937,848
51
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 5: Earnings per share
Basic earnings/(loss) per share (cents per share)
Consolidated
2015
$
0.12
(a) Profit/(loss) used in the calculation of basic earnings per share
463,234
2015
Number
2014
$
(0.02)
(72,415)
2014
Number
(b)Weighted average number of ordinary shares for the purposes of
basic earnings/(loss) per share
398,239,002
363,572,613
The calculation does not include shares under option that could potentially dilute basic earnings per share in the
future as no options are on issue.
NOTE 6: Dividends
No dividend was paid or declared for the current or previous financial year.
NOTE 7: Cash and cash equivalents
Deposits at call
Term deposits
Consolidated
2015
$
557,580
2,239,623
2,797,203
2014
$
497,607
1,600,000
2,097,607
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.
52
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 7: Cash and cash equivalents (Continued)
(i) Reconciliation of loss for the year to net cash flows
from operating activities
Profit/(loss) for the year
Non-cash flows in loss:
Depreciation
Amortisation of intangible assets
Employee share costs
Changes in net assets and liabilities:
Increase in trade and other receivables
Increase in other assets (current)
Increase in other assets (non-current)
Decrease in other financial assets
(Decrease)/increase in trade creditors and other payables
(Decrease)/increase in current tax liabilities
Increase/(decrease) in other liabilities
Net cash (used in)/provided by 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
Consolidated
2015
$
2014
$
463,234
(72,415)
13,649
121,052
12,000
(162,778)
(17,702)
(3,007)
3,004
(257,425)
(144,316)
169,452
197,163
-
-
-
12,793
7,207
20,000
20,000
39,099
59,099
19,242
89,326
-
(111,191)
(78)
-
-
1,469
112,582
(69,325)
(30,390)
11,073
8,927
20,000
1,202
18,798
20,000
20,000
39,099
59,099
52
53
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 8: Trade and other receivables
Consolidated
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
2015
$
457,839
204,338
662,177
101,255
41,269
83,675
-
226,189
2014
$
365,592
133,807
499,399
84,668
23,984
33,748
-
142,400
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 18% (2014: 33%) 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
2015
$
2014
$
42,304
24,602
62,106
59,099
54
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 10: Plant and equipment
Consolidated
Fixtures and equipment
At cost
Less: Accumulated depreciation
Total plant and equipment
Reconciliation
Reconciliation of the carrying amount of each class of plant and
equipment is set out below: Fixtures 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
2015
$
285,237
(258,021)
27,216
29,448
11,417
(13,649)
27,216
1,846,497
(245,055)
1,601,442
1,563,284
159,210
(121,052)
1,601,442
2014
$
273,820
(244,372)
29,448
44,302
4,388
(19,242)
29,448
1,687,287
(124,003)
1,563,284
1,462,204
190,406
(89,326)
1,563,284
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 liver fat assessment tool, further refinement of
FerriScan and the next stage of development of a MRI based liver fibrosis 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.
55
54
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 11: Intangible assets (Continued)
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 a rate of 10% which includes a risk component 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 margins and trends 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 pre-tax discount rate of 10% which includes a risk component.
NOTE 12: Other financial asset
Consolidated
Available-for-sale investments - carried at fair value
Shares in listed corporations
Less: impairment
NOTE 13: Trade and other payables
Current
Trade payables (i)
Sundry creditors and accruals
(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
Current: Long service leave
Non-current: Long service leave
Reconciliation
Balance at the beginning of the year
Arising during the year
Utilised during the year
Balance at the end of the year
2015
$
-
-
-
85,228
243,930
329,158
2014
$
14,337
(11,333)
3,004
136,618
323,811
460,429
413,932
244,480
44,070
-
44,070
88,623
4,163
(48,716)
44,070
48,610
40,013
88,623
80,222
8,401
-
88,623
56
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 16: Issued capital and reserves
(a)
Issued and paid up capital
401,566,203
69,406,199
386,541,784
68,703,510
2015
2014
No
$
No
$
Movements – Ordinary shares
2015
2015
2014
2014
No of shares
$ No. of shares
$
Balance at the beginning of the year
386,541,784
68,703,510
360,991,365
67,534,039
Placement 17 April 2014 at $0.05 each
Rights issue 17 June 2014 at $0.05 each
-
-
-
-
10,000,000
500,000
15,550,419
777,521
Placement 15 September 2014 at $0.05 each
13,000,000
650,000
Placement 30 September 2014 at $0.05 each
1,660,783
Employee Shares 31 March 2015 at $0.033 each
363,636
83,044
12,000
Share capital issue costs
-
(42,350)
-
-
-
-
-
-
-
(108,050)
Balance at the end of the year
401,566,203
69,406,199
386,541,784
68,703,510
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.
(b) Reserves
Nature and purpose of reserves:
Foreign currency translation reserve – the foreign currency translation reserve is used to record exchange
differences arising from the translation of the financial statements of foreign subsidiaries.
Option reserve – the option reserve is used to record the fair value of options issued as share based payments to
employees and directors as part of their remuneration.
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.
56
57
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 17: Financial instruments (Continued)
(b) Categories of financial instruments
Financial assets/(liabilities)
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Other assets
Trade and other payables
Consolidated
2015
$
2,797,202
662,177
-
62,106
(329,158)
2014
$
2,097,607
499,399
3,004
59,099
(460,429)
The net fair values of all financial assets and liabilities approximate their carrying value.
(c) Financial risk management objectives
`
The Group is exposed to market risk (including currency risk, fair value interest rate risk and price risk), credit
risk, liquidity risk and cash flow interest rate risk. The Group seeks to minimise the effects of these risks.
The Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes.
(d) Market risk
The Group’s activities expose it primarily to the financial risk of changes in foreign currency exchange rates.
There has been no change in the Group’s exposure to market risks or the manner in which it manages and
measures the risk from the previous period.
(e) Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate
fluctuations arise. Exchange rate exposures are managed within approved policy parameters. The Group does
not engage in forward exchange contracts.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at
the reporting date is as follows:
United States Dollars
Great British Pounds
European Euros
Liabilities
Assets
2015
$
16,276
25,055
4,996
2014
$
1,904
12,905
-
2015
$
375,225
248,574
21,493
2014
$
372,647
98,802
41,953
58
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 17: Financial instruments (Continued)
(e) Foreign currency risk management (Continued)
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
2015
$
(32,632)
(20,320)
(1,500)
2014
$
(33,704)
(7,809)
(3,814)
(f)
Interest rate risk management
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.
Less than
one month
One to three
months
Total
Cash and cash equivalent financial assets
2015
$2,797,203
$62,106
$2,859,309
Weighted average effective interest rate
1.59%
2.66%
2014
$2,097,607
$59,099
$2,156,706
Weighted average effective interest rate
2.65%
3.42%
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.
58
59
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 17: Financial instruments (Continued)
(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 2015, the Group had one customer that accounted for 18% of all trade receivables
(2014: 33%).
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 to Three months
to one year
one month
$
$
three months
$
Total
$
2015
Non-interest bearing
202,889
62,240
64,029
329,158
2014
Non-interest bearing
227,613
127,509
105,306
460,429
(j) Fair value of financial instruments
The net fair value of all financial assets and liabilities approximate their carrying values. No financial assets or
financial liabilities, except for listed shares are readily traded on organized markets in standardised form.
The aggregate net fair values and carrying amounts of all financial assets and liabilities are disclosed in the
financial statements.
60
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 18: Commitments for expenditure
Consolidated
2015
$
2014
$
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
117,060
131,887
248,947
106,173
255,386
361,559
A lease over premises was entered into effective 1 August 2011 and has been extended from 1 August 2014 for a
further 3 years to July 2017.
Clinical Study commitments
Commitments for minimum payments in relation to non-cancellable
clinical trials 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
Consolidated
2015
$
114,732
47,805
162,537
2014
$
-
-
-
60
61
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 19: Related party disclosure
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
2015
2014
incorporation Class of shares Equity holding Equity holding
Resonance Health Analysis Services Pty Ltd
WA Private Health Care Services Pty Ltd
IVB Holdings Pty Ltd
Resonance USA Inc
Australia
Australia
Australia
USA
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
Resonance Health Limited is the ultimate Australian entity and ultimate parent of the Group.
Transactions with related parties
Transactions with related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
Transactions with key management personnel
Refer to Note 23 for details of transactions with key management personnel.
Transactions between group companies
During the year the following transactions occurred between group companies:
Resonance Health Analysis Services Pty Ltd (RHAS) had provided a US$1,882,111 loan to Resonance Health Limited
(RHT). It was agreed to convert the loan to Australian Dollars, the amount being $2,429,158. The Australian Dollar
loan amount $2,429,158 was applied to a debt owing to RHT. Subsequently the impairment amount of $1,114,196
relating to the loan from RHT to RHAS from prior periods was no longer appropriate and was reversed effective 28th
April 2015.
During the year expenses were paid by RHAS totalling $46,600 (2014: $243,495) on behalf of RHT. At the 30 June
2015 RHT owed a loan balance of $304,813 to RHAS.
During the year RHT forgave a debt to Resonance USA Inc. totalling $705,259. The debt amount had been fully
impaired in prior periods.
In prior periods RHT impaired a loan to WA Private Health Care Services Pty Ltd of $136,423. The loan remains
impaired.
62
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 20: Parent entity disclosures
Consolidated
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Option reserve
Accumulated losses
Total equity
Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive loss
2015
$
2,444,159
856,682
3,300,841
87,707
450,073
537,780
2014
$
1,718,326
1,048,591
2,766,917
238,486
-
238,486
69,406,199
66,284
(66,709,421)
2,763,062
68,703,510
66,284
(66,241,363)
2,528,431
Year ended
30 June 2015
Year ended
30 June 2014
$
(468,058)
-
(468,058)
$
(207,731)
-
(207,731)
NOTE 21: Significant events after balance date
There have been no subsequent events that require disclosure in the financial reports.
NOTE 22: Auditor’s remuneration
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
Consolidated
2015
$
50,000
45,500
95,500
2014
$
49,950
37,750
87,700
63
62
ResonanceHealth
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
NOTE 23: Key management personnel disclosures
(a) Details of key management personnel
(i) Directors
Dr Martin Blake
Chairman (non-executive)
Ms Liza Dunne
Resigned as a Managing Director 31st January 2015
Mr Simon Panton
Director (non-executive)
Dr Jason Loveridge
Director (non-executive)
Professor Tim St Pierre
Resigned as a Director 31st October 2015
ii) Management
Professor Tim St Pierre
Chief Scientific Officer
Mr Sander Bangma
General Manager of Operations
Mrs Melanie Baxter
Director of Marketing
Mr Adrian Bowers
CFO and Company Secretary
Mrs Celine Royet
Manager of Quality Assurance and Regulatory Affairs
Key management personnel remuneration has been included in the Remuneration Report section of the
Directors’ Report.
(b) Key Management Personnel Compensation
Refer to the 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 2015.
The totals paid to KMP of the Group during the year are as follows:
Short term employee benefits
Post employment benefits
Share based payments
Total KMP compensation
2015
$
885,126
53,258
3,000
941,384
2014
$
503,910
35,205
-
539,115
64
ResonanceHealth
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.
ii.
giving a true and fair view of the Group’s financial position as at 30 June 2015 and of its
performance for the year then ended; and
complying with Australian Accounting Standards, the Corporations Regulations 2001, professional
requirements and other mandatory requirements; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and
the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board.
b.
c.
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 2015.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dr Martin Blake Chairman
Place: Perth, Western Australia
Dated: 24 September 2015
64
65
ResonanceHealth
INDEPENDENT AUDITOR’S REPORT
To the members of Resonance Health Limited
Report on the Financial Report
We have audited the accompanying financial report of Resonance Health Limited (“the company”), which comprises
the statement of financial position as at 30 June 2015, the statement of comprehensive income, the statement of
changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors’ declaration for the Group. The Group
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 Group’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.
66
ResonanceHealth
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 Group’s financial position as at 30 June 2015 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 2015. 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 2015 complies with
section 300A of the Corporations Act 2001.
HLB Mann Judd Chartered Accountants
L Di Giallonardo Partner
Perth, Western Australia 24 September 2015
66
67
ResonanceHealth
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 additional information is supplied as at 25 September 2015.
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
The number of shareholdings holding less than a
marketable parcel of shares are 1,029.
2. Voting Rights
Ordinary shares
531
179
227
808
385
2,130
113,892
549,233
1,687,299
31,883,140
367,332,639
401,566,203
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
1. Southam Investments 2003 Pty Ltd
2. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3. The University Of Western Australia
4. Mr Gregory Peter Wilson
5. Mr Sean Watkins-Saxon
6. Mr Kevin Deeves and Mrs Pauline Deeves
7. Timothy Guy St Pierre
8. Wanida Chau-Anusorn
9. Mr Helmut Rocker
10. Mr Harry Basle
11. Mr Robert Panton
12. Walker Trusco Pty Ltd
13. Dr Martin Peter Blake
14. Marcolongo Nominees Pty Ltd
15. Mrs Mridula Asija
16. Honne Investments Pty Ltd
17. Mr Bruce Stevenson
18. Anahein Pty Ltd
19. ABN Amro Clearing Sydney Nominees Pty Ltd
20. Mr Vincent Oladele
65,414,622
21,378,229
9,078,750
8,766,042
7,610,636
7,250,000
7,218,500
6,305,000
6,200,000
5,022,422
4,640,824
4,494,844
3,798,590
3,626,000
3,363,390
3,300,000
3,097,404
3,010,598
2,892,004
2,867,778
179,335,633
Percentage of Total
16.29
5.32
2.26
2.18
1.89
1.80
1.80
1.57
1.54
1.25
1.16
1.12
0.95
0.90
0.84
0.82
0.77
0.75
0.72
0.71
44.64
68
ResonanceHealth
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
4. Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with sections 709 and 710 of
the Corporations Act 2001 are:
Southam Investments 2003 Pty Ltd
65,414,622
ordinary shares
68
69
ResonanceHealth
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
www.resonancehealth.com
info@resonancehealth.com