Resonance
Health
Be Better Informed
Annual Report 2016
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
2
ResonanceHealth CONTENTS
About
Snap Shot
Chairman’s Foreword
General Manager’s Report
Management Team
Year in Review - Operational Excellence
Year in Review - Product Portfolio
FINANCIAL REPORT
Directors’ Report
Corporate Governance Statement
Auditor’s Independence Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information for Listed Public Companies
4
5
6
8
10
12
16
22
35
41
42
43
44
45
46
73
74
76
3
ResonanceHealth Resonance
Health
About
Resonance Health develops and delivers medical imaging solutions and services
to accurately and non-invasively quantify clinical parameters. This information
assists clinicians in their diagnosis and management of human disease and supports
pharmaceutical companies in the development of treatments. The Company’s
flagship product, FerriScan®, is globally recognised as the gold standard for
measurement of liver iron concentration (LIC). FerriScan is also provided as a
dual service together with an assessment of cardiac iron load. The Company’s more
recent product, HepaFat-Scan®, provides a measurement of volumetric liver fat
fraction (VLFF) and is generating interest for improving outcomes for patients,
including those with fatty liver disease.
Resonance Health is expanding its portfolio of products and has also developed
technologies for application in additional organs including the bone marrow,
pancreas, and spleen. The Company continues work on pipeline products including
tools for non-invasive measurement of liver fibrosis and inflammation.
Our Vision and Mission are:
• Being global leaders in radiological diagnostics, monitoring, and core
laboratory services
• Consistently delivering high quality, customer-focused, services
• Developing and commercialising innovative products
• Advancing healthcare and patient outcomes through product and service
excellence
Christie Batkin (7) is one of over 1000 patients benefiting from
FerriScan at St Mary’s Hospital, pictured with Melanie Baxter,
Resonance Health, and Dr Alavi, Consultant Paediatric Radiologist
Resonance
Health
Snap Shot
Year ended with record clinical image analysis volumes for the month, quarter, and year
Celebrated the provision of 30,000 FerriScans to patients globally to date
25 new radiology centres established during year
Strong commercial growth - USA became fastest growing FerriScan market at +25%
Future sustainable growth focus - investment in R&D and marketing
HepaFat-Scan (VLFF) use extended to 7 clinical studies internationally
New service offerings – expanding suite of tools, disease indications, and targeted organs
Aust. & NZ
Asia Africa
UK
Middle East
Canada
Europe
(ex UK)
FY2016 Image Analyses by Region
US
30,000+
07 08 09 10 11 12 13 14 15 16
Cumulative FerriScan Sales Growth
Chairman’s Foreword
This financial year has been an important
that when governments and insurers are
one for the Company as we set out to
faced with multi-thousand dollar costs in
broaden our portfolio of MRI diagnostic
providing treatments to our various patient
tools, expand the scope of those tools
groups the cost of using an accurate
to uses beyond the liver into other organ
registered product is very small.
systems, and increase the use of these tools
into new clinical indications. Resonance
Health continues to build on its reputation
as hepatic MRI diagnostic experts but
expanding our service offerings has
enabled us to open discussions with a
much greater number of potential users
and partners.
We are also exploring various options
to address the financial
limitations
in
developing countries including ongoing
collaboration with a pharmaceutical
company to provide pre-paid FerriScans.
Additionally we have identified the need
to provide a more cost effective solution
in these markets where growth could be
This year marked a significant milestone of
exponential but is constrained by our
providing over 30,000 FerriScans to date
current service model. We are working
globally to the clinical community for the
with a number of groups and collaborators
measurement of liver iron concentration
to seek a technological solution to this
(LIC). We also ended the year with record
problem.
annual image analysis volumes provided
in our Service Centre. We continue to
actively transition FerriScan from high-
value inclusion in pharmaceutical trials
(where the test is provided as part of a suite
of core laboratory services to assist the
trial participants) to embedding the test
in routine clinical practice for long-term
sustainability. This uptake in the clinical
community demonstrates FerriScan being
more widely adopted.
The Company has now provided over
400 HepaFat-Scans for volumetric
liver
fat fraction (VLFF) to clinical trial and key
opinion leaders who are delighted with the
robustness of the test and its reproducibility.
Working with pathologists in these trials we
have recognised a high degree of variability
in the manner liver biopsies for fat grading
are currently being assessed and we have
adopted a stereological method as a more
standardised way to provide comparison
We have also been working to increase our
with the HepaFat-Scan results. This is a time
reach into developing countries that require
consuming process but we have gained
not only affordable access to MRI but a
insights into how this may be improved to
requisite affordability of determining an
become another potential tool Resonance
accurate LIC measurement. We have been
Health can offer commercially. We are
vigorously prosecuting the arguments
currently scoping this work and hope to be
for an accurate LIC measurement and the
able to positively report on this opportunity
pitfalls of relying on serum ferritin as a
as the coming year progresses.
proxy for iron overload and the limitations
of unregulated methods in assessing LIC,
particularly at the high and low ends of the
spectrum. We continue to promote the fact
The development of an MRI technology
to provide
a non-invasive fibrosis
measurement
tool has unfortunately
been more challenging than we would
6
ResonanceHealth Chairman’s Foreword
have liked, but our work has progressed
Sander Bangma, General Manager. Our
into trying to understand how we may
management team use their combined
obtain additional
information about
strengths of deep scientific understanding,
inflammation. Work continues with CSIRO
impressive market knowledge and their
and other collaborators on these projects.
commercial acumen to take a very strategic,
The financial results for this year underline
results-focused approach to drive success.
our strategic
investment
in Resonance
We have an ambitious program for the year
Health’s
future
to obtain maximum
ahead and the right team to deliver it. The
commercial return for shareholders. The
Board thanks our valued shareholders and
net loss for this year was the result of
partners for their continued support as
strategic planned investment to expand
we continually work to deliver maximum
our portfolio with services that have
return on investment and move into a very
immediate application, strengthen our
exciting phase of extended capability and
marketing and operational capability, and
growth. Together with our stakeholders,
deliver sustainable growth.
Resonance Health is uniquely positioned
We conducted a ‘small parcel share-buy-
back’ this year, refreshing Resonance Health
for the longer term and making our registry
more attractive for new investment.
to make ongoing, life-changing advances
in healthcare for patients around the world.
The Board has
confidence
in
the
management structure we have put
Dr Martin Blake
in place and
in the experienced and
Chairman
talented team we have assembled, led by
7
ResonanceHealth General Manager’s Report
success of FerriScan, we have focused on
the expansion of our portfolio of products
with the development of new quantitative
radiological tools and the extension of our
service offerings
into new addressable
clinical markets;
including additional
disease indications and organs.
Targeted Projects
It is gratifying to see these investments
in targeted projects already delivering
tangible results. Following strong clinical
interest we have developed a tool for the
assessment of bone marrow iron which
we will be taking through regulatory
submissions during 2016/2017. Spleen
volume measurement has also been
added to our portfolio as part of our core
laboratory capability, which has led to
expanded commercial agreements for a
global pharmaceutical company clinical
trial. Additionally, we have
recently
commenced pancreatic fat assessment
alongside HepaFat-Scan
(VLFF)
in the
research setting, which is relevant, for
example, for the diabetes community.
We continue to partner with world class
organisations for both our commercial
work as well as collaborative research. We
are applying state-of-the-art technologies
in computer science aiming to streamline
our existing operations and develop new
non-invasive tests. In addition to these
developments, we have identified new
opportunities for additional commercial
gain. These include broadening the use of
our existing services with the application of
FerriScan for measurement of iron loading
in cancer survivors and the combination of
FerriScan and HepaFat-Scan for patients
with unexplained hyperferritinaemia.
I am delighted to have the opportunity
to reflect on the past year and provide a
summary of the significant achievements
that are paving the way for the long-term
sustainable growth of the Company. A
significant
investment has been made
in both R&D and marketing to achieve
strategic short and long-term goals.
Our marketing strategy this year has
strengthened
the globally
recognised
position of our lead product, FerriScan,
as
the gold standard
in
liver
iron
concentration measurement. The result of
this is evident in record radiological image
analysis volumes, both globally and in key
geographical markets including the US
and UK, as well as further recognition of
FerriScan in important clinical guidelines.
We have also laid solid foundations in the
building of partnerships with key opinion
leaders and pharmaceutical companies.
With rapid technological advances
in
the biotechnology
industry, continued
R&D work is key. Leveraging the clinical
“The Resonance Health
team has a strong
passion for healthcare
and is dedicated to
making a positive
impact on the clinical
community. This
passion, together with
a focus on commercial
outcomes and a deep
understanding of the
markets is key to the
Company’s long term
success; benefiting
both patients and
shareholders alike.”
8
ResonanceHealth General Manager’s Report
Long Term Success
World Class Team
The Resonance Health team’s passion
An important focus this year has been on
for healthcare, together with a focus
building and strengthening the Resonance
on commercial outcomes and a deep
Health team and I have been delighted
understanding of the markets, is key to the
with the calibre of our newest recruits. Our
Company’s long term success; benefiting
worldclass team combines the knowledge
both patients and shareholders alike.
of members from twelve different countries
Calculated decisions have been made to
with joint scientific and business expertise.
prepare the market for clinical acceptance
Our talented management team, together
of our new services, such as collaborations
with support from the capable wider
with key opinion
leaders to generate
team, have made this year’s achievements
important clinical study data. These data
possible. We have achieved the significant
are aimed at paving the way for inclusion of
milestone of having provided over 30,000
our technologies in patient management
FerriScans to date and finished the year with
guidelines which in turn will drive clinical
record throughputs for our radiological
uptake. We are confident that these
image analysis service. I commend our staff
collaborations, although
impacting the
for their commitment and hard work this
current income statement, will expedite
past year.
future revenue streams.
I look forward to working with the team
Resonance Health
is committed
to
to further progress the combined R&D
improving the lives of individuals suffering
and marketing projects that have been
from a range of serious medical conditions.
launched this year and to seeing the
This year, Chief Scientific Officer, Prof.
commercial rewards for these efforts come
Tim St Pierre, received an award from the
to fruition over the coming years.
Thalassaemia International Federation in
recognition of the contribution made by
FerriScan to the lives of patients worldwide.
In addition to the contributions already
made in the field, the $USD10,000 prize
money was donated to provide further
Sander Bangma
access
to FerriScan
in economically
General Manager
disadvantaged regions. We have also
welcomed the opportunity to participate in
successful initiatives such as international
student internships, which allow academic
skills to be applied in real-world settings
and introduce new technologies to the
Company.
9
ResonanceHealth Management Team
Sander Bangma M.Sc, DipMgt
General Manager
Medical device software development, intellectual
property, management, and leadership background
Responsible for overall strategic
management of the Company
Prof. Tim St Pierre BSc (Hons) PhD
Chief Scientific Officer
Internationally recognised, widely-published physicist
in medicine and biology
Led the team who developed FerriScan – continues to
oversee and provide expertise in clinical scientific projects
Melanie Baxter BA (Hons)
Marketing Director
Strategic communication, marketing and
sales experience in the medical sector
Leads the ambitious strategic marketing and sales plan
Mr Adrian Bowers B.Bus, CPA, Chartered Secretary
Chief Financial Officer and Company Secretary
Qualified and experienced accountant and
chartered secretary
Manages financial and corporate obligations
10
ResonanceHealth Management Team
Celine Royet Pharm. D
Quality Assurance and Regulatory Affairs Manager
Pharmaceutical and medical device background
Responsible for continuous improvements in product and
process quality and regulatory obligations
Emma Stone BSc (hons)
Service Centre & Global Program Manager
Medical scientist with diverse
healthcare management experience
Manages service delivery operations and team
as well as key marketing programs
Dr Wenjie Pang PhD
Technical & Research Manager
Research physicist highly experienced
in medical image analysis
Drives research projects and develops
solutions for technical challenges
Dr Sherif Boulos PhD
Clinical Research Manager
Medical researcher with broad industry
and laboratory experience
Responsible for coordinating and driving clinical
studies and providing clinical support
Assoc. Prof. Michael House PhD
Scientific Research Officer
Biophysicist with extensive experience in
quantitative MRI techniques
Key researcher in the drive to expand product portfolio
and enhancements to existing products
.
11
ResonanceHealth
Year in Review - Operational Excellence
Resonance Health
is established as a
excellence and as such a strong focus is
world-leader in quantitative radiological
placed on the continual
improvement
techniques for the diagnosis and clinical
of processes in accordance with the ISO-
management of human disease. The
certified quality management system. Such
foundation of Resonance Health’s success in
improvements are generally undertaken
the medical community is the combination
with a multidisciplinary approach between
of scientific rigour, high quality standards,
the Service Centre, Quality Assurance, and
and exceptional customer service. These
R&D teams.
principles drive the Company’s operations;
from product development, education
and profiling in the clinical community, to
service delivery. The success of this strategy
is evident in the recognition of our leading
product, FerriScan, as the international
gold standard for the measurement of liver
iron concentration.
The Company’s standardised approach to
service delivery across multiple scanner
platforms and radiology centres, coupled
with our international regulatory clearances
and proven core laboratory experience,
uniquely position Resonance Health
for pharmaceutical partnerships where
integrity of data is paramount. The clinical
Quality Assured Service Delivery
community also have confidence that the
The products developed by Resonance
Health are used in-house to deliver image
analysis services globally to over 220
radiology centres across 36 countries.
Demand for the Company’s services is
driven by clinicians managing patients,
the pharmaceutical industry for testing the
efficacy of their compounds in the clinical
trial setting, and by key opinion leaders
undertaking medical research.
All clinical data analysis is performed in
the Company’s central Service Centre,
where robust quality control checks are
performed on each raw dataset and
analysis performed, to ensure the highest
quality result possible for patients and their
referrers. The Company strives for service
reliability of our measurement outputs are
assured, as opposed to non-standardised
alternatives. This is a vital consideration for
clinical decisions on patient management.
In response to the steady volume growth
throughout the year, the experienced
and long-standing team of expert Senior
Technical Analysts has been expanded
12
ResonanceHealth Year in Review - Operational Excellence
to include a new Technical Analyst and
opportunities
for maximum exposure,
more recently a Clinical Trial and Service
gaining valuable data to meet market
Support Officer. The Company’s prompt
demand, and achieving further adoption
turnaround time and dedicated customer
within the Company’s existing network.
support are enthusiastically and regularly
Our HepaFat-Scan contracts now span
acknowledged by our radiology centre
across nine countries.
customers and pharmaceutical company
partners. The Service Centre strives to
maintain the solid reputation that it has
built for being a world-leading, quality
service provider.
The Company continued
to
improve
its website, developed powerful new
educational videos, and gained numerous
endorsements for our work and services.
Two prestigious awards were scooped this
Strategic Marketing and Stakeholder
year by Chief Scientific Officer, Prof. Tim St
Relations
This year
the Company’s ambitious
marketing efforts have delivered excellent
results in key target markets including a
25% increase in US FerriScan sales, 25 new
radiology centres established, and record
analysis volumes for the year across all
services globally.
The strategic
focus has centred on
developing stakeholder collaborations to
support immediate growth and longer-
term, sustained revenue, alongside global
profiling of our services. A targeted
conference program of 17 key events across
eight countries this year achieved strong
brand profile, multiple speaking slots on
FerriScan and HepaFat-Scan and has driven
further clinical uptake of services. Ongoing
and new commercial pharmaceutical trials
have been successfully negotiated and
active lobbying has achieved inclusion in
new clinical guidelines for FerriScan, such
as the respected UK Standards of Care for
Thalassaemia. Key opinion leader advocacy
of our services remains fundamental to
increasing market share in existing and
new indications.
The HepaFat-Scan (VLFF) strategy remained
focused on successfully driving targeted
Pierre; the Western Australian Entrepreneur
of the Year award and the Thalassaemia
International Federation’s Panos Englezos
Award for the contribution made by
FerriScan to the lives of patients worldwide.
The significant milestone of providing
30,000 FerriScans to patients globally to
date provided an excellent opportunity to
proactively showcase Resonance Health
and its stakeholders and recognise the
patients at the heart of our services. The
Company was delighted to organise an
13
ResonanceHealth Year in Review - Operational Excellence
event with The Imperial Trust and St Mary’s
Targeted Portfolio Expansion via
Hospital
in London to celebrate their
Research and Development
1000th FerriScan, which saw representation
from four different patient organisations
taking great pride in the achievement of
advancing healthcare for their members.
The Company’s reputation for customer
service remains excellent and it continues
to build on the powerful alliances formed
within the clinical and patient community
to the benefit of all.
A key Company objective for this year
was to expand the portfolio of products
and service offerings. The R&D and
Marketing teams joined forces to identify
and pursue additional target organs and
addressable disease indications. Following
the identification of unmet market and
clinical need, the Company successfully
commenced development of a new suite
Gaining market access and sustained
of radiological image analytical tools for
funding for services in new and target
the assessment of bone marrow
iron,
geographies remains a priority. In Germany
pancreatic fat assessment, and spleen
and Italy further work has been undertaken
volume measurement.
this year to gain reimbursement and will be
actively pursued over the next financial
year. The team successfully extended a
program of industry pre-paid FerriScan
orders to improve access in new countries
and those where funding is limited, with
the longer term opportunity of gaining
data to support reimbursement in these
countries. A total of 27 countries have been
involved in the program to date, with Spain
and Romania joining the program this year.
Resonance Health has continued
to
strategically add to our marketing capability
over the year and now has talented US,
European, and Australian based team
members with excellent networks
to
continue to deliver our dynamic program
across the new financial year.
HepaFat-Scan (VLFF) is actively used in a
growing number of studies with key opinion
leaders, generating further scientific and
clinical evidence of the benefit of the test.
These studies provide an excellent platform
for the Company to collect additional
data that not only supports clinical use of
HepaFat-Scan but also the broader R&D
objectives and expansion of the product
and services portfolio.
Work to further refine the prototype tool
for non-invasive liver fibrosis measurement
that was developed last year continues
with
the Australian Commonwealth
Scientific Industrial Research Organisation
(CSIRO). This project has been more
challenging than originally anticipated
but remains a core part of the Company’s
14
Better measurement
= better performance
ResonanceHealth Year in Review - Operational Excellence
ambitious R&D portfolio. Further value has
In the process of validating HepaFat-Scan
also been derived from this project as the
against
liver biopsy, Resonance Health
Company took a strategic decision to use
developed a novel way of accurately
the knowledge gained in parallel towards
analysing digital optical microscope images
improving the efficiencies of existing
of liver tissue samples to measure the
products and operations. The application
quantity of fat in the tissue. The Company
of state-of-the-art new technologies in
is currently exploring ways of automating
computer science to streamline our existing
the technique, based on a method known
operations and develop new non-invasive
as stereology, for commercialisation. The
tests is anticipated to have a profound
technology has potential to be adapted to
impact on the Company’s service delivery.
measure many other quantitative aspects
In addition to measurement of liver fibrosis,
the clinical community is expressing a
of digital images of tissue samples in
pathology laboratories.
need for a non-invasive measurement of
Work has also progressed on a method
inflammation in the liver which would have
for non-invasively measuring iron loading
great utility in patients with non-alcoholic
in kidneys. The technology may have
steatohepatitis (NASH). NASH is a rapidly
application in assessing the severity of
growing health problem in the developed
haemolysis, the rupture of red blood cells,
world with serious ongoing implications as
in diseases such as sickle cell disease.
it is considered a pre-cursor to development
of liver fibrosis. The Company is exploring
initial proof-of-concept measurements in
this space.
R&D efforts in the coming year will continue
to focus on these important projects.
15
ResonanceHealth Year in Review - Product Portfolio
A substantial expansion of the Company’s product portfolio has been
achieved this year to complement previously established service offerings.
Cardiac T2*
assessment of
heart iron
Spleen volume
measurement
Pancreatic fat
assessment
Kidney R2-MRI
assessment of
kidney iron
Bone Marrow R2-MRI
assessment of bone
marrow iron
FerriScan® R2-MRI
the gold standard
measurement for liver
iron concentration (LIC)
HepaFat-Scan®
measurement of
volumetric liver fat
fraction (VLFF)
Core Laboratory Services
for pharmaceutical company
clinical trials
16
ResonanceHealth Year in Review - Product Portfolio
Established Products
FerriScan® R2-MRI - the Gold Standard
Measurement for Liver Iron Concentration (LIC)
FerriScan®
FerriScan is Resonance Health’s leading
product and is internationally recognised
by clinicians as
the gold
standard
measurement for liver iron concentration.
The MRI-based technique is non-invasive
and eliminates the need
for painful,
dangerous, and costly liver needle biopsy.
FerriScan also overcomes
the poor
sensitivity and specificity of serum ferritin,
sometimes used for assessment of body
iron stores. FerriScan has
international
regulatory clearances in the US (FDA),
Europe (CE Mark), and Australia (TGA).
Both clinicians managing patients and
pharmaceutical companies performing
clinical
trials on
their
therapeutic
compounds
require
an
accurate,
standardised, and validated technique
for
the measurement of
liver
iron
treatment. The most common disease
causing primary iron overload is hereditary
haemochromatosis,
with
numerous
diseases
resulting
in secondary
iron
overload such as thalassaemia, sickle cell
disease, diamond blackfan anaemia, and
myelodysplastic syndrome. This year the
Company has identified new indications for
further expansion of FerriScan use in the
coming year. A leading haematologist in
the field has promoted the use of FerriScan,
combined with HepaFat-Scan,
in
the
setting of unexplained hyperferritinaemia.
Another new and relatively unexplored
field is iron overload in cancer survivors,
resulting from multiple blood transfusions
during their cancer therapies. A targeted
campaign has commenced, focussing on
clinicians treating cancer survivors.
FerriScan has been used
in over 20
international multicentre pharmaceutical
trials over the past 10 years. Partnerships
with existing and new pharmaceutical
companies have continued to develop
over the year including the incorporation
of FerriScan in a clinical trial with a new
concentration. FerriScan is the ideal tool to
collaborator.
meet these needs.
FerriScan is used in the diagnosis and
clinical management of patients with
potentially fatal iron overload. The primary
site of iron accumulation and storage is the
liver, and as such measurement of liver iron
concentration gives the best indication of
total body iron stores.
Iron overload can be primary, from the
excessive absorption of iron from the diet,
or secondary, where excess iron is the
result of multiple blood transfusions or
iron injections during the course of disease
FerriScan is used not only in the diagnosis
of iron overload but also in the monitoring
of therapy to assist clinical decision making.
Multiple international guidelines have been
published that recommend a FerriScan at
least annually, or more frequently for some
conditions. FerriScan has been further
endorsed in such guidelines this year,
which assists with uptake in routine patient
care. Some patients have had over ten
FerriScan measurements during the history
of their iron overload management.
17
ResonanceHealth Year in Review - Product Portfolio
A selection of the numerous clinical
Overall global FerriScan volumes have
guidelines
recommending
Ferriscan
continued to
increase this year, with
include:
•
UK Forum on Haemoglobin Disorders,
Standards
for the Clinical Care of
Children and Adults with Thalassaemia
in the UK, 2016
•
Thalassaemia International Federation,
Guidelines
for the Management of
Transfusion Dependent Thalassaemia,
2014
•
US Department of Health and Human
Services, Evidence-based Management
of Sickle Cell Disease, Expert Panel
Review, 2014
•
Association of the Scientific Medical
Societies
in Germany, Guideline for
diagnosis and treatment of secondary
iron overload in patients with congenital
anaemias, 2015
•
The Fred Hutchinson Cancer Research
Center / Seattle Cancer Care Alliance,
Long-term follow-up after hematopoietic
particular growth in referrals for routine
clinical patients, indicating wider market
penetration. The US has been the fastest
growing region with significant growth
also in Canada and the UK, three of our
key target markets. With our continued,
successful program
to actively
lobby
for
increased clinical acceptance, key
opinion
leader
endorsement,
and
recommendations in international clinical
guidelines, FerriScan growth is expected to
continue in the coming year.
FerriScan and Cardiac T2* Dual Analysis
In addition to FerriScan as a standalone
test, Resonance Heath offers a dual service
of FerriScan
in combination with an
MRI measurement of Cardiac T2* for the
assessment of iron loading in the heart.
Like FerriScan, Resonance Health’s Cardiac
T2* measurement has FDA, CE Mark, and
TGA regulatory clearances.
stem cell transplant general guidelines
Following a
threshold of
liver
iron
for referring physicians, 2014
concentration being exceeded, deposition
may occur in other organs such as the
heart. Heart iron loading causes a greater
risk of cardiac complications and premature
death. The risk of iron-induced cardiac
failure can be assessed by Cardiac T2* and
the commencement of appropriate and
timely chelation therapy can halt and even
reverse iron-induced heart tissue damage.
The dual use of FerriScan and Cardiac T2*
can enable better informed decisions on
the management of patients at risk of
iron-induced organ damage. Cardiac T2*
volumes this year increased 58% on the
previous year and growth is expected to
continue into the next year.
18
ResonanceHealth Year in Review - Product Portfolio
HepaFat-Scan® - Measurement of
This year focused on the roll out of HepaFat-
Volumetric Liver Fat Fraction (VLFF)
Scan in research studies to generate clinical
HepaFat-Scan®
HepaFat-Scan
is Resonance Health’s
MRI-based tool for the measurement of
volumetric liver fat fraction (VLFF). The tool
is clinically validated against independent
liver biopsy measurements, and has a very
high degree of accuracy and repeatability.
HepaFat-Scan is currently the only MR
technique for measuring liver fat fraction
that can be directly compared to biopsy,
the current gold standard for liver fat
measurement. As such, it has a significant
competitive advantage over alternative
techniques. HepaFat-Scan has FDA, CE
Mark, and TGA regulatory clearances and
is available for use in the routine clinical
setting, pharmaceutical company clinical
trials, and in clinical research projects.
Non-Alcoholic Fatty Liver Disease (NAFLD)
is a major health concern world-wide,
driven by the global obesity epidemic. The
potential addressable market is extensive
with 20-30% of
the US population
estimated to have fatty liver disease; with
similar prevalences estimated for Australia,
data supporting the use of the technique,
in order to promote uptake in the clinical
community.
Inclusion of HepaFat-Scan
measurements in the high profile London
Marathon Study and further collaborations
with world-leading diabetes and fatty liver
disease teams in the US, UK, and Australia
were achieved this year. A total of seven
collaborative studies are now underway
in the fields of fatty liver disease in adults
and paediatric patients, pre-surgical
assessments
in
liver cancer, bariatric
surgery, diabetes, and hyperferritinaemia.
As a direct result of these studies we
gained
international exposure on the
potential for FerriScan and HepaFat-Scan
to be used in combination to help diagnose
the underlying causes of unexplained
hyperferritinaemia, a widely encountered
condition in haematology clinics.
Another significant achievement this year
was the publication of the Company’s
HepaFat-Scan validation study
in an
international peer
reviewed
scientific
journal. This publication adds to the
evidence that will support the uptake of
HepaFat-Scan in the community.
Europe, and Asia. A significant proportion
The vital work undertaken this year
of people with fatty liver will develop a
positions HepaFat-Scan for sustainable
serious liver condition known as non-
future revenue streams and the Company
alcoholic steatohepatitis (NASH) and are
continues to proactively generate further
at risk of further developing fibrosis, or
opportunities in the clinical, research and
scarring of the liver. Hence, monitoring
pharmaceutical trial settings.
and management of fatty liver disease
is increasingly being recognised as an
important step towards improving patient
health outcomes.
19
ResonanceHealth Year in Review - Product Portfolio
FY16 Product Additions
examination of iron in bone marrow samples
Bone Marrow R2-MRI – Assessment of
Bone Marrow Iron
One of
the
successful
initiatives of
the Company this year has been the
development of Bone Marrow R2-MRI, for
the assessment of bone marrow iron. The
new technique has already been used in
from invasive and painful needle biopsy.
Strong interest in Bone Marrow R2-MRI
amongst our existing customers, together
with active discussions on
research
collaborations with key opinion leaders,
positions the technology well for future
uptake in the clinical setting.
research collaborations with international
Pancreatic Fat Assessment
clinicians. In order to expand the market to the
clinical community, regulatory submissions
for the FDA (US), CE Mark (Europe), and TGA
(Australia) are commencing in the coming
year. With a strong track record of achieving
regulatory clearances, Resonance Health
is confident that these will be obtained by
mid-late 2017, allowing the new technique
to be actively marketed.
A pancreatic fat assessment technology is a
further addition to the Company’s product
portfolio this year. This tool, offered in a
research setting, measures pancreatic fat
fraction and has been incorporated into
two important diabetes studies with highly
respected clinical teams in this field. There
has been a rapid rise in obesity related type
II diabetes, which affects an estimated 380
In parallel to liver iron concentration, bone
million people globally.
marrow iron is of significance in disease
conditions
requiring multiple blood
transfusions. The bone marrow iron burden
is also believed to be important in potential
bone marrow transplant recipients, as
excess iron may increase the likelihood
of post-transplant complications.
It
is
estimated that more than 50,000 patients
are transplanted annually for certain cancers
or for diseases that affect the production of
bone marrow cells. Improved monitoring
and management of iron prior to transplant
may reduce transplant complications and
have the potential for significant health and
economic benefits. Existing clinical leaders
in the field of bone marrow transplantation
currently using FerriScan to assess body iron
stores prior to transplant, would welcome
a bone marrow-specific test to improve
patients health outcomes. Decreased bone
marrow iron is also clinically relevant, with
Fat accumulates in the pancreas in a variety
of disease states. The measurement and
monitoring of pancreatic fat will provide
important information with regard to its
clinical significance. This work will continue
into the next financial year and the Company
looks forward to reviewing the results and
to determining future potential clinical
applications.
Spleen Volume Measurement
Spleen volume measurement is another new
radiological image analysis tool developed
by the Company this year. The tool has
already been included in the Company’s
service provision
for an
international
pharmaceutical company clinical
trial.
Spleen volume measurement can be used
to assist in the detection of hypersplenism,
an overactive spleen, which can result in the
inappropriate removal of blood cells in the
the definitive test of iron deficiency being
body.
20
ResonanceHealth Financial
Report
2016
21
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 2016. 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. Dr Blake received FAANMS as a post nominal in recognition of his Nuclear Medicine Specialist training
undertaken in 1994 & 1995.
He has been a Partner of Perth Radiological Clinic since 1997 and is currently the Chairman of that Company.
Dr Blake has an MBA from Melbourne University, is a Graduate of the Australian Institute of Company Directors and
holds directorships on a number of private Company boards.
Other current directorships: None
Former directorships in last 3 years: None
Special responsibilities:
Chairman of the Audit Committee
Chairman of the Remuneration Committee
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. Dr Loveridge has recently been
appointed as Chief Executive Officer for 4SC.
Other current directorships:
Actinogen Medical
Former directorships in last 3 years: None
Special responsibilities:
Member of the Audit Committee
Member of the Remuneration Committee
22
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.
Other current directorships: None
Former directorships in last 3 years:
Non-Executive Director of 4DS Ltd
Special responsibilities:
Member of the Audit Committee
Member of the Remuneration Committee
Management
Mr Sander Bangma M.Sc, DipMgt
Position:
General Manager (appointed 31st January 2015)
Experience:
Mr Bangma joined Resonance Health in 2005 and has been appointed General Manager. He holds a Master’s 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 (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
23
ResonanceHealth Directors’ Report
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.
Professor Timothy St Pierre B.Sc(Hons), PhD
Position:
Chief Scientific Officer
Experience:
Prof. 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.
Prof. St Pierre, a Professor at The University of Western Australia, led the team which developed the FerriScan
technology. Prof. St Pierre has strong links with international key opinion leaders in the field of iron overload
diseases and regularly participates in international research collaborations.
24
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
Prof. 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
6,168,500
89,126
30,303
89,126
-
6,377,055
The Company has an Employee Share Plan (ESP) which was adopted at the Annual General Meeting held on 27th
November 2014. In total 764,699 shares were issued to Staff during the year under the ESP (2015: 363,636 Shares).
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.
25
ResonanceHealth
Directors’ Report
Review of Operations and Financial Summary
The Company is pleased to report the following for the financial year 2015/16.
Highlights
•
•
•
•
•
•
•
•
•
The year ended with record analysis volumes for the month, quarter, and year.
Revenue and receipts from customers were both higher than the previous year.
25 new Radiology Centres were established for Resonance Health services – up 25% from previous year.
Chief Scientific Officer, Professor Tim St Pierre, received two prestigious awards for the Company:
• Western Australian Entrepreneur of the Year
•
Thalassaemia International Federation’s Panos Englezos Award
The Resonance Health team was further strengthened with core new roles filled by talented recruits - Scientific
Research Officer, Clinical Research Manager, Account Manager, a US Consultant, a German Consultant and a new
Technical Analyst.
A record number of targeted conferences were attended to showcase and promote our technologies and build
stakeholder and Key Opinion Leader relations – a total of 17 conferences spanning eight countries.
Engagement in numerous collaborative research studies and a new pharmaceutical company clinical trial.
Identified and commenced work towards potential new markets and products to expand the Company’s portfolio.
The position of FerriScan® as the global gold standard for liver iron concentration measurement was reinforced
with endorsements in a variety of scientific publications and clinical guidelines, such as the UK Standards of Care
for Thalassaemia.
Financials
Sales revenue of $2,547,685 was higher than the prior year. Other income was significantly lower than the prior year as
a result of interest income decreasing by $16,579 and the absence of grants during the 2015/2016 financial year. In the
prior year the Company received an Export Market Development Grant of $86,934 and the Western Australian Innovator
of the Year grant of $75,000. Grants are actively being sourced for the 2016/2017 financial year.
Operating expenses (excluding foreign exchange) were 18% or $469,818 higher than the prior year. Total expenditure,
excluding foreign exchange gain/loss for the year was $3,041,375 compared to the prior year total expenditure of
$2,571,557. The operating expense increase was a result of increased marketing activity (with a year on year increase
in marketing and travel expense of $409,807) and increased staff as the company undertakes more Research and
Development and clinical studies (a year on year increase in employee benefits expense of $126,029).
Research and Development expenditure totalled $672,914 during the year up from $390,829 in the previous year. This
comprised capitalised development costs of $277,074 that are recognised as an intangible asset on the Statement
of Financial Position and expenditure of $132,927 amortisation expense, $111,157 recognised in Research and
Development in the Statement of Comprehensive Income and $151,756 recognised in employee benefits.
Resonance Health had cash at bank of $2,512,441 at the end of the financial year compared to $2,797,203 in the
previous year and has no debt. Receipts from customers were $2,513,564; up from the previous year’s result. Cash
flows from operating activities generated positive cash and the services business segment reported a profit.
A net loss was recorded for the year of $384,366 compared to a net profit of $463,234 in the previous financial year.
The net loss was a direct result of strategic future investment in the Company; with a strong focus on Research and
26
ResonanceHealth Directors’ Report
Development to extend the Company’s services and improve efficiencies, as well as an increase in targeted Marketing
activities. A key component of these increased activities included the expansion of the Company’s increasingly strong
team. This phase of growth and development of the Company has resulted in positive outcomes to date and is expected
to place the Company in an ideal position for the future.
Operations
Resonance Health’s lead product, FerriScan, is globally recognised as the gold standard for liver iron concentration
(LIC) measurement. FerriScan is a non-invasive, accurate, and regulatory approved method of measuring LIC from MRI
scans of a patient’s liver, that eliminates the need for an expensive and painful needle biopsy with associated potential
complications. Over 200 Radiology Centres from over 30 countries across the globe are established for FerriScan.
Image data is securely transferred to Resonance Health for analysis at the Company’s ISO-certified, central facility.
FerriScan is strongly endorsed by leading global clinicians who can rely on accurate, quality-assured results for their
patient management. In addition to routine clinical management of patients, FerriScan is also the method of choice
for pharmaceutical companies conducting clinical trials on their compounds. FerriScan has been utilised in over 20
international multicentre trials over the past 10 years and partnerships with existing and new pharmaceutical companies
have continued to develop over the year. Clinician referrals for FerriScan continued to grow over this year with the
highest volumes on record; including in the primary target markets of the United States and United Kingdom. Receipts
from customers were $2,513,564, up from the previous year’s result. FerriScan is also offered as a dual service together
with a Cardiac T2* measurement. Cardiac T2* volumes grew 58% compared to the previous year.
Resonance Health’s latest product to market, HepaFat-Scan®, is a non-invasive method for measuring volumetric
liver fat fraction (VLFF) from MRI scans. With the global epidemic of fatty liver disease the technology is anticipated
to make a significant beneficial impact in the field. A targeted focus on promoting HepaFat-Scan has gained traction
during the year and has resulted in securing collaborations with Key Opinion Leaders in studies in the fields of fatty
liver disease in adults and paediatric patients, pre-surgical assessments in liver cancer, bariatric surgery, diabetes, and
hyperferritinaemia. Participation in seven such studies have been secured, with the aim of collecting supporting data on
the effectiveness of HepaFat-Scan to promote uptake in the clinical community. The Company is also engaging in active
discussion with pharmaceutical companies who are developing therapeutic compounds for fatty liver disease. Another
key achievement during the year was the submission of the results of a HepaFat-Scan study to an international scientific
journal, which has subsequently been published. The results demonstrate HepaFat-Scan’s very high degree of accuracy
and repeatability and that it is directly comparable to liver biopsy, the current gold standard for liver fat measurement.
This positions HepaFat-Scan with an attractive competitive advantage over alternative techniques and positive feedback
has been received from various users of the technology.
Research and Development
The Company continued its strong commitment to Research and Development during the year with a focus on future
sustainability. A key component of this included the expansion of the Research and Development team with recruitment
of two valuable new members; a Scientific Research Officer and a Clinical Research Manager, and an increased time
commitment from the Company’s Chief Scientific Officer. Efforts were multi-pronged; focussing on the continued
development of new technologies and improving efficiencies of current technologies using new advances in computer
science, identification and investigation into potential new markets, and development of current technologies for
additional applications. Resonance Health continued with development of a technology for the quantification of liver
fibrosis using MRI. Collaborations in this space with the Australian Commonwealth Scientific Research Organisation
continued, with promising results to date.
Newly identified markets included previously untargeted disease indications in which patients are expected to
significantly benefit from FerriScan and/or HepaFat-Scan, as well as additional organs in which fat and iron assessments
can be made. The Research and Development team work very closely with the Marketing team to ensure an efficient and
effective multidisciplinary approach.
27
ResonanceHealth Directors’ Report
Marketing
The Company’s strategically targeted marketing focus during the year saw great success. A core focus was the
development of both new and existing key stakeholder relations with whom future collaborations are pivotal. The
ambitious conference schedule not only provided opportunity to promote the Company’s technologies, but also for
clinical education, collection of valuable intelligence, and stakeholder relationship development.
The Marketing team continually improve the marketing materials that are used on the website, during conferences, and
in lead conversion. During the year a powerful educational tool was created in the form of a corporate FerriScan video.
The video succinctly educates on the benefits of FerriScan over competitors and has generated positive feedback from
a wide target audience.
The Marketing presence is global with team members located in Australia, the United Kingdom, United States, and
Germany. Marketing efforts have seen 25 new Radiology Centres established across the globe during the year, increased
analysis volumes in targeted jurisdictions for all products, and engagement with both new existing pharmaceutical
companies.
Resonance Heath has experienced a very productive financial year in terms of growth and development. An increasing
return on investment for these efforts is expected into future years. The strong focus on Research and Development
and Marketing will continue in the 2016/2017 financial year to continue to build the Company’s future sustainability.
Operating Results
The net loss of the Group for the financial year after tax was $384,366 (2015: profit $463,234).
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
On the 31 August 2016, 166,666 shares in Resonance Health Limited were issued to employees under the Employee
Share Plan.
Likely Developments and Expected Results of Operations
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.
28
ResonanceHealth Directors’ Report
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 2016. 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 (non-executive)
Dr Jason Loveridge - Director (non-executive)
Mr Simon Panton - Director (non-executive)
(ii) Management Executives
Prof. Timothy St Pierre – Chief Scientific Officer
Mr Sander Bangma – General Manager
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.
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.
29
ResonanceHealth
Directors’ Report
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 Prof. 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.
Management Employment Agreements
Mr Bowers was appointed to the role of Company Secretary of Resonance Health Ltd on 25th November 2013. His
employment agreement provides for an equivalent full time salary of $140,000 pa exclusive of superannuation for 22.5
hours per week and a termination notice of 2 weeks.
Mr Bangma was appointed to the role of General Manager 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 1st June 2015. Her
employment agreement provides for an equivalent full time salary of $115,000 pa exclusive of superannuation for 32.5
hours per week and a termination notice of 2 weeks.
30
ResonanceHealth Directors’ Report
Consultancy Services Agreement
The Company has an agreement with The University of Western Australia (UWA) for consulting services provided
by Prof. St Pierre. Under this agreement consulting services provided for duties of Chief Scientific Officer totalling
$208,433 (2015: $82,719) were incurred during the financial year. These amounts are included in Prof. Tim St Pierre’s
remuneration disclosed in the following table. The agreement can be terminated by either party giving 90 days notice
to the other party.
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 $182,365 (2015: $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 2016
The remuneration for key management personnel of the Group during the year was as follows:
Short-term
employee
benefits
Post
employment
benefits
Equity
Total
Salary
& Fees
Superannuation
Contributions
Shares/
Options
$
$
$
$
Remuneration
Fixed Remuneration
linked to
performance
%
%
Non-Executive Directors’
remuneration
Dr M Blake
Dr J Loveridge
Mr S Panton
Total
54,795
40,000
36,530
131,325
5,205
-
3,470
8,675
-
-
-
60,000
40,000
40,000
- 140,000
100%
100%
100%
-
-
-
Short-term
employee
benefits
Post
employment
benefits
Equity
Total
Salary Bonus Superannuation
Contributions
& Fees
Shares/
Options
Remuneration
Fixed Remuneration
linked to
performance
$
$
$
$
%
%
Management
Executives’
remuneration
Prof. T St Pierre 1 208,433
Mr S Bangma 3
Mrs M Baxter 2
Mr A Bowers 3
182,365
129,808
129,733
Mrs C Royet
101,574
-
9,000
-
-
-
Total
751,913
9,000
-
- 208,433
12,807
1,000 152,615
-
12,325
9,649
34,781
- 182,365
1,000 143,058
- 111,223
2,000 797,694
100 %
93.4%
100 %
99.3%
100 %
-
6.6%
-
0.7%
-
31
ResonanceHealth
Directors’ Report
1 Prof. 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 2016 a balance of $63,313 was owing to
The University of Western Australia.
2 At 30 June 2016 a balance of $17,210 was owing to Catalyst Communications Limited for consulting services
provided by Mrs Baxter.
3 Received 58,823 shares in Resonance Health Limited on 29th June 2016. 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.
Details of Remuneration for Year Ended 30 June 2015
Short-term
employee
benefits
Post
employment
benefits
Equity
Total
Salary Superannuation
Contributions
& Fees
Shares/
Options
Remuneration
Fixed Remuneration
linked to
performance
%
%
$
$
$
$
Non-Executive Directors’
remuneration
Dr M Blake
Dr J Loveridge
Mr S Panton
54,795
40,000
36,530
Total
131,325
5,205
-
3,470
8,675
-
-
-
60,000
40,000
40,000
- 140,000
100%
100%
100%
-
-
-
Short-term
employee
benefits
Post
employment
benefits
Equity
Total
Salary Superannuation
Contributions
& Fees
Shares/
Options
$
$
$
$
Remuneration
Fixed Remuneration
linked to
performance
%
%
Executive Directors’
remuneration
Ms L Dunne 1
Total
274,007
274,007
20,553
20,553
- 294,560
- 294,560
100%
-
Management Executives’
remuneration
Prof. T St Pierre 2,3
Mr S Bangma 5
Mrs M Baxter 4,5
Mr A Bowers 5
Mrs C Royet6
Total
82,719
119,692
144,133
131,600
1,650
479,794
-
11,371
-
12,502
157
24,030
- 82,719
1,000 132,063
1,000 145,133
1,000 145,102
1,807
-
3,000 506,824
100 %
99.2%
99.3%
99.3%
100 %
-
0.8%
0.7%
0.7%
-
32
ResonanceHealth
Directors’ Report
1 Ms L Dunne resigned as Managing Director 31st January 2015.
2 Prof. T St Pierre resigned as a Director 29th October 2014.
3 Prof. 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 1st June 2015.
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
Received as
1/7/2015 Remuneration
Net Change year on exercise Balance
Other of options 30/6/2015
Received during the
Dr M Blake
6,464,677
Dr J Loveridge
-
Mr S Panton
65,966,163
Prof. T St Pierre
7,218,500
Mr S Bangma
Mrs M Baxter
Mr A Bowers
Mrs C Royet
30,303
30,303
30,303
-
-
-
-
-
58,823
-
58,823
-
-
-
-
(1,050,000)
-
-
-
-
Total
79,740,249
117,646
(1,050,000)
-
-
-
-
-
-
-
-
-
6,464,677
-
65,966,163
6,168,500
89,126
30,303
89,126
-
78,807,895
No options or rights are held by any member of KMP and there were no other transactions with KMP’s during the year.
33
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 2016, and the numbers of meetings attended by each director were:
Director
Meetings
Audit Committee
Meetings
Remuneration
Committee Meetings
Number eligible Number Number eligible Number Number eligible Number
To attend
attended
To attend
attended
To attend
attended
Dr M Blake
Mr S Panton
Dr J Loveridge
8
8
8
8
8
7
3
3
3
3
3
3
2
2
2
2
2
2
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 41 and forms part of this Directors’ Report for the year ended 30 June 2016.
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 21 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 29 September 2016
34
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 responsible for day to day management of service delivery.
• 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
35
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 reserved 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, 30% of all current employees are women and 45% 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
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.
36
ResonanceHealth Corporate Governance Statement
Directors during the financial year were:
•
Dr Martin Blake – Independent – Chairman
• Mr Simon Panton – Not independent – substantial shareholder
•
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.
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 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.
37
ResonanceHealth Corporate Governance Statement
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.
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.
38
ResonanceHealth Corporate Governance Statement
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.
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.
39
ResonanceHealth Corporate Governance Statement
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 2016 the Nomination and Remuneration Committee met
two times.
The Company pays fees to The University of Western Australia for services provided by Prof. 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.
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
40
ResonanceHealth Auditor’s independence Declaration
-20-
RESONANCE HEALTH LIMITED
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 2016, I declare that to the best of my knowledge and belief, there have been no contraventions of:
a)
b)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
29 September 2016
L Di Giallonardo
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
41
ResonanceHealth
Statement of Comprehensive Income
for the Year Ended 30 June 2016
Consolidated
Notes
2(a)
2(b)
2016
$
2,547,685
48,939
2015
$
2,443,476
233,284
2,596,624
2,676,760
(1,474,535)
(1,348,506)
(30,947)
(111,157)
(16,309)
(132,927)
(781,540)
(148,116)
(39,175)
-
2(c)
(345,844)
(483,926)
3
99,560
(94,032)
(68,665)
(13,649)
(121,052)
(371,733)
(159,449)
143,430
(15,264)
(379,207)
248,633
214,601
(384,366)
463,234
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 (loss)/gain
Due diligence expense
Other expenses
Profit/(loss) before income tax benefit
Income tax benefit
Net profit/(loss) for the year attributable to
owners of the parent
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Exchange differences arising on translation of foreign operations
Exchange differences arising on translation of foreign loan
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income/(loss) for the year attributable
to owners of the parent
-
-
-
(61,916)
(37,314)
(99,230)
(384,366)
364,004
Basic earnings/(loss) per share (cents per share)
5
(0.10)
0.12
The accompanying notes form part of these financial statements.
42
ResonanceHealth
Statement of Financial Position
as at 30 June 2016
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Plant and equipment
Intangible assets
Other assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Other liabilities
Total Current Liabilities
Notes
Consolidated
2016
$
2015
$
7
8
9
10
11
9
12
14
13
2,512,441
2,797,203
485,331
44,457
662,177
42,304
3,042,229
3,501,684
74,691
27,216
1,745,589
1,601,442
64,310
62,106
1,884,590
1,690,764
4,926,819
5,192,448
415,364
52,100
425,433
329,158
44,070
413,932
892,897
787,160
Total Liabilities
892,897
787,160
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
4,033,922
4,405,288
15(a)
15(b)
69,419,199
69,406,199
(204,296)
(204,296)
(65,180,981)
(64,796,615)
4,033,922
4,405,288
The accompanying notes form part of these financial statements.
43
ResonanceHealth
Statement of Changes in Equity
for the Year Ended 30 June 2016
Consolidated
Foreign
Currency
Issued Translation
Capital Reserve Reserve
$
Option Accumulated
Losses
$
$
$
Total
Equity
$
Balance at 1 July 2014
68,703,510
(171,350)
66,284
(65,259,849)
3,338,595
Profit for the year
Other comprehensive loss
-
-
-
(99,230)
Total comprehensive income for the year
-
(99,230)
Shares issued
Share 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
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
-
-
-
Shares issued
13,000
-
-
-
-
-
-
-
-
(384,366)
(384,366)
-
-
(384,366) (384,366)
-
13,000
Balance at 30 June 2016
69,419,199 (270,580)
66,284 (65,180,981) 4,033,922
The accompanying notes form part of these financial statements.
44
ResonanceHealth
Statement of Cash Flows
for the Year Ended 30 June 2016
Consolidated
Notes
2016
$
Inflows/(Outflows)
2015
$
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Due diligence expense
Grants received
Interest received
Income tax received
Net cash provided by operating activities
7(i)
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Net cash used in investing activities
Cash flows from financing activities
Share issues
Share issue costs
Net cash provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Foreign exchange differences on cash balances
2,513,564
2,489,302
(2,787,159)
(2,481,556)
-
-
48,744
285,794
60,943
(42,887)
161,934
70,370
-
197,163
(63,784)
(11,417)
(277,074)
(159,210)
(340,858)
(170,627)
-
-
-
(279,915)
(4,847)
650,000
(18,687)
631,313
657,849
41,747
Cash and cash equivalents at the beginning of period
2,797,203
2,097,607
Cash and cash equivalents at the end of the period
7
2,512,441
2,797,203
The accompanying notes form part of these financial statements.
45
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
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.
For the purpose of preparing the consolidated financial statements, the Company is a for profit entity.
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 2016, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current annual reporting period.
As a result of this review, the Directors have determined that there is no material impact of the new and revised
Standards and Interpretations on the Company and, therefore, no material change is necessary to Group
accounting policies.
Standards and Interpretations in issue not yet adopted
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 2016. As a result of this review the Directors have determined that AASB 15
Revenue from contracts with Customers may have a material effect on the Company in future reporting periods.
The Company have elected to not early adopt this Standard and Interpretation and have not quantified the material
effect of application on future periods.
Other than the above, there are no other material impact of the new and revised Standards and Interpretations on
the Group and therefore no change is necessary to Group accounting policies.
(c) Statement of compliance
The financial report was authorised for issue on 29 September 2016.
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
46
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(d) Basis of consolidation (continued)
from the date on which control is transferred out of the Group. Control exists where the Company has the power
to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Business combinations have been accounted for using the acquisition method of accounting (refer Note 1(ab)).
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group
and are presented separately in the statement of comprehensive income and within equity in the consolidated
statement of financial position. Losses are attributed to the non-controlling interest even if that results in a deficit
balance.
(e) Critical accounting judgements and key sources of estimation uncertainty
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
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.
47
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(g) Foreign currency translation
Both the functional and presentation currency of Resonance Health Limited and its Australian subsidiaries is
Australian dollars. Each entity in the Group determines its own functional currency and items included in the
financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange
rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the statement of financial position date.
All exchange differences in the consolidated financial report are taken to profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the
date the fair value was determined.
The functional currency of the foreign operation Resonance USA Inc. is United States dollars (US$). As at
the reporting date the 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.
48
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(j) Lease (continued)
Operating lease payments, where the lessor effectively retains substantially all of the risks and benefits of
ownership of the leased items, are recognised as an expense on a straight line basis over the lease term, except
where another systematic basis is more representative of the time pattern in which economic benefits from the
lease asset are consumed.
(k)
Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary difference and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantially enacted by the balance date. Deferred income tax is provided on all temporary
differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
•
•
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries, associates or interests
in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable future.
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.
49
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(l) Other taxes (continued)
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.
(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.
50
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(n) Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents
as defined above.
(o) Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised
cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally
due for settlement within periods ranging from 14 days to 90 days.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are
written off by reducing the carrying amount directly. An allowance account is used when there is objective
evidence that the Group will not be able to collect all amounts due according to the original contractual terms.
Factors considered by the Group in making this determination include known significant financial difficulties of
the debtor, review of financial information and significant delinquency in making contractual payments to the
Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable
and the present value of estimated future cash flows, discounted at the original effective interest rate. Where
receivables are short-term discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses.
When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a
subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against other expenses in the statement of comprehensive income.
(p) Financial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as
either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or
available-for-sale investments, as appropriate. Where financial assets are recognised initially, they are measured
at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction
costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and
appropriate, re-evaluates this designation at each financial year-end.
All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that the Group
commits to purchase the asset. Regular way purchases or sales of financial assets under contracts that require
delivery of the assets within the period established generally by regulation or convention in the marketplace.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value
through
profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling
in the near term. Gains or losses on investments held for trading are recognised in profit or loss.
(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-
51
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(p) Financial assets (continued)
sale or are not classified as any of the three preceding categories. After initial recognition available-for-sale
investments are measured at fair value with gains or losses being recognised as a separate component of
equity until the investment is derecognised or until the investment is determined to be impaired, at which
time the cumulative gain or loss previously reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined by reference
to quoted market bid prices at the close of business on the balance date. For investments with no active
market, fair value is determined using valuation techniques. Such techniques include using recent arm’s
length market transactions; reference to the current market value of another instrument that is substantially
the same; discounted cash flow analysis and option pricing models.
(q) Derecognition of financial assets and liabilities
(i) Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is derecognised when:
•
•
the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay
them in full without material delay to a third party under a ‘pass-through’ arrangement; or
•
the Group has transferred its rights to receive cash flows from the asset and either:
(a) has transferred substantially all the risks and rewards of the asset, or
(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor
retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is
recognised to the extent of the Group’s continuing involvement in the asset.
(ii) Financial liabilities
A financial liability is recognised when the obligation under the liability is discharged or cancelled or 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.
52
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(r)
Impairment of financial assets (continued)
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.
(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.
53
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(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;
• 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.
54
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(y) Share-based payment transactions
Equity-settled transactions
The Group uses agreements where payment for services rendered are settled by the issuance of fully paid shares
or options in the Company.
The cost of these equity-settled transactions is measured by reference to the fair value of the equity instruments
at the date they are granted and is recognised, together with a corresponding increase in equity, over the period
in which the service is provided.
(z)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
(aa) Earnings per share (“EPS”)
Basic EPS is calculated as net profit/loss attributable to members of the parent, adjusted to exclude any costs of
servicing equity (other than dividends) and preference share dividends, divided by the weighted average number
of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit/loss attributable to members of the parent, adjusted for:
•
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for
any bonus element.
(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.
55
ResonanceHealth Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 1: Statement of significant accounting policies (continued)
(ac) Parent entity financial information
The financial information for the parent entity, Resonance Health Limited, disclosed in Note 20 has been prepared
on the same basis as the consolidated financial statements, except as set out below.
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s
financial statements.
NOTE 2: Revenues and expenses
(a) Sales revenue
Sales to external customers
2,547,685
2,443,476
Consolidated
2016
$
2015
$
(b) Other income
Grants received
Interest received
Other revenue
(c) Expenses
-
48,939
-
48,939
161,934
65,518
5,832
233,284
Rental expense on operating leases
106,076
107,794
56
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 3: Income tax benefit
Consolidated
Income tax recognised in profit or loss
The major components of tax benefit are:
Current taxation – reversal of prior year entries
Fringe Benefits Tax Paid
Adjustments recognised in the current year in relation to the
current tax of prior years – R&D tax offset
2016
$
-
(2,159)
101,719
99,560
2015
$
144,316
-
70,285
214,601
The prima facie income tax benefit on pre-tax accounting (loss)/profit
from operations reconciles to the income tax benefit in the financial
statements as follows:
Accounting (loss)/profit before income tax
(483,926)
248,633
Income tax benefit calculated at 30%
(145,178)
Effect of expenses that are not deductible in determining taxable profit
158,199
Effect of unused tax losses not recognised as deferred tax assets
264,906
Effect of temporary differences not recognised as deferred tax
assets and liabilities
Effect of capital raising costs recognised directly in equity
Fringe Benefits Tax Paid
Income tax benefit reversal of prior year entries
Tax refund receivable (research and development tax offset)
(277,927)
-
(2,159)
-
101,719
Income tax benefit reported in the statement of comprehensive income
99,560
(74,590)
(120,113)
(292,563)
474,562
12,704
-
144,316
70,285
214,601
57
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 3: Income tax benefit (continued)
Consolidated
2016
$
2015
$
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
3,239,315
Amortisation and depreciation timing differences
Business related costs
Unrealised foreign exchange losses
Accrued expenses and liabilities
Deferred tax liabilities:
Capitalised research and development costs
Accrued income
647,875
47,049
9,602
68,940
2,974,408
892,813
66,697
1,708
57,621
4,012,781
3,993,247
523,677
380
480,433
321
524,057
480,754
Income tax benefits not recognised directly in equity
Share issue costs
-
12,704
Deferred tax assets have not been recognised in respect of the above items because it is not considered probable that
future taxable profit will be available against which the Group can utilise the benefits thereof.
Deferred tax 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 differences and it is probable that the temporary differences 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).
58
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
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 2016.
Services
$
Research and
Development
$
Corporate
$
Total
$
Segment revenue
Sales to external customers
2,547,685
Interest revenue
Total segment revenue
-
2,547,685
-
-
-
-
2,547,685
48,939
48,939
48,939
2,596,624
Segment profit/(loss) before tax
201,265
(262,913)
(422,278)
(483,926)
Income tax benefit
Segment assets
Segment liabilities
-
99,560
-
99,560
485,331
840,797
1,745,589
2,695,899
4,926,819
-
52,100
892,897
The Group derived 43% 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.
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
-
-
-
-
65,518
5,832
71,350
Segment profit/(loss) before tax
709,671
(110,565)
(350,473)
-
2,605,410
65,518
5,832
2,676,760
248,633
214,601
Income tax benefit
Segment assets
Segment liabilities
-
214,601
-
662,177
743,090
1,601,441
2,928,830
5,192,448
-
44,070
787,160
59
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 5: Earnings per share
Basic earnings/(loss) per share (cents per share)
Consolidated
2016
$
(0.10)
(a) Profit/(loss) used in the calculation of basic earnings per share
(384,366)
2016
Number
2015
$
0.12
463,234
2015
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
2016
$
1,538,127
974,314
2,512,441
2015
$
557,580
2,239,623
2,797,203
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.
60
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 7: Cash and cash equivalents (continued)
(i) Reconciliation of loss for the year to net cash flows
from operating activities
(Loss)/profit for the year
Non-cash flows in loss:
Depreciation
Amortisation of intangible assets
Employee share costs Note 15
Changes in net assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in other assets (current)
Increase in other assets (non-current)
(Increase)/decrease in other financial assets
Increase/(decrease) in trade creditors and other payables
Decrease in current tax liabilities
Decrease in other liabilities
Net cash provided by operating activities
(ii) Financing facilities
Secured credit card:
Amount used
Amount unused
(iii) Cash balances not available for use
Security deposits:
Credit card
Lease premises
Consolidated
2016
$
2015
$
(384,366)
463,234
16,309
132,927
17,000
176,846
(2,153)
-
(2,204)
95,084
-
11,500
60,943
9,570
10,430
20,000
20,000
44,310
64,310
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
61
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
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
2016
$
466,930
18,401
485,331
88,931
82,804
95,983
-
267,718
2015
$
457,839
204,338
662,177
101,255
41,269
83,675
-
226,199
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 17% (2015: 18%) 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
2016
$
44,457
64,310
2015
$
42,304
62,106
62
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
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
2016
$
349,021
(274,330)
74,691
27,216
63,784
(16,309)
74,691
2,123,571
(377,982)
1,745,589
1,601,442
277,074
(132,927)
1,745,589
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
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.
63
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 11: Intangible assets (continued)
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.
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: Trade and other payables
Current
Trade payables (i)
Sundry creditors and accruals
Consolidated
2016
$
119,783
295,581
415,364
2015
$
85,228
243,930
329,158
(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 13: Other liabilities
Current
Unearned income
NOTE 14: Provisions
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
425,433
413,932
52,100
52,100
44,070
15,691
(7,661)
52,100
44,070
44,070
88,623
4,163
(48,716)
44,070
64
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 15: Issued capital and reserves
(a) Issued and paid up capital
402,330,902
69,419,199
401,566,203
69,406,199
2016
2015
No.
$
No.
$
Movements – Ordinary shares
2016
2016
2015
2015
No of shares
$ No. of shares
$
Balance at the beginning of the year
401,566,203
69,406,199
386,541,784
68,703,510
Placement 15 September 2014 at $0.05 each
Placement 30 September 2014 at $0.05 each
Employee Shares 31 March 2015 at $0.033 each
Share capital issue costs
-
-
-
-
-
-
-
-
Employee Shares 29 June 2016 at $0.017 each
764,699
13,000
13,000,000
650,000
1,660,783
363,636
-
-
83,044
12,000
(42,350)
-
Balance at the end of the year
402,330,902
69,419,199
401,566,203
69,406,204
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 16: Financial instruments
(a) Capital risk management
The Group controls the capital of the Company in order to maintain an appropriate debt to equity ratio and to
ensure that the Company can fund its operations and continue as a going concern. The Group’s overall strategy
remains unchanged from the previous financial year. The capital structure of the Group consists of cash and
cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and
retained earnings. None of the Group’s entities are subject to externally imposed capital requirements. Operating
cash flows are used to maintain and expand operations, as well as to make routine expenditures.
65
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 16: Financial instruments (continued)
(b) Categories of financial instruments
Financial assets/(liabilities)
Cash and cash equivalents
Trade and other receivables
Other assets
Trade and other payables
Consolidated
2016
$
2,512,441
485,331
44,457
(415,364)
2015
$
2,797,202
662,177
62,106
(329,158)
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
2016
$
26,349
21,685
1,692
2015
$
16,276
25,055
4,996
2016
$
1,269,733
238,390
124,271
2015
$
375,225
248,574
21,493
66
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 16: 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
2016
$
(113,035)
(19,700)
(11,144)
2015
$
(32,632)
(20,320)
(1,500)
(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
2016
$2,512,441
$64,310
$2,576,751
Weighted average effective interest rate
1.24%
2.12%
2015
$2,797,203
$62,106
$2,859,309
Weighted average effective interest rate
1.59%
2.66%
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.
67
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 16: 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 2016, the Group had one customer that accounted for 17% of all trade receivables
(2015: 18%).
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) 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
$
2016
Non-interest bearing
265,854
53,448
96,062
415,364
2015
Non-interest bearing
202,889
62,240
64,029
329,158
(i) 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.
68
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 17: Commitments for expenditure
Consolidated
2016
$
2015
$
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
124,873
10,440
135,313
117,060
131,887
248,947
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
2016
$
172,975
-
172,975
2015
$
114,732
47,805
162,537
69
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 18: 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
2016
2015
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 22 for details of transactions with key management personnel.
Transactions between group companies
Transactions between group companies
During the year the following transactions occurred between group companies:
Resonance Health Analysis Services Pty Ltd (RHAS) and Resonance Health Limited (RHT).
During the year expenses were paid by RHAS totalling $136,221 (2015: $46,600) on behalf of RHT. During the year
RHAS repaid $80,000 of loan balance to RHT.
During the Year expenses were paid by RHT totalling $48,898 on behalf of RHAS. During the year RHT provide funds
of $1,015,000 to RHAS
At the 30 June 2016 RHAS owed a loan balance of $542,864 to RHT.
In prior periods RHT impaired a loan to WA Private Health Care Services Pty Ltd of $136,423. The loan remains
impaired.
In prior periods WA Private Health Care Services Pty Ltd has provided a loan of $8,837 to RHT.
70
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 19: 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
2016
$
1,187,783
1,254,286
2,442,069
91,578
-
91,578
2015
$
2,444,159
856,682
3,300,841
87,707
450,073
537,780
69,419,199
66,284
(67,134,992)
2,350,491
69,406,199
66,284
(66,709,421)
2,763,062
Year ended
30 June 2016
Year ended
30 June 2015
$
(425,571)
-
(425,571)
$
(468,058)
-
(468,058)
NOTE 20: Significant events after balance date
On the 31st August 2016 Resonance issued 166,666 shares to employees under the Resonance Health Limited –
Employee Share Plan.
NOTE 21: 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
2016
$
51,500
16,450
67,950
2015
$
50,000
45,500
95,500
71
ResonanceHealth
Notes to the Financial Statements
for the Year Ended 30 June 2016
NOTE 23: Key management personnel disclosures
(a) Details of key management personnel
(i) Directors
Dr Martin Blake
Chairman (non-executive)
Mr Simon Panton
Director (non-executive)
Dr Jason Loveridge
Director (non-executive)
ii) Management
Professor Tim St Pierre
Chief Scientific Officer
Mr Sander Bangma
General Manager
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 2016.
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
2016
$
892,238
43,456
2,000
937,694
2015
$
885,126
53,258
3,000
941,384
72
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 2016 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 2016.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dr Martin Blake Chairman
Place: Perth, Western Australia
Dated: 29 September 2016
73
ResonanceHealth
Independent Auditor’s Report
-52-
RESONANCE HEALTH LIMITED
INDEPENDENT AUDITOR’S REPORT
To the members of Resonance Health Limited
Report on the Financial Report
We have audited the accompanying financial report of Resonance Health Limited (“the company”), which
comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the year then ended, notes comprising a summary of significant accounting policies and other
explanatory information, and the directors’ declaration, of the Group comprising 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
gives a true and fair view and 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, the consolidated financial statements comply 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
about 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 of the financial report
that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances,
An audit
but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
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.
74
ResonanceHealth
Auditor’s Opinion
-53-
RESONANCE HEALTH LIMITED
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 2016 and 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 2016.
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.
Opinion
In our opinion, the Remuneration Report of Resonance Health Limited for the year ended 30 June 2016
complies with section 300A of the Corporations Act 2001.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
29 September 2016
L Di Giallonardo
Partner
\
75
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 11th October 2016.
1. Analysis of Shareholdings
Distribution of Shareholders (ASX Code: RHT)
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
> 100,000
Total
Holders
69
38
46
573
384
1,110
Units
12,332
132,754
357,582
27,274,009
374,720,891
402,497,568
Percentage
0.00%
0.03%
0.09%
6.78%
93.10%
100.00%
The number of shareholdings holding less than a marketable parcel of shares are 185.
2. Voting Rights
Ordinary shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by
proxy has one vote on a show of hands.
76
ResonanceHealth
Additional Information for Listed Public Companies
3. Twenty Largest Shareholders of Quoted Ordinary Shares
Name
Number of Ordinary Shares
Percentage of Total
Southam Investments 2003 Pty Ltd 65,414,622
16.25%
HSBC Custody Nominees (Australia) Limited
28,333,056
1
2
3
The University of Western Australia
4 Mr Gregory Peter Wilson
5 Mr Robert Panton
6 Mr Helmut Rocker
7 Mr Sean Saxon
8
9
Dr Timothy Guy St Pierre
Dr Wanida Chua-Anusorn
10 Mr Harry Basle
11 Mr Andrew Frederick Trowse
12 Molonglo Pty Ltd
13 Walker Trusco Pty Ltd
14 Dr Martin Peter Blake
15 Mr Thomas Psarakis
16 Marcolongo Nominees Pty Ltd
17 Mrs Mridula Asija
18 Mr Vincent Oladele
19 Mr Bruce Alan Stevenson
20 Anahein Pty Ltd
9,078,750
9,006,256
7,527,966
6,400,000
6,371,636
6,168,500
6,005,000
5,022,422
4,698,896
4,500,000
4,494,844
3,798,590
3,725,000
3,626,000
3,563,390
3,294,617
3,097,404
3,010,598
7.04%
2.26%
2.24%
1.87%
1.59%
1.58%
1.53%
1.49%
1.25%
1.17%
1.12%
1.12%
0.94%
0.93%
0.90%
0.89%
0.82%
0.77%
0.75%
187,137,547
46.49%
4. Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with the Corporations Act 2001
are:
Southam Investments 2003 Pty Ltd
65,414,622
SG Hiscock & Company Limited
21,016,635
ordinary shares
ordinary shares
77
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