ANNUAL REPORT
Ground Floor,
Suite 2, 141 Burswood Road
BURSWOOD WA 6100
Telephone: +61 8 9286 5300
Facsimile: +61 8 9286 5399
PO Box 71
BURSWOOD WA 6100
www.resonancehealth.com
Email: info@resonancehealth.com
ABN 96 006 762 492
2018
Corporate Information
ABN 96 006 762 492
Directors
Dr Martin Blake
Non-executive Chairman
Mr Simon Panton
Non-executive Director
Dr Travis Baroni
Non-executive Director
Mr Mitchell Wells
Non-executive Director
Chief Executive Officer
Registered office and
Principal place of business
Ground Floor,
Suite 2, 141 Burswood Road
BURSWOOD WA 6100
Telephone: +61 8 9286 5300
Facsimile: +61 8 9286 5399
Postal address
PO Box 71
BURSWOOD WA 6100
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
Ms Alison Laws
Website and e-mail address
Bankers
www.resonancehealth.com
Email: info@resonancehealth.com
National Australia Bank Limited
Solicitors
Steinepreis Paganin
Level 4, The Reed Building
16 Milligan Street
PERTH WA 6000
Company Secretary
Mr Agha Shahzad Pervez
Securities exchange listing
Resonance Health Limited shares
are listed on the Australian
Securities Exchange.
ASX Code: RHT
2
Contents
ABOUT ......................................................................................................................................4
SNAPSHOT ................................................................................................................................5
CHAIRMAN’S FOREWARD ...........................................................................................................6
YEAR IN REVIEW ........................................................................................................................8
FINANCIAL REPORT .................................................................................................................19
DIRECTORS’ REPORT ...............................................................................................................20
AUDITOR’S INDEPENDENCE DECLARATION ...............................................................................34
STATEMENT OF COMPREHENSIVE INCOME ...............................................................................35
STATEMENT OF FINANCIAL POSITION .......................................................................................36
STATEMENT OF CHANGES IN EQUITY ........................................................................................37
STATEMENT OF CASH FLOWS ...................................................................................................38
NOTES TO THE FINANCIAL STATEMENTS ..................................................................................39
DIRECTORS’ DECLARATION ......................................................................................................72
INDEPENDENT AUDITOR’S REPORT ..........................................................................................73
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES ....................................................77
About
Resonance Health Ltd (ASX: RHT) (“Resonance Health” or “Company”) is an Australian healthcare company
specialising in the development and delivery of non-invasive medical imaging software and services.
Resonance Health has gained endorsement by leading physicians worldwide for consistently providing
highest quality quantitative measurements essential in the management of particular diseases.
Our products are used globally by clinicians in the diagnosis and management of human diseases and by
pharmaceutical companies in their clinical trials. Resonance Health’s dedication to scientific rigour in the
development and implementation of its analysis services has enabled it to achieve regulatory clearances on
a number of products (Software as a Medical Device - SaMD) in the US, Europe and Australia. This rigour
extends to a philosophy of quality management in all aspects of our operations. Resonance Health carries
ISO 13485:2016 certification.
Resonance Health’s flagship product FerriScan® is the global gold-standard for liver iron concentration
quantification and has become established in many international ‘Standards of Care’ for Thalassemia and
Sickle Cell Disease. FerriScan® is also provided as a dual service with Cardiac T2*, the most widely-accepted
MRI-based method for assessing heart iron loading.
FerriScan®’s proprietary technology recently has been applied in training neural networks to develop our
new product FerriSmart®, the world’s first and only regulatory-cleared Artificial Intelligence tool for the
quantification of liver iron concentration.
The Company’s other product offerings include the regulatory cleared HepaFat-Scan, a MRI-based tool for
the measurement of volumetric liver fat fraction (VLFF), and Bone Marrow R2-MRI, for the assessment of
iron levels in the bone marrow.
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
Resonance Health’s Chief Executive Officer, Alison Laws,
speaking at local MTP Connect event.
4
Snapshot
After successful development and validation of FerriSmart®, multi-centre beta-testing was planned
and executed at several large Thalassemia centres in emerging growth markets for feedback on the
usability of the FerriSmart® service and web portal.
Agency agreement signed with TeleMedC PTE LTD to distribute an artificial intelligence (AI) Diabetic
Retinopathy (DR) grading tool.
4 new multi-year work orders won from pharmaceutical or therapeutic companies.
17% increase in revenue from FY16/17.
R&D tax incentive of $451,904K was secured.
New service offerings – NASH Scan, an assessment tool for the screening of non-alcoholic
steatohepatitis (NASH) patients.
Commencement of the Dragon 2 Study, a trial looking to significantly shorten the acquisition time of
the FerriScan® protocol, which currently takes approximately 9 minutes.
FY2018 IMAGE ANALYSES BY REGION
COMMERCIAL SALES VOLUME GROWTH
Above column graph shows all commercial jobs for the FY excluding trial jobs, R&D studies, and FerriScan voucher program
5
Chairman’s Foreward
This financial year has witnessed a significant shift in
focus for Resonance Health as we expand our portfolio
of products and services from MRI diagnostic services
exclusively, to exciting new initiatives including the
provision of regulatory medical expertise, tailored CRO
solutions for global clinical trials, and as a developer
and distributor of mass market AI solutions.
Resonance Health has achieved this by expanding its
service offerings and management capabilities around
pharmaceutical and therapeutic trial work, while also
delivering a world-first in FerriSmart®, the Company’s
quantitative AI solution, which was transitioned from
proof of concept to regulatory clearance in a short
period of time.
Resonance Health’s ongoing investment in research
and development has expanded the Company’s suite
of products and services this financial year, with the
development of a new MRI-based assessment tool
for the screening of non-alcoholic steatohepatitis
(NASH) in patients. This solution, alongside our core
services, is being offered for use to pharmaceutical
and therapeutic companies in their clinical trials. With
the Company’s services having now been used in over
30 clinical trials, we have considerable expertise in
working in this space.
Promising results from the Dragon 2 study have resulted
in acceleration of the trial, which aims to decrease the
acquisition time (time in scanner) of the FerriScan®
service. Success of this study would result in the
scan time of FerriScan® being reduced from around
9 minutes to under 2 minutes. A shorter acquisition
time for the FerriScan® and FerriSmart® services would
considerably reduce the time spent by a patient inside
an MRI machine whilst lowering the costs for hos-
pitals and patients. These benefits will contribute to
FerriScan’s continued success as the gold-standard in
liver iron measurements.
The financial results for the year are underlined by
a net profit of $224,619, compared to a net loss of
$304,217 in the previous financial year. Marketing
activities delivered positive growth in the routine use
of FerriScan® in key commercial markets this financial
year, with increased revenue seen across our services in
an increasingly competitive environment. Total revenue
for the year was $2,896,395, up from the previous
financial year’s total of $2,485,332, an increase of
17%. This financial year also saw a successful R&D tax
incentive claim of $451,904. Receipts from customers
increased to $2,652,132, a 16% increase from the
previous year.
Artificial Intelligence
We are delighted by the Company’s advancements in
the AI space over the financial year, with the transition
of FerriSmart® from proof of concept, to internal
validation, to regulatory clearance from the TGA and
CE Mark, all happening in rapid succession.
With the Company’s well established distribution
network, and FerriSmart® achieving its first official
channel partner in Blackford Analysis Limited, I am
confident that the coming year will see FerriSmart®
make significant roads into commercialisation and
the fulfilment of the unmet global medical need for
an affordable, standardised, reliable, and accurate,
measurement of liver iron concentration (LIC).
While our regulatory approved technologies continued
to show commercial growth during
the year,
Resonance Health is actively seeking to diversify its
service offerings and develop the Company’s artificial
intelligence expertise in other medical conditions.
The recently announced collaborations with TeleMedC
and Perth Radiological Clinic (PRC) are considered first
steps in the Company’s efforts to achieve additional
revenue streams and increase shareholder value.
Clinical Uptake continues to grow
Resonance Health aggressively pursued additional
clinical trial work during the year with great success.
This 12-month period saw Resonance Health acquire 4
new multi-year work orders from global pharmaceutical
and therapeutic companies. In line with the Company’s
strategic expansion into providing further CRO services,
project and clinical trial management work is expected
to grow in the future.
Valuable Skills Added
This year we welcomed Mr Mitchell Wells to our Board,
and Ms Alison Laws to the position of Chief Executive
Officer.
6
Mitchell is a senior executive and a qualified lawyer
with commercial and legal experience in Australia,
the USA, and the United Kingdom. Mitchell played
a role in the corporate restructuring of the Company
over the year and its re-energised focus on commercial
and shareholder-return outcomes. He has a strong
governance background, a thorough understanding of
listed companies, and his corporate and legal back-
ground has further diversified the skillsets on our Board.
Alison has significant commercial experience and
has worked in a variety of roles in small and large
businesses. Since joining the Company in 2016,
Alison has had a positive impact on Resonance Health
and has been instrumental in the work undertaken
during the Company’s restructuring efforts in order to
meet organizational needs and commercial objectives.
The Board recognises that continued R&D investment
must be predicated on commercial potential. In
response, R&D spend was reduced for the year, as key
projects were prioritized and accelerated in response
to market demand, specifically the development and
commercialisation of the Company’s AI solution,
FerriSmart®. The Company’s leading service FerriScan®
was also a major focal point, with trials undertaken
to reduce the acquisition time and adaptation to 3T
MRI scanners. Successful completion of these service
improvements are expected to improve demand for
both FerriScan® and FerriSmart®. We are confident
that our talented leadership team will successfully
execute our ambitious program over the coming years.
The Board would like to thank our valued share-
holders and partners for their continued support that
enables Resonance Health to deliver life-changing
healthcare advances for patients around the world.
We remain committed to delivering maximum return
on investment for our investors, and are excited about
the future direction of the Company after a productive
2017/2018.
We look forward to another transformative year as the
Company continues its diversification of product and
service offerings and further grows its core business in
the global medical community.
Dr Martin Blake
Chairman
MBBS, FRANZCR, FAANMS, MBA, FAICD
7
Year In Review
FINANCIAL HIGHLIGHTS FOR THE YEAR:
•
•
A net profit after tax of $224,619 was recorded for the year, compared to a net loss of $304,217 in
the previous financial year.
Total revenue for the year was $2,896,395, up from the previous financial year’s total of $2,485,332,
an increase of 17% or $411,063.
• Receipts from customers were $2,652,132, up 16% from the previous year’s result.
• R&D tax incentive of $451,904 was secured
ADDITIONAL REVENUE STREAMS
This financial year saw Resonance Health seek additional ways to further build upon its extensive distribution
network and help accelerate initial uptake of the Company’s new AI service via channel partners.
Negotiations commenced with Blackford Analysis Limited for the signing of an Alliance Partnership
Agreement, granting Blackford the right to promote, market, sell, distribute, and license Resonance
Health’s AI solution FerriSmart® directly (or via resellers) to Blackford’s customers in the United States,
Canada, UK, Australia, and New Zealand.
Blackford provides a single platform that enables healthcare providers to quickly access and manage
medical image analysis applications and AI algorithms that add clinical value. The platform allows
healthcare providers to use imaging information efficiently and reduce the cost of care while improving
diagnostic confidence and patient outcomes. The collaboration allows all of Blackford’s current and future
customers’ access to Resonance Health products.
The Blackford Platform integrates directly with PACs systems used by hospitals, including those provided
by channel partners such as Intelerad and eRAD. The Resonance Health product FerriSmart® will now
integrate seamlessly with the Blackford Platform, allowing for easy access from existing clinical workflows
to improve diagnostic confidence, reduce the cost of care, and add clinical value.
The Alliance Partnership Agreement was signed in July 2018 and Blackford CEO, Ben Panter said this of
the alliance: “We look forward to working with Resonance Health to provide our customers and channel
partners quick access to FerriSmart through our single platform, to help provide additional clinical value
for patients.”
Resonance Health’s CEO, Alison Laws commented: “Integration into existing radiology workflows will
mean seamless accessibility for our products across a new customer base, allowing us to provide future
customers with the highest quality data for use in the clinical management of patients. We are very pleased
to be working with Blackford to deliver our services as part of the Blackford platform”.
Resonance Health is actively seeking additional ways to diversify its revenue streams even further over the
coming financial year.
8
Year In Review (Cont’d)
AI EXPERTISE BEING BUILT - A STEP AWAY FROM MRI TECHNOLOGIES
As Resonance Health continues to look at ways to diversify its established core products further, the
Company is also seeking to utilise its AI and machine learning expertise to expand outside of analysis
services built off MRI technologies.
The Company achieved this in two significant ways in the financial year, the first coming via a collaboration
with Perth Radiological Clinic (PRC) for the sharing of data and the training of neural networks to assess
the viability of the development of several screening tools.
Resonance Health seeks to apply our existing skills in medical image diagnostics and an outstanding AI
skillset to a significant number of de-identified data sets from several highly prevalent medical conditions
with a view to developing new AI analysis services.
Perth Radiological Clinic, a leader in diagnostic medical imaging, is providing Resonance Health with
access to CT and MRI data sets to achieve this.
The second step in expansion from MRI has seen Resonance Health sign an agency agreement with Tele-
MedC to distribute an Artificial Intelligence (AI) Diabetic Retinopathy (DR) grading tool known as DR Grader.
Resonance Health in conjunction with TeleMedC, will be able to provide DR screenings for large populations
via primary healthcare providers at a very affordable price with very efficient outcomes.
Resonance Health aims to commercialise DR Grader in Lebanon, Pakistan, and Bangladesh.
With the occurrence of diabetes increasing worldwide, the incidence of its complications including diabetic
eye diseases is expected to rise significantly. Currently, an estimated 425 million people have diabetes
worldwide.
Affecting 1 in 3 diabetics, DR is a major complication of diabetes which can lead to blindness if left
untreated. The DR market is set to exceed USD $11 billion by 2024 according to a research report by
Global Market Insights. Additionally, advances in DR treatment coupled with research activities aimed at
developing innovative products to treat diabetes related vision impairment, may fuel market growth further.
Almost all vision impairment and blindness from DR can be prevented through effective diabetes
management and screening programs. Globally, the reliable detection of DR is rendered problematic
because of limited access to trained specialists such as ophthalmologists and optometrists, who are often
expensive and overburdened, meaning long waiting periods are common. As a result, DR remains critically
underdiagnosed across the globe, leaving patients at serious risk of diabetic eye disease and blindness.
The technology, named DR Grader, was developed by researchers in Australia. The artificial intelligence
(AI) based fully automated DR software system uses images of the eyes to provide a reading accuracy
of over 92%. These results are then reviewed by eye specialists to address the complete needs of those
patients needing further care and treatment.
9
Year In Review (Cont’d)
Since the agreement was announced on the 4 May 2018, Resonance Health has conducted market
research and is in ongoing discussions with key opinion leaders to accelerate initial uptake of DR Grader.
The Agency Agreement is for a term of 2 years and it may be terminated at any time if performance
hurdles (to be agreed following completion of market sampling by Resonance Health) are not achieved by
Resonance Health, or cannot be agreed by the parties.
Resonance Health remains active in its pursuit for opportunities to collaborate through acquisitions, channel partners for
existing products, or providing distribution services for products that are an excellent fit with the Resonance Health core
business and distribution network.
REGULATORY EXPERTISE
Resonance Health has continued to build upon its substantial regulatory expertise over the financial year,
with the Company adding its first Artificial Intelligence (AI) solution FerriSmart® to its list of regulatory
cleared products.
Resonance Health is also now offering regulatory advice and consultancy for other organisations looking
to submit dossiers for regulatory clearance.
The Company’s FerriSmart® service is now one of five regulatory cleared products from Resonance Health,
a list that includes:
Gold Standard in Liver Iron Concentration
Instantaneous Liver Iron Concentration Analysis
Volumetric Liver Fat Fraction
Cardiac T2*
Estimation of iron levels in the bone marrow
10
Year In Review (Cont’d)
GLOBAL SCIENTIFIC ACCEPTANCE CONTINUES TO GROW
Resonance Health is established as a world-leader in the quantification of iron loading for the clinical
management of human disease. The foundation of Resonance Health’s success in the medical community
is the combination of scientific rigour, high quality standards, and exceptional customer service. These
principles drive the Company’s operations; from product development, education and profiling in the
clinical community, and to service delivery.
These principles are defined best by the Company’s leading product, FerriScan®, with the service
internationally recognised as the gold standard in Liver Iron Concentration (LIC) measurement. FerriScan®
is recommended in multiple clinical patient management guidelines and has companion diagnostic device
status which provides information that is considered essential for the safe and effective use of deferasirox
(iron chelator).
The Company’s products and services also continue to be in high demand for clinical trials, as was
shown throughout the financial year with four additional multi-year work orders from pharmaceutical and
therapeutic companies won by Resonance Health over the 12-month period.
To date, Resonance Health products and services have been used by pharmaceutical and therapeutic
companies in over 30 clinical trials.
FERRISCAN® AND CARDIAC T2*
FerriScan®, Resonance Heath’s flagship product, is internationally recognised by clinicians as the gold stan-
dard for the measurement of liver iron concentration. This accurate MRI-based technique is non-invasive
and eliminates the need for liver biopsies. FerriScan® is also far superior to serum ferritin, which is
sometimes used as a proxy for total body iron stores. FerriScan® has regulatory clearance from the FDA
(US), CE Mark (Europe) and TGA (Australia).
By March 2018, over 45,000 FerriScan analyses had been performed globally in over 45 countries.
FerriScan is reimbursed in the UK, Germany, and Canada, by government, and has some private payer
coverage in the US.
Alongside FerriScan®, an increasing number of our customers are now using our Cardiac T2* measurement
service to assess cardiac iron in their patients. This is because in conditions such as thalassaemia, a high
liver-iron-concentration (LIC) can lead to an increased risk of toxic iron accumulation in the heart. Iron may
begin to accumulate in the heart and other organs, potentially causing toxic damage and death. Changes
in LIC generally precede changes in heart iron loading, thereby acting as an early warning sign of possible
future cardiac complications.
Cardiac T2* is the most widely accepted MRI based method for assessing heart iron loading. Resonance
Health offers a dual analysis service including Cardiac T2* measurement in addition to FerriScan to provide
more comprehensive information regarding body iron stores. Both the liver and the heart data are captured
in one patient visit. Resonance Health’s Cardiac T2* analysis service has regulatory approval from the
FDA in the USA, TGA in Australia, and CE Mark for Europe. The Cardiac T2* analysis service is available
to suitably equipped MRI centers internationally and is provided at Resonance’s central image analysis
11
Year In Review (Cont’d)
centre by specially trained and ex-
perienced analysts under stringent
quality controlled conditions.
Cardiac T2* is being increasingly
requested by clinicians alongside
a FerriScan measurement of LIC to
enable better-informed decisions on
the management of patients at risk
of iron-induced organ damage.
Snapshot of our global FerriScan® sites
FUTURE-PROOFING FERRISCAN®
This financial year saw the Company make significant progress in its Dragon 2 Study, a trial looking at
several parameters including protocols attempting to significantly decrease the acquisition time for the
FerriScan® protocol, which currently takes approximately 9 minutes. A shorter acquisition time for the
FerriScan® and FerriSmart® services would considerably reduce the time spent by a patient inside an MRI
machine whilst also lowering the total costs to the hospital and patient.
The first FerriScan® performed in 2004 required almost 20 to 30 minutes of data acquisition, so the 9-minute
scan seems short by comparison – but for very busy MRI departments where demand for time on the scanner
bed is highly competitive, every second counts. In response to this, Resonance Health is highly encouraged
by early data gathered as part of the Dragon 2 Study with colleagues at Bach Mai hospital in Vietnam to
reduce the scan time significantly from 9 minutes to a 2-minute FerriScan® acquisition.
Dr Wenjie Pang, Resonance Health’s Technical Manager commented on the Dragon 2 Study: “We are
hoping to develop a new FerriScan acquisition protocol that will not only enable MRI centres to increase
the patient scans they perform per hour, but ultimately reduce the cost per patient as less scanner time will
be required. The shortened scan time may also provide improved image quality for our internal analysis
which will improve efficiency for our data analysis and quality assurance processes. The new protocol
requires rigorous testing to ensure our sensitivity and specificity is maintained but initial results are looking
very promising indeed.”
Resonance Health also commenced a trial to adapt the Company’s FerriScan® and FerriSmart® services
to 3 Tesla (3T) MRI scanners, as the existing FerriScan® calibration is currently suitable for 1.5T MRI
machines only. With 3T MRI scanners becoming more widely available in the market, Resonance Health
has commenced work on a FerriScan 3T calibration curve. This calibration will allow FerriScan to be used
on 1.5T and 3T scanners.
12
Year In Review (Cont’d)
FERRISCAN® AND CARDIAC T2* SALES GROWTH
Resonance Heath is pleased to have achieved record commercial sales of FerriScan® and Cardiac T2* in
key target markets over the financial year, with the UK experiencing a 10% increase in FerriScan usage,
while the US saw a 35% increase in uptake of the Company’s Cardiac T2* service.
The financial year also saw the Company introduce a premium FerriScan® service offering for rapid
turnaround of patient results. Since its introduction on the 18 January 2018, the expedited service has
been utilised in 8% of all FerriScan jobs in the United States for the financial year.
FerriScan growth in target markets of USA, Canada, UK, and Australia
RESONANCE MOVES INTO AI SPACE WITH FERRISMART®
FerriSmart® uses Artificial Intelligence (AI) as an automated software medical device to accurately and
rapidly determine the liver iron concentration (LIC) from a specially acquired Magnetic Resonance (MR)
image. FerriSmart® was designed to provide a highly scalable and accessible tool for medical professionals
to manage their patients with iron overload disorders such as Thalassemia, Sickle Cell disease, Haemo-
chromatosis, anaemias, and cancers.
FerriSmart® was specifically developed to help clinicians in developing countries access an affordable and
clinically validated method for LIC quantification. Due to significant disparities in assessment and treat-
ment regimes (largely cost driven), patient outcomes in these countries may be significantly lower than in
developed countries. FerriSmart® will enable clinicians to monitor the health of patients with potentially fatal
liver iron-overload with the same calibre of diagnostic tool available to clinicians in developed countries.
13
Year In Review (Cont’d)
FerriSmart® was trained using thousands of archived FerriScan® image data sets with clinically validated
LIC ‘label’ values. These datasets were de-identified, analysed and labelled according to a set of stringent
standards and guidelines implemented as part of an ISO 13485 accreditation quality system that has been
in operation for over 12 years.
ALL IN A YEAR
• Development of FerriSmart®, a machine learned artificial intelligence (AI) prototype for a low-cost test
to measure liver iron concentration (LIC) announced. This development followed results from a study
confirming the urgent need for an affordable solution for measuring LIC in developing nations.
•
•
•
•
•
•
Internal validation of the new FerriSmart® automated AI solution completed, with results demonstrating
a clinically acceptable correlation between our conventional FerriScan® analysis and the new tool.
The commencement of single site beta-testing of FerriSmart®.
After a successful single site beta-testing phase, the Company planned and executed multi-centre
beta testing at several large Thalassemia centres in emerging growth markets.
AI solution FerriSmart® is announced to be distributed via the Company’s newly developed web
portal platform. The platform allows Resonance Health to present multiple AI medical technologies to
customers through one portal, increasing cross-selling opportunities to customers.
FerriSmart® web portal finalised after usability testing feedback is received from beta testers.
FerriSmart® achieves TGA and CE Mark clearance, making it the only regulatory approved artificial
intelligence tool for use in liver iron quantification.
• Resonance Health signs Alliance Partner Agreement with Blackford Analysis Limited to promote,
market, sell, distribute, and license FerriSmart® directly and/or via resellers to their customers.
14
Year In Review (Cont’d)
WHERE IT’S HEADED – TARGET MARKETS
THE PLATFORM
FerriSmart® Portal – User landing page
15
Year In Review (Cont’d)
HEPAFAT-SCAN®
FerriSmart® Portal – On-screen FerriSmart report
HepaFat-Scan® is Resonance Health’s MRI-based tool for the measurement of volumetric liver fat fraction
(VLFF). HepaFat-Scan®, which is clinically validated against biopsy, shows excellent sensitivity and
specificity. HepaFat-Scan® is currently the only MR technique for measuring the liver fat fraction that can
be directly compared to biopsy, the current gold standard for assessing non-alcoholic fatty liver disease
(NAFLD). HepaFat-Scan® has FDA, CE Mark, and TGA regulatory clearance and is available to: clinicians
for disease diagnosis; support Pharma in developing drugs to treat NAFLD and other classes of liver
disease and; academia for use in basic research.
There has been marginal growth in use for HepaFat-Scan® analysis over this financial year. Currently, there
aren’t any therapeutics on the market to treat fatty liver disease. Resonance Health anticipates that the
demand for HepaFat-Scan® should increase if/when such products reach the market.
HEPAFAT-SCAN® SHOWN AS MOST ACCURATE
Resonance Health was featured at several high profile conferences throughout the year, including at
this year’s American Association for the Study of Liver Diseases (AASLD) and the American Society of
Hematology (ASH) conferences, with key meetings taking place to promote our HepaFat-Scan® technology.
HepaFat-Scan® received significant attention at AASLD particularly, with an abstract that highlighted
the outstanding performance of the HepaFat-Scan® technology in children. The abstract concluded that
16
Year In Review (Cont’d)
HepaFat-Scan® was a highly precise and accurate measure of hepatic steatosis, making it suitable for
monitoring changes in liver fat within the context of clinical trials and for general clinical care.
This abstract was presented by key opinion leader Dr Miriam Vos, an Associate Professor of paediatrics
at Emory University School of Medicine, and a physician on staff at Children’s Healthcare of Atlanta. The
abstract titled ‘Accuracy and Repeatability of Magnetic Resonance Imaging Based Volumetric Liver Fat
Fraction Compared to Liver Histology and Magnetic Resonance Spectroscopy as Reference Standards’ is
expected to be released later in 2018.
This financial year has seen the Company expand its efforts into promoting the technology in various clinical
settings, as a significant amount of research is being done globally in the metabolic disease space, and
HepaFat-Scan® is a highly precise measurement of volumetric liver fat fraction for these future clinical studies.
It is estimated by the WHO that there are over 1 billion people in the world with fatty liver currently, making
this market strategically very significant for Resonance Health.
3T COMPATIBLE
Resonance Health has successfully adapted the HepaFat-Scan® service to be compatible with all 3T MRI Scanners.
ADDING VALUE
Resonance Health added to its list of service offerings this financial year with the release of a new MRI-
based assessment tool for the screening of non-alcoholic steatohepatitis (NASH) patients.
As part of the Company’s aggressive R&D program of the past several years, and in recognition of the growing
global clinical importance of non-alcoholic fatty liver disease (NAFLD), a tool was developed to help assist
clinicians in identifying those patients with NASH
and to offer more value to our customers.
Considered a serious manifestation of NAFLD, it
is estimated that approximately 25 million peo-
ple in the United States alone have undiagnosed
NASH, and of these, about 5 million are expected
to develop cirrhosis and/or be diagnosed with
hepatocellular carcinoma.
The Company expects that early uptake of this
technology will come from pharmaceutical and
therapeutic companies engaged in the develop-
ment of drugs to treat NASH. Resonance Health
highlighted this new product for the first time at
the NASH Engage Global conference in London
on February 26-27, 2018.
Melanie Baxter, (Resonance Health) and Dr Deepak Suri highlight
Resonance Health’s HepaFat-Scan and NASHScan technology at NASH
Global Engage Conference
17
Year In Review (Cont’d)
A WIDE SUITE OF SERVICES AVAILABLE
Resonance Health has recently increased its product suite with the inclusion of several new assessment
techniques such as NASHScan (mentioned above), NAFLDGenotyping (genetic risk factor analysis for
NAFLD), and PDFFScan (standardised solution for the measurement of fat in all segments of hepatic
tissue) to assist clinicians in diagnosing and managing conditions. Resonance Health also offers the
following additional services, including:
• Bone Marrow R2-MRI for Iron Assessment - provides a non-invasive assessment of iron
levels in the bone marrow. Available for clinical use in the EU and Australia, and for investigational
use in study settings in the USA. Bone Marrow R2-MRI may provide additional valuable data
as conjunct/replacement for bone marrow aspirates to measure changes in underlying bone
marrow iron deposition.
• Quantitative Iron Assessment in Other Organs - surrogate iron measurements (R2 / R2*)
in other organs including pancreas, spleen, and kidney.
• Organ Volume Measurements - volume measurements of various organs e.g. liver and
spleen.
•
•
•
Liver Biopsy – Stereology Services - quantitative assessment of hepatic steatosis of digitized
biopsies using stereology.
Pancreatic Fat Assessment - quantitative assessment of pancreatic fat.
Visceral / Subcutaneous Fat and Organ Fat in Metabolic Disease - quantitative
assessments of visceral fat, subcutaneous fat, and epicardial fat.
18
Financial Report 30 June 2018
19
Directors’ Report
The Directors present their report on the Group, consisting of Resonance Health Limited (“Company”) and the
entities it controlled together (“the Group”) with the annual financial report for the financial year ended 30 June
2018. 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.
Directors were in office for this entire period unless otherwise stated.
Position: Chairman — Independent
and Non-Executive (appointed as
Director 4 October 2007 and as
Chairman 16 December 2010)
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
Experience: Dr Blake is a Radiologist and
Nuclear Physician and brings significant
Company boards.
Other current directorships:
technical and
industry experience to
None
Resonance Health. Dr Blake received
Former directorships in last 3 years:
FAANMS as a post nominal in recognition
of his Nuclear Medicine Specialist training
None
undertaken in 1994 & 1995.
He has been a Partner of Perth Radiological
Clinic since 1997 and is currently the
Chairman of that Company.
Special responsibilities:
Chairman of the Remuneration Committee
Member of the Audit Committee
Position: Director — Non-Executive
(appointed 28 February 2018)
Other current directorships:
None
Experience: Mr Wells is an experienced
senior executive and a qualified lawyer
with commercial and legal experience in
Australia, the United States of America
and the United Kingdom. He has served
as a Director and worked as a senior exec-
utive of public and private companies in-
cluding ASX and US Nasdaq listed public
companies. He currently serves as Chair
of a large non-profit organisation.
Former directorships in last 3 years:
Lonestar Resources US Inc. – Nasdaq
Listed US Public Company
Lonestar Resources Limited – ASX Listed
Australian Public Company (Delisted on 7
July 2016)
Special responsibilities:
Member of the Audit and Risk Committee
Member of the Remuneration Committee
Dr Martin Blake
MBBS,FRANZCR,
FAANMS, MBA, FAICD
Mr Mitchell Wells
L.LB, B.Comm
20
Directors’ Report (Cont’d)
Position: Director — Non-Executive
(appointed 5 October 2009)
Other current directorships:
None
Experience: Mr Panton has been a
strong supporter of the Company and
the FerriScan technology over a number
of years and is a major shareholder of
Former directorships in last 3 years:
Non-Executive Director of 4DS Ltd
Special responsibilities:
Resonance Health. Mr Panton brings skills
Member of the Audit and Risk Committee
in business and marketing having run his
own successful business.
Member of the Remuneration Committee
Mr Simon Panton
Position: Director — Non-Executive
(appointed 25 November 2016)
providing advisory services
to equity
capital market
transactions, corporate
Experience:
experience across
Mr Baroni has broad
industrial
research,
Other current directorships:
research and valuations to clients.
commercialisation of technology, asset
None
valuations
and
investment banking
services. He has managed innovation
development and technology strategy in a
Former directorships in last 3 years:
None
large company setting as well as being an
Special responsibilities:
Dr Travis Baroni
active investor in early stage investments.
Chairman of the Audit and Risk Committee
He has worked in investment banking,
Member of the Remuneration Committee
Company Secretary
Position: Company Secretary and
Chief Financial Officer (appointed 29
November 2017)
Experience: Mr Pervez has over ten years’
experience in managing the financial ob-
ligations of an ASX listed corporation. He
joined Resonance Health in 2009 and has
in-depth knowledge of all financial and
operational aspects of Resonance. Agha
has also been responsible for the handling
of EMDG rebates and R&D Tax Incentive
claims for the last several years.
Mr Agha Shahzad
Pervez
B.Sc (IT) Hons,
M.Com (Accounting)
21
Directors’ Report (Cont’d)
Interests in the Shares of the Company
The following relevant interests in shares of the Company were held by the Directors at balance date.
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 T Baroni
Dr M Wells
Mr S Panton
Total
6,464,677
500,000
200,000
71,275,743
78,440,420
Shares and Options Granted to Directors and Management Executives
Directors and Management
Executives
Ms A Laws
Mr AS Pervez
Unissued Shares under option
Number of options granted
Number of ordinary shares under
option
10,000,000
1,000,000
10,000,000
1,000,000
The Company has an Employee Incentive Option Plan to key staff members and management of the
Company.
As the date of this report unissued ordinary shares or interests of the Company under option are:
Date options granted
Number of shares under option
Exercise price of option
Expiry date of options
09/03/2018
21,000,000
$0.03 to $$0.10
09/03/2021
The Company has an Employee Share Plan which was adopted at the Annual General Meeting held on 27
November 2014. No shares were issued to staff during the year under the Employee Share Plan (2017: 166,666).
22
Directors’ Report (Cont’d)
Shares issued during or since the end of the year as a result of exercise.
No shares were issued during or since the end of the year as a result of exercise.
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.
23
Directors’ Report (Cont’d)
Review of Operations and Financial Summary
The Company is pleased to report the following for the financial year 2017/18.
Highlights
•
Alison Laws was appointed to the position of Chief Executive Officer as of 23 February 2018.
• Mitchell Wells was appointed as a Non-Executive Director of the Company as of 28 February 2018.
•
•
•
•
•
•
•
•
•
Agha Shahzad Pervez was appointed to the position of Chief Financial Officer and Company Secretary
as of 29 November 2017.
The R&D team commenced work on the ‘Dragon 2 Study’, a trial looking to significantly shorten
the acquisition time of the FerriScan protocol, which currently takes approximately 9 minutes. In
preliminary work, Resonance Health has obtained data sets from over 30 trial patients, with each
data set containing multiple acquisition protocol profiles of varying scan times. Work has now been
escalated on the shorter acquisition due to very promising results to date.
A new MRI-based assessment tool for the screening of non-alcoholic steatohepatitis (NASH) patients
was launched. Initial uptake of this technology is planned to come from pharmaceutical companies
engaged in the development of drugs to treat NASH. Resonance Health highlighted this product for
the first time at the NASH Engage Global conference in London held on 26-27 February, 2018.
Agency agreement signed with TeleMedC PTE LTD to distribute an Artificial Intelligence Diabetic Reti-
nopathy (DR) grading tool. The technology, named DR Grader, was developed by leading researchers
in Australia. The contract has been signed for an initial 2 year period, and is renewable based on
performance and written agreement.
R&D tax incentive of $451,904 was secured.
During the financial year, the Company received 4 new multi-year work orders from pharmaceutical
or therapeutic companies. The total dollar value of work for the four multi-year clinical trials won this
financial year amounts to an approximate aggregate sum of $1,211,000. Refer to the Company’s
announcements; 12/01/2018 - FerriScan® contracted for two new clinical trials, 13/02/2018 –
Resonance Health contracted for new clinical trial, and 23/07/2017 – Appendix 4C quarterly.
Beta-testing was undertaken on the 21 August 2017 for the Company’s new artificial intelligence
solution FerriSmart®, for the rapid low-cost analysis of liver-iron-concentration.
After a successful first phase of FerriSmart® beta-testing, a multi-centre trial was planned and
executed at several large Thalassemia centres in emerging growth markets. The multi-centre trial
allowed the Company to implement several improvements to the FerriSmart web portal and collect
valuable market research from key hospital centres across the globe.
Collaboration announced with Perth Radiological Clinic (PRC) for the sharing of data and the training
of neural networks to assess the viability of the development of several screening tools.
24
Directors’ Report (Cont’d)
Financials
A net profit after tax of $224,619 was recorded for the year, compared to a net loss of $304,217 in the
previous financial year.
Excluding Employee share-based payments of $174,914, profit for FY 2017/18 totalled $399,533.
Total revenue for the year was $2,896,395, up from the previous financial year’s total of $2,485,332,
resulting in an increase of 17% or $411,063. Other income comprised interest income of $15,220.
Overall expenditure (excluding foreign exchange) was 1.6% or $49,662, higher than the prior year.
Research and Development expenditure totalled $1,025,828 during the year, down from the $1,161,027
spent in the previous year. The associated Research and Development expenditure comprised the following:
•
•
•
•
Intangible asset on the Statement of Financial Position of $445,814;
Amortisation expense of $153,119;
Statement of Comprehensive Income of $123,016;
Employee benefits of $303,879.
Resonance Health had a cash at bank figure of $1,549,088 at the end of the financial year, compared to
$1,685,375 in the previous year. The Company has no debt.
Receipts from customers were $2,652,132, up 16% from the previous year’s result.
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
No significant post balance date events have occurred.
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.
25
Directors’ Report (Cont’d)
Environmental Legislation
The Group’s operations are not subject to any significant environmental legislation.
Indemnification and Insurance of Directors and Officers
The Company has agreed to indemnify all the directors and secretaries of the Company for any liabilities
to another person (other than the Company or related body corporate) that may arise from their position
as directors of the Company and its controlled entities, except where the liability arises out of conduct
involving a lack of good faith.
During the financial year the Company paid a premium to insure the directors and secretaries of the
Company and its controlled entities against any liability incurred in the course of their duties to the extent
permitted by the Corporations Act 2001. It is not possible to apportion the premium between amounts
relating to the insurance against legal costs and those relating to other liabilities.
REMUNERATION REPORT (audited)
This report outlines the remuneration arrangements in place for the key management personnel (KMP) of
Resonance Health Limited for the financial year ended 30 June 2018. 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
Mr Simon Panton
Dr Travis Baroni
Mr Mitchell Wells (appointed 28th February 2018)
(ii) Management Executives
Ms Alison Laws – Chief Executive Officer (appointed 23rd February 2018)
Mr Agha Shahzad – Company Secretary & Chief Financial Officer (appointed 29th November 2017)
Dr Timothy St Pierre – Chief Scientific Officer
Mr Sander Bangma – General Manager (resigned 22nd November 2017)
Mr Adrian Bowers - Company Secretary & Chief Financial Officer (resigned 29th November 2017)
26
Directors’ Report (Cont’d)
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 perfor-
mance, executive performance and comparable information from industry sectors and other listed com-
panies 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 exec-
utive remuneration is separate and distinct.
Non-executive Director Remuneration
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to
attract and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Non-executive Directors’ fees not exceeding an aggregate of $250,000 per annum have been approved by
the Company in a general meeting.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which
it is apportioned amongst Directors is reviewed annually. The Board considers fees paid to non-executive
Directors of comparable companies when undertaking the annual review process.
Each of the non-executive Directors receives a fixed fee for their services as Directors. There is no direct
link between remuneration paid to any of the Directors and corporate performance.
27
Directors’ Report (Cont’d)
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 Dr St Pierre and Mr Mitchell Wells) 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.
Employment Agreements
Director Appointment Letter
Mr Mitchell Wells was appointed as a Non-executive Director of Resonance Health Limited on 28th February
2018. His letter of appointment provides for a director fee of $40,000 pa inclusive of superannuation.
Management Employment Agreements
Mr Pervez was appointed to the role of Company Secretary & Chief Financial Officer of Resonance Health
Ltd on 29th November 2017. His employment agreement provides for a salary of $110,000 pa exclusive
of superannuation and a termination notice of 4 weeks.
Ms Laws was appointed to the role of Chief Executive Officer of Resonance Health Analysis Services Pty
Ltd on 23rd February 2018. Her employment agreement provides for a salary of $165,000 pa exclusive
of superannuation and a termination notice of 3 months by the Company or Ms Laws.
Consultancy Services Agreement
The Company has an agreement with The University of Western Australia (UWA) for consulting services
provided by Dr St Pierre. Under this agreement consulting services provided for duties of Chief Scientific
Officer totalling $206,940 (2017: $205,238) were incurred during the financial year. These amounts
are included in Dr 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.
28
Directors’ Report (Cont’d)
Mr Mitchell Wells has a Consultancy Agreement with Resonance Health Analyses Services Under this
agreement consulting services provided for duties as an Investor Relations Consultant. This Consultancy
Agreement provides for consultancy fees of $120,000 per annum reduced to $60,000 per annum from 1
December 2017. The agreement may be terminated at any time upon mutual agreement.
Details of Remuneration for Year Ended 30 June 2018
The remuneration for key management personnel of the Group during the 2018 year was as follows:
Short-term
employee benefits
Post
employment
benefits
Equity
Total
Salary &
Fees
Superannuation
Contributions
Shares/
Options
Fixed
Remuneration
$
$
$
$
%
Remuneration
linked to
performance
%
Non-Executive Directors’ remuneration
Dr T Baroni
Dr M Blake
Mr M Wells1
Mr S Panton
Total
36,530
54,795
93,333
36,530
3,470
5,205
-
3,470
221,188
12,145
-
-
-
-
-
40,000
60,000
93,333
40,000
233,333
100%
100%
100%
100%
-
-
-
-
Short-term
employee benefits
Salary & Fees
Post
employment
benefits
Equity
Total
Superannuation
Contributions
Shares/
Options
Fixed
Remuneration
$
$
$
$
%
Remuneration
linked to
performance
%
Management Executives’ remuneration
Dr T St Pierre2
Mr S Bangma3
Mr A Bowers4
Ms A Laws5
Mr AS Pervez6
Total
206,940
108,313
58,890
154,846
99,408
-
13,267
3,688
-
-
-
206,940
100 %
121,580
100 %
62,578
100 %
14,710 79,764
249,320
100 %
9,444 7,976
116,828
100 %
628,397
41,109 87,740
757,246
-
-
-
-
-
29
Directors’ Report (Cont’d)
1 Mr M Wells was appointed a Director 28th February 2018.
2 Dr 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 2017 a balance of $26,161 was owing to The University of Western Australia.
3 Mr S Bangma resigned as a General Manager effective 22nd November 2017.
4 Mr A Bowers resigned as a Company Secretary/ CFO effective 29th November 2017.
5 Ms A Laws was appointed as Chief Executive Officer 23rd February 2018.
6 Mr AS Pervez was appointed as Company Secretary/ CFO 29th November 2017
Details of Remuneration for Year Ended 30 June 2017
The remuneration for key management personnel of the Group during the 2017 year was as follows:
Short-term
employee benefits
Post
employment
benefits
Equity
Total
Salary &
Fees
Superannuation
Contributions
Shares/
Options
Fixed
Remuneration
$
$
$
$
%
Remuneration
linked to
performance
%
Non-Executive Directors’ remuneration
Dr T Baroni 1
Dr M Blake
Dr J Loveridge 2
Mr S Panton
21,817
54,795
40,000
36,530
2,073
5,205
-
3,470
Total
153,142
10,748
-
-
-
-
-
23,890
100%
60,000
100%
40,000
100%
40,000
100%
163,890
-
-
-
-
30
Directors’ Report (Cont’d)
Short-term
employee benefits
Post
employment
benefits
Equity
Total
Salary &
Fees
Superannuation
Contributions
Shares/
Options
Fixed
Remuneration
$
$
$
$
%
Remuneration
linked to
performance
%
Management Executives’ remuneration
Dr T St Pierre 3
Mr S Bangma
Mr A Bowers
205,238
125,000
96,277
-
-
205,238
100%
11,875 4,000
140,875
100%
9,141
-
105,418
100%
-
-
-
Total
426,515
21,016 4,000
451,531
1 Dr T Baroni was appointed a Director 25th November 2016.
2 Dr J Loveridge resigned as a Director effective 30th June 2017.
3 Dr 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.
No cash bonuses were granted in 2018 and 2017.
No share-based remuneration granted as compensation in 2018 and 2017.
Shareholdings of key management personnel
The numbers of ordinary shares in the Company held during the financial year by key management
personnel of the Group including their personally related entities are set out below.
Balance
1/7/2017
Received as
Remuneration
Received during
the year on
Net Change Other exercise of options
Balance
30/6/2018
Dr M Blake
Dr T Baroni
Mr M Wells
6,464,677
-
-
Mr S Panton
67,966,163
Dr T St Pierre
Ms A Laws
Mr AS Pervez
Mr S Bangma
Mr A Bowers
5,518,500
-
58,823
222,459
89,126
1 Number held on date of resignation
-
-
-
-
-
-
-
-
-
-
500,000
200,000
3,309,580
-
-
542,000
(222,459)1
(89,126)1
-
-
-
-
-
-
-
-
-
6,464,677
500,000
200,000
71,275,743
5,518,500
-
600,823
-
-
31
Directors’ Report (Cont’d)
Option holdings of key management personnel
The number of options in the Company held during the financial year by key management personnel of the
Group including their personally related entities are set out below.
Balance
1/7/2017
Received as
Remuneration Net Change Other
Received during
the year on
exercise of options
Balance
30/6/2018
Dr M Blake
Dr T Baroni
Mr M Wells
Mr S Panton
Dr T St Pierre
Ms A Laws
Mr AS Pervez
Mr S Bangma
Mr A Bowers
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
1,000,000
-
-
Other transactions with key management personnel disclosure are the payment outstanding to:
Dr T St Pierre $95,611 (2017: $26,161)
Mr Mitchell Wells $5,000 (2017: nil)
End of Remuneration Report
32
Directors’ Report (Cont’d)
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 2018, and the numbers of meetings attended by each director were:
Director Meetings
Audit Committee Meetings
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Remuneration Committee
Meetings
Number
eligible
to attend
Number
attended
Dr M Blake
Dr T Baroni
Mr S Panton
Mr M Wells
10
10
10
4
10
10
10
4
3
3
3
1
3
3
3
1
2
2
2
1
2
2
2
1
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 13 and forms part of this Directors’ Report for the year ended 30 June 2018.
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 13 September 2018
33
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Resonance Health Limited for the year ended
30 June 2018, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(a)
(b)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
13 September 2018
L Di Giallonardo
Partner
34
Statement of Comprehensive Income
For The Year Ended 30 June 2018
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
Other expenses
Notes
2(a)
2(b)
Consolidated
2018
$
2017
$
2,896,395
2,485,332
15,220
47,861
2,911,615
2,533,193
(1,782,770)
(1,562,369)
(58,501)
(94,920)
(123,016)
(164,471)
(26,835)
(26,066)
(153,119)
(167,163)
(583,613)
(629,529)
(122,610)
(127,013)
18,988
(44,587)
2(c)
(307,424)
(335,797)
Loss before income tax benefit
(227,285)
(618,722)
Income tax benefit
3
451,904
314,505
Net profit / (loss) for the year attributable
to owners of the parent
224,619
(304,217)
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
224,619
(304,217)
Basic earnings / (loss) per share (cents per share)
5
0.06
(0.08)
The accompanying notes form part of these financial statements
35
Statement of Financial Position
As At 30 June 2018
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
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Note
7
8
9
10
11
9
12
14
13
Consolidated
2018
$
2017
$
1,549,088
1,685,375
573,623
577,393
33,632
62,280
2,156,343
2,325,048
60,986
72,909
2,422,680
2,129,985
45,900
90,973
2,529,566
2,293,867
4,685,909
4,618,915
401,631
487,040
58,600
91,440
69,329
327,841
551,671
884,210
551,671
884,210
4,134,238
3,734,705
15(a)
15(b)
69,424,199
69,424,199
(29,382)
(204,296)
(65,260,579)
(65,485,198)
4,134,238
3,734,705
The accompanying notes form part of these financial statements.
36
Statement of Changes In Equity
For The Year Ended 30 June 2018
Consolidated
Note
Issued
Capital
$
Foreign
Currency
Translation
Reserve
$
Option
Reserve
$
Accumulated
Losses
$
Total Equity
$
Balance at 30 June 2016
69,419,199
(270,580) 66,284 (65,180,981) 4,033,922
Loss for the year
Other comprehensive income
Total comprehensive loss
for the year
-
-
-
Share-based payments
15
5,000
-
-
-
-
-
-
(304,217)
(304,217)
-
-
-
(304,217)
(304,217)
-
-
5,000
Balance at 30 June 2017
69,424,199
(270,580) 66,284 (65,485,198) 3,734,705
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Share-based payments
23
-
-
-
-
-
-
-
-
-
-
224,619
224,619
-
-
224,619
224,619
- 174,914
-
174,914
Balance at 30 June 2018
69,424,199
(270,580) 241,198 (65,260,579) 4,134,238
The accompanying notes form part of these financial statements.
37
Statement of Cash Flows
For The Year Ended 30 June 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Grants received
Interest received
Income tax received
Net cash provided by / (used in) operating activities
Note
3
7(i)
Consolidated
2018
$
Inflows/(Outflows)
2017
$
2,652,132
2,291,634
(2,741,114)
(2,936,514)
-
15,051
20,000
28,054
451,904
314,505
377,973
(282,321)
Cash flows from investing activities
Payments for plant and equipment
10
(14,912)
(23,392)
Payments for intangible assets
Term deposit cash security
Net cash used in investing activities
(531,729)
(454,529)
-
(26,664)
(546,641)
(504,585)
Net decrease in cash and cash equivalents
(168,668)
(786,906)
Cash and cash equivalents at the beginning of period
1,685,375
2,512,441
Foreign exchange differences on cash balances
32,381
(40,160)
Cash and cash equivalents at the end of the period
7
1,549,088
1,685,375
The accompanying notes form part of these financial statements.
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 invest-
ments, 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 2018, 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 2018.
AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for determining whether, how much and when
revenue is recognised, including in respect of multiple element arrangements. It replaces existing rev-
enue recognition guidance, AASB 111 Construction Contracts, AASB 118 Revenue and AASB 1004
Contributions. AASB 15 is effective from annual reporting periods beginning on or after 1 January
2018, with early adoption permitted.
The core principle of AASB 15 is that it requires identification of discrete performance obligations with-
in a transaction and associated transaction price allocation to these obligations. Revenue is recognised
upon satisfaction of these performance obligations, which occur when control of goods or services is
transferred, rather than on transfer of risks and rewards. Revenue received for a contract that includes
a variable amount is subject to revised conditions for recognition, whereby it must be highly probable
that no significant reversal of the variable component may occur when the uncertainties around its
measurement are removed.
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(b) Adoption of new and revised standards (Continued)
The Group has commenced the process of evaluating the impact of the new standard on existing
revenue streams and will first apply AASB 15 in the financial year beginning 1 July 2018.
AASB 16 Leases
AASB 16 replaces the current AASB 117 Leases standard. AASB 16 removes the classification of
leases as either operating leases or finance leases- for the lessee - effectively treating all leases as
finance leases. Most leases will be capitalised on the balance sheet by recognising a ‘right-of-use’ asset
and a lease liability for the present value obligation. This will result in an increase in the recognised
assets and liabilities in the statement of financial position as well as a change in expense recognition,
with interest and deprecation replacing operating lease expense.
Lessor accounting remains similar to current practice, i.e. lessors continue to classify leases as finance
and operating leases.
AASB 16 is effective from annual reporting periods beginning on or after 1 January 2019, with early
adoption permitted for entities that also adopt AASB 15.
Other than the above, there are no other material impacts 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 13 September 2018.
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 Company,
using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income
and expenses and profit and losses resulting from intra-group transactions have been eliminated in
full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and
cease to be consolidated from the date on which control is transferred out of the Group. Control exists
where the Company has the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities.
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(d) Basis of consolidation (Continued)
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.
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(f) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board of
Directors of Resonance Health Limited.
(g) Foreign currency translation
Both the functional and presentation currency of Resonance Health Limited and its Australian
subsidiaries is Australian dollars. Each entity in the Group determines its own functional currency and
items included in the financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position
date.
All exchange differences in the consolidated financial report are taken to profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange
rates at the date the fair value was determined.
The functional currency of the foreign operation Resonance USA Inc. is United States dollars (US$).
As at the reporting date the 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.
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(h) Revenue recognition (Continued)
(ii) Rendering of services
Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
(iii) Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield
on the financial asset.
(i) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
(j)
Lease
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards if ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance lease are initially recognised at their fair value or, if lower, the present value
of the minimum lease payments, each determined at the inception of the lease. The corresponding
liability to the lessor is included in the statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance charges and the reduction of the lease obligation
so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are charged directly against income unless they are directly attributable to qualifying assets, in which
case they are capitalised in accordance with the general policy on borrowing costs.
Finance lease assets are depreciated on a straight line basis over the estimated useful life of the asset.
Operating lease payments, where the lessor effectively retains substantially all of the risks and benefits
of ownership of the leased items, are recognised as an expense on a straight line basis over the lease
term, except where another systematic basis is more representative of the time pattern in which
economic benefits from the lease asset are consumed.
(k)
Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable
income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary difference and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted
at the end of the reporting period in the countries where the Company’s subsidiaries and associates
operate and generate taxable income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
Income tax (Continued)
(k)
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.
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(k)
Income tax (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).
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(m) Impairment of assets (Continued)
An assessment is also made at each balance date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists,
the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case the carrying amount of the asset is increased to
its recoverable amount. That increased amount cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised for the asset in prior
years. Such reversal is recognised in statement of comprehensive income unless the asset is carried at
revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal
the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less
any residual value, on a systematic basis over its remaining useful life.
(n) Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value. Bank overdrafts are shown within borrowings in current liabilities in the statement
of financial position.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above.
(o) Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured
at amortised cost using the effective interest rate method, less any allowance for impairment. Trade
receivables are generally due for settlement within periods ranging from 14 days to 90 days.
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.
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(p) Financial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement
are classified as either financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments, or available-for-sale investments, as appropriate. Where financial
assets are recognised initially, they are measured at fair value, plus, in the case of investments not
at fair value through profit or loss, directly attributable transaction costs. The Group determines
the classification of its financial assets after initial recognition and, when allowed and appropriate,
re-evaluates this designation at each financial year-end.
All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date
that the Group commits to purchase the asset. Regular way purchases or sales of financial assets
under contracts that require delivery of the assets within the period established generally by regulation
or convention in the marketplace.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value
through profit or loss’. Financial assets are classified as held for trading if they are acquired for the
purpose of selling in the near term. Gains or losses on investments held for trading are recognised in
profit or loss.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as
held-to-maturity when the Group has the positive intention and ability to hold to maturity. Investments
intended to be held for an undefined period are not included in this classification.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets that are not quoted in an active market.
Gains and losses are recognised in the profit or loss when the loans and receivables are derecognised
or impaired.
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available-for-
sale or are not classified as any of the three preceding categories. After initial recognition available-for-sale
investments are measured at fair value with gains or losses being recognised as a separate component of
equity until the investment is derecognised or until the investment is determined to be impaired, at which
time the cumulative gain or loss previously reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined by
reference to quoted market bid prices at the close of business on the balance date. For investments
with no active market, fair value is determined using valuation techniques. Such techniques include
using recent arm’s length market transactions; reference to the current market value of another
instrument that is substantially the same; discounted cash flow analysis and option pricing models.
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(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
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(r)
Impairment of financial assets (Continued)
not individually significant. If it is determined that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, the asset is included in a group of
financial assets with similar credit risk characteristics and that group of financial asset is collectively
assessed for impairment. Assets that are individually assessed for impairment and for which an
impairment loss is or continues to be recognised are not included in a collective assessment of
impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or
loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal
date.
(ii) Financial assets carried at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity
instrument that is not carried at fair value (because its fair value cannot be reliably measured), the
amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the current market rate of return for a similar
financial asset. Such impairment loss should not be reversed in subsequent periods.
(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.
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
1: Statement of significant accounting policies
(s) Plant and equipment (Continued)
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.
Derecognition and disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive
income in the year the asset is derecognised.
(t)
Intangible assets
Intangible assets acquired separately
Intangible assets acquired separately are recorded at cost less accumulated amortisation and
impairment. Amortisation is charged on a straight-line basis over their estimated useful lives. The
estimated useful life and amortisation method is reviewed at the end of each annual reporting period,
with any changes in these accounting estimates being accounted for on a prospective basis.
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.
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
1: Statement of significant accounting policies
(t)
Intangible assets (Continued)
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.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less ac-
cumulated amortisation and accumulated impairment losses, on the same basis as intangible assets
acquired separately.
The useful life used in the calculation of amortisation is 10 years.
Impairment of tangible and intangible assets other than goodwill
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.
(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.
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(v)
Interest-bearing loans and borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in profit or loss over the period of the borrowings
using the effective interest method.
Borrowings are removed from the statement of financial position when the obligation specified in
the contract is discharged, cancelled or expired. The difference between the carrying amount of a
financial liability that has been extinguished or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other
income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting period.
(w) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions
are not recognised for future operating losses.
Provisions are measured at the present value or management’s best estimate of the expenditure
required to settle the present obligation at the end of the reporting period.
(x) Employee benefits
Wages, salaries, annual leave, sick leave and long service leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave, long service leave
and sick leave expected to be settled within 12 months of the balance date are recognised in sundry
creditors in respect of employees’ services up to the balance date. They are measured at the amounts
expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are
recognised when the leave is taken and are measured at the rates paid or payable.
(y) Share-based payment transactions
Equity-settled transactions
The Group uses agreements where payment for services rendered are settled by the issuance of fully
paid shares or options in the Company.
The cost of these equity-settled transactions is measured by reference to the fair value of the equity
instruments at the date they are granted and is recognised, together with a corresponding increase in
equity, over the period in which the service is provided.
(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.
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(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-con-
trolling 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.
53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: Statement of significant accounting policies
(ac) Parent entity financial information
The financial information for the parent entity, Resonance Health Limited, disclosed in Note 19 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
Consolidated
2018
$
2017
$
Sales to external customers
2,896,395
2,485,332
(b) Other income
Grants received
Interest received
(c)
Other expenses
Rental expense on operating leases
Share-based payments - employees
-
15,220
20,000
27,861
15,220
47,861
64,223
112,032
174,914
-
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3: Income tax benefits
Income tax recognised in profit or loss
The major components of tax benefit are:
Research and Development tax offset
Consolidated
2018
$
2017
$
451,904
314,505
451,904
314,505
The prima facie income tax benefit on pre-tax accounting
loss from operations reconciles to the income tax benefit
in the financial statements as follows:
Accounting loss before income tax
(227,285)
(618,722)
Income tax expense calculated at 27.5%
(62,503)
(170,149)
Effect of expenses that are not deductible in determining taxable profit
290,950
276,572
Effect of unused tax losses not recognised as deferred tax assets
(28,151)
(100,733)
Effect of temporary differences not recognised as deferred
tax assets and liabilities
(200,296)
(396,505)
Impact for changes in company tax rate (2016: 30% to 2017: 27.5%)
-
390,815
Research and Development tax offset
451,904
314,505
Income tax benefit reported in the statement of comprehensive income
451,904
314,505
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
3,110,431
3,138,581
Amortisation and depreciation timing differences
283,034
406,506
Business related costs
Unrealised foreign exchange losses
Accrued expenses and liabilities
9,310
(2,392)
75,276
29,870
(6,963)
76,704
3,475,659
3,644,698
55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3: Income tax benefits (Continued)
Deferred tax liabilities:
Capitalised research and development costs
Accrued income
Prepayments
Consolidated
2018
$
2017
$
666,237
585,746
341
9,249
295
17,127
675,827
603,168
Income tax benefits not recognised directly in equity
Share issue costs
-
-
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.
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.
Geographical Segment
The company earns revenue in three significant geographical regions, countries are grouped in the regions
of Asia/Pacific, North America and Europe-Middle-East-Africa (EMEA).
All non-current assets are located in Australia being the Asia/Pacific region, applicable disclosure information
is disclosed in Business Segment assets and no additional disclosure is made.
56
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 4: Segment reporting (Continued)
Asia/Pacific
North America
EMEA
2018
$
2017
$
146,311
131,541
1,085,508
837,780
1,664,576
1,516,011
Total Sales to external customers
2,896,395
2,485,332
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 2018.
Services
$
Research and
Development
$
Corporate
$
Total
$
Segment revenue
Sales to external customers
2,896,395
Interest revenue
-
Total segment revenue
2,896,395
-
-
-
-
2,896,395
15,220
15,220
15,220
2,911,615
Segment profit/(loss) before tax
835,916
(426,895)
(636,306)
(227,285)
Income tax benefit
Segment assets
Segment liabilities
-
451,904
-
451,904
573,624
2,422,680
1,689,605
4,685,909
493,071
-
58,600
551,671
The Group derived 29% of its external customer sales revenue from one major customer.
57
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 4: Segment reporting (Continued)
The following table presents revenue and profit/(loss) information and certain asset and liability information
regarding business segments for the year ended 30 June 2017.
Services
$
Research and
Development
$
Corporate
$
Total
$
Segment revenue
Sales to external customers
2,485,332
Grant received
Interest revenue
-
-
-
20,000
-
-
-
27,861
2,485,332
20,000
27,861
Total segment revenue
2,485,332
20,000
27,861
2,533,193
Segment profit/(loss) before tax
260,753
(442,305)
(437,170)
(618,722)
Income tax benefit
Segment assets
Segment liabilities
-
314,505
-
314,505
577,393
2,129,985
1,911,537
4,618,915
814,881
-
69,329
884,210
NOTE 5: Earnings / (loss) per share
Basic loss per share (cents per share)
Consolidated
2018
$
2017
$
0.06
(0.08)
(a)
Earnings / (loss) used in the calculation of basic
224,619
(304,217)
(loss)/earnings per share
2018
Number
2017
Number
(b) Weighted average number of ordinary shares for the
purposes of basic earnings / (loss) per share
402,497,568 402,468,880
The calculation does not include shares under option that could potentially dilute basic earnings / (loss) per
share as the effect would be anti dilutive.
No shares under option will potentially dilute basic earnings / (loss) per share.
NOTE 6: Dividends
No dividend was paid or declared for the current or previous financial year.
58
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 7: Cash and cash equivalents
Deposits at call
Term deposits
Consolidated
2018
$
2017
$
941,405 1,089,093
607,683 596,282
1,549,088 1,685,375
Deposits at call earn interest at floating rates based on daily bank deposit rates.
Term deposits are made for varying periods depending on the immediate cash requirements of the Group
and earn interest at the respective term deposit rates.
(i) Reconciliation of profit / (loss) for the year to net cash
flows from operating activities
Profit / (loss) for the year
Non-cash flows in loss:
Depreciation
Amortisation of intangible assets
Share-based payment expense
Employee share costs
Changes in net assets and liabilities:
Trade and other receivables
Other assets (current)
Other financial assets
224,619
(304,217)
26,835
153,119
174,914
-
(28,609)
28,648
45,073
26,066
167,163
-
5,000
(52,792)
(17,823)
-
Trade creditors and other payables and provisions
Other liabilities
(235,897)
(122,947)
(10,729)
17,229
Net cash (used in)/provided by operating activities
377,973
(282,321)
(ii) Financing facilities
Secured credit card:
Amount used
Amount unused
(iii) Cash balances not available for use
Security deposits:
Credit card
Lease premises
16,079
3,921
16,198
3,802
20,000
20,000
20,000
25,900
20,000
70,973
45,900
90,973
59
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 8: Trade and other receivables
Trade receivables
Other receivables
Consolidated
2018
$
2017
$
555,250
558,610
18,373
18,783
573,623
577,393
The average credit period on sales of goods and rendering of services is 14 to 90 days.
Aging of past due but not impaired
30-60 days
60-90 days
90-120 days
171,926
179,232
73,816
67,117
95,735
124,645
341,477
370,994
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 12% (2017: 19%)
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
Prepayments
NOTE 10: Plant and equipment
Fixtures and equipment
At cost
Less: Accumulated depreciation
Total plant and equipment
60
33,632
62,280
45,900
90,973
388,217
373,304
(327,231)
(300,395)
60,986
72,909
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 10: Plant and equipment (Continued)
Reconciliation
Reconciliation of the carrying amount of each class of plant and
equipment is set out below:
Fixtures and equipment
Carrying amount at the beginning of the year
Additions
Depreciation expense
Carrying amount at the end of the year
NOTE 11: Intangible assets
Development expenditure
At cost
Less: Accumulated amortisation
Total development expenditure
Reconciliation
Consolidated
2018
$
2017
$
72,909
14,912
74,691
24,284
(26,835)
(26,066)
60,986
72,909
3,120,944
2,675,130
(698,264)
(545,145)
2,422,680
2,129,985
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
2,129,985
1,745,589
445,814
551,559
(153,119)
(167,163)
Carrying amount at the end of the year
2,422,680
2,129,985
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.
61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 11: Intangible assets (Continued)
The recoupment of development expenditure is dependent on the successful development and
commercialisation or sale of the technology developed. The Directors are required to assess at each
reporting date whether there is an indication that an asset may be impaired. If any such indication exists
an estimate is made of the asset’s recoverable amount. Where the asset’s carrying value exceeds the
estimated recoverable amount a provision for impairment is recognised.
In making this assessment the Directors had regard to the size of the liver fibrosis and liver fat markets,
competing products, experience gained with the FerriScan technology, the likely period over which these
revenues are expected to be generated and the likelihood of any technological obsolescence.
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
2018
$
2017
$
52,263
203,580
349,368
283,460
401,631
487,040
(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 16.
NOTE 13: Other liabilities
Current
Unearned income
62
91,440
327,841
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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
NOTE 15: Issued capital and reserves
Consolidated
2018
$
2017
$
58,600
69,329
69,329
2,481
52,100
30,673
(13,210)
(13,444)
58,600
69,329
(a)
Issued and paid up capital 402,497,568
69,424,199 402,497,568
69,424,199
2018
2017
Number
$
Number
$
Movements – Ordinary shares
2018
Number of shares
2018
$
2017
Number of shares
2017
$
Balance at the beginning of the year 402,497,568
69,419,199 402,330,902
69,419,199
Employee Shares 31 August 2016
at $0.033 each
-
-
166,666
5,000
Balance at the end of the year
402,497,568
69,424,199 402,497,568
69,424,199
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.
63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 16: Financial instruments
(a) Capital risk management
The Group controls the capital of the Company in order to maintain an appropriate debt to equity
ratio and to ensure that the Company can fund its operations and continue as a going concern. The
Group’s overall strategy remains unchanged from the previous financial year. The capital structure of
the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent,
comprising issued capital, reserves and retained earnings. None of the Group’s entities are subject
to externally imposed capital requirements. Operating cash flows are used to maintain and expand
operations, as well as to make routine expenditures.
(b) Categories of financial instruments
Financial assets/(liabilities)
Cash and cash equivalents
Trade and other receivables
Other assets – prepayments
Other assets - deposits
Trade and other payables
Consolidated
2018
$
2017
$
1,549,088
1,685,375
573,623
577,393
33,632
45,900
62,280
90,973
(401,631)
(487,040)
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.
64
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 16: Financial instruments (Continued)
(e) Foreign currency risk management (Continued)
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary
liabilities at the reporting date is as follows:
Liabilities
Assets
2017
$
2018
$
2017
$
122,385
487,846
1,067,718
15,583
500,880
247,738
334
47,580
41,202
2018
$
1,986
4,362
-
United States Dollars
Great British Pounds
European Euros
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
2018
$
2017
$
(44,169)
(85,939)
(45,138)
(21,105)
(4,325)
(3,715)
(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.
65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 16: Financial instruments (Continued)
(f) Interest rate risk management (Continued)
Cash and cash equivalent financial assets
Less than
one
month
One to three
months
Total
2018
$1,549,088
$45,900
$1,594,988
Weighted average effective interest rate
1.29%
2.44%
2017
$1,685,375
$90,973
$1,776,348
Weighted average effective interest rate
1.54%
2.20%
The Group is exposed to fluctuations in interest rates as it has deposited monies at floating and fixed interest
rates. The impact of a 10% change in interest rates will not have a material impact on the result for the year.
(g) Credit risk management
Credit risk is the risk that a 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 2018, the Group had one customer that accounted for 12% of all trade
receivables (2017: 19%).
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.
66
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 16: Financial instruments (Continued)
(h) Liquidity risk management (Continued)
The following table details the Group’s expected maturity for its financial liabilities.
2018
Non-interest bearing
2017
Non-interest bearing
Less than
one month
$
One month to
three months
$
Three months
to one year
$
Total
$
358,631
43,000
439,040
48,000
-
-
401,631
487,040
(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.
NOTE 17: Commitments for expenditure
Operating lease commitments
Commitments for minimum lease payments in relation to non-
cancellable operating leases for office premises are payable as follows:
Within one year
Later than 1 year but no later than 5 years
Consolidated
2018
$
2017
$
56,652
180,359
65,440
237,002
Total commitments not recognised in the financial statements
237,011
302,442
A lease over premises was entered into effective 1 July 2017 for a period of 5 years to June 2022.
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
Contingent liabilities and assets
There were no contingent liabilities or assets as at 30 June 2018 (2017: $nil).
Consolidated
2018
$
2017
$
-
-
-
85,915
-
85,915
67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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
incorporation
Class of shares
2018
Equity holding
2017
Equity holding
Resonance Health Analysis Services Pty Ltd
Australia
Ordinary
WA Private Health Care Services Pty Ltd
Australia
Ordinary
IVB Holdings Pty Ltd
Resonance USA Inc
Australia
Ordinary
USA
Ordinary
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
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 $90,053 (2017: $32,036) on behalf of RHT.
During the Year expenses were paid by RHT totalling $63,463 on behalf of RHAS.
At the 30 June 2018 RHT owed a loan balance of $221,402 to RHAS.
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.
68
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 19: Parent entity disclosures
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
NOTE 20: Significant events after balance date
No significant events after balance date have occurred.
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
2018
$
2017
$
1,033,099
649,146
856.681
1,354,208
1,889,780
2,003,354
70,139
366,661
88,449
-
436,800
88,449
69,424,199
69,424,199
241,198
66,284
(68,212,417)
(67,575,578)
1,452,980
1,914,905
Year ended
30 June 2018
Year ended
30 June 2017
$
$
(636,839)
(440,586)
-
-
(636,839)
(440,586)
Consolidated
2018
$
2017
$
53,000
52,000
11,150
8,200
64,150
60,200
69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 22: Key management personnel disclosures
(a) Key Management Personnel Compensation
Short term employee benefits
Post employment benefits
Share-based payments
2018
2017
$
$
849,585
579,657
53,254
87,740
31,764
4,000
990,579
615,421
(b) Other transactions with key management personnel disclosure are the payment
outstanding to:
Dr T St Pierre $95,611 (2017: $26,161)
Mr Mitchell Wells $5,000 (2017: nil)
NOTE 23: Share-based payments
The Company has an Employee Incentive Option Plan to key staff members and management of the
Company.
The expense recognised in the Statement of Comprehensive Income in relation to share-based payments
is $174,914.
The following share-based payment arrangements were in place during the current period:
Number
Grant date
Expiry date Exercise price $ Fair value at grant
Series 1
Series 2
Series 3
Series 4
7,000,000
09/03/2018 09/03/2021
4,750,000
09/03/2018 09/03/2021
4,500,000
09/03/2018 09/03/2021
4,750,000
09/03/2018 09/03/2021
0.03
0.05
0.075
0.10
date $
$77,894
$40,875
$30,168
$25,977
There has been no alteration of the terms and conditions of the above share-based payment arrangement
since grant date.
70
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 23: Share-based payments (Continued)
The following table illustrates the number and weighted average exercise prices of and movements in share
options issued during the year.
2018
2017
Weighted Average
Weighted average
Number
exercise price $
Number
exercise price $
Outstanding at the beginning
of year
-
-
Granted during the year
21,000,000
$0.06
Forfeited during the year
Expired during the year
-
-
Outstanding at the end of year
21,000,000
Exercisable at the end of year
21,000,000
-
-
$0.06
$0.06
-
-
-
-
-
-
-
-
-
-
-
-
No share options were exercised during 2018.
The fair value of the equity-settled share options granted under both the option and the loan plans is
estimated as at the date of grant using the Black-Scholes model taking into account the terms and conditions
upon which the options were granted.
Dividend (%)
Volatility (%)
rate (%)
option (years)
(cents)
price
Risk-free interest Expected life of
Exercise price Grant date share
Series 1
Series 2
Series 3
Series 4
0
0
0
0
89
89
89
89
2.14
2.14
2.14
2.14
3.00
3.00
3.00
3.00
0.0300
0.0500
0.0750
0.1000
0.0220
0.0220
0.0220
0.0220
The expected life of the options is based on historical data and is not necessarily indicative of exercise
patterns that may occur. The expected volatility reflects the assumption that the historical volatility is
indicative of future trends, which may also not necessarily be the actual outcome. No other features of
options granted were incorporated into the measurement of fair value.
71
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.
b.
giving a true and fair view of the Group’s financial position as at 30 June 2018 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;
there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable; and
c.
the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board.
2. This declaration has been made after receiving the declarations required to be made to the Directors
in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June
2018.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dr Martin Blake
Chairman
Place: Perth, Western Australia
Dated: 13 September 2018
72
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report
To the Members of Resonance Health Limited
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Resonance Health Limited (“the Company”) and its controlled entities
(“the Group”), which comprises the statement of financial position as at 30 June 2018, the statement of
comprehensive income, the statement of changes in equity and the statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies, and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of
the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the
Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. We have determined the matters described below to be the key audit matters to be
communicated in our report.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: 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 world-wide organisation of accounting firms and business advisers
73
INDEPENDENT AUDITOR’S REPORT
-63-
RESONANCE HEALTH LIMITED
Key Audit Matter
How our audit addressed the key audit matter
Carrying value of intangible assets
Note 11 of the financial report
At balance date, management assessed that
an indicator of impairment was present in
relation to intangible assets and as a result
was required to test the asset for impairment in
accordance with AASB 138 Intangible Assets.
A net present value calculation was performed
and no impairment was required.
Our audit procedures included but were not
limited to the following:
• Obtained an understanding of
the key
controls associated with the preparation of
the net present value calculation used to
assess
the
intangible assets;
the recoverable amount of
to
to
its
importance
We considered this to be a key audit matter
due
the users’
understanding of the financial statements, the
degree of estimation involved in future cash
flows, discount rates and other inputs to the net
present value calculation and the degree of
audit effort directed towards this area.
• Critically
evaluated
management’s
methodology used in the net present value
calculation and
key
assumptions;
the basis
for
• Assessed the net present calculation for
requirements of
consistency with
Australian Accounting Standards;
the
• Compared key assumptions in forecast cash
flows to historical results and, where these
were materially different, we critically
future
reviewed
expectations;
for differing
the basis
• Compared forecast cash flows to the latest
Board approved forecasts;
• Considered
the appropriateness of
the
discount rate used;
• Considered whether the assets comprising
the cash-generating unit had been correctly
allocated;
• Compared the net present value to the
carrying amount of assets comprising the
cash-generating unit;
• Performed sensitivity analyses around the
key inputs used in the cash flow forecasts
and the headroom impact on the net present
value calculation;
• Reviewed the mathematical accuracy of the
net present value calculation; and
• Assessed
the appropriateness of
the
disclosures included in the relevant notes to
the financial report.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
74
INDEPENDENT AUDITOR’S REPORT
-64-
RESONANCE HEALTH LIMITED
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors 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 preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no
realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
75
INDEPENDENT AUDITOR’S REPORT
-65-
RESONANCE HEALTH LIMITED
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of Resonance Health Limited for the year ended 30 June 2018
complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
L Di Giallonardo
Partner
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
13 September 2018
76
ADDITIONAL INFORMATION FOR LISTED PUBLIC
COMPANIES
The following additional information is disclosed in accordance with section 4.10 of the Australia Securities
Exchange Listing Rules in respect of a listed public company.
1. 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 on the Company’s web site located
here: http://www.resonancehealth.com/investors/business-overview.html
2. Analysis of Shareholdings (as of 14 September 2018)
Distribution of shareholders (ASX Code: RHT)
Range of holdings
Holders
Units
Percentage
1 - 1,000
1,001 - 5,000
5,001 - 10,000
77
38
45
14,705
131,557
358,563
10,001 - 100,000
504
23,994,092
0.00%
0.03%
0.09%
5.96%
100,001 - 999,999,999,999
351
377,998,651
93.91%
TOTAL
1,015
402,497,568
100%
The number of shareholders holding less than a marketable parcel are 237.
3. 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 a one vote on a show of hands.
77
ADDITIONAL INFORMATION FOR LISTED PUBLIC
COMPANIES
4.
Twenty largest shareholders of quoted ordinary shares (as of 14 September 2018)
Rank Name
SOUTHAM INVESTMENTS 2003 PTY LTD
Units
% of Units
72,000,000
17.890
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
37,091,529
9.220
THE UNIVERSITY OF WESTERN AUSTRALIA
MR HELMUT ROCKER
MR GREGORY PETER WILSON
MR JACK MOSTYN LONDON
9,078,750
7,500,000
7,413,657
6,500,000
MR ANDREW FREDERICK TROWSE
5,820,626
MR ROBERT FRANCIS PANTON
5,640,824
DR TIMOTHY GUY ST PIERRE
5,518,500
MR HARRY BASLE
MOLONGLO PTY LTD
WALKER TRUSCO PTY LTD
MR THOMAS PSARAKIS
DR WANIDA CHUA-ANUSORN
FULLERTON PRIVATE CAPITAL PTY LIMITED
DR MARTIN PETER BLAKE
MARCOLONGO NOMINEES PTY LTD
MR VINCENT OLADELE
BNP PARIBAS NOMINEES PTY LTD
MR GREGORY YENG TUCK KONG
5,022,422
4,500,000
4,494,844
4,434,777
4,196,071
4,000,000
3,798,590
3,626,000
3,567,100
3,334,279
3,229,430
2.260
1.860
1.840
1.610
1.450
1.400
1.370
1.250
1.120
1.120
1.100
1.040
0.990
0.940
0.900
0.890
0.830
0.800
200,767,399
49.88
5. Twenty largest shareholders of quoted ordinary shares (as of 14 September 2018)
The names of substantial shareholders who have notified the Company in accordance with the
Corporations Act 2001 are:
SOUTHAM INVESTMENTS 2003 PTY LTD
72,000,000 Ordinary shares
SG Hiscock & Company Limited
37,091,529 Ordinary shares
78
ANNUAL REPORT
Ground Floor,
Suite 2, 141 Burswood Road
BURSWOOD WA 6100
Telephone: +61 8 9286 5300
Facsimile: +61 8 9286 5399
PO Box 71
BURSWOOD WA 6100
www.resonancehealth.com
Email: info@resonancehealth.com
ABN 96 006 762 492
2018