Resonance
Health
Be Better Informed
A N N U A L R E P O R T
2019
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
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 9262 3723
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 .................................................................................................................17
DIRECTORS’ REPORT ...............................................................................................................18
AUDITOR’S INDEPENDENCE DECLARATION ...............................................................................32
STATEMENT OF COMPREHENSIVE INCOME ...............................................................................33
STATEMENT OF FINANCIAL POSITION .......................................................................................34
STATEMENT OF CHANGES IN EQUITY ........................................................................................35
STATEMENT OF CASH FLOWS ...................................................................................................36
NOTES TO THE FINANCIAL STATEMENTS ..................................................................................37
DIRECTORS’ DECLARATION ......................................................................................................76
INDEPENDENT AUDITOR’S REPORT ..........................................................................................77
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES ....................................................81
3
About
• Headquartered in Perth, Australia
• Global distribution network of over 490 hospital centres
• 5 regulatory cleared medical devices [SAMD]
Resonance Health Ltd (ASX: RHT) (“Resonance Health” or the “Company”) is an Australian healthcare
company specialising in the development and delivery of non-invasive medical imaging software and services.
The Company has gained endorsement by leading physicians worldwide for consistently providing the highest
quality of quantitative measurements essential in the management of particular diseases.
The Company uses internationally regulatory cleared proprietary software in the provision of services used
by clinicians in the diagnosis and management of human diseases, researchers, and pharmaceutical and
therapeutic companies in their clinical trials. Our services are delivered to 46 countries and stringent quality
control oversees this delivery globally. 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 (SaMD) in the US, Europe and Australia. Resonance Health carries ISO 13485:2016 certification.
Resonance Health has proprietary products for use in patients with suspected iron overload and for use in
diseases such as non-alcoholic steatohepatitis (NASH) and non-alcoholic fatty liver disease (NAFLD). The
Company’s flagship products include FerriScan®, FerriSmart, and HepaFat-Scan®.
FerriScan® is the global gold-standard for liver-iron-concentration (“LIC”) quantification, and has become
established in many international ‘Standards of Care’ for Thalassemia and Sickle Cell Disease.
FerriScan®’s proprietary technology was recently applied in training neural networks to develop our newest
product, FerriSmart, the world’s first and only regulatory-cleared Artificial Intelligence (“AI”) tool for the
quantification of liver iron concentration.
The Company’s other regulatory cleared iron quantification products include Cardiac T2* for the assessment
of heart iron loading (the most widely accepted MRI-based method for assessing heart iron loading), and
Bone Marrow R2-MRI, for the assessment of iron levels in the bone marrow. Resonance Health also has
several research use tools for the assessment of iron levels in the spleen, pancreas, and brain.
HepaFat-Scan® has international regulatory clearances (TGA, CE Mark, FDA), and reports the volumetric liver
fat fraction for a patient (VLFF). Additionally, the proton density fat fraction can also be reported if required.
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
4
Snapshot
FerriSmart, the Company’s AI solution for the quantification of liver iron concentration (“LIC”), received
TGA, CE Mark, and FDA clearance this financial year, it is the world’s first and only regulatory cleared
artificial intelligence tool for LIC.
Signed contracts with Blackford Analysis and EnvoyAI for the distribution of the Company’s FerriSmart
AI solution and other products such as HepaFat-Scan.
Won four new multi-year work orders from pharmaceutical or therapeutic companies.
New service offerings –developed several MRI imaging and analysis protocols to address the complexity
of measuring brain iron at different locations and different levels of iron.
Significant progress made in the Dragon 2 Study, a trial looking at several parameters, including
protocols attempting to significantly decrease the acquisition time for FerriScan® and FerriSmart.
FY2019 IMAGE ANALYSES BY REGION
COMMERCIAL SALES VOLUME GROWTH
Above figures show all commercial jobs for the FY excluding clinical jobs, R&D studies, and FerriScan voucher program
5
Chairman’s Foreward
This financial year has been an important one
for Resonance Health. In addition to delivering
strong growth and a profitable year, the Company
has embarked on a product and service portfolio
expansion program.
The financial results for the year are emphasised
by a strong net profit of $1,270,233, a significant
increase from the previous financial year’s net profit
of $224,619.
Total revenue for the year was $3,624,545, up from
the previous financial year’s total of $2,896,395,
an increase of 25%. This financial year also had
receipts from customers increase to $3,538,602, a
33% increase from the previous year’s results.
The past twelve months have seen the Company
win four additional clinical trial contracts, gain key
FDA regulatory clearance for our first AI solution,
increase our distribution network by signing with
two global channel partners for seamless integration
into radiology departments, and make significant
progress in a number of key R&D projects.
Marketing activities delivered positive growth in the
routine use of FerriScan® in key commercial markets
this financial year, with increased revenue seen
across our core services, and the Company ending
the year with record image analysis volumes provided
for clinical use in our Service Centre. The Company
has over 15 years’ experience providing services
using proprietary regulatory cleared products to
the international clinical community, and pursues
excellence in customer relationship management at
all times.
We also continue to actively convert clinical trial
FerriScan® sites to routine clinical practice for long-
term sustainability, with an additional 60+ hospital
centres added to our distribution network during the
financial year, allowing them the use of Resonance
Health services for commercial and/or clinical trial
use.
Diversification of in-house R&D projects, such as
new protocols for the measurement of brain iron,
shortening the FerriScan® and FerriSmart acquisition
time, 3T calibration, and exploring a number of AI
opportunities have been a key focus for the Company
in this financial year.
Artificial Intelligence
We are proud of the Company’s progress in the AI
space over the past twelve months. FerriSmart
has obtained regulatory clearance from the TGA,
CE Mark, and FDA, making it the first and only
regulatory cleared artificial intelligence tool for use in
liver iron quantification.
Agreements with global channel partners Blackford
Analysis and EnvoyAI allows FerriSmart to be instantly
and seamlessly integrated into existing radiology
workflows via the Blackford and EnvoyAI Exchange
platforms. FerriSmart can also be accessed via a
Resonance Health web portal for customers who
don’t have access to Blackford or EnvoyAI.
Resonance Health is actively involved in various AI
projects in an effort to diversity its service offerings
and develop tools for use in other medical conditions.
Pharma Uptake continues to grow
Resonance Health is making excellent headway with
pharma, and has continued its focussed pursuit of
clinical trial work with great success this financial
year. Resonance Health has in-house regulatory
expertise, and can provide tailored CRO and project
management services for clinical trials. The past
12 month period has seen the Company acquire
an additional four new multi-year work orders from
global pharmaceutical and therapeutic companies
for a combined total dollar value of approximately
US$1,530,200. This newly awarded work means
that Resonance Health is now contracted to provide
services for a total of nine clinical trials, with the
Company actively seeking to pursue additional
opportunities wherever possible.
6
Important Milestone Reached - Clinical Use Continues to
Grow
This year marked a significant milestone for the
Company – the 50,000th FerriScan® patient report
was delivered, and FerriScan® is now provided in
more than 46 countries. Resonance Health is a
global authority on iron measurement and has been
providing results to the global clinical community for
the measurement of liver iron concentration (LIC)
since FerriScan®’s first FDA clearance in 2005.
An R&D Strategy built for success
The financial year has seen the Company continue
to assess opportunities to expand our core business.
As part of this investment, the Company strategy has
included the diversification of in-house R&D projects,
such as new protocols for the measurement of brain
iron, shortening the FerriScan® and FerriSmart
acquisition time, 3T calibration, and exploring
several AI opportunities thanks to the Company’s
access to very high-quality datasets and labels,
and potential for AI tools to be fully integrated into
existing radiology workflows. The Board recognises
that continued R&D investment must be secured
in commercial potential and we are confident that
the talented leadership team we have in place will
be able to execute our ambitious program over the
coming years.
The Board and I would like to thank our valued
shareholders and partners for their ongoing support
as we continually work on increasing return on
investment and move into a very exciting phase
of AI development and increased product growth.
Together with our stakeholders, Resonance Health is
uniquely positioned to make ongoing, life-changing
advances in healthcare for patients and healthcare
professionals around the world.
Dr Martin Blake
Chairman
MBBS, FRANZCR, FAANMS, MBA, FAICD
7
Year In Review
FINANCIAL HIGHLIGHTS FOR THE YEAR:
•
•
•
•
•
Net profit after tax up 466% to $1.27 million
Total revenue of $3,624,545, up from the previous financial year of $2,896,395, an increase of 25% or $728,150
Receipts from customers were $3,538,602, up 33% from the previous year.
R&D tax incentive (refund) of $328,555 was secured
Cash on hand at 30 June 2019 of $3.1 million, up 99% on the previous year
DISTRIBUTION CHANNELS EXPANDED
The past twelve months have seen the Company significantly expand its distribution network by signing
agreements with international companies Blackford Analysis and EnvoyAI. These agreements allow the
Company’s FerriSmart AI solution to be offered through the Blackford Platform and EnvoyAI Exchange
marketplaces, providing customers with seamless and simple integration into their existing clinical workflows.
This results in improved diagnostic confidence, reduced cost of care, and added clinical value.
EnvoyAI is the world’s first medical imaging artificial intelligence (AI) marketplace and it provides a cloud-
based, vendor-neutral distribution platform that integrates machine learning into radiology, giving physicians
access to over 53 AI solutions developed and delivered by more than 31 AI partners globally. FerriSmart
is now available via the EnvoyAI Exchange platform, to Envoy’s customer base of over 5,000 installations
globally, including 85 of the largest 100 hospitals in the United States of America.
Resonance Health’s CEO, Alison Laws, said this of the EnvoyAI distribution agreement: “Resonance Health
is delighted to be working with EnvoyAI to deliver accessible and scalable solutions for clinicians and
radiologists to provide the highest quality data and support tools to assist clinical decision making and patient
management. All existing and future customers of EnvoyAI will now have access to FerriSmart® in seamless
integration with their existing workflows and Resonance Health looks forward to being of service.”
FerriSmart has now been successfully integrated into the EnvoyAI and Blackford platforms, with initial
FerriSmart training completed. FerriSmart is now available to EnvoyAI and Blackford Analysis customers.
8
Year In Review (Cont’d)
This increased accessibility through channel partners such as EnvoyAI and Blackford Analysis will supplement
the Company’s own established distribution network of over 490 hospital and MRI centres across the globe.
This network has been strengthened further this financial year, with over 60 additional hospital centres
onboarded by the Company, allowing them the use of Resonance Health services for commercial clinical
application and/or clinical trials.
CLINICAL TRIAL WORK GROWS RAPIDLY
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 and underpin the Company’s operational culture; from product development to educating
the clinical community, and to service delivery.
For over 13 years Resonance Health has worked closely with pharmaceutical companies, hospitals,
research institutions, clinicians, and researchers in disease areas such as, thalassemia, sickle cell disease,
MDS, Diamond–Blackfan Anemia (DBA), cancer therapy survivors, hereditary hemochromatosis and other
clinical conditions.
This financial year has seen Resonance Health continue to seek further clinical trial opportunities for its
services, with the Company executing four new multi-year contracts with pharmaceutical and therapeutic
companies for a combined total dollar value of approximately US$1,530,200. In addition, the Company
executed new contract extensions to three previously announced clinical trials for an approximate combined
sum of US$460,000.
To date, Resonance Health products and services have been used by pharmaceutical and therapeutic
companies in over 30 clinical trials. As of August 2019, Resonance Health was actively involved in
nine ongoing clinical trials, with monthly payments being received by the Company comprising of two
components:
a) Fixed Costs: Comprised of Data Management Setup charges, and monthly Project and Data
Management fees; and
b) Variable Costs: For use of Resonance Health products and services (such as FerriScan®, Liver
Volume, Spleen Iron, Spleen Volume, FerriScan® Phantom Pack supply and analysis, etc.) for the
duration of each trial as requested. There is also often provision for ad hoc consulting services to
be provided by the Company, to be charged if and when incurred.
Further details of the clinical trials announced during the year are available by viewing the following
announcements made during the year:
• 23 August 2018 – ‘Resonance Health contracted for two new clinical trials’
• 29 October 2018 – ‘Appendix 4C – quarterly’
• 31 October 2018 – ‘New Work Order to provide services for Clinical Trial’
9
Year In Review (Cont’d)
Resonance Health continues to actively pursue clinical trial opportunities with pharmaceutical and
therapeutic companies, as the Company looks to further utilise its services in clinical trial settings.
REGULATORY MILESTONE - FIRST FDA CLEARED AI SOLUTION FOR RESONANCE HEALTH
Resonance Health added to its regulatory cleared product line over the year with FerriSmart, the Company’s
ground-breaking AI solution for the quantification of liver iron concentration (LIC), achieving TGA, CE
Mark, and FDA regulatory clearances. These clearances make FerriSmart the only regulatory cleared
artificial intelligence tool for use in LIC.
In addition to FerriScan®, FerriSmart is now also the only FDA cleared MR companion diagnostic for use
with deferasirox.
FerriSmart is now one of five products developed by Resonance Health with regulatory clearance. Including
FerriSmart, these are the Company’s five regulatory cleared products:
Gold Standard in Liver Iron Concentration
Instantaneous Liver Iron Concentration Analysis
Volumetric Liver Fat Fraction
Cardiac T2*
FERRISCAN® AND CARDIAC T2*
Estimation of iron levels in the bone marrow
FerriScan®, Resonance Heath’s flagship product, is internationally recognised by clinicians as the gold
standard for the measurement of liver iron concentration. This accurate MRI-based technique is non-invasive
and eliminates the need for liver biopsies. FerriScan® is 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). It is also recommended in multiple clinical patient management guidelines and
has FDA cleared companion diagnostic device status for the iron chelator deferasirox, providing the essential
baseline measurement of liver iron concentration prior to the commencement of use of deferasirox in patients.
FerriScan® is then used repeatedly as part of the routine clinical management of patients.
10
Year In Review (Cont’d)
By July 2019, over 50,000 FerriScan® analyses had been performed globally in 46 countries. FerriScan®
is reimbursed in the UK and Canada by their governments, and it has some private payer coverage in the
United States.
An increasing number of Resonance Health customers are using the Company’s Cardiac T2* measurement
service to assess myocardial iron in their patients (iron may begin to accumulate in the heart and other
organs of patients with elevated liver iron concentration, potentially causing toxic damage, and increasing risk
of serious adverse event and even death).
Cardiac T2* is the most widely accepted MRI based method for assessing heart iron loading. Resonance
Health offers a dual analysis service where the Cardiac T2* measurement is provided in addition to FerriScan®
for a more comprehensive assessment of the body’s iron stores. Both the liver and the heart data are captured
in one patient MRI visit. Resonance Health’s Cardiac T2* analysis service has regulatory clearances from the
FDA in the USA, TGA in Australia, and CE Mark for Europe. The Cardiac T2* analysis service is available to
any suitably equipped MRI centres internationally and is processed at the Company’s central image analysis
centre by specially trained and experienced analysts under stringent quality-controlled conditions.
Cardiac T2* is increasingly being requested by clinicians alongside and in addition to a FerriScan® LIC
measurement to enable better-informed decisions on the management of patients with iron related diseases
and/or at risk of iron-induced organ damage.
Snapshot of our global FerriScan® sites
FERRISCAN® AND CARDIAC T2* SALES GROWTH
Resonance Heath is pleased to have once again achieved record commercial sales of FerriScan® and
Cardiac T2* in its key markets over the financial year, with the UK experiencing a 10% increase in
FerriScan® usage, and the US and UK experiencing a combined 44% increase in commercial uptake of
the Company’s Cardiac T2* service. In total, Cardiac T2* saw its revenue earning job usage increase by
24% over the previous financial year.
11
Year In Review (Cont’d)
The Company’s “Premium” FerriScan® service offers a rapid turnaround of patient results and this also
service also continued to gain traction, with a usage increase of 149% over the previous financial year.
The Premium expedited service was utilised in 14% of all FerriScan® jobs in the United States for the
financial year.
FerriScan® growth in target markets of USA, Canada, UK, and Australia
CARDIAC T2* - NEW PHANTOM DEVELOPED
To complement the services Resonance Health is supplying to pharmaceutical and therapeutic companies
in their clinical trials, the Company has developed a Cardiac T2* phantom. The Cardiac T2* phantom
is placed in an MRI machine and scanned to verify the Cardiac T2* scanning sequence in lieu of a
test subject (patient/volunteer). The Cardiac T2* phantoms will be provided annually for the duration of
three previously announced clinical trials to all participating trial sites. Subject to full completion of these
trials, the total additional revenue to be realised from the Cardiac T2* phantoms will be US$108,600.
The newly-developed Cardiac T2* phantom is now being offered as part of the Company’s trial service
offerings.
FUTURE-PROOFING FERRISCAN®
This financial year saw the Company make substantial progress in its Dragon 2 Study, a trial looking at
several parameters including protocols attempting to significantly decrease the acquisition time for the
12
Year In Review (Cont’d)
FerriScan® protocol, which currently takes approximately 7-9 minutes in an MRI machine. 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 time in an
MRI machine, so the 9-minute scan seems short by comparison –but for very busy MRI departments
where demand for time on the scanner is highly competitive, every second counts.
As part of the Dragon 2 Study, Resonance Health is also continuing its work to adapt the Company’s
FerriScan® and FerriSmart services to 3 Tesla (3T) scanners, resulting in better compatibility and usability
with advancements in MRI technology.
Due to the success of preliminary results in the Dragon 2 Study, Resonance Health is collaborating with a
well-known large US hospital to collect additional MRI images. This US hospital is an existing user of the
FerriScan® service and is assisting Resonance Health with the following work:
• Provision of datasets derived from; (i) the shorter acquisition, and (ii) 3T scanners, in connection
with their calibration;
• The new datasets from the US, alongside previous datasets obtained from Vietnam, allow the
Company’s protocols to be tested across multiple scanner manufacturers.
At present, data collection at the US hospital site is more than half way completed, with a significant
update expected from the Company before the end of the calendar year.
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, Hereditary
Haemochromatosis, 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 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 a similar calibre of diagnostic tool available to clinicians in developed countries.
FerriSmart was trained using thousands of archived FerriScan® image data sets with clinically validated
LIC ‘labelled’ values. These datasets were analysed and labelled according to a set of stringent standards
and guidelines implemented as part of an ISO 13485 accreditation quality system in operation for over 12
years. FerriSmart and FerriScan® are the only FDA cleared methods for the quantification of LIC.
13
Year In Review (Cont’d)
This financial year saw the Company’s AI solution (FerriSmart) obtain regulatory clearance from Australia
(TGA), United States of America (FDA), and Europe (CE Mark).
To date, FerriSmart has been successfully integrated into the EnvoyAI and Blackford Analysis platforms
and initial FerriSmart training has been completed across both salesforces. Resonance Health is now
providing ongoing support and assistance in onboarding and sales efforts to setup new FerriSmart users
across these two platforms.
Early work on liaising with large hospital chains across India has resulted in several key meetings to discuss
FerriSmart’s viability in these institutions and their current work practices. After productive meetings, the
Company remains in ongoing discussions to tailor solutions to fit their requirements. Further updates will
be provided as work progresses.
HEPAFAT-SCAN®
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. It is currently the only MR technique for measuring VLFF 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,
pharmaceutical companies for the development of drugs to treat NAFLD and other classes of liver disease,
and academia for use in medical and scientific research.
From a commercial sales perspective, HepaFat-Scan®’s revenue-generating jobs doubled from the previous
financial year, however a historical limiting factor in growth has been the lack of therapeutics available
to treat fatty liver disease. This is currently an area of heavy international research. The World Health
Organisation estimates that there are over 500 million people globally with fatty liver which can lead to
increased rates of diabetes, liver fibrosis, liver cirrhosis, hepatocellular carcinoma, and death.
A LOOK TOWARDS THE FUTURE
Product oriented R&D has become a key priority for the Company in the financial year. Whilst investment
in R&D has continued, it is with a greater focus on timely commercial outcomes, and diversification of the
existing R&D pipeline has been a priority. This is an escalation of the Company’s previous work on the
development of new tools for the quantification of iron and volumetric fat fractions in a number of human
organs, and is in addition to the previous work on the use of the Company’s products by key opinion
leaders and pharmaceutical companies in their research. This work encompasses new product R&D as
well as key improvements to existing products.
The Company’s R&D strategy includes diversification of in-house R&D projects, potential licencing of out-
of-house technologies, and potential acquisitions of new medical diagnostic and treatment technologies.
The current R&D initiatives include, but are not limited to, the following (due to the competitive and
confidential nature of R&D, details of projects, and projects themselves, may be withheld in order to
protect Company intellectual property):
14
Year In Review (Cont’d)
IMAGING R&D:
• Resonance Health has developed several MRI imaging and analysis protocols to address the
complexity of measuring brain iron at different locations in the brain and different levels of iron,
and these research-use only tools are now available for use.
• Automation of the Company’s spleen volume and liver volume analysis, through the application of
machine learning, which has significantly reduced analysis time.
• Resonance Health has executed a Non-exclusive License Agreement with Wisconsin
Alumni Research Foundation (WARF) for the use of numerous patents owned by WARF. The
License Agreement allows the Company to use the licensed patents for the development and
commercialisation of new and/or alternative methods for measuring proton density fat fraction
(PDFF) from MRI images.
• To date, work has progressed well within the scope of the Company’s collaboration with Perth
Radiological Clinic (PRC). The partnership provides the sharing of data and the training of neural
networks to assess the viability of the development of several screening tools. Through images
provided by PRC as part of the agreement, Resonance Health is progressing well with its exploration
into potential new AI solutions.
ARTIFICIAL INTELLIGENCE R&D:
The Company is strongly committed to AI tools due to their excellent reproducibility of results, the Company’s
access to very high-quality datasets and labels, and the potential for AI tools to be fully and seamlessly
integrated into existing radiology workflows.
Using in-house and externally sourced datasets in various diseases and/or conditions, the Company is
making progress on training neural networks in assessing a number of organs. These machine learning tools
are in various stages of development, ensuring Resonance Health has a strong pipeline of AI development.
MOLECULAR R&D:
Using in-house expertise in molecular biology, the Company has commenced two molecular projects this
financial year:
• A biomarker project has been underway for the duration of the Dragon 2 study. Preliminary results
are expected by the end of the calendar year, following which the Company will decide whether to
progress with this project.
• A molecular project that will assess the success of a particular compound that may have some
efficacy as a treatment strategy to mitigate liver disease.
15
Year In Review (Cont’d)
A WIDE SUITE OF SERVICES NOW AVAILABLE
Resonance Health has recently increased its product suite with the inclusion of several new MRI imaging
and analysis protocols to address the complexity of measuring brain iron at different locations and different
levels of iron. Resonance Health also offers the following services:
• 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 available 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.
• Brain Iron – several brain iron imaging protocols to quantify iron deposition in various regions of
the brain such as leptomeninges, basal ganglia, etc.
• Fibrosis and Inflammation – a combination of prototype MRI measures to assess liver fibrosis
and inflammation.
• Liver Biopsy – Stereology Services – quantitative assessment of hepatic steatosis of digitized
biopsies using stereology.
• Pancreatic Fat and/or Assessment – standardised quantitative assessment of pancreatic fat
and/or iron.
• Spleen Volume and/or Iron Assessment – standardised quantitative assessment of spleen
volume and/or iron.
• Visceral/Subcutaneous Fat and Organ Fat in Metabolic Disease – quantitative
assessments of visceral fat, subcutaneous fat, epicardial fat.
• Customised Imaging Solutions – customised design protocols on an as required basis.
Examples include protocols to assess tracer entry into cells (e.g. Gadolinium) to attempt to monitor
drug delivery; novel cardiac imaging protocols; and many others.
16
Financial Report 30 June 2019
17
17
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
2019. 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.
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 Fellow 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
technical and
industry experience to
Company boards.
Other listed company current
directorships:
Resonance Health. Dr Blake received
None
FAANMS as a post nominal in recognition
of his Nuclear Medicine Specialist training
Former listed company directorships in
last 3 years::
undertaken in 1994 & 1995.
None
He has been a Partner of Perth Radiological
Special responsibilities:
Clinic since 1997 and is currently the
Chairman of that Company.
Chairman of the Remuneration Committee
Member of the Audit and Risk Committee
Position: Director — Non-Executive
(appointed 28 February 2018)
Other listed company current
directorships:
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
None
Former listed company directorships in
last 3 years::
Lonestar Resources US Inc. – Nasdaq
Listed US Public Company
executive of public and private companies
Lonestar Resources Limited – ASX Listed
including ASX and US Nasdaq listed
Australian Public Company (Delisted on 7
public companies. He currently serves as
July 2016)
Chair of a large non-profit organisation.
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
18
Directors’ Report (Cont’d)
Position: Director — Non-Executive
(appointed 5 October 2009)
Other current listed company
directorships:
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
Resonance Health. Mr Panton brings skills
in business and marketing having run his
None
Former listed company directorships in
last 3 years:
Non-Executive Director of 4DS Ltd
Special responsibilities:
own successful business.
Member of the Audit and Risk Committee
Mr Simon Panton
Member of the Remuneration Committee
Position: Director — Non-Executive
(appointed 25 November 2016)
capital market
transactions, corporate
research and valuations to clients.
Experience:
experience across
Mr Baroni has broad
industrial
research,
Other current listed company
directorships:
commercialisation of technology, asset
None
valuations
and
investment banking
services. He has managed innovation
development and technology strategy in a
large company setting as well as being an
Dr Travis Baroni
active investor in early stage investments.
Former listed company directorships in
last 3 years:
None
Special responsibilities:
He has worked in investment banking,
Chairman of the Audit and Risk Committee
providing advisory services
to equity
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
obligations 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)
19
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.
Directors
Dr M Blake
Dr T Baroni
Dr M Wells
Mr S Panton
Total
Number of fully
paid ordinary shares
Number of
options
6,464,677
500,000
600,000
73,546,350
81,111,027
-
-
-
-
-
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.
20
Directors’ Report (Cont’d)
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
4,000,000
10,000,000
4,000,000
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
13/09/2018
30/4/2019
16/7/2019
18,500,000
$0.03 to $0.10
09/03/2021
500,000
$0.05 to $0.075
13/9/2021
7,000,000
$0.075 to $0.125
01/01/2022
3,000,000
$0.10
13/6/2022
Shares issued or since the end of the year as a results of exercise
As at the date of this report details of ordinary shares issued by the Company during or since the end of the
financial year as a results of exercise of an options are:
Date of exercise
Number of shares issued
Amount paid for the shares
16/07/2019
4,500,000
$250,000
21
Directors’ Report (Cont’d)
Review of Operations
Resonance Health Strategy Delivers Strong Profit
• Net profit after tax up 466% to $1.27 million
•
•
• Cashflow from operations up 327% to $1.62 million
EPS increase to 0.31 cents per share from 0.06 cents per share in FY18
Sales revenue up 25% as a result of distribution expansion focus
• Cash on hand as at 30 June 2019 up 99% to $3.1 million
Resonance Health Limited (ASX: RHT) (“Resonance Health” or the “Company”) is pleased to announce a
full year NPAT of $1.27 million, representing a fivefold increase over FY18 NPAT of $0.22 million.
EBITDA for the year was $1.15 million, which is a significant reversal
from the loss of $0.62 million in FY18, reflecting improvements made
to core business.
The improved performance is a result of both sales revenue increases
and cost reductions across the business.
Chief Executive Officer, Alison Laws, said, “This year’s profit represents
the successful implementation of concurrent sales revenue growth
and cost control programs, with a 25% increase in revenue and a
16% decrease in operating costs.”
Sales Revenue
Sales revenue for the year was $3.62 million, a 25% increase on the
previous year of $2.90 million with a 13% increase to $1.79 million
in 2H19 from $1.59 million in 2H18. This increase is the result of
the Company’s distribution expansion strategy through:
•
the addition of a further 60 hospitals and imaging centres
using Resonance Health services either commercially or in
clinical trials; and
• a continued focus on using FerriScan and other Resonance
Health services in existing and new clinical trials and
partnering with pharmaceutical and therapeutic companies.
1,500
1,000
500
0
-500
4,000
3,000
2,000
1,000
0
Net Profit A�er Tax $000
1,270
225
-304
FY17
FY18
FY19
Sales Revenue $000
3,625
2,896
2,485
FY17
FY18
FY19
Clinical trial work won this financial year resulted in a combined total dollar value of approximately US$1,530,200
(see ASX announcements dated 23 August 2018, 29 October 2018, and 31 October 2018).
76% of sales revenue for the year was derived from the United States and Canada with the United Kingdom
contributing 20% and the balance spread across Australia, Asia and The Middle East. Commercial
revenue combined with voucher revenue accounted for 60% of total revenue with clinical trials and other
studies making up the balance.
Ms Laws commented, “These results are a strong indication of the potential for the business given the
proven international demand for our flagship product and the high margin revenue derived from sales.”
22
Directors’ Report (Cont’d)
Research and Development
The Company has been successful in obtaining a number of business-critical regulatory clearances,
including FDA clearance in the United States, CE Mark in Europe and TGA clearance in Australia.
FerriSmart is the first and only regulatory cleared AI tool for use in liver iron quantification in the world.
R&D expenditure for the year was reduced from $1.03 million in FY18 to $0.82 million in FY19 as a
result of the re-organisation and streamlining of existing projects and an increase in focus on expansion of
breadth of work into additional areas of unmet clinical need. This reduced level of R&D includes $0.35
million that was capitalised. Despite the reduction in R&D expenditure it remains central to the future
success of the Company, and as such our commitment to it remains unchanged. R&D expenditure will
be targeted at imaging analysis product development, other relevant biomarker developments, and AI
automation.
Operating Costs
Operating costs for the year were reduced by $0.47 million over the previous year, a decrease of more than
15% excluding foreign exchange gains. Major drivers of the reduction in OPEX include reductions of $0.32
million in marketing and travel costs and a reduction of $0.11 million in employee benefits.
Cash
The success of concurrent growth and cost containment strategies has resulted in substantial improvement
in the company’s cash position. Cashflow from operations increased by $1.24 million as a result of an
increase in customer receipts of $0.89 million (33%) over 2018, and a decrease in payments to suppliers
and employees of $0.47 million (17%). Net cash used in investing activities decreased by $0.2 million
over 2018 as a result of a lower level of capitalised R&D expenditure. Cash on hand at 30 June totaled
$3.08 million, almost double the 2018 level of $1.55 million. The company has no debt.
Strategy for Growth
Resonance Health is a medical imaging business, focusing on the research and development of new and
improved proprietary tools and techniques and their subsequent commercialisation. As such, the strategy
to grow commercial sales revenue includes utilisation of third party distribution and servicing platforms
with extensive existing customer bases across five continents. The agreements entered into in FY19 with
EnvoyAI and Blackford Analysis (see ASX announcements dated 15 January 2019 and 5 July 2018)
provide platforms for distribution of Resonance Health’s software and services to well over 5000 hospitals
and MRI Centres worldwide, including 85 of the largest 100 hospitals in the United States. This strategy
enables the Company to minimise customer acquisition and service distribution costs, retain a product
development focus, and pursue new revenue opportunities for the existing product suite.
The strategy to grow revenue from clinical trials includes increasing incremental sales to existing customers,
as well as a continued focus on relationship and brand awareness building with potential pharmaceutical
and therapeutic customers. The strategy will continue to be implemented in FY20, leveraging off the
Company’s success in FY19.
23
Directors’ Report (Cont’d)
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
4,500,000 shares were issued as a result of exercised options and 136,365 shares per Employee Share
Scheme on 16 July 2019.
Other than noted above, there has been no additional matter or circumstance that has arisen after balance
date that has significantly affected, or may significantly affect, the operations of the Group, the results of
those operations, or the state of affairs of the Group in future financial periods
Likely Developments and Expected Results of Operations
Comments on expected results of the operations of the Group are included in this report under the review
of operations.
Disclosure of information regarding likely developments in the operations of the Group in future financial
years and the expected results of those operations is likely to result in unreasonable prejudice to the
Company. Accordingly, this information has not been disclosed in this report
Environmental Legislation
The Group’s operations are not subject to any significant environmental legislation.
Indemnification and Insurance of Directors and Officers
The Company has agreed to indemnify all the directors and secretaries of the Company for any liabilities
to another person (other than the Company or related body corporate) that may arise from their position
as directors of the Company and its controlled entities, except where the liability arises out of conduct
involving a lack of good faith.
During the financial year the Company paid a premium to insure the directors and secretaries of the
Company and its controlled entities against any liability incurred in the course of their duties to the extent
permitted by the Corporations Act 2001. It is not possible to apportion the premium between amounts
relating to the insurance against legal costs and those relating to other liabilities
24
Directors’ Report (Cont’d)
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 2019. 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
(ii) Management Executives
Ms Alison Laws – Chief Executive Officer
Mr Agha Shahzad – Company Secretary & Chief Financial Officer
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.
25
Directors’ Report (Cont’d)
The Remuneration Committee reviews executive packages annually by reference to the Group’s performance,
executive performance and comparable information from industry sectors and other listed companies in similar
industries. The assistance of an external consultant or remuneration surveys are used where necessary.
Remuneration Structure
In accordance with best practice Corporate Governance, the structure of non-executive director and
executive remuneration is separate and distinct.
Non-executive Director Remuneration
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to
attract and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Non-executive Directors’ fees not exceeding an aggregate of $250,000 per annum have been approved by
the Company in a general meeting.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which
it is apportioned amongst Directors is reviewed annually. The Board considers fees paid to non-executive
directors of comparable companies when undertaking the annual review process.
Each of the non-executive Directors receives a fixed fee for their services as directors. There is no direct
link between remuneration paid to any of the Directors and corporate performance.
Executive Remuneration
Remuneration consists of fixed remuneration and variable remuneration.
(i)
Fixed Remuneration
Fixed remuneration is reviewed annually. The process consists of a review of relevant comparative
remuneration in the market and internally, and where appropriate, external advice on policies and practices.
The Committee has access to external, independent advice where necessary.
All executives (except 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 cap-
italised. 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.
26
Directors’ Report (Cont’d)
Employment Agreements
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 $150,000 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 $250,000 pa exclusive
of superannuation and a termination notice of 3 months by the Company or Ms Laws.
Consultancy Services Agreement
Mr Mitchell Wells has a Consultancy Agreement with Resonance Health Analysis Services to provide
duties as an Investor Relations Consultant. This Consultancy Agreement provides for consultancy fees of
$90,000 per annum increased from $60,000 per annum from 1 January 2019. The agreement may be
terminated at any time upon mutual agreement.
Details of Remuneration for Year Ended 30 June 2019
The remuneration for key management personnel of the Group during the 2019 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
112,500
36,530
3,470
5,205
-
3,470
240,355
12,145
-
-
-
-
-
40,000
60,000
112,500
40,000
252,500
100%
100%
100%
100%
-
-
-
-
27
Directors’ Report (Cont’d)
Short-term
employee benefits
Salary & Fees
Post
employment
benefits
Equity
Total
Superannuation
Contributions
Shares/
Options
Fixed
Remuneration
$
$
$
$
%
Remuneration
linked to
performance
%
Management Executives’ remuneration
Ms A Laws
Mr AS Pervez
179,058
116,615
17,010
-
196,068
11,078
70,161
197,854
100%
100%
-
-
Total
295,673
28,088
70,161
393,922
1 Mr M Wells remuneration represents $40,000 director fees and $72,500 consulting fees.
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%
-
-
-
-
28
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 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
121,580
62,578
14,710
79,764
249,320
9,444
7,976
116,828
100%
100%
100%
100%
100%
-
-
-
-
-
628,397
41,109
87,740
757,246
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.
No cash bonuses were granted in 2019 and 2018.
No share-based remuneration granted as compensation in 2019 and 2018.
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
1/7/2018
Received as
Remuneration
Received during
the year on
Net Change Other exercise of options
Balance
30/6/2019
Dr M Blake
Dr T Baroni
Mr M Wells
6,464,677
500,000
200,000
Mr S Panton
71,275,743
Ms A Laws
Mr AS Pervez
-
600,823
-
-
-
-
-
-
-
-
400,000
2,270,607
-
(500,823)
-
-
-
-
-
-
6,464,677
500,000
600,000
73,546,350
-
100,000
29
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
1/7/2018
Received as
Remuneration Net Change Other
Received during
the year on
exercise of options
Balance
30/6/2019
Dr M Blake
Dr T Baroni
Mr M Wells
Mr S Panton
Ms A Laws
-
-
-
-
10,000,000
-
-
-
-
-
Mr AS Pervez
1,000,000
3,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
4,000,000
Other transactions with key management personnel disclosure are the payment outstanding to:
Nil
End of Remuneration Report
30
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
9
9
9
9
9
9
9
8
3
3
3
3
3
3
3
3
2
2
2
2
2
2
2
2
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 2019.
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 27 September 2019
31
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 2019, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
27 September 2019
M R Ohm
Partner
32
Statement of Comprehensive Income
For The Year Ended 30 June 2019
Sales revenue
Other income
Revenue
Employee benefits expense
Consulting and professional services
Research and development
Depreciation expense
Amortisation expense
Marketing and travel
Statutory and compliance
Foreign exchange gain
Other expenses
Note
Consolidated
2019
$
2018
$
2(b)
2(c)
3,624,545
2,896,395
37,228
15,220
3,661,773
2,911,615
(1,671,213)
(1,782,770)
(92,801)
(58,501)
(63,177)
(123,016)
(23,815)
(26,835)
(221,239)
(153,119)
(266,307)
(583,613)
(154,247)
(122,610)
37,361
18,988
2(d)
(264,657)
(307,424)
Profit/(loss) before income tax benefit
941,678
(227,285)
Income tax benefit
4
328,555
451,904
Net profit for the year attributable to owners of the parent
1,270,233
224,619
Other comprehensive income
Other comprehensive income for the year, net of tax
-
-
Total comprehensive income for the year attributable to
owners of the parent
1,270,233
224,619
Basic and earnings diluted per share (cents per share)
6
0.31
0.06
The accompanying notes form part of these financial statements.
33
Statement of Financial Position
As At 30 June 2019
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
Notes
Consolidated
2019
$
2018
$
7
8
9
10
11
9
12
14
13
3,081,192
1,549,088
661,902
573,623
36,320
33,632
3,779,414
2,156,343
40,511
60,986
2,550,818
2,422,680
45,900
45,900
2,637,229
2,529,566
6,416,643
4,685,909
392,809
401,631
75,855
54,399
58,600
91,440
523,063
551,671
523,063
551,671
5,893,580
4,134,238
15(a)
15(b)
69,674,199
69,424,199
209,727
(29,382)
(63,990,346)
(65,260,579)
5,893,580
4,134,238
The accompanying notes form part of these financial statements
34
Statement of Changes In Equity
For The Year Ended 30 June 2019
Consolidated
Note
Issued
Capital
$
Foreign
Currency
Translation
Reserve
$
Option
Reserve
$
Accumulated
Losses
$
Total Equity
$
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 loss
for the year
Equity settled share-based 23
payments
-
-
-
-
-
-
-
-
-
-
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
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
-
-
-
Share issued
250,000
-
-
-
-
-
-
-
-
Equity settled share-based 23
-
- 239,109
1,270,233 1,270,233
-
-
1,270,233 1,270,233
-
-
250,000
239,109
Balance at 30 June 2019
69,674,199
(270,580) 480,307 (63,990,346) 5,893,580
The accompanying notes form part of these financial statements.
35
Statement of Cash Flows
For The Year Ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Income tax received
Note
Consolidated
2019
$
Inflows/(Outflows)
2018
$
3,538,602
2,652,132
(2,273,443)
(2,741,114)
21,343
15,051
3
328,555
451,904
Net cash provided by operating activities
7(i)
1,615,057
377,973
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
(3,340)
(14,912)
11
(344,653)
(531,729)
Net cash used in investing activities
(347,993)
(546,641)
Cash flows from financing activities
Proceeds from share issues
Net cash provided by financing activities
250,000
250,000
-
-
Net increase/(decrease) in cash and cash equivalents
1,267,064
(168,668)
Foreign exchange differences on cash balances
15,040
32,381
Cash and cash equivalents at the beginning of period
1,549,088
1,685,375
Cash and cash equivalents at the end of the period
7
3,081,192
1,549,088
The accompanying notes form part of these financial statements.
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 selected non-current
assets, 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
Standards and Interpretations applicable to 30 June 2019
The Directors have reviewed all of the new and revised Standards and Interpretations issued by the
AASB that are relevant to its operations and effective for the current reporting period. It has been
determined by the Directors that other than AASB 15 Revenue from Contracts with Customers there
is no impact, material or otherwise, of the new and revised Standards and Interpretations on the
Company and, therefore, no material change is necessary to the Group’s accounting policies.
AASB 15 Revenue from Contracts with Customers
Resonance Health Limited has elected to adopt AASB 15 using the modified retrospective method
with an initial date of application of 1 July 2018.
The key changes to the full year financial statements are:
•
•
•
•
The comparative information for each of the primary financial statements is presented based on
the requirements of AASB 111, AASB 118 and related Interpretations.
The cumulative catch-up adjustment to the opening balance of retained earnings (or other
components of equity) as at 1 July 2018, either for all contracts or only for contracts that are not
completed at the date of initial application, is recognised in the statement of changes in equity
and would be disclosed in Note 1(a).
The narrative in Note 2(a), describes the changes and impact of adopting AASB 15.
The Group has elected to apply that method to all contracts at date.
The disclosure of disaggregated revenue in Note 2(b) does not include comparative information under
AASB 15.
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(b) Adoption of new and revised standards (continued)
AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and makes changes
to a number of areas including classification of financial instruments, measurements, impairment of
financial assets and hedge accounting model.
The Group has adopted AASB 9 from 1 July 2018.
The standard introduced new classification and measurement models for financial assets. A financial
asset shall be measured at amortised cost if it is held within a business model whose objective is to
hold assets in order to collect contractual cash flows which arise on specified dates and that are solely
principal and interest.
A debt investment shall be measured at fair value through other comprehensive income if it is held
within a business model whose objective is to both hold assets in order to collect contractual cash
flows which arise on specified dates that are solely principal and interest as well as selling the asset
on the basis of its fair value.
All other financial assets are classified and measured at fair value through profit or loss unless the entity
makes an irrevocable election on initial recognition to present gains and losses on equity instruments
(that are not held-for-trading or contingent consideration recognised in a business combination) in
other comprehensive income (‘OCI’).
Despite these requirements, a financial asset may be irrevocably designated as measured at fair value
through profit or loss to reduce the effect of, or eliminate, an accounting mismatch.
For financial liabilities designated at fair value through profit or loss, the standard requires the portion
of the change in fair value that relates to the entity’s own credit risk to be presented in OCI (unless it
would create an accounting mismatch).
New simpler hedge accounting requirements are intended to more closely align the accounting
treatment with the risk management activities of the entity.
New impairment requirements use an ‘expected credit loss’ (‘ECL’) model to recognise an allowance.
Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument
has increased significantly since initial recognition in which case the lifetime ECL method is adopted.
For receivables, a simplified approach to measuring expected credit losses using a lifetime expected
loss allowance is available.
The Group has applied AASB 9 retrospectively with the effect of initially applying this standard recognised
at the date of initial application, being 1 July 2018 and has elected not to restate comparative
information accordingly, the information presented for 30 June 2018 has not been restated.
Other than the above, 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.
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(b) Adoption of new and revised standards (continued)
Standards and Interpretations in issue not yet adopted
The Directors have also reviewed all Standards and Interpretations in issue not yet adopted for the year
ended 30 June 2019. Those which may have a material impact on the Group are set out below.
AASB 16 Leases
AASB 16 replaces AASB 117 Leases. AASB 16 removes the classification of leases as either operating
leases or finance leases-for the lessee – effectively treating all leases as finance leases.
AASB 16 is applicable to annual reporting periods beginning on or after 1 July 2019.
Impact on operating leases
AASB 16 will change how the Group accounts for leases previously classified as operating leases
under AASB 117, which were off-balance sheet. On initial application of AASB 16, for all leases
(except as noted below), the Group will:
• Recognise right-of-use assets and lease liabilities in the consolidated statement of financial
position, initially measured at the present value of the future lease payments.
• Recognise depreciation of right-of-use assets and interest on lease liabilities in the consolidated
statement of profit or loss.
•
Separate the total amount of cash paid into a principal portion (presented within financing
activities) and interest (presented within operating activities) in the consolidated cash flow
statement.
Lease incentives (e.g. rent-free period) will be recognised as part of the measurement of the right-of-
use assets and lease liabilities whereas under AASB 117 they resulted in the recognition of a lease
liability incentive, amortised as a reduction of rental expenses on a straight-line basis.
Under AASB 16, right-of-use assets will be tested for impairment in accordance with AASB 136
Impairment of Assets. This will replace the previous requirement to recognise a provision for onerous
lease contracts.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as
personal computers and office furniture), the Group will opt to recognise a lease expense on a straight-
line basis as permitted by AASB 16.
The Group has elected not to early adopt AASB 16 but has conducted an assessment of the impact of
the new standard based in the facts and circumstances that existed at that date and have concluded
that the initial application of AASB 16 will have the following impact on the Group’s leases as regards
classification and measurement.
As at 30 June 2019, the Group has non-cancellable operating lease commitments of $180,352.
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(b) Adoption of new and revised standards (continued)
A preliminary assessment indicates that $180,352 of these arrangements relate to leases other than
short-term leases and leases of low-value assets, and hence the Group will recognise a right-of-use
asset of $165,305 and a corresponding lease liability of the same amount.
The impact on profit or loss is to decrease other expenses by $56,650, to increase depreciation by
$50,987 and to increase interest expense by $11,314.
Under AASB 117, all lease payments on operating leases are presented as part of cash flows from
operating activities. The impact of the changes under AASB 16 would be to reduce the cash generated
by operating activities by $56,650 and to increase net cash used in financing activities by the same
amount.
(c) Statement of compliance
The financial report was authorised for issue on 27 September 2019.
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.
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.
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(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.
(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.
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(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
Refer to Note 2.
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)
Leases
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.
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(j)
Leases (continued)
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
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.
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
Income tax (continued)
(k)
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward
of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit, nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only recognised to
the extent that it is probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against with the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to
the extent that it is has become probable that future taxable profit will allow the deferred tax asset to
be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit
or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to
the same taxable entity and the same taxation authority.
Tax consolidation legislation
Resonance Health Limited and its 100% owned Australian resident subsidiaries have implemented
the tax consolidated legislation. Current and deferred tax amounts are accounted for in each individual
entity as if each entity continued to act as a taxpayer on its own.
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(l) Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST)
except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
•
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities, which is recoverable from, or payable to, the
taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the taxation authority.
(m) Impairment of assets
The Group assesses at each balance date whether there is an indication that an asset may be impaired.
If any such indication exists, or when annual impairment testing for an asset is required, the Group
makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher
of its fair value less costs to sell and its value in use and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such
cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When
the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or
cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and adjusted
risk specific to the asset. Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset unless the asset is carried at
revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each balance date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists,
the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case the carrying amount of the asset is increased to
its recoverable amount. That increased amount cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised for the asset in prior
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(m) Impairment of assets (continued)
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.
(p) Financial Instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are
measured at the transaction price in accordance with AASB 15, all financial assets are initially
measured at fair value adjusted for transaction costs (where applicable).
For the purpose of subsequent measurement, financial assets, other than those designated and
effective as hedging instruments, are classified into the following categories:
amortised cost
fair value through profit or loss (FVTPL)
equity instruments at fair value through other comprehensive income (FVOCI)
debt instruments at fair value through other comprehensive income (FVOCI).
•
•
•
•
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(p) Financial Instruments (continued)
All income and expenses relating to financial assets that are recognised in profit or loss are presented
within finance costs, finance income or other financial items, except for impairment of trade receivables
which is presented within other expenses.
The classification is determined by both:
•
•
the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented
within finance costs, finance income or other financial items, except for impairment of trade receivables
which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are
not designated as FVTPL):
•
•
they are held within a business model whose objective is to hold the financial assets to collect its
contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall into this category of financial instruments as well as
listed bonds that were previously classified as held-to-maturity under IAS 39.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to
collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business
model financial assets whose contractual cash flows are not solely payments of principal and interest
are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those
designated and effective as hedging instruments, for which the hedge accounting requirements apply.
The category also contains an equity investment. The Group accounts for the investment at FVTPL
and did not make the irrevocable election to account for the investment in unlisted and listed equity
securities at fair value through other comprehensive income (FVOCI). The fair value was determined
in line with the requirements of AASB 9, which does not allow for measurement at cost.
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(p) Financial Instruments (continued)
Assets in this category are measured at fair value with gains or losses recognised in profit or loss.
The fair values of financial assets in this category are determined by reference to active market
transactions or using a valuation technique where no active market exists.
Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable election
at inception to be measured at FVOCI.
Under Equity FVOCI, subsequent movements in fair value are recognised in other comprehensive
income and are never reclassified to profit or loss.
Dividends from these investments continue to be recorded as other income within the profit or loss
unless the dividend clearly represents return of capital.
This category includes unlisted equity securities that were previously classified as ‘available-for-sale’
under AASB 139.
Any gains or losses recognised in other comprehensive income (OCI) are not recycled upon derecognition
of the asset.
Debt instruments at fair value through other comprehensive income (Debt FVOCI)
Financial assets with contractual cash flows representing solely payments of principal and interest
and held within a business model of collecting the contractual cash flows and selling the assets are
accounted for at debt FVOCI.
The Group accounts for financial assets at FVOCI if the assets meet the following conditions:
•
•
they are held under a business model whose objective it is to “hold to collect” the associated cash
flows and sell financial assts; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition
of the asset.
Impairment of financial assets
AASB 9’s impairment requirements use more forward-looking information to recognise expected credit
losses – the ‘expected credit loss (ECL) model’. This replaced AASB 139’s ‘incurred loss model’.
Instruments within the scope of the new requirements included loans and other debt-type financial
assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and
measured under AASB 15 and loan commitments and some financial guarantee contracts (for the
issuer) that are not measured at fair value through profit or loss.
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(p) Financial Instruments (continued)
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event.
Instead the Group considers a broader range of information when assessing credit risk and measuring
expected credit losses, including past events, current conditions, reasonable and supportable forecasts
that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
•
•
•
financial instruments that have not deteriorated significantly in credit quality since initial
recognition or that have low credit risk (‘Level 1’) and
financial instruments that have deteriorated significantly in credit quality since initial recognition
and whose credit risk is not low (‘Level 2’).
‘Level 3’ would cover financial assets that have objective evidence of impairment at the reporting
date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit
losses’ are recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit
losses over the expected life of the financial instrument.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well
as contract assets and records the loss allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the potential for default at any point during
the life of the financial instrument. In calculating, the Group uses its historical experience, external
indicators and forward-looking information to calculate the expected credit losses using a provision
matrix.
The Group assess impairment of trade receivables on a collective basis as they possess shared credit
risk characteristics they have been grouped based on the days past due.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial
instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction
costs unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method
except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at
fair value with gains or losses recognised in profit or loss (other than derivative financial instruments
that are designated and effective as hedging instruments).
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(p) Financial Instruments (continued)
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported
in profit or loss are included within finance costs or finance income.
(q) 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.
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.
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(r)
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.
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;
The ability to use or sell the intangible asset;
• 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
accumulated 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.
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(r)
Intangible assets (continued)
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.
(s) 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.
(t)
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.
(u) 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.
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(v) 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.
(w) 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.
(x) Share 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.
(y) 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.
53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: Statement of significant accounting policies
(z) Business combinations
The acquisition method of accounting is used to account for all business combinations, including
business combinations involving entities or business under common control, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition
of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the
equity interests issued by the group. The consideration transferred also includes the fair value of
any contingent consideration arrangements and the fair value of any pre-existing equity interest in
the subsidiary. Acquisition-related costs are expenses as incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis,
the group recognises any non-controlling interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree
and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of
the group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement
of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain
purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified as either equity or a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value with changes in fair value recognised in
profit or loss.
(aa) 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
Investments in subsidiaries are accounted for at cost in the parent entity’s financial statements.
(ab) Going concern
The financial report has been prepared on the going concern basis, which contemplates continuity
of normal business activities and the realisation of assets and settlements of liability in the ordinary
course of business.
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 2: AASB 15 Revenue from Contracts with Customers
(a) Adoption of AASB 15
AASB 15 gives rise to changes in the timing of revenue and cost recognition with a date of initial
application of 1 July 2018. AASB 15 does not impact upon the lifetime profitability of contracts or the
cash flow of contracts.
AASB 15 replaces all existing revenue requirements in AASB 118, AASB 111 and related interpretation
and applies to all revenue arising from contracts with customers unless the contracts are within the
scope of other standards.
The standard outlines the principles entities must apply to measure and recognise revenue with the
core principle being that entities should recognise revenue at an amount that reflects the consideration
to which the entity expects to be entitled in exchange for fulfilling its performance obligations to a
customer.
The principles in AASB 15 must be applied using the following five step model:
(1) Identify the contract(s) with a customer
(2) Identify the performance obligations in the contract
(3) Determine the transaction price
(4) Allocate the transaction price to the performance obligations in the contract
(5) Recognise revenue when or as the entity satisfies it performance obligations
The standard requires entities to exercise considerable judgement taking into account all the relevant
facts and circumstances when applying each step of this model to its contracts with customers
The Group has applied AASB 15 using the modified retrospective application method and accordingly
has not restated prior year comparatives and elected to use the following expedient. In respect of
completed contracts, the Group will not restate contracts that (i) begin and end within the same
annual reporting period; or (ii) are completed contracts at date of initial application.
There is no material impact on the adoption of AASB 15.
Accounting policy for revenue
The Group generates revenue largely in the United States of America and the United Kingdom.
The revenue and profits recognised in any period are based on the delivery of performance obligations
and an assessment of when control is transferred to the customer.
In determining the amount of revenue and profits to record, and related statement items (such as
contract fulfilment assets, capitalisation of costs to obtain a contract, trade receivables, accrued income
and deferred income) to recognise in the period, management is required to form a number of key
judgements and assumptions. This includes an assessment of the costs the Group incurs to deliver
the contractual commitments and whether such costs should be expensed as incurred or capitalised.
55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 2: AASB 15 Revenue from Contracts with Customers (continued)
Revenue is recognised either when the performance obligation in the contract has been performed (so
‘point in time’ recognition) or ‘over time’ as control of the performance obligation is transferred to the
customer.
For contracts with multiple components to be delivered such as establishment services, trial
establishment project and data management, project and data management services and analysis
services management applies judgement to consider whether those promised goods and services are
(i) distinct - to be accounted for as separate performance obligations; (ii) not distinct - to be combined
with other promised goods or services until a bundle is identified that is distinct or (iii) part of a series
of distinct goods and services that are substantially the same and have the same pattern of transfer to
the customer.
At contract inception the total transaction price is estimated, being the amount to which the Group
expects to be entitled and has rights to under the present contract.
The transaction price does not include estimates of consideration resulting from change orders for
additional goods and services unless these are agreed.
Once the total transaction price is determined, the Group allocates this to the identified performance
obligations in proportion to their relative stand-alone selling prices and recognises revenue when (or
as) those performance obligations are satisfied.
For each performance obligation, the Group determines if revenue will be recognised over time or at a
point in time. Where the Group recognises revenue over time for long term contracts, this is in general
due to the Group performing and the customer simultaneously receiving and consuming the benefits
provided over the life of the contract.
For each performance obligation to be recognised over time, the Group applies a revenue recognition
method that faithfully depicts the Group’s performance in transferring control of the goods or services
to the customer. This decision requires assessment of the real nature of the goods or services that
the Group has promised to transfer to the customer. The Group applies the relevant output or input
method consistently to similar performance obligations in other contracts.
When using the output method the Group recognises revenue on the basis of direct measurements of
the value to the customer of the goods and services transferred to date relative to the remaining goods
and services under the contract. Where the output method is used, in particular for long term service
contracts where the series guidance is applied, the Group often uses a method of time elapsed which
requires minimal estimation. Certain long term contracts use output methods based upon estimation
of number of users, level of service activity or fees collected.
If performance obligations in a contract do not meet the over time criteria, the Group recognises
revenue at a point in time. This may be at the point of physical delivery of goods and acceptance by
a customer or when the customer obtains control of an asset or service in a contract with customer-
specified acceptance criteria.
56
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 2: AASB 15 Revenue from Contracts with Customers (continued)
The Group disaggregates revenue from contracts with customers by contract type, which includes (i)
commercial revenue, (ii) voucher revenue, (iii) clinical trial revenue and (iv) other study income as
management believe this best depicts how the nature, amount, timing and uncertainty of the Group’s
revenue and cash flows.
The nature of contracts or performance obligations categorised within this revenue type includes (i)
establishment services, (ii) trial establishment project and data management, (iii) project and data
management services, and (iv) analysis services.
The service contracts in this category include contracts with either a single or multiple performance
obligations.
The Group considers that the services provided meet the definition of a series of distinct goods and
services as they are (i) substantially the same and (ii) have the same pattern of transfer (as the series
constitutes services provided in distinct time increments (e.g. monthly or annual services)) and
therefore treats the series as one performance obligation.
(i) Establishment services
Encompasses different services from which the customer is able to benefit from on their own or with
other readily available resources. Accordingly revenues are recognised at a point in time when the
service is delivered.
(ii) Trial establishment project and data management
Revenues are recognised when the contract is signed and the trial establishment activities have been
performed. The customer can benefit from these activities on their own or with other readily available
resources.
(iii) Project and data management services
Revenues are recognised over the contract period as the service is provided.
(iv) Analysis services
Revenues are recognised at a point in time following the completion of the analysis and report
compilation.
Contract fulfilment assets and liabilities
As a result of the contracts which the Group enters into with its customers, a number of different
assets and liabilities are recognised on the Group’s balance sheet. These include but are not limited
to:
Trade receivables*
•
Accrued income*
•
• Deferred income*
* No change in the accounting policies for these assets as a result of the adoption of AASB 15.
57
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 2: AASB 15 Revenue from Contracts with Customers (continued)
Deferred and accrued income
The Group’s customer contracts include a diverse range of payment schedules dependent upon the nature
and type of goods and services being provided. The Group often agrees payment schedules at the inception
of long term contracts under which it receives payments throughout the term of the contracts. These
payment schedules may include performance-based payments or progress payments as well as regular
monthly payments for ongoing service delivery. Payments for transactional goods and services may be at
delivery date, in arrears or part payment in advance.
Where payments made are greater than the revenue recognised at the period end date, the Group recognises
a deferred income contract liability for this difference. Where payments made are less than the revenue
recognised at the period end date, the Group recognises an accrued income contract asset for this difference.
b): Disaggregated Revenue
The group derives its revenue from the services at a point in
time and over time in the following major categories. This is
consistent with the revenue information that is disclosed
for each reportable segment:
Commercial Revenue
Voucher Program
Clinical Trials
Other Studies
Total Revenue from contracts with customers
(c) Reconciliation of revenue from contracts with customers
with the amounts disclosed in segment information
Segment revenue
Adjustments and eliminations
Total revenue from contracts with customers
58
Consolidated
Twelve months to
30 June
2019
$
2,084,562
90,441
1,414,363
35,179
3,624,545
Consolidated
Twelve months to
30 June
$
3,624,545
-
3,624,545
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: Other Revenue and Expenses
(a) Other income
Interest received
(b) Other expenses
Rental expense on operating leases
NOTE 4: Income tax benefit
Income tax recognised in profit or loss
The major components of tax benefit are:
Research and Development tax offset
Consolidated
2019
$
2018
$
37,228
15,220
37,228
15,220
56,052
64,223
Consolidated
2019
$
2018
$
328,555
451,904
328,555
451,904
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
941,678
(227,285)
Income tax expense calculated at 27.5%
258,961
(62,503)
Effect of expenses that are not deductible in determining taxable profit
232,703
290,950
Effect of unused tax losses not recognised as deferred tax assets
(220,073)
(28,151)
Tax losses recovered
(140,906)
-
Effect of temporary differences not recognised
as deferred tax assets and liabilities
Research and Development tax offset
(130,685)
(200,296)
328,555
451,904
Income tax benefit reported in the statement of comprehensive income
328,555
451,904
59
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 4: Income tax benefit (continued)
Unrecognised deferred tax balances
Consolidated
2019
$
2018
$
The following deferred tax assets and liabilities have not been brought to account:
Deferred tax assets:
Losses available for offset against future taxable income - revenue
2,890,357
3,110,431
Amortisation and depreciation timing differences
199,045
283,034
Business related costs
Unrealised foreign exchange losses
Accrued expenses and liabilities
Deferred tax liabilities:
Capitalised research and development costs
Accrued income
Prepayments
4,127
2,338
90,216
9,310
(2,392)
75,276
3,186,083
3,475,659
701,475
666,237
4,710
9,988
341
9,249
716,173
675,827
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.
60
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 5: 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.
NOTE 3: Other Revenue and Expenses
Asia/Pacific
North America
EMEA
Total Sales to external customers
2019
$
2018
$
155,770
146,311
1,128,675
1,085,508
2,340,100
1,664,576
3,624,545
2,896,395
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 2019.
Services
$
Research and
Development
$
Corporate
$
Total
$
Segment revenue
Sales to external customers
3,624,545
Interest revenue
-
Total segment revenue
3,624,545
-
-
-
-
3,624,545
37,228
37,228
37,228
3,661,773
Segment profit/(loss) before tax
1,885,252
(232,942)
(710,632)
-
328,555
-
661,902
2,550,818
3,203,923
6,416,643
447,208
-
75,855
523,063
941,678
328,555
Income tax benefit
Segment assets
Segment liabilities
The Group derived 14% of its external customer sales revenue from one major customer.
In the year ended 30 June 2019, There were non-current asset additions of $349,377 (2018: $445,814)
in the Research and Development segment, and $3,340 (2018: $14,912) in the corporate segment.
61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 5: 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 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 customers sales revenue from one major customer.
NOTE 6: Earnings per share
Basic and diluted earnings per share (cents per share)
(a) Earnings used in the calculation of basic and diluted
earnings per share
Consolidated
2019
$
0.31
2018
$
0.06
1,270,233
224,619
2019
2018
Number
Number
(b) Weighted average number of ordinary shares for the
purposes of basic earnings per share
405,840,034 402,497,568
Weighted average number of ordinary shares for the purpose
of dilutive earnings per share
408,906,230 402,497,658
The dilutionary impact of options did not change the earnings per share.
62
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 7: Cash and cash equivalents
Deposits at call
Term deposits
Consolidated
2019
$
2018
$
1,081,192
941,405
2,000,000 607,683
3,081,192
1,549,088
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
an1d earn interest at the respective term deposit rates.
(i) Reconciliation of profit for the year to net cash flows from operating activities
Profit for the year
Non-cash flows in profit:
1,270,233
Depreciation
Amortisation of intangible assets
Share-based payment expense
Changes in net assets and liabilities:
Trade and other receivables
Other assets (current)
Other assets (non-current)
Trade creditors and other payables and provisions
Other liabilities
23,815
221,239
239,109
(103,319)
(2,688)
-
(50,587)
17,255
224,619
26,835
153,119
174,914
(28,609)
28,648
45,073
(235,897)
(10,729)
Net cash provided by operating activities
1,615,057
377,973
(ii) Financing facilities
Secured credit card:
Amount used
Amount unused
(iii) Cash balances not available for use
Security deposits:
Credit card
Lease premises
14,175
5,825
20,000
20,000
25,900
45,900
16,079
3,921
20,000
20,000
25,900
45,900
63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 8: Trade and other receivables
Trade receivables
Other receivables
Consolidated
2019
$
2018
$
626,802
555,250
35,100
18,373
661,902
573,623
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
155,173
171,926
80,506
161,278
73,816
95,735
396,957
341,477
Trade receivables are non-interest bearing and are generally on terms of 14 days to 90 days. All amounts are
short term. The carrying value of trade receivables is considered a reasonable approximation of fair value.
Expected credit losses
The Group applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade
receivables as these items do not have a significant component.
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as
they possess shared credit risk characteristics.
Trade receivables are written off when there is no reasonable expectation of recovery.
On the basis determined above, the expected credit loss for trade receivables as at 30 June 2019 was
determined as $nil (30 June 2018: $nil).
NOTE 9: Other assets
Current
Prepayments
Non-Current
Deposits
64
36,620
33,632
45,900
45,900
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 10: Plant and equipment
Fixtures and equipment
At cost
Less: Accumulated depreciation
Total plant and equipment
Reconciliation
Consolidated
2019
$
2018
$
391,557
388,217
(351,046)
(327,231)
40,511
60,986
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
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
60,986
3,340
72,909
14,912
(23,815)
(26,835)
40,511
60,986
3,470,321
3,120,944
(919,503)
(698,264)
2,550,818
2,422,680
2,422,680
2,129,985
349,377
445,814
(221,239)
(153,119)
Carrying amount at the end of the year
2,550,818
2,422,680
65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 11: Intangible assets (Continued)
Development expenditure relates to costs incurred in developing MRI image analysis tools for the diagnosis
and clinical management of human disease.
During the current financial year this development has related to a new liver fat assessment tool, further
refinement of FerriScan and the next stage of development of a MRI based liver fibrosis tool.
The recoupment of development expenditure is dependent on the successful development and
commercialisation or sale of the technology developed. The Directors are required to assess at each
reporting date whether there is an indication that an asset may be impaired. If any such indication exists
an estimate is made of the asset’s recoverable amount. Impairment tests are also required for intangible
assets not yet ready for use regardless of the existence of indicator of impairment. 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
Trade payables (i)
Sundry creditors and accruals
Consolidated
2019
$
2018
$
91,289
52,263
301,520
349,368
392,809
401,631
(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.
66
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 13: Other liabilities
Unearned income
NOTE 14: Provisions
Long service leave
Reconciliation
Balance at the beginning of the year
Arising during the year
Utilised during the year
Balance at the end of the year
NOTE 15: Share capital and reserves
Consolidated
2019
$
2018
$
54,399
91,440
75,855
58,600
58,600
35,879
(18,624)
69,329
2,481
(13,210)
75,855
58,600
(a) Share capital
422,497,568 69,674,199 402,497,568 69,424,199
2019
2018
Number
$
Number
$
Movements – Ordinary shares
2019
Number of shares
2019
$
2018
No. of shares
2018
$
Balance at the beginning of the year 402,497,568
69,424,199 402,497,568 69,424,199
Share issue on conversion of options1
-
250,000
Share issue to Acuity Capital2
20,000,000
-
-
-
Balance at the end of the year
422,497,568
69,674,199 402,497,568 69,424,199
(i) As announced on the ASX on 16 July 2019, $250,000 was received in advance in the year ended 30
June 2019 in relation to 4,500,000 fully paid ordinary shares issued on conversion of 1,250,000 Series
1 Options, 1,250,000 Series 2 Options and 2,000,000 Series 7 Options.
(ii) As announced on ASX dated 30 April 2019, “Collateral for the Controlled Placement Agreement”, the
Company agreed to place 20,000,000 shares from its Listing Rule 7.1 capacity, at nil consideration to
Acuity Capital (collateral shares) but may, at any time, cancel the Controlled Placement Agreement and buy
back the collateral shares for no consideration.
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.
67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 15: Share capital and reserves (continued)
(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.
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
2019
$
2018
$
3,081,192
1,549,088
661,902
573,623
36,321
45,900
33,632
45,900
(392,809)
(401,631)
(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.
68
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 16: Financial instruments (continued)
(e) Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange
rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters. The
Group does not engage in forward exchange contracts.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities
at the reporting date is as follows:
United States Dollars
Great British Pounds
European Euros
Liabilities
Assets
2019
$
-
4,378
-
2018
$
1,986
4,362
2019
$
666,033
391,923
-
115,397
2018
$
487,846
500,880
47,580
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 an 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
2019
$
2018
$
(60,548)
(35,231)
(10,491)
(44,169)
(45,138)
(4,325)
(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.
69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 16: Financial instruments (continued)
Cash and cash equivalent financial assets
Less than
one
month
One to three
months
Total
2019
$3,081,192
$45,900
$3,127,092
Weighted average effective interest rate
1.81%
2.54%
2018
$1,549,088
$45,900
$1,594,988
Weighted average effective interest rate
1.29%
2.44%
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 2019, the Group had one customer that accounted for 12% of all trade
receivables (2018: 12%).
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.
70
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 16: Financial instruments (continued)
The following table details the Group’s expected maturity for its financial liabilities.
2019
Non-interest bearing
2018
Non-interest bearing
Less than
one month
$
One month to
three months
$
Three months
to one year
$
Total
$
351,688
41,121
358,631
43,000
-
-
392,809
401,631
(i) Fair value of financial instruments
The net fair value of all financial assets and liabilities approximate their carrying values.
NOTE 17: Commitments for expenditure
Operating lease commitments
Commitments for minimum lease payments in relation to
Consolidated
2019
$
2018
$
non-cancellable operating leases for office premises are payable as follows:
Within one year
Later than 1 year but no later than 5 years
58,356
56,652
122,017
180,359
Total commitments not recognised in the financial statements
180,373
237,011
A lease over premises was entered into effective 1 July 2017 for a period of 5 years to June 2022.
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%
Resonance Health Limited is the ultimate Australian entity and ultimate parent of the Group.
100%
100%
100%
100%
71
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 18: Related party disclosure (continued)
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 $23,450 (2018: $90,053) on behalf of RHT.
During the year expenses were paid by RHT totalling $Nil (2018: $63,463) on behalf of RHAS.
At the 30 June 2019 RHT owed a loan balance of $1,899,592 (2018: $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.
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
72
2019
$
2018
$
2,510,882
1,033,099
856,682
856,681
3,367,564
1,889,780
92,686
70,139
2,044,852
366,661
2,137,538
436,800
69,674,199
480,307
69,424,199
241,198
(68,924,480)
(68,212,417)
1,230,026
1,452,980
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 19: Parent entity disclosures (continud)
Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive loss
Year ended
30 June 2019
Year ended
30 June 2018
$
$
(712,063)
(636,839)
-
-
(712,063)
(636,839)
NOTE 20: Significant events after balance date
4,500,000 Shares were issued as a result of exercised options and 136,365 shares per Employee Share
Scheme on 16 July 2019.
Other than noted above, there has been no additional matter or circumstance that has arisen after balance
date that has significantly affected, or may significantly affect, the operations of the Group, the results of
those operations, or the state of affairs of the Group in future financial periods.
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
NOTE 22: Key management personnel disclosures
Key Management Personnel Compensation
Short term employee benefits
Post employment benefits
Share-based payments
Consolidated
2019
$
2018
$
56,736
12,325
53,000
11,150
69,061
64,150
2019
$
2018
$
536,028
849,585
40,233
70,161
53,254
87,740
646,422
990,579
73
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 $239,109.
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
Series 5
Series 6
Series 7
Series 8
Series 9
7,000,000
08/11/2018 09/03/2021
4,750,000
08/11/2018 09/03/2021
4,500,000
08/11/2018 09/03/2021
4,750,000
08/11/2018 09/03/2021
250,000
08/11/2018 13/09/2021
250,000
08/11/2018 13/09/2021
3,000,000
14/02/2019 01/01/2022
3,000,000
14/02/2019 01/01/2022
3,000,000
14/02/2019 01/01/2022
Series 10
3,000,000
13/06/2019 13/06/2022
0.0300
0.0500
0.0750
0.1000
0.0500
0.0750
0.0750
0.1000
0.1250
0.1000
date $
$97,424
$47,872
$32,818
$26,468
$2,908
$2,227
$134,144
$120,594
$109,837
$210,483
There has been no alteration of the terms and conditions of the above share-based payment arrangement
since grant date.
The following table illustrates the number and weighted average exercise prices of and movements in share
options issued during the year.
2019
2018
Weighted Average
Weighted average
Number
exercise price $
Number
exercise price $
21,000,000
$0.0600
-
-
Outstanding at the beginning
of the year
Granted during the year
12,500,000
$0.0985
21,000,000
$0.0600
Forfeited during the year
Expired during the year
-
-
-
-
-
-
Outstanding at the end of year 33,500,000
$0.0744
21,000,000
Exercisable at the end of year
33,500,000
$0.0744
21,000,000
-
-
$0.0600
$0.0600
74
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 23: Share-based payments (continued)
No share options were exercised during 2019.
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
Series 5
Series 6
Series 7
Series 8
Series 9
Series 10
0
0
0
0
0
0
0
0
0
0
83
83
83
83
83
83
100
100
100
100
2.27
2.27
2.27
2.27
2.27
2.27
1.73
1.73
1.73
1.03
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
0.0300
0.0500
0.0750
0.1000
0.0500
0.0750
0.0750
0.1000
0.1250
0.1000
0.0290
0.0290
0.0290
0.0290
0.0290
0.0290
0.0750
0.0750
0.0750
0.1100
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.
NOTE 24: Contingent liabilities and assets
The group has no contingent liabilities and assets as at 30 June 2019 (2018: $nil).
75
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 2019 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
2019.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dr Martin Blake
Chairman
Place: Perth, Western Australia
Dated: 27 September 2019
76
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 consolidated statement of financial position
as at 30 June 2019, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then
ended, 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 2019 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 matter to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Intangible assets
Note 11 of the financial report
As at 30 June 2019, the Group has an intangible
asset balance of $2,550,818 which comprises
intangible assets not yet available for use and
other intangible assets.
Our audit procedures included but were not
limited to the following:
-
Obtained an understanding of the key
controls associated with the preparation
77
INDEPENDENT AUDITOR’S REPORT
Key audit matter
How our audit addressed the key audit matter
Impairment of Assets,
Under AASB 136
intangible assets not yet available for use are
subject to an annual impairment test and other
intangible assets are subject to an impairment
test should indicators of impairment arise.
The cash generating unit has been attributed to
both intangible assets not yet available for use
are subject to an annual impairment test and
other intangible assets and an impairment
assessment using value in use approach. A net
present value calculation was performed and no
impairment was required.
We consider this to be a key audit matter as it
involves complex matters involving subjectivity
and judgement, it is material to the users’
understanding of the financial statements as a
required significant auditor
whole and
attention and communication with
those
charged with governance.
it
-
-
-
-
-
-
-
-
the basis
of the value-in-use calculation used to
assess the recoverable amount of the
intangible assets;
Critically
evaluated management’s
methodology used in the value-in-use
calculation and
for key
assumptions including the discount rate
used;
Assessed the value-in-use calculation for
consistency with accounting standard
requirements;
Compared key assumptions in forecast
cash flows to historical results and, where
these were materially different, we
critically reviewed the basis for differing
future expectations;
Considered
assets
whether
comprising the cash-generating unit had
been correctly allocated;
Compared
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 value-in-use 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.
the value-in-use
the
to
Application of AASB 15 Revenue from Contracts with Customers
Note 2 of the financial report
Our procedures included but were not limited to
the following:
-
-
-
with
to determine
Reviewing a sample of the Company’s
key contracts
if we
concurred
management’s
assessment of performance obligations,
the transaction price and any contract
assets and liabilities that may arise, the
allocation of the transaction price, and
when to recognise revenue, either at a
point in time, or over time;
Assessing whether
revenue
recognised during the year is materially
correct based upon contractual terms and
the requirements of AASB 15; and
Assessing
the
of
disclosures included within the financial
report.
adequacy
the
the
The Group has adopted AASB 15 Revenue
from Contracts with Customers effective from 1
July 2018.
The Company has two distinct categories of
revenue being (i) revenue recognised at a point
in time and (ii) revenue recognised over time as
described in Note 2 of the financial report.
We focused on this area as a key audit matter
due to its importance for the understanding of
users of the financial statements and the degree
of audit effort involved.
78
INDEPENDENT AUDITOR’S 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 2019, 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.
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.
-
79
INDEPENDENT AUDITOR’S REPORT
-
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.
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 within the directors’ report for the year ended
30 June 2019.
In our opinion, the Remuneration Report of Resonance Health for the year ended 30 June 2019
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.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
27 September 2019
M R Ohm
Partner
80
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 20 September 2019)
Distribution of shareholders (ASX Code: RHT)
Range of holdings
Holders
Units
Percentage
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 999,999,999,999
95
115
222
946
406
18,405
474,935
1,841,963
38,889,313
0.00%
0.11%
0.43%
9.11%
385,909,317
90.35%
TOTAL
1,784
427,133,933
100%
The number of shareholders holding less than a marketable parcel are 119.
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.
81
ADDITIONAL INFORMATION FOR LISTED PUBLIC
COMPANIES
4.
Twenty largest shareholders of quoted ordinary shares (as of 20 September 2019)
Rank Name
Units
% of Units
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SOUTHAM INVESTMENTS 2003 PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ACUITY CAPITAL INVESTMENT MANAGEMENT PTY LTD
MR GREGORY PETER WILSON
CASTLEREAGH EQUITY PTY LTD
MR JACK MOSTYN LONDON
THE UNIVERSITY OF WESTERN AUSTRALIA
MR HELMUT ROCKER
DR MARTIN PETER BLAKE
MR BRUCE ALAN STEVENSON
MR ROBERT FRANCIS PANTON
MARCOLONGO NOMINEES PTY LTD
MR THOMAS PSARAKIS
NEWECONOMY COM AU NOMINEES PTY LIMITED
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE)
PTY LIMITED
MR VINCENT OLADELE
MRS CHERYL LESLEY THOMPSON
ANAHEIN PTY LTD
BNP PARIBAS NOMINEES PTY LTD
FULLERTON PRIVATE CAPITAL PTY LIMITED
73,000,000
42,771,412
20,000,000
9,000,000
8,400,000
8,263,103
7,978,750
7,000,000
6,464,677
5,667,716
5,640,824
5,354,000
4,434,777
4,434,446
3,989,538
3,676,552
3,260,094
3,010,598
2,714,577
2,650,000
17.09
10.01
4.68
2.11
1.97
1.93
1.87
1.64
1.51
1.33
1.32
1.25
1.04
1.04
0.93
0.86
0.76
0.70
0.64
0.60
227,711,064
53.3
5. Twenty largest shareholders of quoted ordinary shares (as of 20 September 2019)
The names of substantial shareholders who have notified the Company in accordance with the
Corporations Act 2001 are:
SOUTHAM INVESTMENTS 2003 PTY LTD
73,000,000 Ordinary shares
SG Hiscock & Company Limited
42,771,412 Ordinary shares
82
Resonance
Health
Be Better Informed
A N N U A L R E P O R T
2019
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