Resonance
Health
Be Better Informed
A N N U A L R E P O R T
2020
Corporate Information
ABN 96 006 762 492
Directors
Dr Martin Blake
Non-executive Chairman
Mr Simon Panton
Non-executive Director
Dr Travis Baroni
Non-executive Director
Mr Mitchell Wells
Non-executive Director
Chief Executive Officer
Registered office and
Principal place of business
Ground Floor,
Suite 2, 141 Burswood Road
BURSWOOD WA 6100
Telephone: +61 8 9286 5300
Facsimile: +61 8 9286 5399
Postal address
PO Box 71
BURSWOOD WA 6100
Auditors
HLB Mann Judd
Level 4,
130 Stirling Street
PERTH WA 6000
Share registry
Advanced Share Registry Ltd
110 Stirling Highway
NEDLANDS WA 6009
Tel: +61 8 9389 8033
Fax: +61 8 9389 7871
Ms Alison Laws
Website and e-mail address
Bankers
www.resonancehealth.com
Email: info@resonancehealth.com
National Australia Bank Limited
Solicitors
Steinepreis Paganin
Level 4, The Reed Building
16 Milligan Street
PERTH WA 6000
Company Secretary
Mr Agha Shahzad Pervez
Securities exchange listing
Resonance Health Limited shares
are listed on the Australian
Securities Exchange.
ASX Code: RHT
2
Contents
ABOUT ......................................................................................................................................4
SNAPSHOT ................................................................................................................................6
CHAIRMAN’S FOREWORD ...........................................................................................................7
YEAR IN REVIEW ........................................................................................................................8
FINANCIAL REPORT .................................................................................................................17
DIRECTORS’ REPORT ...............................................................................................................18
AUDITOR’S INDEPENDENCE DECLARATION ...............................................................................33
STATEMENT OF COMPREHENSIVE INCOME ...............................................................................34
STATEMENT OF FINANCIAL POSITION .......................................................................................35
STATEMENT OF CHANGES IN EQUITY ........................................................................................36
STATEMENT OF CASH FLOWS ...................................................................................................37
NOTES TO THE FINANCIAL STATEMENTS ..................................................................................38
DIRECTORS’ DECLARATION ......................................................................................................74
INDEPENDENT AUDITOR’S REPORT ..........................................................................................75
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES ....................................................79
3
About
• Over 15 years’ experience working with clinicians and radiologists
•
Activated over 500 hospital and MRI centres in 50 countries
• Manufacturer of regulatory cleared medical devices (SaMD)
Resonance Health Ltd (ASX: RHT) (“Resonance Health” or the “Company”) is an Australian publicly listed
healthcare company specialising in the development and commercialisation of radiology image-based analysis
tools and services that quantify various parameters, such as iron and fat, in the human body.
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’s
products and services are used globally in the routine clinical management of patients and in clinical trials
and research studies.
Resonance Health is the manufacturer of proprietary, regulatory cleared software and analysis systems used
in the provision of services to clinicians in the diagnosis and management of human diseases, to researchers,
and pharmaceutical and therapeutic companies for their clinical trials. Our services are delivered to 50
countries with stringent quality control.
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 ‘software as a medical device’ 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®, HepaFat-Scan®, and the recently developed
HepaFat-AI.
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 applied in training neural networks to develop our first Artificial Intelligence (“AI”)
solution, FerriSmart®, the world’s first and only regulatory-cleared AI tool for the quantification of LIC.
HepaFat-Scan® has international regulatory clearances (TGA, CE Mark, FDA). It reports the volumetric liver
fat fraction for a patient (“VLFF”) and can also report the proton density fat fraction, if required. The HepaFat-
Scan® technology has been used in the development and validation of the Company’s second AI solution,
HepaFat-AI. Work on HepaFat-AI has recently progressed with a 510(k)-application submission for regulatory
clearance by the United States Food and Drug Administration (“FDA”).
4
About (Cont’d)
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.
Our Vision and Mission are:
•
•
•
•
Be global leaders in radiological diagnostics, monitoring, and core laboratory services;
Consistently deliver high quality, customer-focused services;
Develop and commercialise innovative products; and
Advance healthcare and patient outcomes through product and service excellence
5
Snapshot of Activities
Medical Device Licence & Royalty Agreement signed with 3DR Laboratories, LLC, for the non-exclusive
right to distribute the Company’s FerriSmart® service in the USA.
Solution Partner Agreement signed with Siemens Healthcare GmbH, a leading medical technology
company, for the distribution of the Company’s FerriSmart® service through the Siemens Healthineers
Digital Marketplace.
Provisional patent filed for the discovery and use of novel blood markers to determine a person’s iron status.
Provisional patent filed covering the application of novel Antisense Oligonucleotides (“ASOs”) to treat
liver related disease.
HepaFat-AI, the Company’s second AI solution, was successfully developed and validated for the
automated assessment of liver fat from MRI data.
A 510(k) application was submitted for regulatory clearance by the FDA in the USA, for HepaFat-AI.
Executed three new contracts to provide services to pharmaceutical companies for new clinical
trials this financial year. Additionally, several amendments were executed to extend existing service
contracts with pharmaceutical companies. The total aggregated sum of these is approximately USD
$2.9 million, subject to full completion of these trials.
In the months of April and May, the Company experienced a variable reduction in requests for
its routine clinical use services from Europe (including the UK) and the USA due to COVID-19.
Commercial demand for the Company’s services has since returned to pre-COVID levels.
FY2020 IMAGE ANALYSES BY REGION
6
recognises
The Board
that continued R&D
investment must be based 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 months and
years.
On behalf of the Board, 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 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.
Chairman’s Foreword
Resonance Health has made good progress in a
number of areas this financial year and has had
continued success promoting its products and
services in the difficult global circumstances
produced by COVID-19.
Of key focus for the Company this financial year has
been the continued expansion of the distribution
channels for the Company’s products, as well as
R&D focus on product improvement and expansion.
The Company has over 17 years’ experience
providing services using proprietary regulatory
cleared products to the international clinical
community and pursues excellence in customer
care and relationships at all times.
An R&D Strategy built for success
The diversification of in-house R&D projects has
three key areas of focus; artificial intelligence,
imaging, and molecular medicine.
These focus area include, but are not limited to, the
following projects;
(i) a new novel MRI method to assess liver
fibrosis,
(ii) shortening the FerriScan® acquisition time
and 3T calibration,
(iii) application
for
regulatory clearance
for
HepaFat-AI,
(iv) the
novel
application
Antisense
of
Oligonucleotides (“ASOs”) to treat liver related
disease, including the filing of a provisional
patent;
(v) a number of artificial intelligence projects.
Dr Martin Blake
Chairman
MBBS, FRANZCR, FAANMS, MBA, FAICD
7
Year In Review
FINANCIAL HIGHLIGHTS FOR THE YEAR:
•
Excluding non-cash share-based payment expenses for employee and director options, the Company recorded
a result for the year of positive $1.12 million.
•
Sales revenue for the year was $3.66 million, a 1% increase on the previous year of $3.62 million. 2020 was impacted
by COVID-19 due to global lockdowns and accessibility issues for patients to scanning centres during the global
pandemic. Commercial demand for the Company’s services has currently returned to pre-COVID levels.
•
•
•
Receipts from customers were $3.60 million, up 2% from the previous year.
R&D tax incentive (refund) of $238 thousand was secured.
Resonance Health has no debt and $6.97 million in cash and equivalents at 30 June 2020, compared to $3.08
million at 30 June 2019.
DISTRIBUTION CHANNELS EXPANDED FURTHER
The Company’s strategy to grow commercial sales revenue includes the utilisation of strategic third-party
distribution and servicing platforms with extensive existing customer bases across the five continents. This
strategy enables the Company to (i) minimise customer acquisition and service distribution costs, (ii) retain
focus on product development, and (iii) pursue new revenue opportunities for the existing product suite.
Over the past twelve months this strategy has seen the Company further expand its distribution network by
signing agreements with Siemens Healthcare GmbH and 3DR Laboratories. These agreements allow the
Company’s FerriSmart® AI solution to be offered through the Siemens Healthineers Digital Marketplace and
sold as part of 3DR’s post-processing services to their customers in the USA.
Siemens Healthcare GmbH, a leading medical technology company headquartered in Erlangen, Germany,
will distribute the Company’s FerriSmart® product through the Siemens Healthineers Digital Marketplace.
The Siemens Healthineers Digital Marketplace provides healthcare professionals with direct and open
access to a curated and growing portfolio of digital clinical solutions. The FerriSmart® scanning protocol will
be available to radiologists, radiographers, and technicians via the Siemens Healthineers website. Future
customers can download the FerriSmart® protocol settings directly from the Digital Marketplace, removing the
8
Year In Review (Cont’d)
need for radiology to liaise with Resonance Health directly during the setup of MRI machines, and thereby
greatly improving the customers’ experience.
Resonance Health also entered into a Medical Device Licence & Royalty Agreement with 3DR Laboratories,
LLC, the largest 3D medical post-processing laboratory in the United States, the non-exclusive right to sell
the Company’s FerriSmart® service in the United States.
Integration work into these platforms has now been successfully completed for FerriSmart®. The increased
accessibility for customers to FerriSmart® through partners such as Siemens and 3DR will supplement the
Company’s own established distribution network of over 500 hospital and MRI centres across the globe.
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 underpin the Company’s operational culture; from product development to educating the clinical
community and service delivery.
For over 14 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 the Company has executed three new multi-year contracts and several new amendments
and extensions to existing trial contracts with pharmaceutical and therapeutic companies. The total
aggregated sum of these extensions is approximately USD $2.9 million, subject to full completion of trials.
To date, Resonance Health products and services have been used by pharmaceutical and therapeutic
companies in over 30 clinical trials. For each clinical trial in progress, Resonance Health receives monthly
payments 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 the 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 are available by viewing (on the Company’s or the ASX’s
website) the following Company announcements made during the year:
• 19 July 2019 – ‘Resonance Health contracted new clinical trials’
• 28 October 2019 – ‘Appendix 4C – quarterly’
9
Year In Review (Cont’d)
• 29 January 2020 – ‘Appendix 4C – quarterly’
• 28 April 2020 – ‘Appendix 4C – quarterly’
• 28 July 2020 - ‘Appendix 4C – quarterly’
Resonance Health continues to actively pursue clinical trial opportunities with pharmaceutical and
therapeutic companies.
SUITE OF REGULATORY CLEARED SOLUTIONS
Resonance Health is currently in the process of obtaining regulatory clearance for its second AI solution,
with the Company having submitted in April 2020 its 510(k) application to the USA FDA for HepaFat-AI,
the Company’s newly developed fully automated AI liver fat solution.
HepaFat-AI can be deployed in the cloud or on premises and can be integrated directly into existing radiology
workflows. HepaFat-AI may be suitable to aid in a patient’s management of several conditions, including
fatty liver disease, monitoring the liver-fat content in patients undergoing weight loss management, and
aiding in the assessment and screening of living donors for liver transplants.
Previous work has seen the successful development of FerriSmart®, the only regulatory cleared (TGA, CE
Mark, and FDA) AI tool for use in liver iron concentration (LIC). In addition to FerriScan®, FerriSmart® is
also the only FDA cleared MR companion diagnostic for use with Deferasirox. The Company’s services
with regulatory clearances include:
Gold Standard in Liver Iron Concentration
Instantaneous Liver Iron Concentration Analysis
Volumetric Liver Fat Fraction
Estimation of iron levels in the bone marrow
Cardiac T2*
10
Year In Review (Cont’d)
FERRISCAN® (AND CARDIAC T2* )
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 superior to serum ferritin, which is sometimes used as a proxy for total body iron stores. FerriScan®
has regulatory clearance from the FDA (USA), CE Mark (Europe) and TGA (Australia). It is 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.
By June 2020, over 55,000 FerriScan® analyses had been performed globally in 50 countries. FerriScan® is
reimbursed in the UK and Canada by their governments, and it has some private payer coverage in the USA.
The Company’s ’expedited’ FerriScan® service offers a rapid turnaround of patient results. It continued to
gain traction during the year despite being impacted by COVID-19, with a usage increase of 13% over the
previous year. The expedited service was utilised in 16% of all FerriScan® jobs in the USA for the year.
An increasing number of Resonance Health customers are using the Company’s Cardiac T2* measurement
service to assess myocardial iron in their patients.
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, the 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
11
Year In Review (Cont’d)
FERRISMART®
FerriSmart® uses AI as an automated software medical device to accurately and rapidly determine 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 using a similar calibre of diagnostic tool available to clinicians in developed countries.
In December 2019, FerriSmart® was showcased at the Siemens, Blackford Analysis, and Envoy AI display
booths at Radiology Society of North America (“RSNA”) conference, which is the world’s largest radiology
conference.
To date, FerriSmart® has been successfully integrated into the Siemens, EnvoyAI, Blackford, and 3DR
systems. Resonance Health is providing support and assistance as necessary in efforts to setup FerriSmart®
users across these platforms.
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 increased by over 60%
from the previous financial year. Historically a limiting factor to revenue growth for HepaFat-Scan has been
the lack of a therapeutic for the treatment of fatty liver disease, however this is currently an area of heavy
research.
It is estimated that the prevalence of NAFLD in the general global population is between 24% and 30%,
meaning that between 1.8 and 2.3 billion people may be affected at present1. This is expected to grow
year-on-year consistent with increasing rates of obesity. In North America, NAFLD is now the leading
cause of liver disease, and with no treatments readily available for this disease, it is a leading cause for
liver transplant2.
12
Year In Review (Cont’d)
Of the 1.8 to 2.3 billion individuals estimated to have NAFLD, it is estimated that 20%, or up to 468
million, will also develop NASH3. NASH is the most severe form of NAFLD where inflammation can cause
liver damage and fibrosis. Fibrosis can worsen over time and lead to severe scarring of the liver, called
cirrhosis. Patients who develop cirrhosis have an increased risk of liver failure and liver cancer.
In the USA alone, it is estimated that 64 million people have some form of NAFLD, ranging from simple
fatty liver to late-stage cirrhosis costing their healthcare system up to $103 billion annually. In the
European countries of Germany, France, Italy, and the United Kingdom, there are approximately 52 million
people with NAFLD, with an estimated healthcare system cost of approximately €35 billion annually4.
If the prevalence of NAFLD continues to rise in line with the obesity epidemic, it is predicted that the
healthcare burden of NAFLD over the next 10 years could increase to $1.005 trillion in the USA, and
€334 billion across Germany, France, Italy, and the United Kingdom4.
1. Sayiner, M., Koenig, A., Henry, L., & Younossi, Z. M. (2016). Epidemiology of Nonalcoholic
Fatty Liver Disease and Nonalcoholic Steatohepatitis in the United States and the Rest of the
World. Clinics in liver disease, 20(2), 205–214. Retrieved from https://doi.org/10.1016/j.
cld.2015.10.001
2. Jayakumar, S. (2018). Liver transplantation for non-alcoholic fatty liver disease—a review. AME
Medical Journal, 3(2). Retrieved from http://amj.amegroups.com/article/view/4320
3. Spengler, E. K., & Loomba, R. (2015). Recommendations for Diagnosis, Referral for Liver Biopsy,
and Treatment of Nonalcoholic Fatty Liver Disease and Nonalcoholic Steatohepatitis. Mayo Clinic
proceedings, 90(9), 1233–1246. Retrieved from https://doi.org/10.1016/j.mayocp.2015.06.013
4. Younossi, Z. M., Blissett, D., Blissett, R., Henry, L., Stepanova, M., Younossi, Y., Racila, A., Hunt,
S., & Beckerman, R. (2016). The economic and clinical burden of nonalcoholic fatty liver disease
in the United States and Europe. Hepatology (Baltimore, Md.), 64(5), 1577–1586. Retrieved
from https://doi.org/10.1002/hep.28785.
A FOCUSED R&D PIPELINE
Product oriented R&D has become a key priority for the Company over the past two years. 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. 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 overall 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. Due to the competitive and confidential nature of R&D, details of projects may be withheld
in order to protect the Company’s intellectual property. The current R&D initiatives include, but are not
limited to, the following:
13
Year In Review (Cont’d)
IMAGING
Shortening the FerriScan MRI acquisition time.
Resonance Health has made significant progress in its trials looking at several protocols attempting to
significantly decrease the acquisition time for FerriScan® for 1.5 and 3T scanners. A shorter acquisition
time for the FerriScan® service would considerably reduce the time spent by a patient inside an MRI
machine whilst also lowering the total costs to customers.
Calibration of FerriScan to 3T MRI machines
Resonance Health is currently studying whether the FerriScan® service can be calibrated to 3 Tesla (3T)
scanners. If successful, this would also allow customers to select the FerriScan® service on either 1.5 or
3T MRI machines.
Novel MRI method to assess liver fibrosis
Resonance Health has commenced a new study to investigate the ability of a novel non-invasive MRI
method to assess liver fibrosis.
Brain iron measurement
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. These tools do not have regulatory clearance (TGA, CE Mark, FDA)
and results are to be interpreted in the context of a clinical study.
ARTIFICIAL INTELLIGENCE (“AI”)
FerriSmart
FerriSmart® is an automated system for measuring liver iron concentration (LIC). FerriSmart® uses a specially
trained convolutional neural network (artificial intelligence – machine learning) to analyse R2-MRI images to
quantify the patient’s LIC. These images, acquirable on most makes and models of 1.5 Tesla MRI machines,
are obtained through a unique and standardised scanning sequence to ensure results are accurate, reliable,
and reproducible over time and between hospitals and the various makes and models of MRI scanners.
In addition to FerriScan®, FerriSmart® is the only FDA cleared MR companion diagnostic for use with
Deferasirox. FerriSmart® is regulatory cleared by the FDA, TGA, and CE Mark.
HepaFat-AI
HepaFat-AI is a fully automated AI software tool that measures a patient’s volumetric liver fat fraction (liver
fat). HepaFat-AI has been developed to be either deployed in the cloud or on premises and can be integrated
directly into existing radiology workflows. HepaFat-AI may be suitable to aid in a patient’s management of
several conditions, including fatty liver disease, monitoring the liver-fat content in patients undergoing weight
loss management, and aiding in the assessment and screening of living donors for liver transplants.
A 510(k) application for regulatory clearance by the USA’s FDA was submitted in April 2020.
Confidential AI Projects- # 1-3
Using in-house and externally sourced MRI and CT datasets in various diseases and/or conditions,
Resonance Health is making progress on training neural networks in assessing a number of organs,
including three specific AI projects.
14
Year In Review (Cont’d)
MOLECULAR MEDICINE
New method for treating liver related disease
Resonance Health has filed a provisional patent covering the application of novel Antisense Oligonucleotides (“ASOs”)
to treat liver related disease.
The novel ASOs were designed to specifically and selectively target a human (host) protein essential to the lifecycle
of a number of human viruses. In the liver this protein supports the infectivity, growth and maturation of: Hepatitis
B Virus (HBV), Hepatitis C Virus (HCV), and Immunodeficiency Virus Type 1 (HIV-1).
Resonance Health is investigating the use of the novel ASOs as a treatment for Chronic Hepatitis B (“CHB”) infection.
Discovery and use of novel blood markers to determine an individual’s iron status
Resonance Health has filed a provisional patent for the discovery and use of novel blood markers to determine an
individual’s iron status.
Whilst the use of FerriScan® remains the global gold standard for quantifying an individual’s iron status, the Company
is actively pursuing alternative biochemical methods to assist clinicians to diagnose and monitor iron overload in
locations where access to MRI is limited.
A WIDE SUITE OF SERVICES NOW AVAILABLE
Resonance Health has a suite of ‘for investigational use only’ tools available. These tools have been
developed inhouse and in accordance with our quality management processes and procedures. These tools
do not yet have regulatory clearance and are therefore available for research or investigational use only.
These ‘investigational use only’ tools include:
• Quantitative Iron Assessment in Other Organs – surrogate iron measurements (R2 / R2*) in
other organs including pancreas, spleen, and kidney;
• Brain iron – several brain iron imaging protocols to quantify iron deposition in various regions of the
brain such as leptomeninges, basal ganglia, etc;
• Pancreatic Fat Assessment – quantitative assessment of pancreatic fat;
• Visceral / Subcutaneous Fat and Organ Fat in Metabolic Disease – quantitative assessments
of visceral fat, subcutaneous fat, epicardial fat;
• Fibrosis and Inflammation – a combination of MRI measures to assess liver fibrosis and inflammation;
• Liver Biopsy – Stereology Services – quantitative assessment of hepatic steatosis of digitised biopsies
using stereology;
• Organ Volume Measurements – measurements of various organs such as the liver and spleen;
• Other – 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.
15
Year In Review (Cont’d)
BONE MARROW R2-MRI FOR IRON ASSESSMENT
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.
STEREOLOGY SERVICES - LIVER BIOPSY
Resonance Health can provide a quantitative assessment of hepatic steatosis of digitised biopsies using
stereology. Stereology offers multiple key advantages:
• Stereology is a non-biased method that delivers a standardised assessment of steatosis from
biopsies. In particular, this can add value in circumstances where more than one histopathologist
is engaged across multiple study sites. As histopathological scoring for a given biopsy can vary
between experts, stereology can provide a means to ascertain the extent of bias.
• Stereology can be applied retrospectively to analyse archived biopsy data originating from completed
studies so as to determine if a ‘drug effect’ has been obscured because of disparate assessments
from expert histopathologists.
• As stereology is used to determine the number of hepatocytes with fat vesicles (macrovesicular/
microvesicular steatosis) within a liver biopsy, its findings are reported as a volumetric liver fat
fraction (VLFF), and can be directly compared to the HepaFat-Scan measurements.
VISCERAL, SUBCUTANEOUS, AND ORGAN FAT IN METABOLIC DISEASE
A key indicator in the establishment of metabolic disease is the deposition of abnormal fat within and
around organs and muscle tissue.
Given the links between hepatic steatosis, diabetes, and non-alcoholic steatohepatitis, Resonance Health
has developed a number of investigational imaging tools to quantify the presence of fat within tissues such
as pancreas, kidneys, and skeletal muscle.
ORGAN VOLUME MEASUREMENTS
Volume measurements of various organs such as liver and spleen for use in identifying disease states or
tracking change over time as result of treatment.
CUSTOMIZED IMAGING SOLUTIONS
Our team of physicists is able to design protocols on an as required basis, include protocols to assess tracer entry
into cells (e.g. Gadolinium) to attempt to monitor drug delivery; novel cardiac imaging protocols; and many others.
RESEARCH SERVICES AND COLLABORATIONS
In recognising the changing needs of the clinical community and healthcare industry, Resonance Health
remains committed to the development of novel and clinically relevant imaging modalities. As such, our
team of scientists and academics are available to assist our pharmaceutical partners in the development of
customised imaging solutions to maximise the return on their clinical trial investment.
16
Financial Report 30 June 2020
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
2020. 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)
Wells provides part-time consulting services
to the company full details of which are set
Experience: Mr Wells is an experienced
senior executive and a qualified lawyer
with commercial and legal experience in
out in the remuneration report.
listed
Other
directorships:
company
current
Australia, the United States of America and
None
the United Kingdom. He has served as a
Director and worked as a senior executive of
public and private companies including ASX
and US Nasdaq listed public companies. He
recently served as Chair of two large non-
profit organisations and he has previously
Former listed company directorships in
last 3 years:
Lonestar Resources US Inc. – Nasdaq
Listed US Public Company
Special responsibilities:
served as the company secretary of two
Member of the Audit and Risk Committee
ASX listed public companies and as the
corporate secretary of a US Nasdaq listed
public company. He currently serves as a
director of several private companies. Mr.
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:
None
Special responsibilities:
own successful business.
Member of the Audit and Risk Committee
Mr Simon Panton
Member of the Remuneration Committee
Position: Director — Independent and
Non-Executive (appointed 25 November
2016)
industrial
Experience:
Mr Baroni has broad
research,
experience across
commercialisation of
technology, asset
valuations and investment banking services.
He has managed innovation development
and technology strategy in a large company
setting as well as being an active investor
in early stage investments. He has worked
in investment banking, providing advisory
services to equity capital market transactions,
corporate research and valuations to clients.
Other current listed company
directorships:
None
Former listed company directorships in
last 3 years:
None
Special responsibilities:
Chairman of the Audit and Risk Committee
Member of the Remuneration Committee
Dr Travis Baroni
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
Mr M Wells
Mr S Panton
Total
Number of fully
paid ordinary shares
Number of
options
6,464,677
3,000,000
500,000
3,000,000
600,000
3,000,000
73,546,350
3,000,000
81,111,027
12,000,000
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)
Interests in the Shares and Options of the Company
The following relevant interest in shares of the Company were held by Management Executives at the
balance date. There have been no changes up to the date of this report.
Management Executives
Fully paid ordinary shares
Number of options
Ms A Laws
Mr AS Pervez
Unissued Shares under option
9,091
9,091
10,000,000
3,500,000
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
14/02/2019
13/06/2019
28/11/2019
02/12/2019
15,000,000
$0.03 to $0.10
2,000,000
$0.10 to $0.125
9/3/2021
1/1/2022
3,000,000
$0.10
13/6/2022
12,000,000
$0.15 to $0.20
28/11/2022
200,000
$0.10
1/12/2022
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
03/12/2019
13/01/2020
06/03/2020
4,500,000
750,000
3,000,000
250,000
$250,000
$32,500
$90,000
$18,750
21
Directors’ Report (Cont’d)
Review of Operations
Sales Revenue
Resonance Health Maintains Strong Balance Sheet
Sales revenue for the year was $3.66 million, a 1% increase on the previous year of $3.62 million. 2H20
was impacted by COVID-19 due to global lockdowns and accessibility issues for patients to scanning
centres during the global pandemic. Commercial demand for the Company’s services has now returned to
pre-COVID levels.
Resonance Health continued to win contracts to provide services to sponsors for their clinical trials.
The combined total dollar value of additional work won amounts to approximately US$2.9 million (see
ASX announcements on 19 July 2019, 28 October 2019, 29 January 2020, 28 April 2020, and 28
July 2020). This includes the execution of three new contracts
to provide services to pharmaceutical companies for their new
clinical trials, and several amendments executed to extend existing
service contracts with pharmaceutical companies.
Sales Revenue in $000
Sales Revenue in $000
$3,500
$4,000
76% of sales revenue for the year was derived from the USA and
Canada with the UK contributing 18% and the balance spread
across Europe, Australia, Asia and the Middle East. Commercial
revenue combined with voucher revenue accounted for 55% of
total revenue, with clinical trials and other studies making up
the balance. Receipts from customers were $3,601,142, up 2%
from the previous year’s result.
Net Profit after Tax (NPAT)
$3,000
$4,000
$2,500
$3,500
$2,000
$3,000
$1,500
$2,500
$1,000
$2,000
$500
$1,500
$-
$1,000
$500
$-
FY 2018
FY 2019
FY 2020
FY 2018
FY 2019
FY 2020
Excluding non-cash share-based payment expenses for employee and Director options, the Company
recorded a result for the full year of positive $1,121,147 (Graph 1 below). Including the non-cash share-
based payment expenses, the Company reported a Net Loss after Tax for the full year of $715,076 (Graph
2 below). This reported loss is due to a non-cash share-based payment expense of employee options of
$140,324 and Director options expense of $1,695,899 and related payroll tax expenses of $27,060 as
a result of the vesting of Directors’ options. The Directors options were approved by shareholders at the
Company’s AGM on 28 November 2019.
Graph 1: Result excluding share-based
payment and related expenses (in $000)
Graph 2: NPAT including share-based payment
and related expenses (in $000)
$2,000
Graph 1: Result excluding share-based
payment and related expenses (in $000)
$1,500
Graph 2: NPAT including share-based payment
and related expenses (in $000)
$1,500
$1,000
$2,000
$500
$1,500
$-
$1,000
$500
$-
FY 2018
FY 2019
FY 2020
22
FY 2018
FY 2019
FY 2020
$1,000
$500
$1,500
$-
$1,000
-$500
$500
-$1,000
$-
-$500
-$1,000
FY 2018
FY 2019
FY 2020
FY 2018
FY 2019
FY 2020
Directors’ Report (Cont’d)
Research & Development (“R&D”)
Resonance Health has applied for regulatory clearance from the US Food and Drug Administration (“FDA”)
for HepaFat-AI, the Company’s newly developed and fully automated AI liver fat quantification tool (see
ASX announcement on 06 April 2020). If successful, HepaFat-AI will be the second of the Company’s
AI tools to gain FDA regulatory clearance (the first of these tools is FerriSmart, which is used for liver iron
concentration calculation). These tools have been developed as part of the Company’s AI R&D stream.
The Company has also progressed its molecular medicine R&D stream over the financial year using
in-house expertise in molecular biology. This year, two provisional patents have been filed on behalf of the
Company (see ASX announcements on 20 November 2019 and 25 May 2020).
The Company received an R&D tax incentive of $237,624 for eligible R&D work expended by the Company
for the financial year ended 30 June 2020.
Overall R&D expenditure totalled $880,286 for the financial year, up from $820,075 in the previous year.
R&D expenditure for the year comprised the following:
• $246,512 recognised as an intangible asset on the Statement of Financial Position.
• $265,208 amortisation expense recognised in the Statement of Comprehensive Income
• $152,280 R&D expense recognised in the Statement of Comprehensive Income
• $216,286 employee benefits expense recognised in the Statement of Comprehensive Income
Intangible assets, representing capitalised development expenditure, totalled $2,532,122 at the end of financial
year. By comparison, intangible assets totalled $2,550,818 at the end of the 30 June 2019 financial year.
The Company continues to assess opportunities to expand its core business, with R&D expenditure targeted
specifically towards the diversification of in-house R&D projects by establishing three key areas of focus;
artificial intelligence, imaging, and molecular medicine.
Cash
Cash balances at 30 June 2020 totalled $6.97 million,
in comparison to the 30 June 2019 cash balance of
$3.08 million. The financial year included an R&D
tax incentive refund of $238K and a capital raising of
$2.75m via the utilisation of a controlled placement
agreement (“CPA”). Further details of the CPA were
included in the Company’s announcement dated 30
April 2019.
The Company has no debt.
$8,000
$6,000
$4,000
$2,000
$-
Cash at Bank in $000
FY 2018
FY 2019
FY 2020
23
Directors’ Report (Cont’d)
Strategy for Growth
The Company’s strategy to grow commercial sales revenue includes the strategic utilisation of third-party
distribution and servicing platforms with extensive existing customer bases across the five continents. 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.
Over the past twelve months this strategy has seen the Company further expand its established distribution
network by signing agreements with Siemens Healthcare GmbH and 3DR Laboratories. These agreements
allow the Company’s FerriSmart® AI solution to be offered through the Siemens Healthineers Digital
Marketplace and sold as part of 3DR’s post-processing services to their customers in the USA (see ASX
announcements dated 04 February 2020 and 28 November 2019).
The strategy to grow revenue from clinical trials includes increasing incremental sales to existing pharma
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 FY21,
leveraging off the Company’s FY20 success
COVID-19 Impact
In the months of April and May, the Company experienced a reduction in requests for its routine clinical
use services from Europe (including the UK) and the USA due to COVID-19. Commercial demand for the
Company’s services has since returned to pre-COVID levels.
24
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
There has been no additional matter or circumstance that has arisen after the 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.
25
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 2020. 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.
26
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 a high 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 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 was 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.
All remuneration paid to Directors and executives is valued at the cost to the Company and expensed or
capitalised. Securities given to Directors and executives are valued as the difference between the market
price of those shares and the amount paid by the director or executive.
27
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 and provides
commercial, investor relations, and management consulting services on a part-time basis. This Consultancy
Agreement provides for consultancy fees of $90,000 pa. The agreement may be terminated on mutual
agreement 30 days.
Adoption of Remuneration Report
The remuneration report for FY19 was adopted at the 2019 AGM.
Details of Remuneration for Year Ended 30 June 2020
The remuneration for key management personnel of the Group during the 2020 year was as follows:
Short-term
employee benefits
Post
employment
benefits
Salary &
Fees
Superannuation
Contributions
Equity
Shares/
Options2
Total
Fixed
Remuneration
$
$
$
$
%
Remuneration
linked to
performance
%
Non-Executive Directors’ remuneration
Dr T Baroni
Dr M Blake
36,530
54,795
Mr M Wells1
130,000
3,470
5,205
-
Mr S Panton
36,530
3,470
423,975
423,975
423,975
423,975
463,975
483,975
553,975
9%
12%
23%
91%
88%
77%
463,975
9%
91%
Total
257,855
12,145
1,695,900
1,965,900
28
Directors’ Report (Cont’d)
Short-term
employee benefits
Salary & Fees
Post
employment
benefits
Equity
Total
Cash
Bonus
Superannuation
Contributions
Shares/
Options2
Fixed
Remuneration
Remuneration
linked to
performance
$
$
$
$
%
%
Management Executives’ remuneration
Ms A Laws
250,000
27,000
26,315
1,000
304,315
Mr AS Pervez 150,000
15,000
15,675 141,322
321,997
90%
51%
10%
49%
Total
400,000
42,000
41,990 142,322
626,312
1 Mr M Wells remuneration represents $40,000 director fees and $90,000 consulting fees.
2 The share-based remuneration is a non-cash expense of $140,322 for employee options and $1,695,900 for Director options
as a result of all options being expensed out this financial year. The Directors options were approved by shareholders at the
Company’s AGM held on 28 November 2019. The valuation is based on the grant date according to AASB 2, and no director
has exercised any of their options.
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
Non-Executive Directors’ remuneration
$
$
$
$
%
Remuneration
linked to
performance
%
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%
-
-
-
-
29
Directors’ Report (Cont’d)
Short-term
employee benefits
Post
employment
benefits
Salary &
Fees
Superannuation
Contributions
Equity
Shares/
Options
Total
Fixed
Remuneration
$
$
$
$
%
Remuneration
linked to
performance
%
Management Executives’ remuneration
Ms A Laws
179,058
Mr AS Pervez 116,615
Total
295,673
17,010
11,078
28,088
-
70,161
70,161
196,068
197,854
393,922
100%
65%
-
35%
1 Mr M Wells remuneration represents $40,000 director fees and $72,500 consulting fees.
Cash bonuses of $42,000 were granted in 2020. And no cash bonuses were granted in 2019.
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
1/7/2019
Received as
Remuneration
Received during
the year on
Net Change Other exercise of options
Balance
30/6/2020
Dr M Blake
Dr T Baroni
Mr M Wells
6,464,677
500,000
600,000
Mr S Panton
73,546,350
-
-
-
-
Ms A Laws
Mr AS Pervez
-
100,000
9,091
9,091
-
-
-
-
-
-
-
-
-
-
(600,000)
500,000
6,464,677
500,000
600,000
73,546,350
9,091
9,091
30
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
1/7/2019
Received as
Remuneration Net Change Other
Received during
the year on
exercise of options
Dr M Blake
Dr T Baroni
Mr M Wells
Mr S Panton
Ms A Laws
Mr AS Pervez
-
-
-
-
3,000,000
3,000,000
3,000,000
3,000,000
10,000,000
4,000,000
-
-
-
-
-
-
-
(500,000)
-
-
-
-
-
-
There are no other payments outstanding to key management personnel.
During the year, 12 million options were issued to Directors with the following terms:
Balance
30/6/2020
3,000,000
3,000,000
3,000,000
3,000,000
10,000,000
3,500,000
Number
Grant date
Expiry date
Exercise price $
Fair value at grant date $
Series 1
Series 2
Series 3
4,000,000
28/11/2019
28/11/2022
4,000,000
28/11/2019
28/11/2022
4,000,000
28/11/2019
28/11/2022
0.15
0.175
0.20
$588,423
$564,476
$543,000
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2020 are summarised below:
2020
$’000
3,899
(653)
(994)
(715)
2019
$’000
3,662
1150
904
1270
2018
$’000
2,912
(62)
(243)
225
2017
$’000
2,533
(473)
(667)
(304)
2016
$’000
2,597
(384)
(533)
(384)
Total revenue
EBITDA
EBIT
Profit/ (loss)
after income tax
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share price at
financial year end ($)
2020
0.15
2019
0.105
2018
0.024
2017
0.024
Basic earnings per share) (0.17)
(cents per share)
End of Remuneration Report
0.31
0.06
(0.08)
2016
0.017
(0.10)
31
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 2020, 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
1
1
1
1
1
1
1
1
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.
Auditor Independence and Non-audit Services
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the Directors of the
Company with an Independence Declaration in relation to the audit of the financial report. This Independence
Declaration is set out on page 15 and forms part of this Directors’ Report for the year ended 30 June 2020.
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.
Indemnity and Insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditors
of the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company
has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.
This report is made in accordance with a resolution of the Board of Directors.
Dr Martin Blake
Chairman
Perth, Western Australia
Dated this 30 September 2020
32
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 2020, 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
30 September 2020
M R Ohm
Partner
33
Statement of Comprehensive Income
For The Year Ended 30 June 2020
Sales revenue
Other income
Revenue
Employee benefits expense
Share-based payments
Consulting and professional services
Research and development
Depreciation expense
Amortisation expense
Marketing and travel
Statutory and compliance
Foreign exchange gain
Other expenses
Notes
2(b)
2(c)
Consolidated
2020
$
2019
$
3,668,184
3,624,545
231,239
37,228
3,899,423
3,661,773
(1,734,589)
(1,432,104)
(1,836,223)
(239,109)
(108,822)
(92,801)
(152,280)
(63,177)
(75,364)
(23,815)
(265,208)
(221,239)
(236,457)
(266,307)
(215,917)
(154,247)
(4,024)
37,361
(223,239)
(264,657)
(Loss)/ profit before income tax benefit
(952,700)
941,678
Income tax benefit
4
237,624
328,555
Net (loss)/ profit for the year attributable to owners
of the parent
(715,076)
1,270,233
Other comprehensive income
Other comprehensive income for the year, net of tax
-
-
Total comprehensive (loss)/ income for the year
attributable to owners of the parent
(715,076)
1,270,233
Basic and diluted (loss)/ earnings per share (cents per share)
6
(0.17)
0.31
The accompanying notes form part of these financial statements
34
Statement of Financial Position
As At 30 June 2020
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Plant and equipment
Right-of-use asset
Intangible assets
Other assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Other liabilities
Lease liability
Total Current Liabilities
Non-Current Liabilities
Lease liability
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Note
Consolidated
2020
$
2019
$
7
8
9
10
26
11
9
12
14
13
27
27
6,974,237
3,081,192
765,606
39,871
661,902
36,320
7,779,714
3,779,414
27,431
111,849
40,511
-
2,532,122
2,550,818
45,900
45,900
2,717,302
2,637,229
10,497,016
6,416,643
385,272
392,809
75,821
13,843
55,998
75,855
54,399
-
530,934
523,063
60,105
60,105
-
-
591,039
523,063
9,905,977
5,893,580
15(a)
15(b)
72,565,449
69,674,199
2,045,950
209,727
(64,705,422)
(63,990,346)
9,905,977
5,893,580
The accompanying notes form part of these financial statements.
35
Statement of Changes In Equity
For The Year Ended 30 June 2020
Consolidated
Note
Issued
Capital
$
Foreign
Currency
Translation
Reserve
$
Option
Reserve
$
Accumulated
Losses
$
Total Equity
$
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 loss for the year -
Shares Issued
Equity settled share-based 23
payments
250,000
-
-
-
-
-
-
-
-
-
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
Loss for the year
Other comprehensive loss
Total comprehensive
income for the year
-
-
-
Share issued
2,891,250
-
-
-
-
-
-
-
-
Equity settled share-based 23
-
- 1,836,223
(715,076)
(715,076)
-
-
(715,076)
(715,076)
-
-
2,891,250
1,836,223
Balance at 30 June 2020
72,565,449 (270,580) 2,316,530
(64,705,422) 9,905,977
The accompanying notes form part of these financial statements.
36
Statement of Cash Flows
For The Year Ended 30 June 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Grant received
Interest received
Interest paid
Income tax received
Note
Consolidated
2020
$
Inflows/(Outflows)
2019
$
3,601,142
3,538,602
(2,654,492)
(2,273,443)
88,000
47,639
(9,135)
-
21,343
-
4
237,624
328,555
Net cash provided by operating activities
7(i)
1,310,778
1,615,057
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from share issues
Proceeds from issue of equity securities
Reduction in lease liability
Share issue costs paid
(2,106)
(3,340)
(248,526)
(344,653)
(250,632)
(347,993)
141,250
250,000
2,750,000
(51,671)
(15,000)
-
-
-
Net cash provided by financing activities
2,824,579
250,000
Net increase in cash and cash equivalents
Foreign exchange differences on cash balances
3,884,725
1,517,064
8,320
15,040
Cash and cash equivalents at the beginning of period
3,081,192
1,549,088
Cash and cash equivalents at the end of the period
7
6,974,237
3,081,192
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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. Cost is based on the fair value 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 primarily 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 2020
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 16 Leases 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 16 Leases
The Group has applied AASB 16 from 1 July 2019 using the modified retrospective approach, with no
restatement of comparative information. The impact on the accounting policies, financial performance,
and financial position of the Group from the adoption of AASB 16 is detailed in Note 25. Other than
the above, there is no material impact of the new and revised Standards and Interpretations on the
Group.
Standards and Interpretations in issue not yet adopted
The Directors have also reviewed all the new and revised Standards and Interpretations in issue not
yet adopted that are relevant to the Company and effective for recording periods beginning on or after
1 July 2020. As a result of this review the Directors have determined that there is no material impact
of the Standards and Interpretations in issue not yet adopted on the Group and therefore no change is
necessary to Group accounting policies.
(c) Statement of compliance
The financial report was authorised for issue on 30 September 2020.
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).
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(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”).
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated
entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns
for its involvement with the entity and has the ability to affect those returns through its power to
direct the actions of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
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.
Business combinations have been accounted for using the acquisition method of accounting (refer
Note 1(y)).
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held
by the Group and are presented separately in the statement of comprehensive income and within
equity in the consolidated statement of financial position. Losses are attributed to the non-controlling
interest even if that results in a deficit balance.
(e) Critical accounting judgements and key sources of estimation uncertainty
The application of accounting policies requires the use of judgements, estimates and assumptions
about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised
in the period in which the estimate is revised if it affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Impairment of intangibles
The Group determines whether intangibles with indefinite useful lives are impaired at least on an
annual basis. This requires an estimation of the recoverable amount of the cash generating units
to which the intangibles with indefinite useful lives are allocated. The assumptions used in this
estimation of recoverable amount and the carrying amount of intangibles with indefinite useful lives
are discussed in Note 11.
Additionally, the Group assesses impairment at the end of each reporting period by evaluating
conditions and events specific to the Group that may indicate impairment triggers. Recoverable
amounts of relevant assets are reassessed using value-in-use calculations which incorporate various
key assumptions.
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(e) Critical accounting judgements and key sources of estimation uncertainty (continued)
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.
The directors acknowledge that there is potential uncertainty surrounding budgeted commercial income
as a result of the COVID-19 pandemic. As a result, the projected cash flows have been adjusted. For
commercial income in the 2021 financial year, we have assumed a 30% reduction in job volume for
the first half of the year, a 15% reduction in the March quarter, with no further reduction past this
point. For following periods, a reduced growth rate of 10% has been adopted.
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 analyses of 5% and 10% reduction in revenue and the use of a pre-tax
discount rate of 15% have been calculated and did not indicate an impairment.
Share based payments
The consolidated entity measures the cost of equity-settled transactions with employees by reference
to the fair value of the equity instruments at the date at which they are granted. The fair value is
determined by using the Black-Scholes model taking into account the terms and conditions upon
which the instruments were granted. The accounting estimates and assumptions relating to equity-
settled share-based payments would have no impact on the carrying amounts of assets and liabilities
within the next annual reporting period but may impact profit or loss and equity (refer to Note 23).
(f) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board of
Directors of Resonance Health Limited.
(g) Foreign currency translation
Both the functional and presentation currency of Resonance Health Limited and its Australian
subsidiaries is Australian dollars. Each entity in the Group determines its own functional currency and
items included in the financial statements of each entity are measured using that functional currency.
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(g) Foreign currency translation (continued)
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 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 for accounting policy.
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield
on the financial asset.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance
that the grant will be received and the Group will comply with all attached conditions.
(i) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
(j)
Leases
Refer to Note 25 for accounting policy.
(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. Any research
and development tax offset received during the year is recognised as an income tax benefit.
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(k)
Income tax (continued)
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the end of the reporting period in the countries where the Company’s subsidiaries and
associates operate and generate taxable income. Management periodically evaluates positions taken
in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantially enacted by the balance date. Deferred income
tax is provided on all temporary differences at the balance date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and that, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates
or interests in joint ventures, and the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused
tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences and the carry-forward of unused tax credits and unused tax
losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit, nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only recognised to
the extent that it is probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against with the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(k)
Income tax (continued)
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.
(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 non-financial 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
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(m)
Impairment of non-financial assets (continued)
of its fair value less costs to sell and its value in use and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such
cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When
the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or
cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and adjusted
risk specific to the asset. Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset unless the asset is carried at
revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each balance date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists,
the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case the carrying amount of the asset is increased to
its recoverable amount. That increased amount cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised for the asset in prior
years. Such reversal is recognised in statement of comprehensive income unless the asset is carried at
revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal
the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount,
less any residual value, on a systematic basis over its remaining useful life.
(n) Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value. Bank overdrafts are shown within borrowings in current liabilities in the statement
of financial position.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above.
(o) Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured
at amortised cost using the effective interest rate method, less any allowance for impairment. Trade
receivables are generally due for settlement within periods ranging from 14 days to 90 days.
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(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.
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’.
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.
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.
(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
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(q)
Plant and equipment (continued)
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
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.
(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.
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(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) 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.
(u) Employee benefits
Wages, salaries, annual leave and long service leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service
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.
(v) Share-based payment transactions
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees
in exchange for the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is
independently determined using the Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk free interest rate
for the term of the option, together with non-vesting conditions that do not determine whether the
consolidated entity receives the services that entitle the employees to receive payment. No account is
taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase
in equity over the vesting period. The cumulative change to profit or loss is calculated based on the
grant date fair value of the award, the best estimate of the number of awards that are likely to vest
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(v) Share-based payment transactions (continued)
and the expired portion of the vesting period. The amount recognised in profit or loss for the period is
the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject
to market conditions are considered to vest irrespective of whether or not that market condition has
been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the medication
has not been made. An additional expense is recognised, over the remaining vesting period, for any
modification that increases the total fair value of the share-based compensation benefit as the date of
modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure
to satisfy the condition is treated as a cancellation. If the condition is not within the control of the
consolidated entity or employee and is not satisfied during the vesting period, any remaining expense
for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and
any remaining expense is recognised immediately. If a new replacement award is substituted for the
cancelled award, the cancelled award and new award is treated as if they were a modification.
(w) 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.
(x) 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.
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: Statement of significant accounting policies
(y) 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.
(z) 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, less any impairment in the parent entity’s
financial statements.
(aa) 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.
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 2: AASB 15 Revenue from Contracts with Customers
(a) 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.
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 changed 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.
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 2: AASB 15 Revenue from Contracts with Customers (continued)
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.
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.
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 2: AASB 15 Revenue from Contracts with Customers (continued)
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
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
Consolidated
Twelve months to
30 June
2020
$
Consolidated
Twelve months to
30 June
2019
$
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
2,007,927
2,084,562
25,342
90,441
1,587,337
1,414,363
47,578
35,179
Total Revenue from contracts with customers
3,668,184
3,624,545
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 2: AASB 15 Revenue from Contracts with Customers (continued)
(c) Reconciliation of revenue from contracts with customers with the amounts disclosed in
segment information
Segment revenue
Adjustments and eliminations
Consolidated
Consolidated
Twelve months to
30 June
2020
$
Twelve months to
30 June
2019
$
3,668,184
3,624,545
-
-
Total revenue from contracts with customers
3,668,184
3,624,545
NOTE 3: Other Revenue
(a) Other income
Grants received1
Interest received
2020
$
2019
$
189,925
41,314
-
37,228
231,239
37,288
1 Grants received included $117,000 in Jobkeeper and $72,925 in cash flow boost.
NOTE 4: Income tax benefit
Income tax recognised in profit or loss
The major components of tax benefit are:
Research and Development tax offset
The prima facie income tax benefit on pre-tax accounting
loss from operations reconciles to the income tax benefit
in the financial statements as follows:
Accounting loss before income tax
Income tax expense calculated at 27.5%
Effect of expenses that are not deductible
in determining taxable profit
Consolidated
2020
$
2019
$
237,624
328,555
237,624
328,555
(952,700)
941,678
(261,993)
258,961
548,516
232,703
53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 4: Income tax benefit (continued)
Non-assessable income
Consolidated
2020
$
2019
$
(20,054)
-
Effect of unused tax losses not recognised as deferred tax assets
-
(220,073)
Tax losses recovered
Effect of temporary differences not recognised
as deferred tax assets and liabilities
Research and Development tax offset
Income tax benefit reported in the statement of
comprehensive income
Unrecognised deferred tax balances
(233,474)
(140,906)
(32,995)
(130,685)
237,624
328,555
237,624
328,555
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
2,530,838
2,890,357
Amortisation and depreciation timing differences
Business related costs
Unrealised foreign exchange losses
Accrued expenses and liabilities
Others
Deferred tax liabilities:
Capitalised research and development costs
Accrued income
Prepayments
139,972
199,045
1,925
1,107
4,127
2,338
101,688
90,216
1,170
-
2,776,700
3,186,083
696,334
701,475
2,970
-
4,710
9,988
699,304
716,173
Income tax benefits not recognised directly in equity
Share issue costs
-
-
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 4: Income tax benefit (continued)
Deferred tax assets have not been recognised in respect of the above items because it is not considered
probable that future taxable profit will be available against which the Group can utilise the benefits thereof.
Deferred tax liabilities have not been recognised in respect of these taxable temporary differences as the
entity is able to control the timing of the reversal of the temporary differences and it is probable that the
temporary differences will not reverse in the foreseeable future.
Tax Consolidation
Resonance Health Limited and its 100% owned Australian resident subsidiaries implemented the tax
consolidation legislation from 1st July 2012.
NOTE 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 informa-
tion is disclosed in Business Segment assets and no additional disclosure is made.
Asia/Pacific
North America
EMEA
Total Sales to external customers
Business Segments
2020
$
2019
$
115,185
155,770
1,149,062
1,128,675
2,403,937
2,340,100
3,668,184
3,624,545
The following table presents revenue and profit/(loss) information and certain asset and liability information
regarding business segments for the year ended 30 June 2020.
55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 5: Segment reporting (continued)
Services
$
Research and
Development
$
Corporate
$
Total
$
Segment revenue
Sales to external customers
3,668,184
Interest revenue
-
Total segment revenue
3,668,184
-
-
-
-
3,668,184
231,239
231,239
231,239
3,899,423
Segment profit/(loss) before tax
1,583,246
(300,400)
(2,235,546)
(952,700)
Income tax benefit
Segment assets
Segment liabilities
-
237,624
-
237,624
765,606
2,532,122
7,199,288
10,497,016
399,115
-
191,924
591,039
The group derived 12% of its external customer sales revenue from one major customer.
In the year ended 30 June 2020, there were non-current asset additions of $246,512 (2019: $349,377)
in the Research and Development segment, and $174,133 (2019: $3,340) in the corporate segment,
which included a right-of-use asset of $167,774.
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)
941,678
Income tax benefit
Segment assets
Segment liabilities
-
328,555
-
328,555
661,902
2,550,818
3,203,923
6,416,643
447,208
-
75,855
523,063
The Group derived 14% of its external customers sales revenue from one major customer.
56
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 6: Loss/Earnings per share
Consolidated
2020
$
2019
$
Basic and diluted (loss)/ earnings per share (cents per share)
(0.17)
0.31
(a) Loss/Profit used in the calculation of basic and diluted (loss)/ earnings
per share
(715,076)
1,270,233
(b) Weighted average number of ordinary shares for the
purposes of basic earnings per share
432,385,267 405,840,034
2020
Number
2019
Number
Weighted average number of ordinary shares for the
purpose of dilutive earnings per share
432,385,267 405,906,230
The dilutionary impact of options did not change the earnings per share.
NOTE 7: Cash and cash equivalents
Deposits at call
Term deposits
Consolidated
2020
$
2019
$
929,779
1,081,192
6,044,458
2,000,000
6,974,237 3,081,192
Deposits at call earn interest at floating rates based on daily bank deposit rates.
Term deposits are made for varying periods depending on the immediate cash requirements of the Group
and earn interest at the respective term deposit rates.
57
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 7: Cash and cash equivalents (continued)
(i) Reconciliation of profit for the year to net cash flowsfrom operating activities
Consolidated
2020
$
2019
$
Profit/ (loss) for the year
Non-cash flows in profit:
Depreciation
Amortisation of intangible assets
Share-based payment expense
Changes in net assets and liabilities:
Trade and other receivables
Other assets (current)
Trade creditors and other payables and provisions
Other liabilities
(715,076)
1,270,233
75,364
23,815
265,208
221,239
1,836,223
239,109
(103,278)
(103,319)
(3,551)
(2,688)
(44,078)
(50,587)
(34)
17,255
Net cash provided by operating activities
1,310,778
1,615,057
(ii) Financing facilities
Secured credit card:
Amount used
Amount unused
(iii) Cash balances not available for use
Security deposits:
Credit card
Lease premises
58
5,562
14,438
14,175
5,825
20,000
20,000
20,000
25,900
20,000
25,900
45,900
45,900
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 8: Trade and other receivables
Trade receivables
Other receivables
Aging of past due but not impaired
30-60 days
60-90 days
90-120 days
Consolidated
2020
$
2019
$
739,517
626,802
26,089
35,100
765,606
661,902
88,813
155,173
35,512
80,506
279,044
161,278
403,369
396,957
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 financing 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 2020 was
determined as $nil (30 June 2019: $nil).
NOTE 9: Other assets
Current
Prepayments
Non-Current
Deposits
39,871
36,620
45,900
45,900
59
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 10: Plant and equipment
Fixtures and equipment
At cost
Less: Accumulated depreciation
Total plant and equipment
Reconciliation
Consolidated
2020
$
2019
$
397,916
391,557
(370,485)
(351,046)
27,431
40,511
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
40,511
6,359
60,986
3,340
(19,439)
(23,815)
27,431
40,511
3,716,832
3,470,321
(1,184,710)
(919,503)
2,532,122
2,550,818
Reconciliation of the carrying amount of intangible assets is set out below:
Development expenditure
Carrying amount at the beginning of the year
Additions
Amortisation expense
2,550,818
2,422,680
246,512
349,377
(265,208)
(221,239)
Carrying amount at the end of the year
2,532,122
2,550,818
60
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
2020
$
2019
$
53,617
91,289
331,655
301,520
385,272
392,809
(i) Trade payables are non-interest bearing and are normally settled on 30-day terms. The carrying value
of the trade payables is considered a reasonable approximation of fair value. Information regarding the
effective interest rate and credit risk of current payables is set out in Note 16.
61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 13: Other liabilities
Consolidated
2020
$
2019
$
Unearned income
13,843
54,399
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
75,821
75,855
75,855
25,868
58,600
35,879
(25,902)
(18,624)
75,821
75,855
NOTE 15: Share capital and reserves
(a) Share capital
443,773,933 72,565,449
422,497,568 69,674,199
2020
2019
Number
$
Number
$
Movements - Ordinary shares
2020
Number of shares
2020
$
2019
No. of shares
2019
$
Balance at the beginning of the year 422,497,568 69,674,199
402,497,568 69,424,199
Share issue on conversion of options
8,500,000
141,250
Shares issue under ESS
136,365
15,000
Controlled placement cost
-
(15,000)
-
-
-
Share issue to Acuity Capital1
12,640,000
2,750,000
20,000,000
250,000
-
-
-
Balance at the end of the year
443,773,933 72,565,449
422,497,568 69,674,199
(1) As announced on the ASX on 30 April 2019, the Company agreed to place additional 20,000,000
shares from its Listing Rule 7.1 capacity, at nil consideration to Acuity Capital (collateral shares). In the
current year, the Company agreed to place additional 12,640,000 shares from its Listing Rule 7.1 capacity,
at issue price of $0.218 per share to Acuity Capital (collateral shares) but may, at any time, cancel the
Controlled Placement Agreement and buy back the collateral shares for no consideration.
62
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 15: Share capital and reserves (continued)
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company
in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled
to one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the company does not have a limited amount of authorised capital.
(b) Reserves
Nature and purpose of reserves:
Foreign currency translation reserve – the foreign currency translation reserve is used to record exchange
differences arising from the translation of the financial statements of foreign subsidiaries.
Option reserve – the option reserve is used to record the fair value of options issued as share-based payments.
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 – deposits
Trade and other payables
Lease liabilities
Consolidated
2020
$
2019
$
6,974,237
3,081,192
765,606
661,902
45,900
45,900
(385,272)
(392,809)
(116,103)
-
(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.
63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16: Financial instruments (Continued)
(d) Market risk
The Group’s activities expose it primarily to the financial risk of changes in foreign currency exchange rates.
There has been no change in the Group’s exposure to market risks or the manner in which it manages and
measures the risk from the previous period.
(e) Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange
rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters. The
Group does not engage in forward exchange contracts.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities
at the reporting date is as follows:
United States Dollars
Great British Pounds
European Euros
Liabilities
Assets
2020
$
5,441
4,378
2,249
2019
$
2020
$
-
1,052,673
4,378
291,320
-
174,061
2019
$
666,033
391,923
115,397
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.
64
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16: Financial instruments (Continued)
Profit or loss impact:
- USD
- GBP
- EUR
2020
$
2019
$
(95,203)
(26,086)
(15,619)
(60,548)
(35,231)
(10,491)
(f) Interest rate risk management
All financial assets and financial liabilities are non-interest bearing except for cash and cash equivalent
balances, and lease liabilities. The following table details the Group’s expected maturities for cash and cash
equivalent financial assets.
Cash and cash equivalent financial assets
2020
Weighted average effective interest rate
2019
Weighted average effective interest rate
Less than
one
month
$6,974,237
0.86%
$3,081,192
1.81%
One to three
months
$45,900
1.34%
$45,900
2.54%
Total
$7,020,137
$3,127,092
The Group is exposed to fluctuations in interest rates as it has deposited monies at floating 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 2020, the Group had one customer that accounted for 12% of all trade
receivables (2019: 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.
65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16: Financial instruments (continued)
(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.
T The following table details the Group’s expected maturity for its financial liabilities.
Less than
one month
$
One month to
three months
$
Three months
to one year
$
Total
$
2020
Non-interest bearing
342,361
42,000
2019
Non-interest bearing
351,688
41,121
-
-
384,361
392,809
(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
The Group has no operating or capital commitments.
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
2020
Equity holding
2019
Equity holding
Resonance Health Analysis Services Pty Ltd
Australia
Ordinary
WA Private Health Care Services Pty Ltd
Australia
Ordinary
IVB Holdings Pty Ltd
Resonance USA Inc
Australia
Ordinary
USA
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
66
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 18: Related party disclosure (continued)
Resonance Health Limited is the ultimate Australian entity and ultimate parent of the Group.
Transactions with related parties
Transactions with related parties are on normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
Transactions with key management personnel
Refer to Note 22 for details of transactions with key management personnel.
Transactions between group companies
During the year the following transactions occurred between group companies:
Resonance Health Analysis Services Pty Ltd (RHAS) and Resonance Health Limited (RHT).
During the year expenses were paid by RHAS totalling $51,194 (2019: $23,450) on behalf of RHT.
During the year expenses were paid by RHT totalling $Nil (2019: $Nil) on behalf of RHAS.
At the 30 June 2020 RHT owed a loan balance of $3,195,247 (2019: $1,899,592) 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
2020
$
2019
$
6,091,272
2,510,882
856,682
856,682
6,947,954
3,367,564
59,343
92,686
3,340,507
2,044,852
3,399,850
2,137,538
67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 19: Parent entity disclosures (continued)
Equity
Issued capital
Option reserve
Accumulated losses
Total equity
Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive loss
72,565,449
69,674,199
2,316,530
480,307
(71,333,875)
(68,924,480)
3,548,104
1,230,026
Year ended
30 June 2020
$
Year ended
30 June 2019
$
(2,409,395)
(712,063)
-
-
(2,409,395)
(712,063)
NOTE 20: Significant events after balance date
There has been no additional matter or circumstance that has arisen after balance date that has significant-
ly 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
Consolidated
2020
$
2019
$
57,528
12,500
56,736
12,325
70,028
69,061
68
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 22: Key management personnel disclosures
Key Management Personnel Compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
2020
$
2019
$
699,855
536,028
54,135
1,838,222
40,233
70,161
2,592,212
646,422
NOTE 23: Share-based payments
The Company has an Employee Incentive Option Plan for key staff members and management of the
Company.
The expense recognised in the Statement of Comprehensive Income in relation to share-based payments
is $1,836,223.
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
4,000,000
28/11/2019 28/11/2022
4,000,000
28/11/2019 28/11/2022
4,000,000
28/11/2019 28/11/2022
200,000
2/12/2019
2/12/2022
0.15
0.175
0.20
0.10
date $
$588,423
$564,476
$543,000
$27,830
There has been no alteration of the terms and conditions of the above share-based payment arrangement
since grant date.
69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 23: Share-based payments (Continued)
The following table illustrates the number and weighted average exercise prices of and movements in share
options issued during the year.
2020
2019
Weighted Average
Weighted average
Number
exercise price $
Number
exercise price $
Outstanding at the beginning of year 33,500,000
Granted during the year
12,200,000
Exercised during the year
(8,500,000)
Forfeited during the year
(5,000,000)
Expired during the year -
$0.074
$0.170
21,000,000
$0.0600
12,500,000
$0.0985
-
-
-
-
-
-
-
-
-
Outstanding at the end of year
32,200,000
Exercisable at the end of year
32,200,000
$0.122
$0.122
33,500,000
$0.0744
33,500,000
$0.0744
The weighted average share price during the year was $0.087.
The weighted average remaining contractual life of options outstanding at the end of the financial year was
1.5 years.
The fair value of the equity-settled share options granted under the option plan is estimated as at the date of
grant using the Black-Scholes model taking into account the terms and conditions upon which the options
were granted.
Dividend (%)
Volatility (%)
rate (%)
option (years)
(cents)
price
Risk-free interest Expected life of
Exercise price Grant date share
Series 1
Series 2
Series 3
Series 4
0
0
0
0
100
100
100
100
0.66
0.66
0.66
0.66
3.00
3.00
3.00
3.00
0.150
0.175
0.200
0.100
0.2150
0.2150
0.2150
0.1900
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.
70
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 24: Contingent liabilities and assets
The group has no contingent liabilities and assets as at 30 June 2020 (2019: $nil).
NOTE 25: AASB 16 Leases
Change in Accounting Policy
AASB 16 Leases supersedes AASB 117 Leases and related interpretations. The Group has adopted AASB
16 from 1 July 2019 which has resulted in changes in the classification, measurement and recognition
of leases. The new standard requires recognition of a right-of-use asset (the leased item) and a financial
liability (to pay rentals). The exceptions are short-term leases and leases of low value assets.
The Group has adopted AASB 16 using the modified retrospective approach under which the reclassifi-
cations and the adjustments arising from the new leasing rules are recognised in the opening Condensed
Statement of Financial Position on 1 July 2019. Under this approach, there is no initial impact on accu-
mulated losses under this approach, and comparatives have not been restated.
The Group has a single premises lease and plant and equipment leases. Prior to 1 July 2019, leases were
classified as operating leases. Payments made under operating leases were charged to profit or loss on a
straight-line basis over the period of the lease.
From 1 July 2019, where the Company is a lessee, the Group recognises a right-of-use asset and a corre-
sponding liability at the date which the lease asset is available for use by the Group (i.e. commencement
date). Each lease payment is allocated between the liability and the finance cost. The finance cost is
charged to profit or loss over the lease period so as to produce a consistent period rate of interest on the
remaining balance of the liability for each period.
The lease liability is initially measured at the present value of the lease payments that are not paid at
commencement date, discounted using the rate implied in the lease. If this rate is not readily determinable,
the Group uses its incremental borrowing rate.
Lease payments included in the initial measurement of the lease liability consist of:
• Fixed lease payments less any lease incentives receivable;
• Variable lease payments that depend on an index or rate, initially measured using the index or rate at
commencement date;
• Any amounts expected to be payable by the Group under residual value guarantees;
• The exercise price of purchase options, if the Group is reasonably certain to exercise the options; and
• Termination penalties of the lease term reflects the exercise of an option to terminate the lease.
An extension option is included within the property lease held by the Group. In determining the lease
term, management considers all facts and circumstances that create an economic incentive to exercise
an extension option. Extension options are only included in the lease term if, at commencement date, it is
reasonably certain that the options will be exercised.
71
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 25: AASB 16 Leases (Continued)
Subsequent to initial recognition, the lease liability is measured by increasing the carrying amount to reflect
interest on the lease liability (using the effective interest method) and by reducing the carrying amount to
reflect the lease payments made. The lease liability is remeasured (with a corresponding adjustment to the
right-of-use asset) whenever there is a change in the lease term (including assessments relating to exten-
sion and termination options), lease payments due to changes in an index or rate, or expected payments
under guaranteed residual values.
Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments
made at or before commencement date, less any lease incentives received and any initial direct costs. These
right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses.
Where the terms of a lease require the Group to restore the underlying asset, or the Group has an obligation
to dismantle and remove a leased asset, a provision is recognised and measured in accordance with AASB
137. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-
use asset.
Right-of-use assets are depreciated on a straight-line basis over the term of the lease (or the useful life of the
leased asset if this is shorter). Depreciation starts on commencement date of the lease.
Where leases have a term of less than 12 months or relate to low value assets, the Group has applied the
optional exemptions to not capitalise these leases and instead account for the lease expense on a straight-
line basis over the lease term.
Impact on adoption of AASB 16
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously
been classified as operating leases under the principles of AASB 117. These liabilities were measured at the
present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as
of 1 July 2019. The weighted average lessee’s incremental borrowing rate applied to lease liabilities on 1
July 2019 was 4.79%.
On initial application right-of-use assets were measured at the amount equal to the lease liability, adjusted
by the amount of any prepaid or accrued lease payments relating to that lease recognised in the Statement
of Financial Position as at 30 June 2019.
In the Condensed Statement of Cash Flows, the Group has recognised cash payments for the principal
portion of the lease liability within financing activities, cash payments for the interest portion of the lease
liability as interest paid within operating activities and short-term lease payments and payments for lease of
low-value assets within operating activities.
On 1 July 2019, the adoption of AASB 16 resulted in the recognition of right-of-use assets of $167,774
and lease liabilities of $167,774 in respect of all operating leases, other than short-term leases and leases
of low-value assets.
The net impact on accumulated losses on 1 July 2019 was $nil.
72
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 25: AASB 16 Leases (Continued)
Practical expedients applied
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
• For existing contracts as at 1 July 2019, the Group has elected to apply the definition of lease contained in AASB
117 and Interpretation 4 and has not applied AASB 16 to contracts that were previously not identified as leases
under AASB 117 and Interpretation 4;
• Using hindsight in determining the lease term where the contract contains options to extend or terminate the lease
Below is a reconciliation of total operating lease commitments as at 30 June 2019, as disclosed in the annual
financial statements for the year ended 30 June 2019, and the lease liabilities recognised on 1 July 2019:
Operating lease commitments disclosed as at 30 June 2019
Discounted using the lessee’s incremental borrowing rate
at the date of initial application
Lease liabilities as at 1 July 2019
NOTE 26: Right-of-use Assets
Carrying value
Cost
Accumulated depreciation
Carrying value as at 30 June 2020
NOTE 27: Lease Liabilities
Current liabilities
Non-current liabilities
Total
$
180,373
167,774
167,774
Premises
$
167,774
(55,925)
111,849
Premises
$
55,998
60,105
116,103
AASB 16 has been adopted during the period, refer note 25 for details.
The Group leases only premises. The remaining term of the lease as of 30 June 2020 is 24 months. The
incremental borrowing rate applied to this lease is 4.79%.
Underlying assets serve as security for the related lease liabilities. A maturity analysis of future minimum
lease payments is presented below:
30 June 2020
Lease payments
Interest
Net present values
<1 year
$
60,100
4,102
55,998
Lease payments due
1-2 years
$
61,903
1,798
60,105
Total cash outflow relating to leases for the period ended 30 June 2020 was $58,350.
Total
$
122,003
5,900
116,103
73
DIRECTORS’ DECLARATION
1.
In the opinion of the Directors:
a. the accompanying financial statements, notes and the additional disclosures are in accordance
with the Corporations Act 2001 including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
performance for the year then ended; and
ii. complying with Australian Accounting Standards, the Corporations Regulations 2001, profes-
sional requirements and other mandatory requirements;
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable; and
c. the financial statements and notes thereto are in accordance with International Financial Re-
porting 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
2020.
This declaration is signed in accordance with a resolution of the Board of Directors.
Dr Martin Blake
Chairman
Place: Perth, Western Australia
Dated: 30 September 2020
74
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 2020, 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 2020 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 matter described below to
be the key audit matter to be communicated in our report.
Key Audit Matter
Intangible assets
Refer to Note 11
How our audit addressed the key audit
matter
As at 30 June 2020, the Group has an
intangible asset balance of $2,532,122 which
comprises intangible assets not yet available
for use and other intangible assets.
Under AASB 136 Impairment of Assets,
intangible assets not yet available for use are
Our audit procedures included but were not
limited to the following:
- Obtained an understanding of the key
controls associated with the preparation of
the value-in-use calculation used to assess
the recoverable amount of the intangible
assets;
75
INDEPENDENT AUDITOR’S REPORT
subject to an annual impairment test and other
intangible assets are subject to an impairment
test should indicators of impairment arise.
We consider this to be a key audit matter as it
involves
involving
complex matters
subjectivity and judgement, it is material to the
financial
users’ understanding of
it required
statements as a whole and
significant
and
auditor
communication with
those charged with
governance.
attention
the
- Critically
evaluated
in
management’s
the value-in-use
methodology used
calculation and
for key
assumptions including the discount rate
used;
the basis
- 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 whether the assets comprising
the cash-generating unit had been
correctly allocated;
- Compared the value-in-use to the carrying
amount of assets comprising the cash-
generating unit;
- Performed sensitivity analyses around the
key inputs used in the cash flow forecasts
and the headroom impact on the value-in-
use calculation;
- Reviewed the mathematical accuracy of
the net present value calculation; and
the appropriateness of
the
disclosures included in the relevant notes
to the financial report.
- Assessed
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 2020 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.
76
INDEPENDENT AUDITOR’S REPORT
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
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.
77
INDEPENDENT AUDITOR’S REPORT
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 2020.
In our opinion, the Remuneration Report of Resonance Health Limited for the year ended 30 June
2020 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
30 September 2020
M R Ohm
Partner
78
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 Compa-
ny’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 8 September 2020)
Distribution of shareholders (ASX Code: RHT)
Range of holdings
Holders
Units
Percentage
1 - 1,000
1,001 - 5,000
5,001 - 10,000
110
202
251
20,728
768,924
2,020,965
0.01%
0.18%
0.46%
10,001 - 100,000
1,152
46,560,953
10.49%
100,001 - 999,999,999,999
463
394,384,363
88.87%
TOTAL
2,178
443,773,933
100%
The number of shareholders holding less than a marketable parcel are 183.
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..
79
ADDITIONAL INFORMATION FOR LISTED PUBLIC
COMPANIES
4.
Twenty largest shareholders of quoted ordinary shares (as of 8 September 2020)
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
73,000,000
SOUTHAM INVESTMENTS 2003 PTY LTD
43,574,154
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
20,000,000
ACUITY CAPITAL INVESTMENT MANAGEMENT PTY LTD
9,325,519
MRS CHERYL LESLEY THOMPSON
6,500,000
MR HELMUT ROCKER
6,464,677
DR MARTIN PETER BLAKE
5,967,716
MR BRUCE ALAN STEVENSON
5,460,000
MR GREGORY PETER WILSON
5,440,824
MR ROBERT FRANCIS PANTON
5,400,000
CASTLEREAGH EQUITY PTY LTD
MARCOLONGO NOMINEES PTY LTD 5,186,200
4,978,750
THE UNIVERSITY OF WESTERN AUSTRALIA
4,434,777
MR THOMAS PSARAKIS
4,170,000
MR PAUL ANDREW FITZMAURICE
4,062,284
NEWECONOMY COM AU NOMINEES PTY LIMITED
4,045,653
BNP PARIBAS NOMINEES PTY LTD
4,014,908
MORGAN STANLEY AUSTRALIA SECURITIES
(NOMINEE) PTY LIMITED
MR VINCENT OLADELE
FULLERTON PRIVATE CAPITAL PTY LIMITED
ANAHEIN PTY LTD
3,641,552
3,500,000
3,010,598
16.45
9.82
4.51
2.10
1.46
1.46
1.34
1.23
1.23
1.22
1.17
1.12
1.00
0.94
0.92
0.91
0.90
0.82
0.79
0.68
222,177,612 50.07
2.
Twenty largest shareholders of quoted ordinary shares (as of 8 September 2020)
The names of substantial shareholders who have notified the Company in accordance with the Corpora-
tions Act 2001 are:
SOUTHAM INVESTMENTS 2003 PTY LTD
SG Hiscock & Company Limited
73,000,000
Ordinary shares
43,574,154
Ordinary shares
80
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