Uscom Ltd, Suite 1, Level 7, 10 Loftus Street, Sydney NSW 2000 Australia T +612 9247 4144
L i v e s
g
v i n
S a
ANNUAL REPORT
2012
Chairmans Letter
2
Corporate Governance
5
Directors’ Report and Financial Statements
10
CHAIRMANS LETTER
To fellow shareholders
Change: This year saw a significant change in direction of the Company with a fundamental re-organisation of the
management at the direction of shareholders at the 2011 AGM. I am pleased to report the Company results of
the 2012 financial year, and to update investors of the objectives, activities and early results of the new Company
strategy. While much of this 6 months has been review and re-orientation, we are confident in the new Uscom
direction and early signs are promising.
Strategy: Immediately following the 2011 AGM we reviewed operations and devised a new strategy with
consideration to the then state of operations, the uncertain global economy, and the evolving unprecedented
scientific recognition of the USCOM technology. The strategy focused on three points;
1.
2.
3.
Restore operational soundness - increase sales and decrease spend and preserve cash.
Focus on incremental growth opportunities – licensing, product co-developments and transactions.
Realise the true capital value of the technology and company – the current capitalised value of the company
is a fraction of similar entities despite the world leading and increasingly recognised technology.
Results: The FY 2012 results are weighed down by the poor Q1 and Q2 results of last year. However Q3 and Q4
have responded positively as new management has revived sales and reduced costs. Total revenue for the 2012
FY was $864k, down 2% on last year from $881k in 2011. The new cost containment strategy introduced in Q3 and
Q4 has reduced the aggregate loss for FY 2012 by 32% from a $2.869m loss in 2011 to $1.825m in FY 2012.
Capital: To restore capital adequacy to the Company we have undertaken a successful private placement raising
approximately $1m at 12c a share from sophisticated investors including both current and new investors. The
offer was over subscribed, with some shares offered conditional to shareholder approval and will be voted on at
the AGM. We will also receive a research and development tax rebate of approximately $400k. This, combined
with our tightly managed spend, will ensure capital certainty in the year ahead as our current strategy is
implemented. We have always valued capital and respect shareholder’s investments, and while creating life
saving technology is a mission of our company, we believe this good should be converted to significant
shareholder rewards.
Last year the Auditor’s review of the Uscom accounts included an emphasis of matter and comments regarding
matters of going concern. This year, after the private placement and introduction of new budget measures the
current financial position is much improved and recognised by an unmodified audit opinion. This reflects the new
emphasis on controlled management and validates shareholders actions at last year’s AGM.
Sales: It is taking time to re-motivate the previously alienated distributors, but we are seeing some up swing in
both opportunities and sales, and we are optimistic this trend will continue as new international research
promotes new markets, and current markets begin to grow again. While sales are unlikely to be spectacular, the
cash needs of the Company are now tightly managed and increased revenue combined with a decreased cost will
positively effect operations and we are optimistic for the year ahead.
Share price: The share price has more than doubled from 6c to 15c in the last 6 months on relatively high volume
as the new management and strategy have been recognised by investors, and this has resulted in a more
balanced shareholder register. Uscom Limited is currently capital valued at a fraction of that of our competitors
and we are looking forward to new investor demand driving the retail market and restoring the share price to
reasonable levels. Additionally the Company is well poised to achieve a significant value re-alignment as the
implications of the world leading USCOM science is recognised and new partnerships are completed. The
bioscience sector continues to gain investor attention and USCOM science is unequalled and represents an
outstanding commercial opportunity, and we are now poised to realise the commercial value of the technology
for shareholders.
Risks: The risks for the Company remain in sales and marketing in a particularly difficult market with limited
resources. Resistance to change in clinical practice, despite outstanding clinical evidence, also remains an
impediment to adoption; change is always difficult in the conservative field of medicine. The strategy of
establishing partnerships, although promising, depends on the willingness and vision of prospective partners.
Science: This year the non-invasive USCOM was confirmed as the clinical gold standard cardiac monitor and a
true platform technology across multiple applications, an objective on which the Company was founded.
USCOM now has clinical proof in over 21 fields including paediatrics, sepsis, heart failure and hypertension, and
the list is expanding. Each of these applications supports a potential licensing partnership and a unique and
expansive business opportunity. The USCOM now has over 250 peer reviewed publications researching its clinical
utility, and clinical adoption of Uscom technology continues with over 600 USCOM’s in clinical sites throughout
the world.
Uscom Limited - Annual Report 2012 - 2
CHAIRMANS LETTER continued
The scientific highlights for this year include:
•
Professor Smith at Bathurst has demonstrated a reduced mortality in management of sepsis of 90%
using USCOM. This evidence will influence clinical practice worldwide.
• USCOM was proven in a study at The Howard Florey Institute in Melbourne to be 6 to 8 times as
sensitive as the pulmonary artery catheter which requires a catheter inserted directly into the heart.
USCOM was founded to replace invasive and ineffective technologies with accurate and non-invasive
alternatives; this study validates that objective and separates USCOM from its competitors.
With the increasing scientific validation, the pressure for adoption of USCOM as a global standard of care is
increasing. The USCOM science is now unequalled, with lives being saved weekly, if not daily, worldwide.
Partnerships strategy: USCOM is a genuine gold standard, platform cardiac monitoring technology on the cusp
of commercial recognition and our new strategy is to work with major medical device companies, which are
known to USCOM, with specific market expertise and distribution channels to establish selective partnerships. It is
envisaged that these partnerships will be based on co-development and distribution relationships and the
partners multi-national organisations with sales and marketing scale and reach with sector specific focus. These
partnerships are expected to add cost effectively to revenue and add incremental capital value to the Company.
The increasing scientific recognition will drive USCOM into many new markets, all of which will require strategic
partnerships to adequately capitalise. A single strong partnership has the potential to make the company
profitable immediately. Current partnership opportunities include licensing USCOM technology into ultrasound
devices, cardiac monitoring modules, ventilators, pacemakers and artificial hearts, pharmaceutical companies for
guidance and optimisation of drugs for heart failure, hypertension and chemotherapy, and home care
management. This will result in specialised USCOM devices for paediatrics, sepsis, heart failure, hypertension,
electrophysiology, cardiac monitoring, and include our new cardioCARE management guidance software.
Conclusion: Uscom is doing genuinely important work; changing clinical practice and saving lives. Uscom remains
a great Company with great technology and great people, poised to transition to a powerful multi-product and
profitable global bio-device Company. I am proud of what we have done, excited about what we hope to do and
delighted to have you as investors in Uscom Limited to share in the success as we improve global medical care
and refine operations with a new strategy and company vision. I believe we can look forward to the coming year
with optimism as we pursue the milestones which will incrementally grow the value of Uscom and reward
investors.
Thank you.
Rob Phillips
Executive Chairman
Uscom Limited
Uscom Limited - Annual Report 2012 - 3
USCOM - SAVING LIVES
Uscom Limited - Annual Report 2012 - 4
CORPORATE GOVERNANCE STATEMENT
As outlined in previous annual reports, Uscom is committed to continuing its high standards of corporate
governance. Effective corporate governance aids the Company to set and achieve its objectives. Our Governance
Statement for 2011/2012 outlines our policies and practices by reference to the Corporate Governance Principles
and Recommendations with 2010 Amendment published by the ASX Corporate Governance Council (“ASX
Principles”).
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1: Establish the functions reserved to the board and those delegated to senior
executives and disclose those functions.
The Board has adopted a charter that sets out the responsibilities reserved by the Board, those delegated to the
Executive Chairman. For a copy of the Board Charter refer to Uscom Corporate Governance Documentation on
the Company website.
Recommendation 1.2: Disclose the process for evaluating the performance of senior executives.
The Chief Executive Officer and General Manager attend the scheduled board meetings and present to the
Board regarding the Company’s performance against its goals and objectives. The Board assesses the
performance of the Senior Executives against their individual goals and objectives and those of the Company on
a regular basis at these meetings. The Company conducts annual performance appraisals of all employees.
Recommendation 1.3: Provide the information indicated in the Guide to reporting on Principle 1.
A performance evaluation of Senior Executives has taken place during the reporting period in accordance with
the process disclosed above. A copy of the Board Charter is included with the Uscom Corporate Governance
Documentation on the Company website.
Principle 2: Structure the board to add value
Uscom Ltd has the services of a Board with a wide range of professional experience in fields such as science,
medicine, marketing and international business. Further information regarding the Directors is provided in the
Directors’ Report (refer to page 10).
Recommendation 2.1: A majority of the board should be independent directors.
The Board consists of three members, two of whom are Non-Executive Directors. The Company takes the view
that the two Non-Executive Directors are also Independent Directors. In the interests of transparency, the
Company discloses relationships or business associations which may impact a person’s own interpretation of the
definition of independent.
The Board believes that the composition is appropriate for the Company due to its small size and the nature of
the business. The Board will continue to review this on an ongoing basis.
Recommendation 2.2: The chairperson should be an independent director.
The Chairman of Uscom Ltd, Mr Rob Phillips, is an executive director and is therefore not an independent
director. The Board believes that an Executive Chairman is appropriate given the size of the Company and the
nature of the business.
Recommendation 2.3: The roles of chairperson and chief executive officer should not be exercised by the
same individual.
Mr Rob Phillips is the Executive Chairman and Chief Executive Officer. The Board believes this is appropriate
given the size of the Company and the nature of the business.
Recommendation 2.4: Establish a nomination committee.
The Company believes that a nomination committee is not necessary at this stage of the Company’s
development. Issues relating to board membership will continue to be overseen by the full Board. The
Company believes this to be justified given the relatively small size of the board and that significant growth in the
number of Directors is not envisaged in the medium term.
Recommendation 2.5: Disclose the process for evaluating the performance of the board, its committees
and individual directors.
A director’s performance is evaluated informally by assessing their contribution and attendance at all Board
meetings.
Uscom Limited - Annual Report 2012 - 5
CORPORATE GOVERNANCE STATEMENT continued
Recommendation 2.6: Provide the information indicated in the Guide to reporting on principle 2.
•
The skills, experience and expertise relevant to the position of Director held by each director in office can be
found in the Directors’ Report.
The names of the Directors considered by the Board to constitute Independent Directors and the Company’s
materiality threshold can be found in the Directors’ Report.
•
• All Company Non-Executive Directors are considered independent, notwithstanding the existence of
relationships stated in the Guide.
The term of office held by each Director in office can be found in the Directors’ Report.
•
• As set out above, the Company believes that a nomination committee is not necessary at this stage of the
Company’s development therefore does not hold nomination meetings.
• A statement detailing the procedure agreed by the Board for Directors to take independent professional
•
advice at the expense of the Company can be found in the Remuneration Report.
The Board’s membership and structure is selected for optimum efficiency while providing high levels of
expertise in science, medicine and business. The Board as a whole considers nomination issues, including
the mix of skills and diversity of the Board, in an ongoing, informal manner. As stated above the Board is not
looking to significantly expand its membership in the medium term.
• A formal performance evaluation for the Board, its committees and Directors has not taken place in the
reporting period however performance is measured as described in 2.5 above.
Principle 3: Promoting ethical and responsible decision-making
Recommendation 3.1: Establish a code of conduct to guide the Directors, the Chief Executive Officer and
other key Executives as to:
•
•
The practices necessary to maintain confidence in the Company’s integrity.
The practices necessary to take into account their legal obligations and the reasonable expectations of
their stakeholders.
The responsibility and accountability of individuals for reporting and investigating reports of unethical
practice.
•
The Company has developed a Code of Conduct for Directors, management and staff, underlining the
Company’s commitment to high ethical standards in the conduct of the Company’s business. The Board is
responsible for ensuring the Company’s compliance with the Code and the good and fair management of reports
of any breaches.
For detailed Code of Conduct refer to Uscom Corporate Governance Documentation on the Company website.
Recommendation 3.2: Establish a policy concerning diversity and disclose the policy or a summary of that
policy.
The Company has adopted a policy in relation to diversity. For details refer to Uscom Corporate Governance
Documentation on the Company website.
Recommendation 3.3: Companies should disclose in each annual report the measurable objectives for
achieving gender diversity set by the board in accordance with the diversity policy and progress towards
achieving them.
The Company has not established measurable objectives for achieving gender diversity at this time.
Recommendation 3.4: Companies should disclose in each annual report the proportion of women
employees in the whole organisation, women in senior executive positions and women on the board.
The proportion of women within the organisation is: 42%
Women within whole organisation:
Women in senior executive positions:
Women on the board:
5
8%
1
Recommendation 3.5: Companies should provide the information indicated in the Guide to reporting on
Principle 3.
Information can be found in the Uscom Corporate Governance Documentation on the Company website.
Uscom Limited - Annual Report 2012 - 6
CORPORATE GOVERNANCE STATEMENT continued
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1: Establish an audit committee.
The Board has established an Audit and Risk Committee.
Recommendation 4.2: Structure the audit committee so that it consists of only non-executive directors; a
majority of independent directors; an independent chairperson, who is not chairperson of the board; at
least three members.
The Company has appointed an Audit and Risk Committee (“Committee”), responsible for reporting to the full
Board on issues relating to the Company’s financial information and a regular review of the Company’s risk
environment.
The Committee is made up of two members, both independent Directors. The Chairman of the Committee is an
independent director. The size of the Committee, although not in compliance with the ASX Principles, is
considered appropriate for the size of the Company. The Committee will meet at least three times per year.
Recommendation 4.3: The audit committee should have a formal charter.
The Committee operates according to a formal charter.
Recommendation 4.4: Provide the information indicated in the Guide to reporting on Principle 4.
The qualifications of the Committee members are set out in the Directors’ Report together with their attendance
at Committee meetings.
The Committee charter, which includes information regarding the external auditor’s engagement, is included in
the Uscom Corporate Governance Documentation on the Company website.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1: Establish written policies designed to ensure compliance with ASX Listing Rule
disclosure requirements and to ensure accountability at a senior executive level for that compliance and
disclose those policies or a summary of those policies.
The Company has produced and adopted a disclosure policy, which has been communicated to all Directors,
managers and employees.
The Board, Company Secretary and senior executives are aware of the ASX Listing Rules and Corporations Act
disclosure requirements, and take steps to actively monitor and ensure ongoing compliance.
The Executive Chairman in consultation with the Company Secretary, continually monitors developments in the
Company and its business and reports any developments immediately to the Board for consideration.
Recommendation 5.2: Provide information indicated in the Guide to reporting on Principle 5.
Refer to the Uscom Corporate Governance documentation on the Company website.
Principle 6: Respect the rights of shareholders
Recommendation 6.1: Design a communications policy for promoting effective communication with
shareholders and encouraging their participation at general meetings and disclose their policy or a
summary of that policy.
Uscom Ltd is committed to keeping shareholders fully informed of significant developments and activities at the
Company.
The Company’s primary communications tool is its website, and all announcements are posted on the site,
immediately after they are released to the ASX through the appropriate electronic publication procedure.
Where information may be provided to market analysts or the media which is materially incremental to the
announcements already published, this information would be treated as an announcement and published
accordingly.
All announcements, dating back to May 2001, remain available on the website.
In addition, the website provides an “Investors” section, where more detailed information is available, including
access to all of the Company’s financial statements and the delayed share trading data produced by ASX.
Shareholders are encouraged to actively communicate with the Company through contact details provided on
the website.
Uscom Limited - Annual Report 2012 - 7
CORPORATE GOVERNANCE STATEMENT continued
The Company also encourages shareholders to participate in the annual general meeting.
Ample notice of this meeting will be provided. All documents and presentations delivered to the annual general
meeting will be posted immediately on the Company website.
Recommendation 6.2: Provide the information indicated in the Guide to reporting on Principle 6.
Refer to the Uscom Corporate Governance documentation on the Company website.
Principle 7: Recognise and manage risk
Recommendation 7.1: Establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
The Company has appointed an Audit and Risk Committee, which is charged with oversight of the Company’s risk
profile. The Committee assesses the adequacy of the Company’s control and risk environment, including
accounting, financial and operating controls and the appropriateness of its accounting policies and practices. The
committee manages a dynamic checklist of potential risk components and reviews each component during the
course of a year.
Recommendation 7.2: Require management to design and implement the risk management and internal
control system to manage the Company’s material business risks and report to it on whether those risks are
being managed effectively. The board should disclose that management has reported to it as to the
effectiveness of the Company’s management of its material business risks.
The Board has required Management to design and implement the risk management and internal control system
to manage the company's material business risks and report to it on whether those risks are being managed
effectively. Management has reported to the Board as to the effectiveness of the Company’s management of its
material business risk.
Recommendation 7.3: Disclose whether it has received assurance from the Chief Executive Officer (or
equivalent) and Chief Financial Officer (or equivalent) that the declaration provided in accordance with
section 295A of the Corporations Act is founded on a sound system of risk management and internal
control and that the system is operating effectively in all material respects in relation to financial reporting
risks.
The Board has received assurance from the Chief Executive Officer and the General Manager that the declaration
provided in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk
management and internal control and that the system is operating effectively in all material respects in relation to
financial reporting risks.
Recommendation 7.4: Provide the information indicated in the Guide to reporting on Principle 7.
The Board has received the report from management under recommendation 7.2 and the assurance from the
Chief Executive Officer and the General Manager under recommendation 7.3.
Refer to the Audit and Risk Committee Charter included in Uscom Corporate Governance on the Company
website for further information regarding the Company’s policies on risk oversight and management of material
business risks.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1: Establish a Remuneration Committee.
Given the relatively small size of the Uscom board, the Company does not currently see the need for a separate
remuneration committee.
Uscom Ltd has adopted a remuneration policy based on performance and contribution.
Is chaired by an independent chair
Recommendation 8.2: The remuneration committee should be structured so that it:
• Consists of a majority of independent directors
•
• Has at least three members.
As set out above, given the relatively small size of the Uscom board, the Company does not currently see the
need for a separate remuneration committee.
Uscom Limited - Annual Report 2012 - 8
CORPORATE GOVERNANCE STATEMENT continued
Recommendation 8.3: Clearly distinguish the structure of non-executive directors’ remuneration from that
of executive directors and senior executives.
Information regarding the remuneration of non-executive Directors, executive Directors and Senior Executives is
provided in the Company’s Remuneration Report from pages 13 to 17.
Recommendation 8.4: Companies should provide the information indicated in the guide to reporting on
Principle 8.
There are no schemes for retirement benefits, other than superannuation, for non-executive directors. Non-
executive directors do not receive options or bonus payments.
The Company’s departure from Recommendations 8.1 and 8.2 are explained above.
Uscom Limited - Annual Report 2012 - 9
DIRECTORS’ REPORT
The Directors present their report on Uscom Ltd and its Controlled Entity for the financial year ended 30 June
2012.
Directors
The following persons were Directors of Uscom Ltd during the whole of the financial year and up to the date of
this report, unless otherwise stated.
Mr R A Phillips
Ms S Jack
Mr C Bernecker
Mr P Kiely
Mr B Rathie
Mr J Bonitz
Executive Director - Chairman
Non-Executive Director (Appointed on 25th November 2011)
Non-Executive Director (Appointed on 25th November 2011)
Executive Chairman (Ceased on 22nd November 2011)
Non-Executive Director (Resigned on 30th August 2011)
Non-Executive Director (Ceased on 22nd November 2011)
Directors’ qualifications and experience
Mr Rob Phillips
Rob Phillips is the founder of Uscom Ltd, the Chief Executive Officer, Executive Director and Chief Scientist of the
Company. Rob has 9 years experience as Executive Chairman of the Company, having taken the Company to IPO
in 2003, and has over 20 years in executive corporate management. The Company received the Frost and Sullivan
Global Entropolis Award for the Emerging Medical Device Company of the Year in 2007. He has a Master of
Philosophy in Medicine from The University of Queensland and is currently completing his PhD. He is an
Australian Post Graduate Award recipient and was a finalist in the Time-CNN World Health and Medicine
Technology Awards in 2004. Rob has pioneered novel clinical approaches to cardiovascular assessment having
authored over 30 patents and patent applications and is an internationally recognised teacher and examiner in
the field of echocardiography.
Ms Sheena Jack
Ms Sheena Jack was appointed Non-Executive Director of Uscom Ltd on 25th November 2011 and is also the
Chairman of the Audit and Risk Committee.
Sheena is currently the Chief Financial Officer of HCF and has 26 years experience as a finance professional and
corporate executive. She has had experience across a range of corporate organisations including ASX listed
companies, government and not for profit in both mature and start-up businesses. Sheena has significant
experience in mergers and acquisitions, business integration, strategy development and implementation, capital
markets and organisational transformation. She is a Director of Moneytime Health Pty Ltd and Treytell Pty Ltd.
Sheena is a Chartered Accountant and a graduate member of the Australian Institute of Company Directors.
Mr Christian Bernecker
Mr Christian Bernecker was appointed Non-Executive Director of Uscom Ltd on 25th November 2011 and is also a
member of the Audit & Risk Committee.
Christian is Managing Director of Nightingale Partners Pty Limited, an active investment company which provides
expansion capital to small cap companies. He is currently a Non-Executive Director of LongReach Group Limited,
DSQ Holdings Limited, Australis Music Group Pty Limited, Creditorwatch Pty Limited, Mayfield Industries Pty
Limited, Stream Group Holdings Pty Limited and a number of other private companies.
Christian is a member of the Institute of Chartered Accountants in Australia and holds a Bachelor of Commerce
from Ballarat University.
Mr Phil Kiely (Ceased on 22nd November 2011)
Mr Kiely was the Executive Chairman for Uscom Ltd until 22nd November 2011. Mr Kiely holds a Bachelor of
Commerce/Law degree from the University of NSW.
Phil Kiely has over 25 years in the ICT sector working in leading global companies most recently establishing an
investment company, Matrix Capital Corporation, which has developed and commercialised innovative product &
services organisations. Prior to Matrix Phil spent seven years at Oracle Corporation, the world’s largest database
company. His last role at Oracle was as Vice President Oracle Online, Asia Pacific. Prior to joining Oracle, Phil was
one of the pioneers of IT outsourcing in Australia. He held positions as General Manager, Continuum Australia
later acquired by CSC and General Manager, Computations.
Mr Bruce Rathie (Resigned on 30th August 2011)
Mr Rathie was a Non-Executive Director of Uscom Ltd until 30th August 2011. He holds degrees in law, commerce
and business and has considerable experience as a lawyer having practiced as a solicitor and partner in a major
Brisbane based legal firm and then as Senior in-house Counsel to Bell Resources Limited from 1980 to 1985 in
aggregate. He studied for his MBA in Geneva and then went into investment banking in 1986 which subsequently
took him to New York for over 2 years returning to Sydney in 1990. He spent the 90's in investment banking in
Uscom Limited - Annual Report 2012 - 10
DIRECTORS’ REPORT continued
Sydney, the last 5 years as a Director of Investment Banking at Salomon Brothers/ Salomon Smith Barney where
he was responsible for the firm's activities/ roles in the industrial sector and the Federal Government's
privatisation of Qantas, Commonwealth Bank (CBA3) and Telstra (T1). Mr Rathie currently holds board positions
with a number of Australian companies.
During the past three years Mr Rathie held senior positions of the following listed companies:
• DataDot Technology Limited
Non-Executive & Chairman
• Anteo Diagnostics Limited
• Calzada Limited
• Mungana Goldmines Limited
Mr Rathie was a member of the Audit and Risk Committee until 30th August 2011.
Chairman and Non-Executive Director
Non- Executive Director
Non- Executive Director
December 2006 – January 2009
& October 2009 - present
July 2006 – August 2009
April 2010 - present
October 2010 - present
Mr Jochen Bonitz (Ceased on 22nd November 2011)
Mr Bonitz was a Non-Executive Director of Uscom Ltd until 22nd November 2011. He holds a Bachelor of Science
degree from the University of NSW and a MBA from the Australian Graduate School of Management.
Mr Bonitz was a former Director at KPMG Corporate Finance with over 20 years experience in the technology
sector spanning a career in programming, consulting and Mergers & Acquisitions advisory.
Having focused initially in the technical field and consulting at Logica and IBM, Mr Bonitz started and developed
a communication company which he merged into Pacnet where he was then the CEO for the Australian
subsidiary. He later worked with the Commonwealth Bank and at KPMG as a corporate M&A adviser with a
specific focus on the ICT and telecoms sectors. Most recently he has been on the direction panel for the Federal
Government’s National Broadband Network (NBN).
Mr Bonitz was a member of the Audit and Risk Committee until 22nd November 2011.
Company Secretary’s qualifications and experience
Mr Tom Rowe
Mr Rowe was appointed the Company Secretary of Uscom Ltd on 7th December 2011. He is a Corporate and
Commercial Lawyer with a specialty in listed company secretarial practice. Mr Rowe holds a BA LLB (Hons) from
the University of Adelaide and is an Associate of the Chartered Institute of Secretaries. He is the current Principal
of Company Matters, a specialist provider of legal, governance and company secretarial services. Previously, he
held the position of Legal Counsel and Company Secretary at CSR Ltd.
Meetings of Directors
Directors
Board of Directors
Audit and Risk Committee
R A Phillips
S Jack **
C Bernecker **
P Kiely *
B Rathie ***
J Bontiz *
Meetings held while
a Director
13
8
8
4
2
4
No. of meetings
attended
12
8
6
4
2
4
Meetings held while a
Director
-
1
1
-
1
1
No. of meetings
attended
-
1
1
-
1
1
* Ceased on 22nd November 2011
** Appointed on 25th November 2011
*** Resigned on 30th August 2011
Principal activities
Uscom Ltd is engaged in the development, design, manufacture and marketing of non-invasive cardiac
monitoring devices. Uscom Ltd owns a portfolio of intellectual property relating to the technology and
techniques associated with these devices and manages a worldwide network of distribution partners for the sale
of its equipment to hospitals and other medical care locations. Uscom Ltd owns 100% of Uscom, Inc. a company
engaged in the sale and promotion of USCOM devices primarily in the United States.
Operating result
The loss of the Consolidated Entity after providing for income tax amounted to $1,824,547 (2011: $2,685,913)
Dividends
No dividends were declared or recommended for the financial year ended 30 June 2012.
Uscom Limited - Annual Report 2012 - 11
DIRECTORS’ REPORT continued
Significant changes in state of affairs
There were no significant changes in state of affairs during the financial year apart from the change of Board of
Directors and Management following the AGM in November 2011.
Operating and financial review
The operating and financial review is stated on pages 2 to 3 of this report.
Events after the reporting date
Apart from the items disclosed in note 29 to the financial statements, no other matters or circumstances have
arisen since the end of the financial year to the date of this report, that has significantly affected or may
significantly affect the activities of the Consolidated Entity, the results of those activities or the state of affairs of
the Consolidated Entity in the ensuing or any subsequent financial year.
Future developments
Other than the business activities described in the annual report and, in particular, those matters discussed in the
Review of Operations, the Board is not aware of any likely developments in the foreseeable future which may
materially impact on the financial outlook of the Consolidated Entity.
Environmental issues
The Consolidated Entity’s operations are not subject to significant environmental regulation under the law of the
Commonwealth and State.
Indemnifying officers
The Consolidated Entity has paid premiums to insure all Directors and Executives against liabilities for costs and
expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the
capacity of Director of the Company, other than conduct involving a wilful breach of duty in relation to the
Company.
Proceedings on behalf of the Consolidated Entity
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Consolidated Entity, or to intervene in any proceedings to which the Consolidated
Entity is a party, for the purpose of taking responsibility on behalf of the Consolidated Entity for all or part of
those proceedings.
No proceedings have been brought or intervened in on behalf of the Consolidated Entity with leave of the Court
under section 237 of the Corporations Act 2001.
Non-audit services
The Consolidated Entity may decide to employ the auditor on assignments additional to their audit duties where
the auditor’s expertise and experience with the Consolidated Entity are important.
During the year, $2,956 was paid to PKF California for tax consulting services provided to the Consolidated Entity.
The Directors are of the opinion that the provision of non-audit services as disclosed in note 26 in the financial
report does not compromise the external auditor’s independence as outlined in the Corporations Act 2001 for
the following reasons:
• All non-audit services have been reviewed and approved 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 the
Code of Conduct APES110 Code of Ethics of Professional Accountants issued by the Accounting
Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting
in management decision making capacity for the Company, acting as advocate for the Company or
jointly sharing economic risks and rewards.
Refer to note 26 of the financial statements on page 42 for details of auditors’ remuneration.
The auditor’s independence declaration under section 307C of the Corporation Act is set out on page 18 and
forms part of the Directors’ Report.
Uscom Limited - Annual Report 2012 - 12
DIRECTORS’ REPORT continued
Remuneration report
This remuneration report has been prepared by the Directors of Uscom Ltd to comply with the Corporations Act
2001 and the key management personnel (KMP) disclosures required under Australian Accounting Standards
AASB 124 – Related Party Disclosures.
Key management personnel
The following were key management personnel of the Entity at the start of the financial year to the date of this
report unless otherwise stated:
Non-Executive Directors
Sheena Jack, Non-Executive Director (commenced on 25th November 2011)
Christian Bernecker, Non-Executive Director (commenced on 25th November 2011)
Bruce Rathie, Non-Executive Director (ceased on 30th August 2011)
Jochen Bonitz, Non-Executive Director (ceased on 22nd November 2011)
Executive Directors
Rob Phillips, Executive Director, Chairman, Chief Executive Officer
Phil Kiely, Executive Chairman (ceased on 22nd November 2011)
Senior Executives
Tom Rowe, Company Secretary (commenced on 7th December 2011)
Nick Schicht, General Manager
Daniel Fah, Chief Financial Officer, Company Secretary (ceased on 30th November 2011)
Deb Johnson, VP Sales and Marketing (ceased on 8th June 2012)
Joe Trygar, Chief Executive Officer (from 16th September 2011 to 2nd December 2011)
In the Directors’ opinion, there are no other Executives of the Entity.
Remuneration policies
The Board is responsible for reviewing the remuneration policies and practices of the Consolidated Entity,
including the compensation arrangements of Executive Directors, Non-Executive Directors and Senior Executives.
The Consolidated Entity has adopted remuneration policies based on performance and contribution for
determining the nature and amount of emoluments of Board Member and Senior Executives. The objective of
these policies is to:
• Make Uscom Ltd and its Controlled Entity an employer of choice
• Attract and retain the highest calibre personnel
• Encourage a culture of reward for effort and contribution
• Set incentives that reward short and medium term performance for the Consolidated Entity
• Encourage professional and personal development
In the case of Senior Executives, a recommendation for compensation review will be made by the Chairman to
the Board, which will conduct a performance review.
Non-Executive Directors
The Board determines the Non-Executive Director remuneration by independent market data for comparative
Companies.
As at the date of this report the maximum aggregate remuneration payable out of the funds of the Entity to Non-
Executive Directors of the Consolidated Entity for their services as Directors including their service on a
committee of Directors is $165,000 per annum.
Non-Executive Directors do not receive any performance related remuneration, therefore they do not receive
bonuses or non-cash benefits.
Non-Executive Directors’ retirement payments are limited to compulsory employer superannuation.
Executive Directors and Senior Executives remuneration
The Consolidated Entity’s remuneration policy directs that the remuneration package appropriately reflects the
Executives’ duties and responsibilities and that remuneration levels attract and retain high calibre Executives with
the skills necessary to successfully manage the Consolidated Entity’s operations and achieve its strategic and
financial objectives.
Uscom Limited - Annual Report 2012 - 13
DIRECTORS’ REPORT continued
The total remuneration packages of Executive Directors and Senior Executives are on a salary basis. In addition to
base salary, the Company has a policy of rewarding extraordinary contribution to the growth of the Company with
the grant of an annual discretionary cash bonus and options under the Consolidated Entity’s Employee Share
Option Plan.
Executives are also entitled to be paid for their reasonable travel, accommodation and other expenses incurred in
consequence in the execution of duties.
Other than the Uscom Ltd Employee Share Option Plan, the Consolidated Entity does not provide any other non-
cash benefits in lieu of base salary to Executives.
Remuneration packages for Executive Directors and Senior Executives generally consist of three components:
• Fixed remuneration which is made up of cash salary, salary sacrifice components and superannuation
• Short term incentives
• Long term incentives which include issuing options pursuant to the Uscom Ltd Employee Share Option Plan.
Fixed remuneration
Senior Executives who possess a high level of skill and experience are offered a competitive base salary. The
performance of each Executive will be reviewed annually. Following the review, the Consolidated Entity may in its
sole discretion increase the salary based on that Executive’s performance, productivity and such other matters as
the Board considers relevant. Superannuation contribution by the Consolidated Entity is limited to the statutory
level at 9% of wages and salaries.
Short-term incentives
The remuneration of Uscom Ltd Senior Executives does not include any short-term incentive bonuses as part of
their employment conditions. The Board may however approve discretionary bonuses to Executives in relation to
certain milestones being achieved.
Long-term incentives
The Consolidated Entity has adopted a Share Option Plan for the benefit of Executive Directors, full-time and
part-time staff members employed by the Consolidated Entity.
In accordance with the employee option plan, options issued under the employee option plan, have an exercise
price based on 85% of the average ASX closing price for the 5 days prior to offer/acceptance of the options. Each
option is issued for a period of 4 years, which vest 25% in tranches throughout the period.
An Executive Share Option Plan has also been developed for approved participants.
The Board, at its discretion, may approve the issue of options under the Employee Share Option Plan and the
Executive Share Option Plan to Senior Executives. The vesting of options issued may be conditional upon the
achievement of performance hurdles determined by the Board from time to time. The Board may propose the
issue of options to Directors, however this will be subject to shareholder approval at the Annual General Meeting.
Independent data from applicable sources may be requested by the Board to assess whether the performance
hurdles have been met.
During the year, 400,000 options were issued to employees under the Employee Share Option Plan at an exercise
price of 5.95 cents per option and 400,000 options were issued to executives under the Executive Share Option
Plan at an exercise price of 5.95 cents per option.
Service agreements
The Consolidated Entity has entered into a service agreement with the Chairman that
• Outlines the components of remuneration payable; and
• Specifies term and termination conditions.
Details of the service agreement are as follows:
Term
The Executive Employment Agreements are for a term of 3 years. The term of employment may be extended by
the Consolidated Entity after the expiration of the initial 3 year term.
Each Executive may not, during the term of the employment agreement, perform work for any other person,
corporation or business without the prior written consent of the Consolidated Entity.
Uscom Limited - Annual Report 2012 - 14
DIRECTORS’ REPORT continued
Due to the small number of Executives the remuneration committee comprises the Board of Directors which is
made up of two Non-Executive Directors. Reference is made to external market information in order to retain the
most suitable Executives for meeting the entity’s goals. Executive Directors are excluded from discussions on
their remuneration. The remuneration of key Executives are not linked with the Consolidated Entity’s performance
as the focus is on retention of key Executives to ensure growth and traction in what is a new market. The Board of
Directors will consider linking executive remuneration to Consolidated Entity’s performance once the
Consolidated Entity has sufficient market traction.
Termination
Despite anything to the contrary in the agreement, the Consolidated Entity or the Executive may terminate the
employment at any time by giving the other party 3 months’ notice in writing.
If either the Consolidated Entity or the Executive gives notice of termination, the Consolidated Entity may, at its
discretion, choose to terminate the Executive’s employment immediately or at any time during the notice period
and pay the Executive an amount equal to the salary due to them for the residual period of notice at the time of
termination.
Where the Executive gives less than 3 months written notice, the Consolidated Entity may withhold from the
Executive’s final payment an amount equal to the shortfall in the notice period.
The employment of each Executive may be terminated immediately without notice or payment in lieu in the event
of any serious or persistent breach of the agreement, any serious misconduct or wilful neglect of duties, in the
event of bankruptcy or any arrangement or compensation being made with creditors, on conviction of a criminal
offence, permanent incapacity of the Executive or a consistent failure to carry out duties in a manner satisfactory
to the Consolidated Entity.
Directors and Executives remuneration
Remuneration includes salaries, benefits and superannuation contributions in respect of the financial year 2012.
Non-Executive Director
S Jack (from 25 Nov 2011)
C Bernecker (from 25 Nov 2011)
B Rathie (to 30 Aug 2011)
J Bonitz (to 22 Nov 2011)
Executive Director
R Phillips
P Kiely (to 22 Nov 2011)
Senior Executive
T Rowe (from 7 Dec 2011)
N Schicht
D Fah (to 30 Nov 2011)
D Johnson (to 8 Jun 2012)
J Trygar (from 15 Jul to 2 Dec 2011)
Equity
Total
remuneration
Short term benefits
Directors’
Base Fee
$
-
-
5,833
-
Base salary
$
-
-
-
-
Other
payments
$
-
-
-
-
Post employment
benefits
Superannuation
$
-
-
525
-
171,090
-
-
60,000(2)
46,281(1)
-
Share-based
payment
$
% of total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
166,000
-
139,640
58,145
1,965(3)
-
26,360(4)
14,323
-
-
14,940
-
-
-
61,746
-
642
-
564
-
1,206
-
0.4%
-
0.4%
-
-
$
-
-
6,358
-
217,371
60,000
1,965
181,582
26,360
154,527
58,145
706,308
Total
5,833
534,875
102,648
(1)
(2)
(3)
(4)
$28,333 of Directors’ salary was sacrificed to post employment benefit during FY2012
Payments were made to Ecrucis Pty Ltd for the services provided by Mr Kiely.
Payments were made to Company Matters Pty Ltd for the services provided by Mr Rowe.
Payments were made to CFO Strategic Chartered Accountants for the services provided by Mr Fah.
Uscom Limited - Annual Report 2012 - 15
DIRECTORS’ REPORT continued
Directors and Executives remuneration
Remuneration includes salaries, benefits and superannuation contributions in respect of the financial year 2011.
Non-Executive Director
R Zwolenski (to 22 Dec 2010)
B Rathie
J Bonitz (from 4 Jan 2011)
Executive Director
R Phillips
P Kiely (from 22 Dec 2010)
Senior Executive
D Fah
N Schicht
A Hughes-Jones (to 10 Dec 2010)
D Johnson
Short term benefits
Directors’
Base Fee
$
17,500
35,000
-
Base salary
$
-
-
-
Other
payments
$
-
-
-
Post employment
benefits
Superannuation
$
1,575
3,150
-
Equity
Total
remuneration
Share-based
payment
$
% of total
-
-
29,440
-
-
100.0%
$
19,075
38,150
29,440
-
-
-
-
-
-
155,000
-
-
108,000(1)
13,950
-
-
294,400
-
73.2%
168,950
402,400
-
157,900
43,080
143,174
65,994(2)
-
-
13,412
-
14,211
23,101
-
55,987
1,297
2,594
-
-
1.9%
1.5%
-
-
67,291
174,705
66,181
156,586
327,731
-
1,122,778
Total
52,500
499,154
187,406
(1)
(2)
Payments were made to Ecrucis Pty Ltd for the services provided by Mr Kiely.
Payments were made to CFO Strategic Chartered Accountants for the services provided by Mr Fah.
Employee Share Option Plan
The Consolidated Entity has adopted an Employee Share Option Plan for the benefit of Executive Directors and
full-time or part-time staff members employed by the Consolidated Entity. At the date of this Report the following
options had been issued pursuant to the Employee Share Option Plan. Each option was issued for a period of 4
years and vest in tranches of 25% after 9 months, 12 months, 24 months and 36 months.
Exercise price is based on 85% of the average ASX closing price for the 5 days prior to offer/acceptance of the
options, in accordance with the Employee Share Option Plan.
An Executive Share Option Plan has also been developed to provide approved participants further incentive in
their performance for the Consolidated Entity and an opportunity to acquire an ownership interest in the
Consolidated Entity.
Number of options over ordinary shares held by Directors and Senior Executives
Balance
Granted
Exercised
Lapsed /
Transferred
out
Balance
Total vested
Non-Executive Director
S Jack (from 25 Nov 2011)
C Bernecker (from 25 Nov 2011)
B Rathie (to 30 Aug 2011)
J Bonitz (to 22 Nov 2011)
Executive Director
R Phillips
P Kiely (to 22 Nov 2011)
Senior Executive
T Rowe (from 7 Dec 2011)
N Schicht
D Fah (to 30 Nov 2011)
D Johnson (to 8 Jun 2012)
J Trygar (to 2 Dec 2011)
Total
1 July 2011
No.
-
-
-
400,000
-
4,000,000
-
100,000
50,000
-
-
4,550,000
During
FY2012
No.
During
FY2012
No.
During FY2012
30 June 2012
No.
No.
& exercisable
30 June 2012
No.
-
-
-
-
-
-
-
300,000
-
150,000
-
450,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(400,000)
-
(4,000,000)
-
-
(50,000)
(150,000)
-
(4,600,000)
-
-
-
-
-
-
-
400,000
-
-
-
400,000
-
-
-
-
-
-
-
100,000
-
-
-
100,000
Uscom Limited - Annual Report 2012 - 16
DIREC
CTORS’
’ REPOR
RT conti
nued
Details
of options
s outstandin
ng as at en
nd of year
Holders N
No.
Grant d
date
Exerc
at 30
cisable
0 June
2012
%
100%
100%
e
Expiry date
20
17
November 20
December 20
12
13
30 June 2
Outstand
Op
2012
ding
ption
No.
0,000
0,000
260
2,000
cise
Exerc
rice
Pr
$
0
0.29
375
0.3
Issue
date fa
valu
ed
air
ue
$
19
12
0.1
0.1
0 November 2
20
7 December 2
17
2008
2008
29 March 2
2012
0%
29 March 20
16
1,300
0,000
0.05
595
0.0
06
3,560
0,000
yees)
7 (Employ
or)
1 (Investo
oyees &
10 (Emplo
e)
Executive
Total
Further details
of the options are disc
closed in note 19 of the
e financial statements.
Numbe
er of shares
s held by D
irectors an
Balance
July 2011
No.
xecutives (
nd Senior E
Op
s
Received as
Exer
Remuneration
R
No.
indirect int
(including i
Net change
N
ptions
Other*
cised
No.
No.
erest)
ce
Balanc
12
30 June 20
No.
N
1 J
cutive Direct
m 25 Nov 2011)
ker (from 25 Nov 2
(to 30 Aug 2011)
to 22 Nov 2011)
e Director
Non-Exe
S Jack (from
C Bernec
B Rathie (
J Bonitz (t
Executive
R Phillips
P Kiely (to
22 Nov 2011)
Senior Ex
xecutive
rom 7 Dec 2011)
T Rowe (fr
t
N Schicht
30 Nov 2011)
D Fah (to 3
on (to 8 Jun 2012)
D Johnso
to 2 Dec 2011)
J Trygar (t
or
011)
-
-
93,809
-
6,996,733
16
333,333
-
18,200
5,000
5,100
-
Total
17
,452,175
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,000
-
(93,809)
-
80,000
0(1)
-
-(2)
-
-
(333,333)
16,996,733
3(3)
-(4)
-
-
(5,000)
(5,100)
-
18,200
-
0(5)
-(6)
-(7)
-
(357,242)
17,094,93
33
*Net change ot
(1) All these ord
ther refers to share pur
dinary shares are held b
rchased or sold during
by family associate.
the financial year, or c
cessation of categorisa
ation as a Director or Se
enior Executive.
(2) Bruce Rathie
e ceased to be key man
nagement personnel o
on 30 August 2011.
(3) 382,924 of th
hese ordinary shares ar
re held by Australian C
Cardiac Sonography Pty
y Ltd as trustee for the
e Phillips Superannuatio
on.
(4) Phil Kiely cea
ased to be key manag
ement personnel on 22
2 November 2011.
(5) 10,000 of the
ese ordinary shares are
e held by family associa
ate.
(6) Daniel Fah c
ceased to be key mana
agement personnel on
30 November 2011.
(7) Deb Johnso
n ceased to be key ma
anagement personnel o
on 8 June 2012.
This Direc
ctor’s report is
s signed in acc
cordance with
h a resolution o
of the Board o
of Directors.
Rob Philli
ips
Sheena J
ack
Executive
e Director - Ch
hairman
Non-Exe
cutive Directo
or
Sydney, 3
30 August 201
2
Uscom Limited
- Annual Repor
rt 2012 - 17
AUDITOR’S INDEPENDENCE DECLARATION
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 10, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY TIM SYDENHAM TO THE DIRECTORS OF USCOM LIMITED
As lead auditor of Uscom Limited for the year ended 30 June 2012, I declare that, to the best of
my knowledge and belief, there have been no contraventions of:
•
•
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Uscom Limited and the entities it controlled during the year.
Tim Sydenham
Partner
BDO East Coast Partnership
Sydney, 30 August 2012
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
Uscom Limited - Annual Report 2012 - 18
INCOME STATEMENT
For the financial year ended 30 June 2012
Continuing operations
Revenue
Raw materials and consumables used
Expenses from continuing activities
Loss before income tax credit
Income tax credit
Loss after income tax credit
Earnings per share (EPS)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Consolidated
2012
$
2011
$
Note
3
4
5
6
7
7
864,099
(212,924)
(2,881,975)
880,873
(251,541)
(3,660,141)
(2,230,800)
(3,030,809)
406,253
344,896
(1,824,547)
(2,685,913)
(3.5)
(3.5)
(5.8)
(5.8)
This Income Statement is to be read in conjunction with the attached notes.
Uscom Limited - Annual Report 2012 - 19
STATEMENT OF COMPREHENSIVE INCOME
For the financial year ended 30 June 2012
Loss for the year
Other comprehensive income
Foreign currency translation difference for foreign operations
Other comprehensive income for the year
Consolidated
2012
$
2011
$
(1,824,547)
(2,685,913)
2,830
2,830
8,143
8,143
Total comprehensive loss for the year
(1,821,717)
(2,677,770)
Attributable to:
Owners of the Company
(1,821,717)
(2,677,770)
Total comprehensive loss for the year
(1,821,717)
(2,677,770)
This Statement of Comprehensive Income is to be read in conjunction with the attached notes.
Uscom Limited - Annual Report 2012 - 20
STATEMENT OF FINANCIAL POSITION
As at 30 June 2012
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Tax asset
Other assets
Total current assets
Non-current assets
Plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Short term provisions
Total current liabilities
Non-current liabilities
Long term provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Unissued capital
Options reserve
Accumulated losses
Translation reserve
Total equity
Consolidated
2012
$
2011
$
Note
8
9
10
11
14
12
13
15
16
16
544,463
140,936
191,030
406,253
41,946
1,324,628
2,125,156
163,991
213,882
344,896
72,589
2,920,514
68,258
435,472
503,730
93,289
510,487
603,776
1,828,358
3,524,290
108,357
122,983
231,340
148,273
142,269
290,542
126,952
126,952
98,143
98,143
358,292
388,685
1,470,066
3,135,605
17
18
19
6
20
21,376,920
150,000
1,379,673
(21,510,754)
74,227
21,376,920
-
1,373,495
(19,686,207)
71,397
1,470,066
3,135,605
This Statement of Financial Position is to be read in conjunction with the attached notes.
Uscom Limited - Annual Report 2012 - 21
STATEMENT OF CHANGES IN EQUITY
For the financial year ended 30 June 2012
Issued
Capital
Options
Reserve
Accumulated
Losses
Consolidated
$
$
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 1 July 2010
18,345,462
1,041,613
(17,000,294)
63,254
2,450,035
Loss for the year
Other Comprehensive
Income
Total Comprehensive
Income for the year
Transactions with Owners in
their capacity as owners
Shares Issued
Transaction costs on Shares
Issued
Share-based payments
-
-
-
3,096,132
(64,674)
-
-
-
-
-
-
331,882
(2,685,913)
-
(2,685,913)
-
8,143
8,143
(2,685,913)
8,143
(2,677,770)
-
-
-
-
-
-
3,096,132
(64,674)
331,882
Balance at 30 June 2011
21,376,920
1,373,495
(19,686,207)
71,397
3,135,605
Loss for the year
Other Comprehensive
Income
Total Comprehensive
Income for the year
Transactions with Owners in
their capacity as owners
Unissued share capital
Share-based payments
-
-
-
-
-
-
(1,824,547)
-
(1,824,547)
-
2,830
2,830
(1,824,547)
2,830
(1,821,717)
150,000
-
-
6,178
-
-
-
-
150,000
6,178
Balance at 30 June 2012
21,526,920
1,379,673
(21,510,754)
74,227
1,470,066
This Statement of Changes in Equity is to be read in conjunction with the attached notes.
Uscom Limited - Annual Report 2012 - 22
STATEMENT OF CASH FLOWS
For the financial year ended 30 June 2012
Cash flows from operating activities
Receipts from customers
Interest received
Payments to suppliers and employees
Grant and other income received
Income tax receipt
Consolidated
2012
$
2011
$
Note
817,190
61,400
(2,888,232)
8,564
344,896
726,135
41,323
(3,337,048)
4,737
370,529
Net cash used in operating activities
21(b)
(1,656,182)
(2,194,324)
Cash flows from investing activities
Purchase of patents and trademarks
Purchase of plant and equipment
Net cash used in investing activities
(74,148)
(363)
(65,941)
(22,082)
(74,511)
(88,023)
Cash flows from financing activities
Issue of shares
Share application monies received from private placement
17
18
-
150,000
3,031,459
-
Net cash provided by financing activities
150,000
3,031,459
Net (decrease) / increase in cash held
Cash and cash equivalents at the beginning of the year
Exchange rate adjustment for opening balance
Cash and cash equivalents at the end of the year
(1,580,693)
2,127,265
(2,109)
544,463
749,112
1,372,843
3,201
2,125,156
21 (a)
This Statement of Cash Flows is to be read in conjunction with the attached notes.
Uscom Limited - Annual Report 2012 - 23
NOTES TO FINANCIAL STATEMENTS
Note 1: Adoption of new and revised accounting standards
As at the date of this report there are a number of new accounting standards and interpretations that have been
issued but are not yet effective as detailed below:
Australian Accounting Standards
AASB No.
Title
Issue Date
Operative Date
(Annual reporting
periods beginning
on or after)
9
10
11
12
13
Financial Instruments
Dec 2010
1 Jan 2013
Consolidation
Aug 2011
1 Jan 2013
Joint Arrangements
Aug 2011
1 Jan 2013
Disclosure of Interests in Other Entities
Aug 2011
1 Jan 2013
Fair Value Measurement
Sep 2011
1 Jan 2013
1053
Application of Tiers of Australian Accounting Standards
Jun 2010
1 Jul 2013
2010 – 2
Amendments to Australian Accounting Standards arising from
Reduced Disclosure Requirements
Jun 2010
1 Jul 2013
2010 – 7
Amendments to Australian Accounting Standards arising from
AASB 9 (December 2010)
[AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128,
131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10,
12, 19 & 127]
Dec 2010
1 Jan 2013
2010 – 8
Amendments to Australian Accounting Standards – Deferred
Tax: Recovery of Underlying Assets [AASB 112]
Dec 2010
1 Jan 2012
2010 – 10
2011 – 4
Further Amendments to Australian Accounting Standards –
Removal of Fixed Dates for First-time Adopters
[AASB 2009-11 & AASB 2010-7]
Amendments to Australian Accounting Standards to Remove
Individual Key Management Personnel Disclosure Requirements
[AASB 124]
Dec 2010
1 Jan 2013
Jul 2011
1 Jul 2013
Australian Interpretations
AASB No.
Title
Issue Date
Operative Date
(Annual reporting
periods beginning
on or after)
20
Stripping Costs in the Production Phase of a Surface Mine
Nov 2011
1 Jan 2013
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no
material financial impact on the financial statements of the Consolidated Entity.
These Standards and Interpretations will be first applied in the financial statements of the Consolidated Entity
that relates to the annual reporting period beginning after the effective date of each pronouncement.
Uscom Limited - Annual Report 2012 - 24
NOTES TO FINANCIAL STATEMENTS continued
Note 1: Adoption of new and revised accounting standards (continued)
New Standards Adopted During the Year
The Consolidated Entity has adopted all of the new, revised or amending Accounting Standards issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The
adoption of these Accounting Standards and Interpretations did not have any impact on the financial
performance or position of the consolidated entity.
Any new, revised or amending Accounting Standards and Interpretations that are not yet mandatory have not
been early adopted.
Note 2: Statement of significant accounting policies
Introduction
(a)
The financial report covers the Consolidated Entity of Uscom Ltd and its Controlled Entity. Uscom Ltd is a listed
public company, incorporated and domiciled in Australia.
Operations and principal activities
Uscom Ltd is engaged in the development, design, manufacture and marketing of non-invasive cardiac
monitoring devices. Uscom Ltd owns a portfolio of intellectual property relating to the technology and
techniques associated with these devices and manages a worldwide network of distribution partners for the sale
of its equipment to hospitals and other medical care locations.
Scope of financial statements
The financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, the Corporations Act 2001 and complies with other
requirements of the law, as appropriate for-profit oriented entities.
Accounting Standards include Australian Equivalents to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the Consolidated Entity financial report conforms with International Financial
Reporting Standards (IFRS).
Going Concern
The Directors have prepared the financial statements on a going concern basis, which contemplates continuity of
normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of
business. The Consolidated Entity has been able to secure additional funding subsequent to the Balance Sheet
date and this is commented on further in note 29. Based on anticipated levels of operational cash flow
requirements, the Consolidated Entity has sufficient cash to fund current operations for more than one year.
Currency
The financial report is presented in Australian dollars, which is the Parent Company’s functional and
presentational currency.
Historical Cost Convention
This financial report has been prepared under the Historical Cost Convention.
Reporting period
The financial report is presented for the year ended 30 June 2012. The comparative reporting period was for the
year ended 30 June 2011.
Comparatives
Where required by Accounting Standards comparative figures have been adjusted to conform with changes in
presentation for the current financial year.
Registered office
Level 7, 10 Loftus Street, Sydney NSW 2000.
Authorisation of financial report
The financial report was authorised for issue on 30 August 2012 by the Directors.
(b) Overall policy
The principal accounting policies adopted by the Consolidated Entity are stated in order to assist in the general
understanding of the financial report.
Uscom Limited - Annual Report 2012 - 25
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
Significant judgment and key assumptions
(c)
The Directors evaluate estimates and judgements incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and within the Entity.
The Consolidated Entity assesses impairment at each reporting date by evaluating conditions specific to the
group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the
asset is determined.
(d) Financial assets and financial liabilities
Financial assets and financial liabilities are recognised on the Statement of Financial Position when the
Consolidated Entity becomes party to the contractual provisions of the financial instrument.
A financial asset is derecognised when the contractual rights to the cash flows from the financial assets expire or
are transferred and no longer controlled by the Entity. A financial liability is removed from the Statement of
Financial Position when the obligation specified in the contract is discharged or cancelled or expires.
Upon initial recognition a financial asset or financial liability is designated as at fair value through Profit or Loss
except for investments in equity instruments that do not have a quoted market price in an active market and
whose fair value cannot be reliably measured.
A gain or loss arising from a change in the fair value of a financial asset or financial liability classified as at fair
value through Profit or Loss is recognised in the Income Statement.
Financial assets not measured at fair value comprise receivables and investment in subsidiary. These are non-
derivative financial assets with fixed or determinable payments that are not quoted in an active market and are
measured at amortised cost using the effective interest method.
Available-for-sale financial assets include other financial assets, comprising investments in subsidiaries, not
included in the above categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains
and losses arising from changes in fair value are taken directly to equity.
Financial liabilities comprise of trade and other payables, and borrowings and are measured at amortised cost
using the effective interest method.
Trade accounts payable represent the principal amounts outstanding at balance date plus, where applicable, any
accrued interest.
The amortised cost of a financial asset or a financial liability is the amount initially recognised minus principal
repayments, plus or minus cumulative amortisation of any difference between the initial amount and maturity
amount and minus any write-down for impairment or uncollectibility.
Financial assets, other than those at fair value through profit or loss, are reassessed for indicators of impairment at
each reporting date. Financial assets are impaired where there is objective evidence that as a result of one or
more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the
investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is
the difference between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with
the exception of trade receivables where the carrying amount is reduced through the use of an allowance
account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in profit and loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment loss is revered through profit and loss to the
extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not been recognised.
Uscom Limited - Annual Report 2012 - 26
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
(e) Principles of consolidation
A Controlled Entity is any entity Uscom Ltd has the power to control the financial and operating policies of so as
to obtain benefits from its activities.
A list of Controlled Entities is contained in note 23 to the financial statements. All Controlled Entities have a June
financial year-end.
All inter-company balances and transactions between Entities in the Consolidated Group, including any
unrealised profits or losses, have been eliminated on consolidation. Accounting policies of Subsidiaries have
been changed where necessary to ensure consistencies with those polices applied by the Parent Entity.
On consolidation, the assets and liabilities of the Consolidated Entity’s overseas operations are translated at
exchange rates prevailing at the reporting dates. Income and expense items are translated at the average
exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any,
are recognised in the foreign currency translation reserve, and are recognised in income statement on disposal of
the foreign operation.
Foreign currency transactions and balances
(f)
All foreign currency transactions during the financial year are brought to account using the exchange rate in effect
at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange
rate existing at reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-
monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
The gains and losses from conversion of assets and liabilities, whether realised or unrealised, are included in
profit or loss from continuous operations as they arise.
(g) Revenue recognition
• Sale of goods
Revenue from the sale of goods is recognised when all significant risks and rewards of ownership have been
transferred to the buyer and when the other contractual obligations of the Entity are performed.
• Revenue from rendering of services
Rendering of services consists of training, repair and product maintenance supplied to customers. Revenue is
recognised when contractual obligations are expired and services are provided.
•
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
• Government grants
Government grants revenue is recognised at fair value when there is reasonable assurance that the grant will be
received and the grant conditions will be met.
Interest revenue
Inventories
(h)
Inventories are measured at the lower of cost or net realisable value. Costs are assigned on the basis of weighted
average costs. Cost comprises all costs of purchase and conversion and an appropriate proportion of fixed and
variable overheads, net of settlement discounts. Overheads are applied on the basis of normal operative capacity.
The costs are recognised when materials are delivered to the Consolidated Entity.
Property, plant and equipment
(i)
Property, plant and equipment are included at cost. Assets in plant and equipment are depreciated on
diminishing value basis over their estimated useful lives covering a period of two to seven years.
On disposal of an item of property, plant and equipment, the difference between the sales proceeds and the
carrying amount of the asset is recognised as a gain or loss in the Income Statement.
The depreciation rates used for each class of depreciable assets are:
Class Of Fixed Asset
- Plant & Equipment
- Office Furniture & Equipment
- Computer Software
- Low Value Pool
Depreciation Rate
10% - 40%
15%
40%
37.5%
Uscom Limited - Annual Report 2012 - 27
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
Intangibles
(j)
Patents and Trademarks are valued in the financial statements at cost of acquisition less accumulated
amortisation and are amortised on diminishing value basis at 12.5% per annum.
Impairment of assets
(k)
At each reporting date, the Consolidated Entity reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed to the income statement. In assessing value in use, the estimated future cash flows discounted to their
present value using a pre-tax discount rate.
Leases
(l)
Lease of assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the
legal ownership, are transferred to the Consolidated Entity were classified as finance leases. Finance leases are
capitalised, recording an asset and a liability equal to the present value of the minimum lease payments,
including any guaranteed residual values.
Leased assets are amortised on diminishing value basis over their estimated useful lives where it is likely that the
Consolidated Entity will obtain ownership of the asset or over the term of the lease. Lease payments are allocated
between the reduction of the lease liability and the lease interest expense for the period.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
recognised as an expense on a straight line basis over the lease term unless another systematic basis is more
representative of the time pattern in which benefits are diminished.
Lease incentives under operating leases are recognised as liabilities. The incentives are recognised as a
reduction of expenses on a straight line basis unless another systematic basis is more representative of the time
pattern in which benefits are diminished.
(m) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and at call deposits with banks or financial institutions.
Investments
(n)
Investments in Controlled Entities are carried at the lower of cost and recoverable amount.
(o) Research & development expenditure
Research & development costs are charged to the Income Statement as incurred, or deferred where it is probable
that sufficient future benefits will be derived so as to recover those deferred costs.
(p) Foreign currency transactions and balances
Foreign currency transactions during the year are converted to Australian dollars at the rates of exchange
applicable at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance
sheet date are converted at the rates of exchange ruling at that date.
The gains and losses from conversion of assets and liabilities, whether realised or unrealised, are included in
profit or loss from continuous operations as they arise.
Income tax
(q)
Income taxes are accounted for using the Balance Sheet liability method whereby:
• The tax consequences of recovering (settling) all assets (liabilities) are reflected in the financial statements;
• Current and deferred tax is recognised as income or expenses except to the extent that the tax relates to
equity items or to a business combination;
• A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available to
realise the asset;
• Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability settled.
The charge for current income tax expense/credit is based on the profit or loss for the year adjusted for any non
assessable or disallowed items. It is credited using tax rates that have been enacted or are substantively enacted
by the reporting date.
Uscom Limited - Annual Report 2012 - 28
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
Deferred tax is accounted for using the Balance Sheet liability method in respect of temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settle. Deferred tax is credited in the income statement except where it relates to items that may be
credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption
that no adverse change will occur in income taxation legislation and the anticipation that the Consolidated Entity
will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions
of deductibility imposed by the law.
Short term employee benefits
(r)
Short term employee benefits are employee benefits (other than termination benefits and equity compensation
benefits) which fall due wholly within 12 months after the end of the period in which employee services are
rendered. They comprise wages, salaries, social security obligations, short-term compensation absences, profit
sharing and bonuses payables within 12 months and non-mandatory benefits such as medical care, housing, car
and service goods.
The provision for employee entitlements to wages, salaries and annual leave represents the amount that the
Consolidated Entity has a present obligation to pay resulting from employee services provided up to reporting
date. The provision has been calculated after taking into consideration estimated future increases in wages and
salaries and past experience regarding staff departures and includes related on-costs.
The undiscounted amount of short-term benefits expected to be paid is recognised as an expense.
Long term employee benefits
(s)
Long term employee benefits include long-service leave, long-term disability benefits, deferred compensation
and profit sharing and bonuses payable 12 months or more after the end of the period in which employee
services are rendered.
Uscom Ltd has adopted an Employee Share Option Plan for the benefit of Executive and Non-Executive Directors
and full-time or part-time staff members employed by the Consolidated Entity. Refer note 19 to the financial
statements for details.
An Executive Share Option Plan has also been developed to provide approved participants further incentive in
their performance for the Consolidated Entity and an opportunity to acquire an ownership interest in the
Consolidated Entity.
Share-based payment arrangement
(t)
Goods or services received or acquired in a share-based payment transaction are recognised as an increase in
equity if the goods or services were received in an equity-settled share based payment transaction or as a liability
if the goods and services were acquired in a cash settled share based payment transaction.
For equity-settled share based transactions, goods or services received are measured directly at the fair value of
the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made the
value of the goods or services is determined indirectly by reference to the fair value of the equity instrument
granted.
Transactions with employees and others providing similar services are measured by reference to the fair value at
grant date of the equity instrument granted.
(u) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of
the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the
Statement of Financial Position are shown inclusive of GST.
Uscom Limited - Annual Report 2012 - 29
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
(v) Receivables
Trade receivables and other receivables represent the principal amounts due at reporting date plus accrued
interest and less, where applicable, any unearned income and provision for doubtful accounts. An estimated
doubtful debt is made when collection of the full amount is no longer probable.
(w) Contingent liabilities
A contingent loss is recognised as an expense and a liability if it is probable that future events will confirm that,
after taking into account any related probable recovery, an asset has been impaired or a liability incurred and, a
reasonable estimate of the amount of the resulting loss can be made.
(x) Warranties
Provision is made in respect of the Consolidated Entity's estimated liability on all products and services under
warranty at reporting date. The provision is measured at the present value of future cash flows estimated to be
required to settle the warranty obligation. The future cash flows have been estimated by reference to the
Consolidated Entity's history of warranty claims.
(y) Events after the reporting date
Assets and liabilities are adjusted for events incurring after the reporting date that provide evidence of conditions
existing at the reporting date. Important after reporting date events which do not meet these criteria are
disclosed in note 29 to the financial statements.
Note 3: Revenue
Operating revenue
Sale of goods
Other revenue
Interest received
Grants received - VAT return
Miscellaneous income
Total other income
Total revenues from continuing operations
Note 4: Expenses from continuing activities, excluding finance costs
Depreciation and amortisation expenses
Impairment of patents
Employee benefits expense
Research and development expenses
Advertising and marketing expenses
Occupancy expenses
Auditors remuneration (audit)
Auditors remuneration (audit review)
Regulatory expenses
Administrative expenses
Exchange losses
Total expenses from continuing activities, excluding finance costs
Operating lease expenses of $139,544 in 2012 (2011: $131,849) are included in
occupancy expenses above
Consolidated
2012
$
2011
$
794,135
834,813
61,400
4,928
3,636
69,964
41,323
1,555
3,182
46,060
864,099
880,873
103,465
80,497
944,173
509,858
544,746
152,531
39,000
18,000
55,577
427,832
6,296
2,881,975
103,412
11,731
1,254,616
502,037
913,149
153,683
39,000
17,000
70,424
444,602
150,487
3,660,141
Uscom Limited - Annual Report 2012 - 30
NOTES TO FINANCIAL STATEMENTS continued
Note 5: Income tax credit
Major components of income tax credit
Current income tax credit
Income tax credit
Consolidated
2012
$
2011
$
406,253
406,253
344,896
344,896
Reconciliation between income tax credit and prima facie tax on accounting
loss
Accounting loss before income tax
2,230,800
3,030,809
Tax benefit at 30% in Australia, 15% in USA (2011: 30% in Australia)
Tax effect on non deductible expenses
Temporary differences
Deferred tax asset not brought to account
Research and development tax offset - current year
Income tax credit
678,128
(289,844)
(37,077)
(351,207)
406,253
406,253
902,660
(372,527)
(19,611)
(510,522)
344,896
344,896
As at 30 June 2012, the Consolidated Entity had estimated unrecouped operating income tax losses of $14,923,319
(2011: $13,832,400). The benefit of these losses of $4,300,155 (2011: $3,957,157) has not been brought to account as
realisation is not probable. The benefit will only be obtained if:
• The Consolidated Entity derives future assessable income of a nature and an amount sufficient to enable the
benefits from the deductions for the losses to be realised;
• The Consolidated Entity continues to comply with the conditions for deductibility imposed by the law;
• No changes in tax legislation adversely affect the Consolidated Entity in realising the benefit from the deduction
for the losses.
Note 6: Accumulated losses
Accumulated losses at the beginning of the financial year
Net loss attributable to members of the Entity
Accumulated losses at the end of the financial year
Note 7: Earnings per share
Loss after tax used in calculation of basic and diluted EPS
(19,686,207)
(1,824,547)
(17,000,294)
(2,685,913)
(21,510,754)
(19,686,207)
(1,824,547)
Number
(2,685,913)
Number
Weighted average number of ordinary shares during the year used in calculation
of basic EPS
Weighted average number of options outstanding
Weighted average number of ordinary shares outstanding during the year used in
calculation of diluted EPS
(5.8)
Basic earnings per share (cents per share)
(5.8)
Diluted earnings per share (cents per share)
The options in existence have an anti-dilutive effect on EPS, therefore there is no difference between basic earnings
per share and diluted earnings per share as shown above. After the reporting date, 2,000,000 ordinary shares were
issued on 2 July 2012 which have not been included in the calculations of basic and dilutive EPS.
52,124,488
54,719,283
46,103,168
50,811,524
(3.5)
(3.5)
4,708,356
2,594,795
Note 8: Cash and cash equivalents
Cash on hand
Bank: Cheque accounts
Bank: Cash management
Bank: Term deposits
Bank: Deposit at call
Total cash and cash equivalents
185
463,633
28,758
35,230
16,657
544,463
185
747,600
34,745
1,235,230
107,396
2,125,156
Uscom Limited - Annual Report 2012 - 31
NOTES TO FINANCIAL STATEMENTS continued
Note 9: Trade and other receivables
Current
Trade receivables
Total current receivables
Consolidated
2012
$
2011
$
140,936
140,936
163,991
163,991
Trade receivables are non-interest bearing and on an average of 45 day terms. Details of trade receivables due but
not impaired are disclosed in note 22.
Note 10: Inventories
Current inventories at cost
Raw materials
Finished products
Total inventories
Note 11: Tax asset
Income tax credit
Total tax asset
Note 12: Plant and equipment
Plant and equipment at cost
Accumulated depreciation
Office furniture and equipment at cost
Accumulated depreciation
Computer software at cost
Accumulated depreciation
Low value asset pool at cost
Accumulated depreciation
113,367
77,663
191,030
406,253
406,253
148,903
64,979
213,882
344,896
344,896
556,216
(492,603)
63,613
546,714
(459,480)
87,234
59,166
(56,326)
2,840
22,120
(21,505)
615
32,089
(30,899)
1,190
59,166
(55,825)
3,341
22,120
(20,981)
1,139
31,726
(30,151)
1,575
Total plant and equipment
68,258
93,289
Movements in carrying amounts
Plant and
equipment
Office
furniture
Computer
software
Low value
asset pool
Useful life
2-7 years
$
2-7 years
$
3 years
$
3 years
$
Consolidated Entity
Carrying amount at 1 July 2011
Additions
Disposals
Depreciation expense
Effects of foreign currency exchange differences
Carrying amount at 30 June 2012
87,234
9,397
-
(33,027)
9
63,613
3,341
-
-
(501)
-
2,840
1,139
-
-
(524)
-
615
1,575
363
-
(748)
-
1,190
Uscom Limited - Annual Report 2012 - 32
NOTES TO FINANCIAL STATEMENTS continued
Note 13: Intangible assets
Non-current
Patents at cost
Additions
Impairment at cost
Accumulated amortisation, net of impairment
Carrying amount at 30 June 2012
Movements in carrying amounts
Carrying amount at 1 July 2011
Additions
Amortisation
Impairment
Carrying amount at 30 June 2012
Consolidated
2012
$
2011
$
839,505
74,147
(151,322)
(326,858)
435,472
510,487
74,147
(68,665)
(80,497)
435,472
785,795
65,941
(12,232)
(329,017)
510,487
525,486
65,941
(69,209)
(11,731)
510,487
Intangible Assets comprise Intellectual Property in the form of Patents. The Patents have finite useful lives. The
current amortisation charge in respect of Patents is included under Expenses from Continuing Activities in the
Income Statement. An impairment charge of $80,497 has been recognised in the current year (2011: $11,731) in
relation to Patents carried in Australia where there have been no sales for several years. The impairment charge is
recorded under Expenses from Continuing Activities.
Note 14: Other assets
Current
GST receivable
Prepayments
Total other current assets
Note 15: Trade and other payables
Current
Trade payables
Sundry payables and accrued expenses
Employee related payables
Total payables
Note 16: Provisions
Short term
Provision for annual leave
Long term
Provision for long service leave
Provision for warranties
11,067
30,879
41,946
37,584
41,019
29,754
19,811
52,778
72,589
54,387
62,051
31,835
108,357
148,273
122,983
122,983
119,734
7,218
126,952
142,269
142,269
91,248
6,895
98,143
(a) Aggregate employee benefits
242,717
233,517
(b) Movement in employee benefits
Balance at beginning of the year
Additional provision
Amounts used
Balance at end of the year
(c) Number of employees at year-end
233,517
129,767
(120,567)
242,717
205,132
98,264
(69,879)
233,517
Number
Number
11
14
Uscom Limited - Annual Report 2012 - 33
NOTES TO FINANCIAL STATEMENTS continued
Note 17: Issued capital
Issued capital
Fully paid ordinary shares
Total contributed equity
Movement in issued capital
Shares on issue at the beginning of the year
9,437,835 ordinary shares issued at 30 cents
882,606 ordinary shares issued at 30 cents
Share issue costs
Ordinary shares at the end of the year
Fully paid ordinary shares
Ordinary shares at the beginning of the year
9,437,835 ordinary shares issued by private placement
882,606 ordinary shares issued by SPP
Total ordinary shares at the end of the year
Consolidated
2012
$
2011
$
21,376,920
21,376,920
21,376,920
21,376,920
21,376,920
-
-
-
18,345,462
2,831,350
264,782
(64,674)
21,376,920
21,376,920
Number
52,124,488
-
-
Number
41,804,047
9,437,835
882,606
52,124,488
52,124,488
The Company’s authorised share capital amounted to 52,124,488 ordinary shares of no par value.
Fully paid ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to
the number of shares held. At shareholders meetings, each ordinary share is entitled to one vote when a poll is
called, or via a show of hands.
After the reporting date, 2,000,000 ordinary shares were issued on 2 July 2012.
Note 18: Unissued capital
Unissued capital
Application monies received in advance for share allotment
Total contributed equity
Movement in unissued capital
Balance at the beginning of the year
Application monies received in advance for share allotment
Unissued capital at the end of the year
Consolidated
2012
$
2011
$
150,000
150,000
-
150,000
150,000
-
-
-
-
-
After the reporting date, 2,000,000 ordinary shares were issued on 2 July 2012 at 7.5 cents.
Note 19: Options reserve
The Consolidated Entity has adopted an Employee Share Option Plan and an Executive Share Option Plan for the
benefit of Executive Directors and full-time or part-time staff members employed by the Consolidated Entity. At the
date of this Report the following options had been issued pursuant to the Employee Share Option Plan. Each
option was issued for a period of 4 years and vest in tranches of 25% after 9 months, 12 months, 24 months and 36
months. Exercise price is based on 85% of the average ASX closing price for the 5 days prior to offer/acceptance of
the options, in accordance with the Employee Share Option Plan and the Executive Share Option Plan. The Board
may impose conditions, including performance related conditions, on the right to exercise any options granted
under the Executive Share Option Plan.
During the year, 400,000 options were granted to employees under the Employee Share Option Plan and 900,000
options were granted to executives and consultants under the Executive Share Option Plan.
Uscom Limited - Annual Report 2012 - 34
NOTES TO FINANCIAL STATEMENTS continued
Note 19: Options reserve (continued)
Effect of share-based payment transactions
Share Option Plan
Options reserve balance at the beginning of the year
Expenses arising from share-based payment transactions
Options reserve balance for Share Option Plan at the end of the year
OSI Systems
Right to participate in options
Option reserve at the end of the year
Consolidated
2012
$
2011
$
1,373,494
6,178
1,379,672
1,041,612
331,882
1,373,494
1
1
1,379,673
1,373,495
Movement during the financial year
Opening number of options
Granted during the financial year – Directors
Option Deed
Granted during the financial year – Employees &
Executives
Lapsed during the financial year
Closing number of options
Number of
Options 2012
7,710,000
Weighted
average
exercise price
1.10
Number of
options 2011
3,780,000
Weighted
average
exercise price
0.36
-
-
4,400,000
1,300,000
(5,450,000)
3,560,000
0.06
1.40
0.25
-
(470,000)
7,710,000
1.69
-
0.65
1.10
Details of options outstanding as at end of the year
Holders No.
Grant date
20 November 2008
17 December 2008
7 (Employees)
1 (Investor)
10 (Employees &
Executives)
Total
Exercisable
at 30 June
2012
%
100%
100%
Expiry date
20 November 2012
17 December 2013
30 June 2012
Outstanding
Option
No.
260,000
2,000,000
Exercise
Price
$
0.29
0.375
Issued
date fair
value
$
0.19
0.12
29 March 2012
0%
29 March 2016
1,300,000
0.0595
0.06
3,560,000
Fair value
Fair value was measured using Blackscholes and the inputs to it were as follows:
Weighted average share price Range from $0.06 to $1.10
Exercise price
Option life
Risk-free interest rate
Expected dividends
Expected volatility*
* Historical volatility has been the basis for determining the expected share price volatility as it is assumed that it is indicative of the future trade, which may not eventuate.
260,000 at $0.29; 2,000,000 at $0.375; 1,300,000 at $0.0595
4-5 years
Range from 4.17% to 4.6%
0
Range from 62% to 65%
Note 20: Translation reserve
Opening balance
Translation of financial statements of foreign Controlled Entity
Closing balance
Consolidated
2012
$
71,397
2,830
74,227
2011
$
63,254
8,143
71,397
Uscom Limited - Annual Report 2012 - 35
NOTES TO FINANCIAL STATEMENTS continued
Note 21: Cash flow information
(a) Reconciliation of cash
Cash at bank and on hand
Total cash at end of year
(b) Reconciliation of cash flow from operations to loss from continuing operations
after income tax
Loss from continuing operations after income tax
Non cash flows in loss from continuing operations
Depreciation
Amortisation
Impairment of patents
Options reserve
Translation reserve
(Increase)/Decrease in assets
Trade debtors
Inventories
Prepayments
Income tax
GST assets
Increase/(Decrease) in liabilities
Trade payables
Sundry payables and accrued expenses
Employee related payables
Employee provisions
Other provisions
Net cash used in operating activities
Note 22: Financial instruments
Consolidated
2012
$
2011
$
544,463
544,463
2,125,156
2,125,156
(1,824,547)
(2,685,913)
34,800
68,665
80,497
6,178
2,822
23,055
13,455
21,899
(61,357)
8,744
(16,803)
(21,032)
(2,081)
9,200
323
34,203
69,209
11,731
331,882
8,213
(108,678)
105,657
1,547
25,633
4,890
(37,854)
16,936
(1,780)
28,385
1,615
(1,656,182)
(2,194,324)
Significant accounting policies
(a)
Details of the significant accounting policies and methods adopted, including the criteria of recognition, the basis
of measurement and the basis on which income and expenses are recognised, in respect of each class of financial
asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.
(b) Capital risk management
The Consolidated Entity manages its capital to ensure that companies in the Consolidated Entity are able to
continue as a going concern. The capital structure of the Entity consists of cash and cash equivalents (note 8 on
page 31) and equity attributable to equity holders of the Parent, comprising issued capital (note 17 on page 34),
and accumulated losses (note 6 on page 31).
Financial instruments
(c)
At 30 June 2012, there were no outstanding contracts.
(d) Financial risk management objectives
The Consolidated Entity’s principal financial instruments are cash and term deposit accounts. Its financial
instruments risk is with interest rate risk on its cash and term deposits and liquidity risk for its term deposits.
The Consolidated Entity does not enter into or trade financial instruments, including derivative financial
instruments, for speculative purposes. The Board is updated monthly by management as to the amounts of funds
available to the Consolidated Entity from either cash in the bank or term deposits, and continually monitors
interest rate movements.
Uscom Limited - Annual Report 2012 - 36
NOTES TO FINANCIAL STATEMENTS continued
Note 22: Financial instruments (continued)
(e) Foreign currency risk management
The Consolidated Entity undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise. The Consolidated Entity does not have any forward foreign exchange contracts
as at 30 June 2012 and is exposed to foreign currency risk on sales and purchases dominated in a currency other
than Australian dollars.
The currencies given rise to this risk is primarily the US Dollar, Euro and British Pound. The Consolidated Entity
incurs costs in US Dollars for its operations which provide a natural hedge for a portion of income denominated in
US Dollars.
The carrying amount of the Consolidated Entity’s foreign currency denominated monetary assets and monetary
liabilities at the reporting date is as follows:
Consolidated
Cash
Current trade debtors
Current trade creditors
Cash
Current trade debtors
Current trade creditors
Current trade debtors
2012
US$
211,041
136,890
20,385
€
63,323
5,350
2,052
£
-
2011
US$
90,224
146,410
10,434
€
45,555
9,150
5,891
£
10,200
Foreign currency sensitivity
(f)
The Consolidated Entity is mainly exposed to exchange rate risks arising from movements in the US Dollar, Euro
and British Pound against the Australian Dollar, and the US Dollar from the translation of the operations of its
Controlled Entity.
The analysis below demonstrates the impact of a 10% movement of US Dollar and a 5% movement of Euro and
British Pound rates against the Australian Dollar with all other variables held constant. 10% and 5% are the
sensitivity rates used when reporting foreign currency risk internally to key management personnel and represents
management’s assessment of the possible change in foreign exchange rates.
Profit/Loss - increase 10% (US$) and 5% (€) & (£)
- decrease 10% (US$) and 5% (€) & (£)
Consolidated
2012
$
(73,584)
73,584
2011
$
(74,279)
74,279
Interest rate risk management
(g)
The Consolidated Entity does not have any external loans or borrowings as at 30 June 2012 and is not exposed to
interest rate risks related to debt.
The Consolidated Entity is exposed to interest rate risk as companies in the Consolidated Entity hold cash and
term deposits at both fixed and floating interest rates. The risk is managed by the Consolidated Entity
maintaining an appropriate mix between both rates.
Management continually monitor its cash requirements through forecasts and cash flow projections and move
funds between fixed and variable interest instruments to hold the maximum amount possible in instruments
which pay the greater rate of interest. This limits the amount of risk associated with setting a policy on the mix of
funds to be held in fixed or variable interest rate instruments.
Uscom Limited - Annual Report 2012 - 37
NOTES TO FINANCIAL STATEMENTS continued
Note 22: Financial instruments (continued)
Interest rate sensitivity
(h)
A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management
personnel and represents management’s assessment of the possible change in interest rates.
Profit/Loss - increase 100 basis points
- decrease 100 basis points
Consolidated
2012
$
6,140
(6,140)
2011
$
4,132
(4,132)
(i) Credit risk management
Credit risk represents the loss that would be recognised if counterparties defaulted on its contractual obligations.
The Consolidated Entity’s exposure and the credit ratings of its counterparties are continuously monitored and
the aggregate value of transactions concluded is spread among approved counterparties. Credit exposure is
controlled by counterparty limits that are reviewed and approved by the management annually. Ongoing credit
evaluation is also performed on the financial condition of accounts receivable.
The Consolidated Entity does not have significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics; because the current major counterparties are alliance distributors
and public hospitals with approved funds available prior to purchases under most circumstances.
The credit risk on financial assets of the Consolidated Entity have been recognised on the Statement of Financial
Position, is the carrying amount, net of any allowance for doubtful debts. Credit risk in respect of cash and
deposit is minimised as counterparties are recognised financial intermediaries with acceptable credit ratings
determined by a recognised rating agency.
Past due but not impaired
0 - 45 days
46 – 90 days
Over 90 days
Total
Consolidated
2012
$
17,035
-
15,821
32,856
2011
$
10,662
-
-
10,662
No bad debt was written off during the year (2011: $Nil). There was no doubtful debt provision as at 30 June 2012
(2011: Nil).
Management considers the above debts to be recoverable based on the continuing work with the parties
involved and the progress they have made in the market, and the recognised long lead time associated with
selling capital item, hence no impairment allowance is required.
Liquidity risk management
(j)
The objective for managing liquidity risk is to ensure the business has sufficient working capital or access to
working capital as and when required.
The Consolidated Entity limits its exposure to liquidity risk by holding the majority of its assets in cash or term
deposits which can be quickly converted to cash if required.
The carrying amounts of financial assets and financial liabilities recorded at cost approximate their fair values.
The following table details the Consolidated Entity’s remaining contractual maturity for its non-derivative financial
assets and liabilities. The table has been drawn up based on the undiscounted cash flows expected to be
received/paid by the Consolidated Entity.
Uscom Limited - Annual Report 2012 - 38
NOTES TO FINANCIAL STATEMENTS continued
Note 22: Financial instruments (continued)
Consolidated
Fixed interest rate maturing
Weighted
Average
effective
interest
Rate %
Floating
interest
Within 1
year
1 to 5
years
Non-
interest
bearing
Total
$
$
$
$
$
2012
Financial assets
Cash
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade creditors
Payables
Total financial liabilities
Net financial assets
2011
Financial assets
Cash
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade creditors
Payables
Total financial liabilities
Net financial assets
1.3
-
4.9
-
509,233
-
-
509,233
35,230
-
-
35,230
-
-
-
-
-
-
509,233
35,230
889,926
-
-
1,235,230
-
-
889,926
1,235,230
-
-
-
-
-
-
889,926
1,235,230
Reconciliation of net financial assets to net assets
Net financial assets as above
Non financial assets and liabilities
Current tax receivable
Inventories
Prepayments
Plant and equipment
Intangible assets
Accruals
Provisions
Net assets per Statement of Financial Position
Note 23: Related party disclosures
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
140,936
11,067
152,003
37,584
29,754
67,338
544,463
140,936
11,067
696,466
37,584
29,754
67,338
84,665
629,128
-
163,991
19,811
2,125,156
163,991
19,811
183,802
2,308,958
54,387
31,835
86,222
54,387
31,835
86,222
97,580
2,222,736
2012
$
629,128
2011
$
2,222,736
406,253
191,030
30,879
68,258
435,472
(41,019)
(249,935)
344,896
213,882
52,778
93,289
510,487
(62,051)
(240,412)
1,470,066
3,135,605
Transactions between related parties are on normal commercial terms and conditions, no more favourable than
those available to other parties unless otherwise stated.
Parent and Controlled Entity
Parent Entity
Significant investments in subsidiaries:
Country of subsidiary incorporation:
Proportion of ownership interest:
Consolidated
The Parent and Ultimate Parent Entity is Uscom Ltd.
Uscom, Inc.
U.S.A
100%
Uscom Limited - Annual Report 2012 - 39
NOTES TO FINANCIAL STATEMENTS continued
Note 23: Related party disclosures (continued)
Transactions between related parties
Other related parties
Company Matters Pty Limited
As a Company Secretary of Uscom Ltd, Mr Tom Rowe provides services to the
Company through Company Matters Pty Limited.
Services rendered
CFO Strategic Chartered Accountants
As a Company Secretary and Chief Financial Officer of Uscom Ltd up to 30th
November 2011, Mr Daniel Fah provided services to the Company through CFO
Strategic Chartered Accountants.
Services rendered
Ecrucis Pty Limited
As a Director of Uscom Ltd up to 22nd November 2011, Mr Phil Kiely provided
services to the Company through Ecrucis Pty Limited.
Services rendered
3 Pools Pty Limited
Rent received from 3 Pools Pty Limited, a company owned by Mr Jochen Bonitz
who was a director of Uscom Limited up to 22nd November 2011.
Consolidated
2012
$
2011
$
1,965
-
26,360
65,994
60,000
108,000
3,636
3,182
Key management personnel
The following were key management personnel of the Consolidated Entity at any time during the reporting period
and unless otherwise indicated were key management personnel for the entire period:
Non-Executive Directors
Bruce Rathie, Non-Executive Director (ceased on 30th August 2011)
Jochen Bonitz, Non-Executive Director (ceased on 22nd November 2011)
Sheena Jack, Non-Executive Director (commenced on 25th November 2011)
Christian Bernecker, Non-Executive Director (commenced on 25th November 2011)
Executive Directors
Rob Phillips, Executive Director, Chairman, Chief Executive Officer
Phil Kiely, Executive Chairman (ceased on 22nd November 2011)
Senior Executives
Daniel Fah, Chief Financial Officer, Company Secretary (ceased on 30th November 2011)
Tom Rowe, Company Secretary (commenced on 7th December 2011)
Nick Schicht, General Manager
Deb Johnson, VP Sales and Marketing (ceased on 8th June 2012)
Joe Trygar, Chief Executive Officer (from 16th September 2011 to 2nd December 2011)
For further remuneration information of key management personnel refer to the remuneration report in the
Directors’ report on pages 13 to 17.
The aggregate compensation made to Directors and other members of key management personnel of the
Company and the Consolidated Entity is set out below:
Short-term employee benefits
Post-employment benefits
Other payments
Share-based payment
Total key management personnel remuneration
Consolidated
2012
$
540,708
61,746
102,648
1,206
706,308
2011
$
551,654
55,987
187,406
327,731
1,122,778
Uscom Limited - Annual Report 2012 - 40
NOTES TO FINANCIAL STATEMENTS continued
Note 23: Related party disclosures (continued)
Number of options over ordinary shares held by Key Management Personnel
Balance
Granted
Exercised
Lapsed /
Transferred
out
Balance
Total vested
During
FY2012
No.
During
FY2012
No.
During FY2012
30 June 2012
No.
No.
& exercisable
30 June 2012
No.
Non-Executive Director
S Jack (from 25 Nov 2011)
C Bernecker (from 25 Nov 2011)
B Rathie (to 30 Aug 2011)
J Bonitz (to 22 Nov 2011)
Executive Director
R Phillips
P Kiely (to 22 Nov 2011)
Senior Executive
T Rowe (from 7 Dec 2011)
N Schicht
D Fah (to 30 Nov 2011)
D Johnson (to 8 Jun 2012)
J Trygar (to 2 Dec 2011)
Total
1 July 2011
No.
-
-
-
400,000
-
4,000,000
-
-
-
-
-
-
-
100,000
50,000
-
-
-
300,000
-
150,000
-
4,550,000
450,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(400,000)
-
(4,000,000)
-
-
(50,000)
(150,000)
-
(4,600,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
400,000
-
-
-
400,000
-
100,000
-
-
-
100,000
Number of shares held by Key Management Personnel (including indirect interest)
Balance
1 July 2011
No.
Received as
Remuneration
No.
Options
Exercised
No.
Net change
Other*
No.
Balance
30 June 2012
No.
Non-Executive Director
S Jack (from 25 Nov 2011)
C Bernecker (from 25 Nov 2011)
B Rathie (to 30 Aug 2011)
J Bonitz (to 22 Nov 2011)
Executive Director
R Phillips
P Kiely (to 22 Nov 2011)
Senior Executive
T Rowe (from 7 Dec 2011)
N Schicht
D Fah (to 30 Nov 2011)
D Johnson (to 8 Jun 2012)
J Trygar (to 2 Dec 2011)
-
-
93,809
-
16,996,733
333,333
-
18,200
5,000
5,100
-
Total
17,452,175
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80,000
-
(93,809)
-
80,000(1)
-
-(2)
-
-
(333,333)
16,996,733(3)
-(4)
-
-
(5,000)
(5,100)
-
-
18,200(5)
-(6)
-(7)
-
(357,242)
17,094,933
*Net change other refers to share purchased or sold during the financial year, or cessation of categorisation as a Director or Senior Executive.
(1) All these ordinary shares are held by family associate.
(2) Bruce Rathie ceased to be key management personnel on 30 August 2011.
(3) 382,924 of these ordinary shares are held by Australian Cardiac Sonography Pty Ltd as trustee for the Phillips Superannuation.
(4) Phil Kiely ceased to be key management personnel on 22 November 2011.
(5) 10,000 of these ordinary shares are held by family associate.
(6) Daniel Fah ceased to be key management personnel on 30 November 2011.
(7) Deb Johnson ceased to be key management personnel on 8 June 2012.
Uscom Limited - Annual Report 2012 - 41
NOTES TO FINANCIAL STATEMENTS continued
Note 24: Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of comprehensive income
Loss after income tax credit
Total comprehensive loss
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Options reserve
Accumulated losses
Total equity
Parent
2012
$
2011
$
(1,877,967)
(1,877,967)
(2,702,672)
(2,702,672)
1,274,021
1,711,184
227,635
354,587
2,870,703
3,445,954
269,424
367,567
21,526,920
1,379,673
(21,549,996)
1,356,597
21,376,920
1,373,495
(19,672,028)
3,078,387
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2012 and 30 June 2011.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2012 and 30 June
2011.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in
note 2.
Note 25: Commitments
Operating lease commitments
Operating commitments represent payments due for office rentals and have an
average term from 18 to 30 months.
Less than 1 year
Between 1 and 5 years
Total operating commitments
Note 26: Auditors’ remuneration
Remuneration of BDO / PKF East Coast Practice for
Audit of financial report
Review of financial report
Non-audit services
Remuneration of PKF California for
Tax consulting services
Total auditors’ remuneration
Consolidated
2012
$
2011
$
64,136
-
64,136
39,000
18,000
-
2,956
59,956
123,337
64,136
187,473
39,000
17,000
2,000
2,409
60,409
Note 27: Operating segments
Segment information
The Consolidated Entity operates in the global health and medical products industry.
The Consolidated Entity sells a single product, the A1 monitor. Geographical segment reporting is therefore the
appropriate method of reporting operating segments.
Globally the Company has five geographic sales and distribution segments as shown below. For each segment, the
CEO and CFO / General Manager review internal management reports on at least a monthly basis.
Uscom Limited - Annual Report 2012 - 42
NOTES TO FINANCIAL STATEMENTS continued
Note 27: Operating segments (continued)
The largest customer group which operates in Asia accounts for 49% of the total sales revenue. The businesses 2nd
largest customer accounts for over 17% of the total sales revenues and operates in Europe.
Basis of accounting for purposes of reporting by operating segments
Accounting policies
Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 2 and
accounting standard AASB 8 Operating Segments which requires a ‘Management approach’ under which segment
information is presented on the same basis as that used for internal reporting purposes. This has resulted in no
change to the reportable segments as operating segments continue to be reported in a manner consistent with the
internal reporting provided to the chief operating decision maker, which is the Board of Directors.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment. Segment
assets include all assets used by a segment and consist primarily of inventories, property, plant and equipment and
intangible assets. While most of these assets can be directly attributable to individual segments, the carrying
amounts of certain assets used jointly by segments are not allocated. Segment liabilities consist primarily of trade
and other creditors, employee benefits and provisions for warranties. Segment assets and liabilities do not include
deferred income taxes.
Australia
$
Asia
$
USA
Europe
$
$
Other
region
220
65,036
392,266
-
150,990
-
235,735
4,928
14,924
-
65,256
392,266
150,990
240,663
14,924
Unallocated
Eliminated Consolidated
$
-
-
-
$
-
-
-
$
794,135
69,964
864,099
115
65,141
406,253
134,994
257,272
-
742,031
(591,041)
-
165,171
75,492
-
18,003
(3,079)
-
2,665,478
(2,665,478)
-
(630,893)
630,893
-
3,094,899
(2,230,800)
406,253
2012
Sales to external
customers
Other revenues
Total segment
revenues
Segment
expenses
Segment result
Income tax credit
Consolidated loss
from ordinary
activities after
income tax credit
Segment assets
Segment
liabilities
258,407
422,034
-
-
307,602
199,970
3,705
-
Acquisition of
property, plant
and equipment
and intangibles
Impairment of
patents
Depreciation and
amortisation
17,403
15,199
30,011
21,294
65,706
14,791
-
-
52,057
408
16,071
27,769
-
-
-
-
-
(1,824,547)
1,129,826
(67,447)
1,828,358
-
(67,447)
358,292
-
-
7,160
-
-
-
83,907
80,497
103,465
Uscom Limited - Annual Report 2012 - 43
NOTES TO FINANCIAL STATEMENTS continued
Note 27: Operating segments (continued)
Australia
$
Asia
$
USA
Europe
$
$
Other
region
715
44,505
291,963
-
444,875
-
87,026
1,555
10,234
-
45,220
291,963
444,875
88,581
10,234
Unallocated
Eliminated Consolidated
$
-
-
-
$
-
-
-
$
834,813
46,060
880,873
326
44,894
344,896
87,133
204,830
-
1,012,180
(567,305)
-
282,815
(194,234)
-
6,870
3,364
-
3,220,747
(3,220,747)
-
(698,389)
698,389
-
3,911,682
(3,030,809)
344,896
2011
Sales to external
customers
Other revenues
Total segment
revenues
Segment
expenses
Segment result
Income tax credit
Consolidated loss
from ordinary
activities after
income tax credit
Segment assets
Segment
liabilities
381,660
396,903
-
-
254,744
206,445
21,118
-
Acquisition of
property, plant
and equipment
and intangibles
Impairment of
patents
Depreciation and
amortisation
36,595
12,231
8,961
40,153
-
11,731
-
-
44,804
500
25,386
25,223
-
-
-
-
-
Note 28: Contingencies
There were no contingencies as at 30 June 2012.
(2,685,913)
2,710,777
(29,336)
3,524,290
-
(29,336)
388,685
-
-
7,499
-
-
-
97,940
11,731
103,412
Note 29: Events after the reporting date
On 2 July 2012, 2 million shares were issued at 7.5 cents each under a private placement. The issue raised an
additional $150,000 in new capital and does not require shareholder approval as it is below the limit of 15% of
issued capital which a company can issue within a 12 month period without shareholder approval per Listing Rule
7.1. In August 2012, the company offered to issue 5.8 million shares at 12 cents each raising $696,000 as part of a
private placement to sophisticated investors. The offer was over-subscribed. 5.8 million shares which represent
the balance of the company’s 15% capacity under Listing Rule 7.1 will be issued at the close of the placement and
any additional shares will be issued subject to shareholder approval.
Apart from that, no other matters or circumstances have arisen since the end of the financial year to the date of
this report, that has significantly affected or may significantly affect the activities of the Consolidated Entity, the
results of those activities or the state of affairs of the Consolidated Entity in the ensuing or any subsequent
financial year.
Uscom Limited - Annual Report 2012 - 44
DIREC
CTORS’
’ DECLA
ARATION
N Uscom Lim
mited and its C
Controlled Ent
tity
In the dire
ectors' opinio
n:
•
•
•
•
financial state
the attached f
t
Accounting St
tandards, the
A
;
requirements;
ments and no
Corporations
tes thereto co
Regulations 2
omply with the
2001 and othe
e Corporations
r mandatory p
e
s Act 2001, the
eporting
professional re
the attached f
t
Standards as i
S
financial state
f
financial state
issued by the
ments;
ments and no
International A
tes thereto co
Accounting St
omply with Inte
tandards Boar
ernational Fin
rd as describe
ancial Reporti
ed in note 2 to
ing
the
t
the attached f
financial posit
f
financial state
tion as at 30 Ju
ments and no
une 2012 and
tes thereto gi
of its perform
ve a true and
mance for the f
fair view of th
inancial year e
e consolidate
ended on that
d entity's
t date;
t
there are reas
become due a
b
sonable groun
and payable.
ds to believe
that the comp
pany will be ab
ble to pay its d
debts as and w
when they
The direc
ctors have bee
en given the d
eclarations req
quired by sect
tion 295A of t
he Corporatio
ons Act 2001.
Signed in
n accordance w
with a resoluti
on of director
rs made pursu
ant to section
295(5) of the
Corporations
Act 2001.
On behal
f of the direct
tors
Rob Philli
ips
Sheena J
ack
Executive
e Director - Ch
hairman
Non-Exe
cutive Directo
or
Sydney, 3
30 August 201
2
Uscom Limited
- Annual Repor
rt 2012 - 45
INDEPENDENT AUDIT REPORT
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 10, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of Uscom Limited
Report on the Financial Report
We have audited the accompanying financial report of Uscom Limited, which comprises the
statement of financial position as at 30 June 2012, the statement of comprehensive income, the
statement of changes in equity and the statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory information, and
the directors’ declaration of the consolidated entity comprising the company and the entities it
controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error. In Note 2, the directors also state, in
accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the
financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards require
that we comply with relevant ethical requirements relating to audit engagements and plan and
perform the audit to obtain reasonable assurance about whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the company’s preparation of the financial report that gives a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the directors, as well as evaluating the overall presentation of
the financial report.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
Uscom Limited - Annual Report 2012 - 46
INDEPENDENT AUDIT REPORT continued
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001. We confirm that the independence declaration required by the
Corporations Act 2001, which has been given to the directors of Uscom Limited, would be in the
same terms if given to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of Uscom Limited is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June
2012 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended
30 June 2012. The directors of the company are responsible for the preparation and presentation
of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Uscom Limited for the year ended 30 June 2012
complies with section 300A of the Corporations Act 2001.
BDO East Coast Partnership
Tim Sydenham
Partner
Sydney, 30 August 2012
Uscom Limited - Annual Report 2012 - 47
SHAREHOLDER INFORMATION
Additional information required by Australian Stock Exchange Listing Rules is as follows. This information is
current as at 31 July 2012.
(a) Distribution Schedules of Shareholder
Holdings Ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 99,999,999,999
Total
Holders
Number
112
208
76
118
44
558
Ordinary shares
Number
80,749
619,718
606,082
4,268,734
48,549,205
54,124,488
%
0.149
1.145
1.120
7.887
89.699
100
There were 269 holders of less than a marketable parcel of 451,871 ordinary shares.
(b) Class of shares and voting rights
All shares are ordinary shares. Each ordinary share is entitled to one vote when a poll is called, otherwise each
member present at a meeting or by proxy has one vote on a show of hands.
Substantial shareholders
(c)
The names of the substantial shareholders listed in the holding company’s register as at 31 July 2012 are:
Robert Allan Phillips
Gary Desmond Davey
Dr Stephen Frederick Woodford
DRP Cartons (NSW) Pty Ltd
16,996,733
6,219,000
3,459,590
2,175,458
(d) Twenty largest registered holders – ordinary shares
Balance as at 31 July 2012
Robert Allan Phillips
Gary Desmond Davey
Dr Stephen Frederick Woodford
DRP Cartons (NSW) Pty Ltd
Bell Potter Nominees Ltd
Merrill Lynch (Australia) Nominees Pty Limited
Stream Group Holdings Pty Ltd
Invia Custodian Pty Limited
Arinya Investments Pty Ltd
Stream Group Aust Pty Ltd
Mr Rutherford James Browne & Mrs Sheba Elizabeth Marjorie Browne
Mr Alister John Forsyth
Gailforce Marketing & PR Pty Ltd
Apollan Pty Ltd
DRP Cartons (NSW) Pty Ltd
Jules Flach
Ross Planning Pty Ltd
Dr Russell Kay Hancock
Citicorp Nominees Pty Limited
Hinona Pty Ltd
Ordinary
shares
Number
16,996,733
6,219,000
3,459,590
2,175,458
2,124,836
2,014,982
2,000,000
1,688,118
1,050,000
954,111
829,792
768,809
553,809
547,700
507,876
500,000
421,269
400,800
375,535
357,159
%
31.40%
11.49%
6.39%
4.02%
3.93%
3.72%
3.70%
3.12%
1.94%
1.76%
1.53%
1.42%
1.02%
1.01%
0.94%
0.93%
0.78%
0.74%
0.69%
0.66%
Total
43,945,577
81.19%
Uscom Limited - Annual Report 2012 - 48
SHAREHOLDER INFORMATION continued
Registered office and principal place of office
Level 7, 10 Loftus Street
Sydney NSW 2000 Australia
Tel:
Fax:
02 9247 4144
02 9247 8157
Company Secretary
Tom Rowe
Registers of securities
Boardroom Pty Limited
Level 7, 207 Kent Street
Sydney NSW 2000 Australia
GPO Box 3993
Sydney NSW 2001 Australia
1300 737 760
Tel:
Fax:
1300 653 459
www.boardroomlimited.com.au
Stock exchange listing
Quotation has been granted for 54,124,488 ordinary shares of the Company on all Member Exchanges of the
Australian Stock Exchange Limited.
Unquoted securities
Options over unissued shares
A total of 3,560,000 options over ordinary shares are on issue. 2,000,000 options are on issue to OSI System. and
1,560,000 options are on issue to ten employees and executives under the Uscom Employee Share Option Plan
and Uscom Executive Share Option Plan.
Uscom Limited - Annual Report 2012 - 49
Uscom Ltd, Suite 1, Level 7, 10 Loftus Street, Sydney NSW 2000 Australia T +612 9247 4144