Uscom Ltd, Suite 1, Level 7, 10 Loftus Street, Sydney NSW 2000 Australia T +612 9247 4144
ASX:UCM
ANNUAL REPORT
2014
The measure of life.
“Uscom is a de-risked medical
device company, with two
validated and approved
products, growing global
revenues, with a clear focus on
building a real business with
global impact, in real markets,
doing global good, and
making real profits.”
Chairmans Letter
2
Corporate Governance
5
Directors’ Report and Financial Statements
10
CHAIRMAN’S LETTER
Fellow shareholders, it gives me great pleasure to present the Company results for the 2014 financial year; a year
in which we consolidated the foundations for commercial success and corporate profitability by growth and
acquisition. The year ahead is focused on completing this commercialisation by growing sales, distribution and
revenue by feeding the Uscom products into our growing distribution channels, growing revenues, generating
new revenues and growing shareholder value.
2014 Headlines:
1. Operations - Revenues from activities up 67%, and cash on hand up 192%
2. Outcomes - Shareholder equity up 41%, and Uscom capitalised value up 55%
3. Growth - Successful integration of Pulsecor IP, systems and assets
4. Milestones - Manufacture and sale of the first Uscom BP+, new USA BP+ patent, and CE approval
5. Distribution - Increased Uscom BP+ and USCOM 1A distributors by 12 to 27
6. Science - 36 new publications for USCOM 1A and BP+
Overview 2014: This year has been a year of consolidation and positioning for Uscom with the Company
completing the acquisition of the BP+ technology, integrating the Pulsecor operations and IP into Uscom,
manufacturing the first BP+ devices, receiving a new USA BP+ patent, and CE Mark for BP+, and significantly
growing the number of global distributors while increasing revenues by 67%.
As part of the Uscom strategy distribution partnerships have been significantly increased by 12 to 27, with a
number awaiting execution. These distributors have been brought on to both distribute the newly manufactured
Uscom BP+ and expand the current USCOM 1A distribution. The new distributors are from China, Germany, the
UK, Europe and the USA, and the accompanying revenue growth is expected as their market activities accelerate
over the coming 12 to 18 months. We have also strengthened user and distributor support processes in
anticipation of this increased demand allowing us to cost-effectively support these incoming partners and an
expanded user installation base.
Results: Revenue for 2014 increased by 67% from 2013 as a result of increased demand for USCOM 1A devices.
There was a small increase in cost of operations associated with the costs of integrating BP+ assets including IP
transfers, regulatory re-registrations and preparation for BP+ manufacture leading to a 5% increased loss before
income tax.
Importantly cash on hand at the end of the period increased by 192% from 2013 as a result of the capital raising.
This cash will be used to fund operations as the sales distribution networks for USCOM 1A and the Uscom BP+
become effective and operations profitable.
Total assets of the Company increased in 2014 by 34% to $3.77m, while total shareholder equity increased by 41%
in the period.
It is envisaged that with many of the one off BP+ acquisition costs behind us, combined with increasing
USCOM 1A revenues from a significantly expanded distribution network, and early BP+ sales, the financial
position for Uscom in 2015 should significantly improve on the current reported results.
Capital: Uscom had $1,582,834 cash on hand at the end of the period and intends to manage expenditure
cautiously as the expected revenue pick up continues.
Sales: This year saw the appointment of a global sales manager based in the UK and this was associated with a
significant increase in distribution partners. Sales were up 67% for the year, and this was from the USCOM 1A as
the Uscom BP+ was being prepared for manufacture and market. It is anticipated that with the increased sales
and distribution channels there will be a significant increases in revenues as their activities are reflected in
customer sales. This increase in revenue will be further impacted as the Uscom BP+ is fed into global sales
channels and new distributors are activated.
Share price: The capitalised value of the Company increased by 55% during the reporting period to $17.9m. The
three year VWAP has increased by an average 50% pa over the last three years from the lows of 2012. Lodge
partners have a buy recommendation and a 45c target price on the Company for 2015.
As the newly manufactured BP+ devices are fed into our new and expanded distribution channels over the next
12-18mths, directly growing revenue, it is anticipated that the commercial value of the BP+ acquisition will be
recognised by the market.
Science: The Uscom BP+ and the USCOM 1A are breakthrough cardiovascular technologies, representing the
best of blood pressure and cardiac output monitoring technology, and this year saw further evidence supporting
Uscom Limited - Annual Report 2014 - 2
CHAIRMAN’S LETTER continued
the expanded clinical utility of these technologies. There were 36 new publications supporting the utility of
USCOM 1A and the BP+ in 2014, taking the USCOM evidence to greater than 450 papers in the fields of
hypertension, heart failure and sepsis in adults, children and neonates.
New evidence supporting the adoption of central blood pressure, or pressure at the heart has become wide
spread. This heart pressure is measured by the supra-systolic Uscom BP+, and is gaining recognition as superior
to sub-systolic cuff based blood pressure measured in the arm or pressure pulse measures in the wrist, These
studies establish the Uscom BP+ as a cost effective standard of care technology for measurement in hypertension
and a viable new technology compared to more expensive alternatives.
The scientific highlights for this year include:
•
Independent global hypertension experts from Cambridge University, Cambridge, UK, Wales Heart
Institute, Cardiff, UK, Weill Cornell Medical College, New York, USA and the University of California,
Irvine, USA, review 10 central blood pressure devices and found BP+ the most clinically applicable
technology.
• Central blood pressure was found to better predict cardiovascular risk, achieving lower blood pressures
using fewer drugs and was proposed as the possible new gold standard method for hypertension
management.
BP+ was found to be an improved method for measuring central blood pressure in children when
compared to current gold standard which was found to be difficult to use.
•
• New research from two separate leading centres in London demonstrated the importance of USCOM 1A
for management of sepsis in children.
With the increasing scientific validation, the pressure for adoption of USCOM and BP+ is increasing and will
support current increased sales and marketing programmes. Uscom is a company founded on sound and
clinically useful science, and this year confirms the success of this founding mission.
Partnerships: A cornerstone of the expanded Uscom distribution was the execution of the partnership with
Pioneer Medical, Shanghai in a 5 year $7m deal. The deal will yield revenue upon the CFDA approval of BP+
expected in 2015. The partnership is a fast-track to the rapidly growing Chinese medical device market (25.3%
annual growth rate). Pioneer is a Hong Kong listed, Shanghai based medical distribution company with excellent
channels to the Chinese medical device market.
This year saw Uscom partner with UK Doppler company Deltex Medical to access their capable and well
connected distribution, particularly in the UK. The partnership sets a platform for ongoing relationships to better
grow global Doppler markets under the banner of “to Doppler or not to Doppler”. Deltex and Uscom have
complimentary technologies with common science in complimentary critical care markets. The potential and
rationale for developing the partnership with Deltex to better access the increasing recognition of Doppler
monitoring remains strong.
Discussions are on going with a number of major distribution partners for various territories world wide for both
USCOM and BP+, and we look forward to consolidating these partners and improving our path to market,
building revenue and establishing profitability. For Uscom these distribution partners hold the key to our future,
and the growing number and quality of these partners will be reflected in future financial results.
Strategy 2015: Uscom now owns and manufactures two practice leading premium cardiovascular devices with
validation and global approvals. The strategy for Uscom is now to complete the commercialisation of these world
leading technologies by increasing sales and distribution, and thus revenue to achieve enduring profitability.
In FY 2015 we are planning to further grow both reach and depth of distribution by appointing more and larger
distributors.
We also intend to deliver the BP+ device into currently approved international markets via direct sales,
distribution and licensing partnerships. To ensure optimal market penetration and profitability, Uscom is
investigating new and more cost effective, high volume manufacturing strategies for the BP+ and USCOM 1A
device to meet potential rapid growth in demand. Global marketing of the BP+ will be focused on hypertension,
medical clinics, home care and hypertension research centres. We are also in discussions to bring the BP+
technology to market via strategic and licensing partnerships.
For the future Uscom will develop and acquire new products that can be fed into the rapidly growing Uscom
distribution channels, to fulfil the Uscom vision of providing increased shareholder value off the back of improved
cardiovascular care.
Uscom Limited - Annual Report 2014 - 3
CHAIRMAN’S LETTER continued
Incremental growth by acquisition is always a strategic opportunity and valuable partnership targets are
continually being assessed. The potential to acquire additional premium non-invasive cardiovascular devices is
clearly part of the Uscom future.
We believe the business is well prepared to accelerate growth in the coming year, and the Company
management are committed to a strategy of increased distribution and growth to meet the anticipated demand.
These developments will result in a changed operational environment for Uscom; one that should immediately
reward shareholders.
Risks: While commercial success is anticipated for the year ahead, Uscom is exposed to risks which may impair
operations and impact predicted outcomes.
Global markets, while showing signs of early recovery may not continue to recover as anticipated and as such
predicted revenues may not be achieved. Partnering risks relates to the under performance of distribution
partners, particularly where best endeavours contracts are in place, may also impact forecast revenues. The
appointment of Mr Steven Haken as global sales manager reduces this risk by providing hands on distributor
management and continual monitoring of results.
Regulatory risks relevant to medical devices are associated with delayed or declined approvals to specific
jurisdictions. While both USCOM 1A and BP+ are non-invasive and already have major approvals, it is possible
that new approvals, and re-approvals associated with changed and inefficient regulatory systems may delay
approvals and subsequently revenue.
Key personnel risk; currently there is a small and vital team working on the Uscom project to ensure and manage
growth and commercial success. Development of an executive remuneration plan to ensure adequate
compensation for executives for extra-ordinary contributions may mitigate the risk of untimely resignations that
have the potential to damage operations and impede commercial momentum, and is an important task going
forward.
Other risks include competitive risks and patent breach risks in global markets, and the risk associated with
impending rapid growth which may become significant if predicted anticipated sales are achieved. Substantial
unpredicted product demand and growth may generates scale up stress on the business, thus challenging cash
flow management and equity adequacy may need focused management.
Conclusion: 2014 has been a great year for Uscom as we consolidated the foundations of an influential and
profitable global medical device business. We have now acquired and integrated a new technology, new IP and
operations, and manufactured our second ground breaking cardiovascular product, while increasing overall sales
revenues by 67% and significantly expanding global distribution.
This year has seen us position ourselves for approaching commercial success; success that will create significant
shareholder value and provide us with the momentum to develop and acquire additional technologies to deliver
into our growing distribution channels. Achieving profitability from this enhanced distribution will drive strategic
and operational changes that ensure Uscom transitions to a global leader in medical device development,
manufacture and distribution.
Uscom has a history of meeting corporate milestones and the Uscom focus for 2015 is marketing, sales and
revenue, and we are grateful for the on going support of shareholders as we execute this strategy. Uscom is a real
company, with real products, in real markets, earning real revenue, for real investors, and preparing for real
growth and we can all look forward to the year ahead.
Thank you.
Rob Phillips
PhD(med), MPhil(med), FASE, DMU(cardiol)
Executive Chairman
Uscom Limited
Uscom Limited - Annual Report 2014 - 4
CORPORATE GOVERNANCE STATEMENT
Uscom is committed to maintaining high standards of corporate governance. Effective corporate governance aids
the Company to set and achieve its objectives. Our Governance Statement for 2013/2014 outlines our policies
and practices by reference to the ASX Corporate Governance Principles and Recommendations (2nd Edition) (ASX
Principles). Uscom will report against the 3rd Edition of the Principles in the next financial year.
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, and those delegated to
the Executive Chairman. The Board Charter is available in the Uscom Corporate Governance section of the
Company website.
Recommendation 1.2: Disclose the process for evaluating the performance of senior executives.
The Chief Executive Officer presents to the Board at each Board Meeting regarding the Company’s performance
against its goals and objectives, including the contribution of senior management to that performance. The Board
assesses the performance of senior management 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, including senior management.
Recommendation 1.3: Provide the information indicated in the Guide to reporting on Principle 1.
A performance evaluation of Executives and senior management has taken place during the reporting period in
accordance with the process disclosed above. A copy of the Board Charter is available in the Corporate
Governance section of the Uscom website.
Principle 2: Structure the board to add value
Uscom Ltd has the services of a Board with an experience at senior levels encompassing fields such as science,
medicine, marketing and international business. Further information regarding the Directors is provided in the
Directors’ Report at 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, taking into account its , stage of
development and nature of its operations. 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, Dr Rob Phillips, is an executive director and is therefore not an independent
director. The Board believes that an Executive Chairman is appropriate taking into account the size of the
Company, its stage of development and the nature of its operations.
Recommendation 2.3: The roles of chairperson and chief executive officer should not be exercised by the
same individual.
Dr 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 its business, and taking into account Mr Phillips’ qualifications,
knowledge and experience in the field of the Company’s operations, and his exceptional knowledge of the
Company.
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 is appropriate given the relatively small size of the Board and that it is not intended to
increase the size of the Board in the medium term.
Uscom Limited - Annual Report 2014 - 5
CORPORATE GOVERNANCE STATEMENT continued
Recommendation 2.5: Disclose the process for evaluating the performance of the board, its committees
and individual directors.
The performance of Directors is evaluated informally by assessing each Director’s contribution and attendance at
all Board meetings.
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 [on Page 10].
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 on page 10.
•
• 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 on page 10.
• 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. Matters relating to Board
composition and membership will continue to be overseen by the full Board.
• 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 on page 12.
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.
Uscom’s Securities Trading Policy applies to all Directors, officers and employees of Uscom – it sets out the
prohibition against insider trading and prescribes certain requirements for dealing in the Company’s securities.
The Securities Trading Policy is available in the Corporate Governance section of the Uscom website.
Uscom’s Code of Conduct is available in the Corporate Governance section of the Uscom 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, which is available in the Corporate Governance
section of the Uscom 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. The
Company believes this is appropriate taking into account the size of the Company and its stage of development.
Uscom Limited - Annual Report 2014 - 6
CORPORATE GOVERNANCE STATEMENT continued
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.
Women within whole organisation:
Women in senior management positions:
Women on the board:
4 (36%)
0%
1 (33%)
Recommendation 3.5: Companies should provide the information indicated in the Guide to reporting on
Principle 3.
This information can be found in the Corporate Governance section of the Company website.
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1: Establish an audit committee.
During the reporting period, the Board determined that taking into account the size of the Company and the
Board, and the nature of the Company’s operations, it was not necessary to have a separate Audit Committee,
and the Audit Committee was dissolved. The functions that would be undertaken by an Audit Committee are
primarily carried out by the two independent Directors. Ms Sheena Jack, an independent Director, is an
experienced financial professional who has held senior positions in that capacity.
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 functions that would ordinarily be the responsibility of an Audit Committee, including issues relating to the
Company’s financial information and regular review of the Company’s risk environment, are undertaken primarily
by the two independent Directors.
Recommendation 4.3: The audit committee should have a formal charter.
Not applicable.
Recommendation 4.4: Provide the information indicated in the Guide to reporting on Principle 4.
The Company does not have an Audit Committee.
The attendance of the Committee members at Audit Committee meetings held during the Reporting Period are
set out on page 10.
The Company has not established a formal procedure for the selection, appointment and rotation of the external
auditor. The performance of the external auditor is reviewed on an ongoing basis by the Board and any changes
implemented where the Board considers changes are required.
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 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 Company’s obligations under the ASX
Listing Rules and Corporations Act disclosureframework, and 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.
Uscom Limited - Annual Report 2014 - 7
CORPORATE GOVERNANCE STATEMENT continued
Refer to the Corporate Governance section of the Uscom 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 of the
Company.
The Company’s primary communications tool is its website, and all announcements are posted on the Company
website, immediately after they are released to the ASX.
All announcements, dating back to May 2001, are 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.
The Company also encourages shareholders to participate in the annual general meeting (AGM). Provision is
made for shareholders to submit written questions to the Company and/or the auditor prior to the AGM. Any
presentations made at a general meeting are made available immediately after the meeting, by first releasing to
ASX, and then posting the presentation on the Uscom website.
Ample notice of the Annual General Meeting and any other General Meetings will be provided to shareholders.
All documents and presentations general meetings will be posted immediately on the Company website.
The auditor attends the Annual General Meeting and is available to answer shareholders’ questions on:
•
•
•
•
The conduct of the audit;
The preparation and conduct of the Auditor’s Report;
The accounting policies adopted by Uscom in relation to the preparation of the financial statements; and
The independence of the auditor in relation to the conduct of the audit.
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 Board is charged with oversight of the Company’s risk profile. The Board 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 Board 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
Uscom Limited - Annual Report 2014 - 8
CORPORATE GOVERNANCE STATEMENT continued
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 in respect of the
financial statements and notes for the financial year that the declaration provided in accordance with section
295A of the Corporations Act 2001 (Cth) 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 also received assurance from the CEO and General Manager in respect of its half-year financials
that in their opinion, the financial records of the entity have been properly maintained and that the financial
statements comply with the appropriate accounting standards and give a true and fair view of the financial
position and performance of the entity, and that the opinion has been formed on the basis of a sound system of
risk management and internal control which is operating effectively.
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.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1: Establish a Remuneration Committee.
The Company does not believe that it is necessary to have a separate Remuneration Committee, taking into
account the size of the Company, the stage of its development, and the nature of its operations. Issues relating
to board membership will continue to be overseen by the full Board.
Uscom Ltd has adopted a remuneration policy based on performance and contribution.
Recommendation 8.2: The remuneration committee should be structured so that it:
• Consists of a majority of independent directors
•
• Has at least three members.
Is chaired by an independent chair
Not applicable
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 12 to 16.
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 2014 - 9
DIRECTORS’ REPORT
The Directors present their report on Uscom Ltd and its Controlled Entity for the financial year ended 30 June
2014.
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.
Dr R A Phillips
Ms S Jack
Mr C Bernecker
Executive Director - Chairman
Non-Executive Director
Non-Executive Director
Directors’ qualifications and experience
Dr Rob Phillips
Dr Rob Phillips is the founder of Uscom Ltd, the Chief Executive Officer, Executive Director and Chief Scientist of
the Company. Rob has 10 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 and capital raising. The Company
received the Frost and Sullivan Global Entropolis Award for the Emerging Medical Device Company of the Year in
2007. He has a Doctor of Philosophy and a Master of Philosophy in Cardiovascular Medicine from The University
of Queensland. He is an Australian Post Graduate Award recipient and was a finalist in the Time-Google-CNN-
Science-NYSE 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 cardiac ultrasound, cardiovascular function and
circulation.
Ms Sheena Jack
Ms Sheena Jack is a Non-Executive Director of Uscom Ltd since November 2011 and was also the Chairman of
the Audit and Risk Committee until the Audit and Risk Committee was dissolved on 21 February 2014.
Sheena was until recently the Chief Financial Officer of HCF when she took up the role of HCF Chief Strategy
Officer. Sheena has 25+ 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 has been a Director of Moneytime Health Pty Ltd since January 2007. Sheena is a Chartered
Accountant and a graduate member of the Australian Institute of Company Directors.
Mr Christian Bernecker
Mr Christian Bernecker is a Non-Executive Director of Uscom Ltd since November 2011 and was also a member of
the Audit & Risk Committee until the Audit and Risk Committee was dissolved on 21 February 2014.
Christian is Executive Chairman of Stream Group Limited since February 2014 and was Director of Stream Group
Holdings Pty Limited since August 2010. He is Director of a number of other private companies.
Christian has more than 10 years of broad investment experience across capital raising, merge and acquisition.
Christian is a member of the Institute of Chartered Accountants in Australia and holds a Bachelor of Commerce
from Ballarat University.
Company Secretary’s qualifications and experience
Ms Catherine Officer
Ms Catherine Officer was appointed the Company Secretary of Uscom Ltd on 18th July 2013. Catherine Officer is
an experienced Company Secretary and Corporate Lawyer with over 20 years experience. She has previously
held senior positions at ASX Limited and Macquarie Group. She has a Bachelor of Laws from the University of
Melbourne.
Meetings of Directors
Directors
Board of Directors
Audit and Risk Committee
R A Phillips
S Jack
C Bernecker
Meetings held while
a Director
8
8
8
No. of meetings
attended
8
8
7
Meetings held while a
Director
-
2
2
No. of meetings
attended
-
2
2
Uscom Limited - Annual Report 2014 - 10
DIRECTORS’ REPORT continued
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 $1,520,500 (2013: $1,371,683)
Dividends
No dividends were declared or recommended for the financial year ended 30 June 2014 (2013: nil).
Significant changes in state of affairs
There were no significant changes in state of affairs during the financial year.
Operating and financial review
The operating and financial review is stated per the Chairman’s letter on pages 2 to 4.
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
Operating and Financial Review, 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, there were no non-audit 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:
Uscom Limited - Annual Report 2014 - 11
DIRECTORS’ REPORT continued
• 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 40 for details of auditors’ remuneration.
The auditor’s independence declaration as required under section 307C of the Corporation Act is set out on page
17 and forms part of the Directors’ Report.
BDO East Coast Partnership continues in office in accordance with section 327 of the Corporations Act 2001.
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
Christian Bernecker, Non-Executive Director
Executive Directors
Rob Phillips, Executive Director, Chairman, Chief Executive Officer
Senior Executives
Nick Schicht, General Manager
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.
Uscom Limited - Annual Report 2014 - 12
DIRECTORS’ REPORT continued
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.
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 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, 2,000,000 options owned by Dr Rob Phillips were cancelled at Dr Rob Phillips request. These
options were issued to Dr Rob Phillips under the Executive Share Option Plan in November 2012.
Service agreements
The Consolidated Entity has entered into an employment agreement with the Executives that
• Outlines the components of remuneration payable; and
• Specifies termination conditions.
Uscom Limited - Annual Report 2014 - 13
DIRECTORS’ REPORT continued
Details of the employment agreement are as follows:
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.
The employment terms do not prescribe the duration of employment for executives.
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 2014.
Non-Executive Director
S Jack
C Bernecker
Executive Director
R Phillips
Senior Executive
N Schicht
Short term benefits
Directors’
Base Fee
$
33,000
38,238
Base salary
$
-
-
-
-
170,000
166,000
Total
71,238
336,000
Post employment
benefits
Superannuation
$
5,238
-
Equity
Total
remuneration
Share-based
payment
$
% of total
$
-
-
-
-
38,238
38,238
37,869
42,345(1)
16.9%
250,214
15,355
58,462
2,927
1.6%
184,282
45,272
-
510,972
Other
payments
$
-
-
-
-
-
(1)
In addition to the above, an expense of $70,210 resulted from the cancellation of 2,000,000 options for R Phillips in accordance with Australian Accounting
Standards. No actual benefit accrued to R Phillips as a result of the cancellation.
Uscom Limited - Annual Report 2014 - 14
DIRECTORS’ REPORT continued
Remuneration includes salaries, benefits and superannuation contributions in respect of the financial year 2013.
Non-Executive Director
S Jack
C Bernecker
Executive Director
R Phillips
Senior Executive
T Rowe (to 7 Nov 2012)
S Prince (from 7 Nov 2012)
N Schicht
Short term benefits
Directors’
Base Fee
$
55,417
60,404
Base salary
$
-
-
-
-
-
-
170,000
-
-
166,000
Total
115,821
336,000
Post employment
benefits
Superannuation
$
4,987
-
Equity
Total
remuneration
Share-based
payment
$
% of total
$
-
-
-
-
60,404
60,404
15,300
91,538
33.1%
276,838
-
-
14,940
35,227
-
-
12,665
104,203
-
-
6.5%
-
9,501
8,149
193,605
608,901
Other
payments
$
-
-
-
9,501(1)
8,149(2)
-
17,650
(1)
(2)
Payments were made to Company Matters Pty Ltd for the services provided by Mr Rowe.
Payments were made to Company Matters Pty Ltd for the services provided by Ms Prince.
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.
Exercise
d
During
FY2014
No.
Number of options over ordinary shares held by Directors and Senior Executives
Total
vested
Lapsed /
Cancelled
Granted
Balance
Balance
Total
unexercisable
Non-Executive Director
S Jack
C Bernecker
Executive Director
R Phillips
Senior Executive
N Schicht
Total
1 July 2013
No.
-
-
3,000,000
300,000
3,300,000
During
FY2014
No.
-
-
-
-
-
During FY2014
30 June 2014
30 June 2014
30 June 2014
No.
No.
No.
-
-
-
-
-
-
No.
-
-
(2,000,000)
1,000,000
500,000
500,000
-
300,000
225,000
(2,000,000)
1,300,000
725,000
75,000
575,000
-
-
-
-
-
Details of options outstanding as at end of year
Holders No.
Grant date
Exercisable
at 30 June
2014
%
Expiry date
30 June 2014
Outstanding
Option
No.
Exercise
Price
$
Issued
date fair
value
$
8 (Employees &
Executive)
1 (Director)
Total
29 March 2012
7 November 2012
75%
50%
29 March 2016
1,100,000
0.0595
7 November 2016
1,000,000
0.0595
0.06
0.07
2,100,000
Further details of the options are disclosed in note 18 of the financial statements.
Uscom Limited - Annual Report 2014 - 15
DIRECTORS’ REPORT continued
Number of shares held by Directors and Senior Executives (including indirect interest)
Balance
1 July 2013
No.
Received as
Remuneration
No.
Options
Exercised
No.
Net change
Other*
No.
Balance
30 June 2014
No.
Non-Executive Director
S Jack
C Bernecker
Executive Director
R Phillips
Senior Executive
N Schicht
Total
630,000
-
17,046,733
18,200
17,694,933
-
-
-
-
-
-
-
-
-
-
166,667
-
796,667(1)
-
-
-
17,046,733(2)
18,200(3)
166,667
17,861,600
*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) 6,432,924 of these ordinary shares are held by Australian Cardiac Sonography Pty Ltd as trustee for the Phillips Superannuation.
(3) 10,000 of these ordinary shares are held by family associate.
This Directors’ report is signed in accordance with a resolution of the Board of Directors, pursuant to section
298(2)(a) of the Corporations Act 2001.
Dr Rob Phillips
Ms Sheena Jack
Executive Director - Chairman
Non-Executive Director
Sydney, 15 August 2014
Uscom Limited - Annual Report 2014 - 16
AUDITOR’S INDEPENDENCE DECLARATION
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY TIM SYDENHAM TO THE DIRECTORS OF USCOM LIMITED AND
ITS CONTROLLED ENTITY
As lead auditor of Uscom Limited and its controlled entity for the year ended 30 June 2014, I
declare that, to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Uscom Limited and the entity it controlled during the period.
Tim Sydenham
Partner
BDO East Coast Partnership
Sydney, 15 August 2014
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 1
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 Legislatio
(other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
Uscom Limited - Annual Report 2014 - 17
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the financial year ended 30 June 2014
Continuing operations
Revenue and other income
Raw materials and consumables used
Expenses from continuing activities
Loss before income tax credit from continuing operations
Income tax credit
Loss after income tax credit from continuing operations
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation difference for foreign operations
Other comprehensive income for the year, net of tax
Consolidated
2014
$
2013
$
1,064,666
(235,308)
(2,662,908)
638,734
(140,644)
(2,241,981)
(1,833,550)
(1,743,891)
313,050
372,208
(1,520,500)
(1,371,683)
Note
3
4
5
6
(893)
(893)
4,246
4,246
Total comprehensive income for the year
(1,521,393)
(1,367,437)
Attributable to:
Owners of the Company
(1,521,393)
(1,367,437)
Total comprehensive income for the year
(1,521,393)
(1,367,437)
Earnings per share from continuing operations attributable to the
owners of the Company
Earnings per share (EPS)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
7
7
(2.0)
(2.0)
(2.2)
(2.2)
This Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the attached
notes.
Uscom Limited - Annual Report 2014 - 18
STATEMENT OF FINANCIAL POSITION
As at 30 June 2014
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
Options reserve
Accumulated losses
Translation reserve
Total equity
Consolidated
2014
$
2013
$
Note
8
9
10
11
14
12
13
15
16
16
1,582,834
325,514
216,870
313,050
70,384
2,508,652
541,195
98,436
190,654
372,208
54,472
1,256,965
38,039
1,222,518
1,260,557
51,589
1,506,634
1,558,223
3,769,209
2,815,188
255,770
172,474
428,244
196,107
241,797
437,904
21,572
21,572
22,617
22,617
449,816
460,521
3,319,393
2,354,667
17
18
6
19
26,006,168
1,638,582
(24,402,937)
77,580
23,638,157
1,520,474
(22,882,437)
78,473
3,319,393
2,354,667
This Statement of Financial Position is to be read in conjunction with the attached notes.
Uscom Limited - Annual Report 2014 - 19
STATEMENT OF CHANGES IN EQUITY
For the financial year ended 30 June 2014
Issued
Capital
Options
Reserve
Accumulated
Losses
Consolidated
$
$
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 1 July 2012
21,526,920
1,379,673
(21,510,754)
74,227
1,470,066
Loss for the year
Other Comprehensive
Income
Total Comprehensive
Income for the year
Transactions with Owners in
their capacity as owners:
Shares Issued
Unissued share capital
Transaction costs on Shares
Issued
Share-based payments
-
-
-
2,284,944
(150,000)
(23,707)
-
-
-
-
-
-
-
140,801
(1,371,683)
-
(1,371,683)
-
4,246
4,246
(1,371,683)
4,246
(1,367,437)
-
-
-
-
-
-
-
-
2,284,944
(150,000)
(23,707)
140,801
Balance at 30 June 2013
23,638,157
1,520,474
(22,882,437)
78,473
2,354,667
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
-
-
-
2,513,207
(145,196)
-
-
-
-
-
-
118,108
(1,520,500)
-
(1,520,500)
-
(893)
(893)
(1,520,500)
(893)
(1,521,393)
-
-
-
-
-
-
2,513,207
(145,196)
118,108
Balance at 30 June 2014
26,006,168
1,638,582
(24,402,937)
77,580
3,319,393
This Statement of Changes in Equity is to be read in conjunction with the attached notes.
Uscom Limited - Annual Report 2014 - 20
STATEMENT OF CASH FLOWS
For the financial year ended 30 June 2014
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Interest received
Payments to suppliers and employees (inclusive of GST)
Grant and other income received
Income tax receipt
Consolidated
2014
$
2013
$
Note
829,424
8,090
(2,445,534)
74
372,208
621,253
11,741
(2,015,036)
4,213
406,253
Net cash used in operating activities
20(b)
(1,235,738)
(971,576)
Cash flows from investing activities
Purchase of patents and trademarks
Purchase of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Issue of shares (net of share issue cost)
Net cash provided by financing activities
Net increase/(decrease) 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
(87,726)
(2,908)
(92,929)
-
(90,634)
(92,929)
17
2,368,011
1,061,237
2,368,011
1,061,237
1,041,639
540,600
595
1,582,834
(3,268)
548,238
(3,775)
541,195
20 (a)
This Statement of Cash Flows is to be read in conjunction with the attached notes.
Uscom Limited - Annual Report 2014 - 21
NOTES TO FINANCIAL STATEMENTS
Note 1: Adoption of new and revised accounting standards
New, revised or amending Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted. The impact of these Accounting Standards or Interpretations is not expected to have significant
impact with the exception of IFRS 15 Revenue from Contracts with customers, where the impact has not yet been
assessed.
Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting
Interpretations are disclosed below. The adoption of these Accounting Standards and
Standards and
Interpretations did not have any significant impact on the financial performance or position of the consolidated
entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 10 Consolidated Financial Statements
The consolidated entity has applied AASB 10 from 1 July 2013, which has a new definition of 'control'. Control
exists when the reporting entity is exposed, or has the rights, to variable returns from its involvement with another
entity and has the ability to affect those returns through its 'power' over that other entity. A reporting entity has
power when it has rights that give it the current ability to direct the activities that significantly affect the investee's
returns. The consolidated entity not only has to consider its holdings and rights but also the holdings and rights of
other shareholders in order to determine whether it has the necessary power for consolidation purposes.
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from
AASB 13
The consolidated entity has applied AASB 13 and its consequential amendments from 1 July 2013. The standard
provides a single robust measurement framework, with clear measurement objectives, for measuring fair value
using the 'exit price' and provides guidance on measuring fair value when a market becomes less active. The
'highest and best use' approach is used to measure non-financial assets whereas liabilities are based on transfer
value. The standard requires increased disclosures where fair value is used.
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirement
The consolidated entity has applied 2011-4 from 1 July 2013, which amends AASB 124 'Related Party Disclosures'
by removing the disclosure requirements for individual key management personnel ('KMP'). Corporations and
Related Legislation Amendment Regulations 2013 and Corporations and Australian Securities and Investments
Commission Amendment Regulation 2013 (No.1) now specify the KMP disclosure requirements to be included
within the directors' report.
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).
Uscom Limited - Annual Report 2014 - 22
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
Going Concern
The consolidated entity incurred an operating cash outflow of $1,235,738 for the year ended 30 June 2014 (2013:
$971,576). The loss for the year ended 30 June 2014 was $1,520,500 (2013: $1,371,683), and the Company finished
the year with $1,582,834 cash in the bank, up from $541,195 at end of FY 2013.
These conditions indicate the existence of a material uncertainty which may cast doubt over the consolidated
entity’s continuance as a going concern.
The FY 2014 operations report reflect the costs of acquisition, integration and manufacture of the BP+ device
while receipts from the first Uscom BP+ devices, which are currently being manufactured, are scheduled to begin
in Q2 of FY 2015. This new manufacture is expected to impact revenues in the proceeding 12-18mths. As part of
this preparation the entity has significantly increased distribution capacity during the current period. Currently
executed distributor contracts are targeted to boost revenue by an average of $2.3M pa, with Pioneer to begin
selling in China following CFDA approval, which may be granted in the second half of FY 2015.
FY 2014 delivered a significant increase in USCOM sales, resulting in a 67% increase in revenue from ordinary
activities, up from $638,734 to $1,064,666, and it is anticipated that this growth trend will continue as new
distributors ramp up to target volumes.
Our budget forecasts have been predicated on conservative assumptions and cautious cash management. While
China, our main market, remains strong, there remains a potential for markets to perform at the lower end of
expectations, and we are well poised should they improve more rapidly.
If regulatory approvals are timely, current sales trends continue, new distributors achieve targets, and revenues
increase over the next 12 to 18mths as anticipated, then current cash will meet requirements. However accurate
forecasting of operating cash flows is difficult. Consequently should the timing of these cash flows be significantly
different to those forecast, the consolidated entity may need to seek alternative financing options to enable it to
settle its liabilities as they fall due.
The Directors are satisfied that adequate plans and strategies have been formulated and will be adopted as
required to allow the company to have sufficient cash to meet its obligations through to 31st of August 2015 (12
months from date of audit report). On this basis the financial report has been prepared on the going concern
basis.
Should the consolidated entity be unable to continue as a going concern it may be required to realise its assets
and discharge its liabilities other than in the normal course of business and at amounts different to those stated in
the financial statements. The financial statements do not include any adjustments relating to the recoverability
and classification of asset carrying amounts or the amount of liabilities that might result should the consolidated
entity be unable to continue as a going concern and meet its debts as and when they fall due.
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 2014. The comparative reporting period was for the
year ended 30 June 2013.
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 15 August 2014 by the Directors.
Uscom Limited - Annual Report 2014 - 23
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
(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.
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 statement of profit and loss and other comprehensive income.
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 reporting 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.
Uscom Limited - Annual Report 2014 - 24
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
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.
(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 22 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 statement of profit or loss and
other comprehensive income 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 statement of profit or loss and other
comprehensive income.
Uscom Limited - Annual Report 2014 - 25
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
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%
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 statement of profit or loss and other comprehensive income. 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 statement of profit or loss and other comprehensive income as
incurred, or deferred where it is probable that sufficient future benefits will be derived so as to recover those
deferred costs.
Income tax
(p)
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 2014 - 26
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 settled. 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.
Where the Consolidated Entity is entitled to a research and development tax offset, this is treated as an income
tax credit in the period to which the entitlement relates.
(q) Short term employee benefits
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
(r)
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 Directors and full-time or
part-time staff members employed by the Consolidated Entity. Refer note 18 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
(s)
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.
(t) 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
Uscom Limited - Annual Report 2014 - 27
NOTES TO FINANCIAL STATEMENTS continued
Note 2: Statement of significant accounting policies (continued)
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.
(u) 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.
(v) 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.
(w) 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.
(x) 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 and other income
Operating revenue
Sale of goods
Other revenue
Interest received
Other income
Grants received - VAT return
Exchange gain
Miscellaneous income
Total other income
Consolidated
2014
$
2013
$
1,056,502
578,753
8,090
74
-
-
8,164
11,741
684
44,027
3,529
48,240
Total revenues and other income from continuing operations
1,064,666
638,734
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
210,030
178,269
793,120
396,522
494,900
134,442
41,000
19,500
83,188
287,056
24,881
2,662,908
79,022
15,161
866,313
531,395
216,769
149,733
46,000
18,500
70,817
248,271
-
2,241,981
Operating lease expenses of $120,140 in 2014 (2013: $135,677) are included in occupancy expenses above.
Share based expenses of $118,108 in 2014 (2013: $140,801) are included in employee benefits expenses above.
Uscom Limited - Annual Report 2014 - 28
NOTES TO FINANCIAL STATEMENTS continued
Note 5: Income tax credit
Major components of income tax credit
Current income tax credit
Income tax credit
Reconciliation between income tax credit and prima facie tax on accounting
loss
Accounting loss before income tax
Tax benefit at 30% in Australia, 15% in USA (2013: 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
Consolidated
2014
$
2013
$
313,050
313,050
372,208
372,208
1,833,550
1,743,891
551,615
(225,377)
(8,060)
(318,178)
313,050
313,050
524,782
(279,507)
(10,015)
(235,260)
372,208
372,208
As at 30 June 2014, the Consolidated Entity had estimated unrecouped operating income tax losses of $17,017,122
(2013: $15,821,412). The benefit of these losses of $4,910,427 (2013: $4,570,418) 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
(22,882,437)
(1,520,500)
(21,510,754)
(1,371,683)
(24,402,937)
(22,882,437)
(1,520,500)
Number
(1,371,683)
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
(2.2)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
(2.2)
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.
61,174,959
66,402,185
74,712,512
79,112,580
(2.0)
(2.0)
5,227,226
4,400,068
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
215
725,523
16,340
840,756
-
1,582,834
177
438,960
33,749
35,230
33,079
541,195
Uscom Limited - Annual Report 2014 - 29
NOTES TO FINANCIAL STATEMENTS continued
Note 9: Trade and other receivables
Current
Trade receivables
Total current receivables
Consolidated
2014
$
2013
$
325,514
325,514
98,436
98,436
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 21.
Note 10: Inventories
Current inventories at cost
Raw materials
Work in Progress
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
139,933
39,912
37,025
216,870
313,050
313,050
163,029
-
27,625
190,654
372,208
372,208
564,251
(529,431)
34,820
562,158
(514,028)
48,130
59,166
(57,114)
2,052
22,120
(21,939)
181
32,871
(31,885)
986
59,166
(56,752)
2,414
22,120
(21,819)
301
32,089
(31,345)
744
Total plant and equipment
38,039
51,589
Movements in carrying amounts
Useful life
Plant and
equipment
Office
furniture and
equipment
Computer
software
Low value
asset pool
2-7 years
$
2-7 years
$
3 years
$
3 years
$
Consolidated Entity
Carrying amount at 1 July 2013
Additions
Disposals
Depreciation expense
Effects of foreign currency exchange differences
Carrying amount at 30 June 2014
48,130
2,128
-
(15,438)
-
34,820
2,414
-
-
(362)
-
2,052
301
-
-
(120)
-
181
744
782
-
(540)
-
986
Uscom Limited - Annual Report 2014 - 30
NOTES TO FINANCIAL STATEMENTS continued
Note 13: Intangible assets
Non-current
Patents at cost
Additions
Impairment
Accumulated amortisation, net of impairment
Carrying amount at 30 June
Movements in carrying amounts
Carrying amount at 1 July
Additions
Impairment
Amortisation
Carrying amount at 30 June
Consolidated
2014
$
2013
$
1,889,364
87,726
(203,460)
(551,112)
1,222,518
1,506,634
87,726
(178,269)
(193,573)
1,222,518
762,330
1,142,928
(15,894)
(382,730)
1,506,634
435,472
1,142,928
(15,161)
(56,605)
1,506,634
(i)
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
Statement of Profit or Loss and Other Comprehensive Income. An impairment charge of $178,269 has been
recognised in the current year (2013: $15,161) in relation to Patents carried in Australia where there has not yet been
sufficient sales generated to support the full carrying value. The remaining carrying value of Australian patents after
impairment is $62,137. The impairment charge is recorded under Expenses from Continuing Activities (refer to note
4).
(i) $1,106,497 of additions in the year ended 30 June 2013 related to the acquisition of Pulsecor Limited’s assets –
refer to note 24 for more details.
Note 14: Other assets
Current
GST receivable
Deposit paid
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
Current
Provision for annual leave
Provision for long service leave
Non-current
Provision for long service leave
Provision for warranties
29,136
26,327
14,921
70,384
61,508
165,404
28,858
255,770
85,390
87,084
172,474
12,672
8,900
21,572
20,547
17,331
16,594
54,472
107,976
55,652
32,479
196,107
115,819
125,978
241,797
14,936
7,681
22,617
(a) Aggregate employee benefits
185,146
256,733
Uscom Limited - Annual Report 2014 - 31
NOTES TO FINANCIAL STATEMENTS continued
Note 16: Provisions (continued)
(b) Movement in employee benefits
Balance at beginning of the year
Additional provision
Amounts used
Balance at end of the year
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
2,000,000 ordinary shares issued at 7.5 cents
9,034,997 ordinary shares issued at 12 cents
12,500 ordinary shares issued at 5.95 cents
5,000,000 ordinary shares issued at 21 cents
87,500 ordinary shares issued at 5.95 cents
150,000 ordinary shares issued at 20 cents
7,266,668 ordinary shares issued at 15 cents
5,783,337 ordinary shares issued at 24 cents
Share issue costs
Issued Equity at the end of the year
Consolidated
2014
$
2013
$
256,733
46,220
(117,807)
185,146
242,717
95,383
(81,367)
256,733
26,006,168
23,638,157
26,006,168
23,638,157
23,638,157
5,206
30,000
1,090,000
1,388,001
(145,196)
21,376,920
150,000
1,084,200
744
1,050,000
(23,707)
26,006,168
23,638,157
(i)
(ii)
(ii)
(ii)
(ii)
(ii)
(i) Cash received in prior year (refer to note 18).
(ii) Cash received / (paid) in current year totalling $2,368,011
Fully paid ordinary shares
Ordinary shares at the beginning of the year
2,000,000 ordinary shares issued by private placement
9,034,997 ordinary shares issued by private placement
12,500 ordinary shares issued by exercise of options
5,000,000 ordinary shares issued for acquisition of assets
25,000 ordinary shares issued by exercise of options on 30 July 2013
150,000 ordinary shares issued by private placement on 6 August 2013
62,500 ordinary shares issued by exercise of options on 18 September 2013
7,100,001 ordinary shares issued by private placement on 18 September 2013
166,667 ordinary shares issued by private placement on 14 November 2013
5,783,337 ordinary shares issued at by private placement on 24 May 2014
Number
52,124,488
2,000,000
9,034,997
12,500
5,000,000
Number
68,171,985
25,000
150,000
62,500
7,100,001
166,667
5,783,337
Total ordinary shares at the end of the year
81,459,490
68,171,985
The Company’s authorised share capital amounted to 81,459,490 ordinary shares of no par value at 30 June 2014.
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.
Uscom Limited - Annual Report 2014 - 32
NOTES TO FINANCIAL STATEMENTS continued
Consolidated
2014
$
2013
$
Note 18: 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.
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
1,520,474
118,108
1,638,582
1,379,672
140,801
1,520,473
-
1
1,638,582
1,520,474
Movement during the financial year
Opening number of options
Granted during the financial year – Director
Granted during the financial year – Employees &
Executives
Lapsed during the financial year
Cancelled during the financial year
Exercised during the financial year
Closing number of options
Number of
Options 2014
6,287,500
-
-
(2,050,000)
(2,050,000)
(87,500)
2,100,000
Weighted
average
exercise price
0.16
-
-
0.37
0.06
0.06
0.06
Number of
Options 2013
3,560,000
3,000,000
-
(260,000)
(12,500)
6,287,500
Weighted
average
exercise price
0.25
0.06
-
0.29
0.06
0.16
Details of options outstanding as at end of the year
Exercisable
at 30 June
2014
%
Holders No.
Grant date
Expiry date
30 June 2014
Outstanding
Option
No.
Exercise
Price
$
Issued
date fair
value
$
8 (Employees &
Executives)
1 (Director)
Total
29 March 2012
7 November 2012
75%
50%
29 March 2016
1,100,000
0.0595
7 November 2016
1,000,000
0.0595
0.06
0.07
2,100,000
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 $0.17
Exercise price
Option life
Risk-free interest rate
Expected dividends
Expected volatility*
2,100,000 at $0.0595
4-5 years
Range from 3.15% to 4.17%
0
Range from 62% to 76%
* 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.
Uscom Limited - Annual Report 2014 - 33
NOTES TO FINANCIAL STATEMENTS continued
Note 19: Translation reserve
Opening balance
Translation of financial statements of foreign Controlled Entity
Closing balance
Note 20: 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
Consolidated
2014
$
78,473
(893)
77,580
2013
$
74,227
4,246
78,473
1,582,834
1,582,834
541,195
541,195
(1,520,500)
(1,371,683)
16,457
193,573
178,269
118,108
(893)
(227,078)
(26,216)
(7,323)
59,158
(8,589)
(46,468)
109,752
(3,621)
(71,587)
1,220
22,417
56,605
15,161
140,801
4,246
42,500
(5,365)
(3,046)
34,045
(9,480)
70,392
14,633
2,725
14,016
457
(1,235,738)
(971,576)
Significant accounting policies
Note 21: Financial instruments
(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 29) and equity attributable to equity holders of the Parent Entity, comprising issued capital (note 17 on page
32), and accumulated losses (note 6 on page 29).
(c) Outstanding contracts
At 30 June 2014, 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 2014 - 34
NOTES TO FINANCIAL STATEMENTS continued
Note 21: 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 2014 and is exposed to foreign currency risk on sales and purchases denominated in a currency
other than Australian dollars.
The currencies giving 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:
Cash
Current trade debtors
Current trade creditors
Cash
Current trade debtors
Current trade debtors
Consolidated
2014
US$
290,166
258,745
1,365
€
50,961
20,300
£
11,860
2013
US$
304,132
70,525
17,400
€
17,252
-
£
13,600
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 profit 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
2014
$
(99,371)
99,371
2013
$
(54,055)
54,055
Interest rate risk management
(g)
The Consolidated Entity does not have any external loans or borrowings as at 30 June 2014 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 monitors its cash requirements through forecasts and cash flow projections and moves
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 2014 - 35
NOTES TO FINANCIAL STATEMENTS continued
Note 21: 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
2014
$
809
(809)
2013
$
1,174
(1,174)
(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, as 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
deposits is minimised as counterparties are recognised financial intermediaries with acceptable credit ratings
determined by a recognised rating agency.
Debtors past due but not impaired
0 - 45 days
46 – 90 days
Over 90 days
Total
Consolidated
2014
$
141,566
5,974
44,603
192,143
2013
$
-
-
-
-
No bad debt was written off during the year (2013: $Nil). There was no doubtful debt provision as at 30 June 2014
(2013: Nil). All the past due debts of $192,143 have been received (except $108) subsequent to the reporting
date.
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 2014 - 36
NOTES TO FINANCIAL STATEMENTS continued
Note 21: 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
$
$
$
$
$
2014
Financial assets
Cash
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade creditors
Payables
Total financial liabilities
Net financial assets
2013
Financial assets
Cash
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade creditors
Payables
Total financial liabilities
Net financial assets
2.3
-
0.5
-
742,078
-
-
742,078
840,756
-
-
840,756
-
-
-
-
-
-
742,078
840,756
505,965
-
-
505,965
35,230
-
-
35,230
-
-
-
-
-
-
505,965
35,230
Reconciliation of net financial assets to net assets
Net financial assets as above
Non financial assets and liabilities
Current tax asset
Inventories
Deposit paid
Prepayments
Plant and equipment
Intangible assets
Accruals
Provisions
Net assets per Statement of Financial Position
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
325,514
29,136
1,582,834
325,514
29,136
354,650
1,937,484
61,508
28,858
90,366
61,508
28,858
90,366
264,284
1,847,118
-
98,436
20,547
118,983
107,976
32,479
140,455
541,195
98,436
20,547
660,178
107,976
32,479
140,455
(21,472)
519,723
2014
$
1,847,118
313,050
216,870
26,327
14,921
38,039
1,222,518
(165,404)
(194,046)
2013
$
519,723
372,208
190,654
17,331
16,594
51,589
1,506,634
(55,652)
(264,414)
3,319,393
2,354,667
The carrying amounts of the consolidated entity’s financial assets and financial liabilities are assumed to
approximate their fair values due to their short-term nature.
Uscom Limited - Annual Report 2014 - 37
NOTES TO FINANCIAL STATEMENTS continued
Note 22: Related party disclosures
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%
Transactions between related parties
Other related parties
Company Matters Pty Limited
As a Company Secretary of Uscom Ltd from 7th November 2012, Ms Sarah Prince
provides services to the Company through Company Matters Pty Limited.
Services rendered
Company Matters Pty Limited
As a Company Secretary of Uscom Ltd up to 7th November 2012, Mr Tom Rowe
provided services to the Company through Company Matters Pty Limited.
Services rendered
Consolidated
2014
$
2013
$
-
-
8,149
9,501
Company Matters Pty Limited continues to provide company secretary services to the company. The services were
carried out by Sarah Prince up to 18 July 2013 and by Catherine Officer from this day onwards. The management of
the Consolidated Entity no longer considers the services provided by Company Matters Pty Limited as transactions
between related parties.
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
Sheena Jack, Non-Executive Director
Christian Bernecker, Non-Executive Director
Executive Directors
Rob Phillips, Executive Director, Chairman, Chief Executive Officer
Senior Executives
Nick Schicht, General Manager
For further remuneration information of key management personnel refer to the remuneration report in the
Directors’ report on pages 10 to 16.
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
2014
$
407,238
58,462
-
115,482
581,182
2013
$
451,821
35,227
17,650
104,203
608,901
Uscom Limited - Annual Report 2014 - 38
NOTES TO FINANCIAL STATEMENTS continued
Note 23: 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 income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Options reserve
Accumulated losses
Total equity
Parent
2014
$
2013
$
(1,535,874)
(1,535,874)
(1,382,447)
(1,382,447)
2,484,085
3,622,481
424,474
446,046
1,212,639
2,683,950
435,145
457,762
26,006,168
1,638,582
(24,468,315)
3,176,435
23,638,157
1,520,474
(22,932,443)
2,226,188
Contingent liabilities
The parent entity has provided a guarantee in respect of obligations under premises lease of $40,418.01 (2013: nil).
No liability was recognised by the parent entity or the consolidated entity in relation to this guarantee.
Other than the guarantee mentioned above, the parent entity did not have any contingent liabilities as at 30 June
2014 or 30 June 2013.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2014 and 30 June
2013.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in
note 2.
Note 24: Asset acquisition
On 17 June 2013, Uscom Limited acquired the assets of Pulsecor Limited, a New Zealand company which has
developed novel non-invasive central blood pressure measurement methods pioneered at the Weill Cornell
Medical College in New York. The acquired assets include all Pulsecor technology, products and 34 global patents
and patent applications and 4 trademarks related to measurement and monitoring of blood pressure. Uscom
Limited has issued 5 million fully paid ordinary Uscom shares as consideration for the acquisition.
Details of the acquisition are as follows:
Patents
Acquisition-date fair value of the total consideration transferred
Representing:
Shares issued
Legal fees paid
There was no cash used in the acquisition apart from the legal fees paid.
Fair Value
$
1,106,497
1,106,497
1,050,000
56,497
1,106,497
Uscom Limited - Annual Report 2014 - 39
NOTES TO FINANCIAL STATEMENTS continued
Note 25: Commitments
Operating lease commitments
Operating commitments represent payments due for office rentals and have an
average term from 18 to 30 months and month to month thereafter.
Less than 1 year
Between 1 and 5 years
Total operating commitments
Note 26: Auditors’ remuneration
Remuneration of BDO East Coast Partnership for
Audit of financial report
Review of financial report
Total auditors’ remuneration
Consolidated
2014
$
2013
$
131,862
67,334
199,196
-
-
-
41,000
19,500
60,500
46,000
18,500
64,500
Note 27: Operating segments
Segment information
The Consolidated Entity operates in the global health and medical products industry.
The Consolidated Entity sells two cardiovascular products, the USCOM A1 cardiac output monitor and the Uscom
BP+ central blood pressure monitor.
Globally the Company has five geographic sales and distribution segments Australia, Asia, the Americas, Europe
and Mid East and Africa, and other regions. For each segment, the CEO and General Manager review internal
management reports on at least a monthly basis.
The largest customer group operates in Asia and accounts for 35% of the total sales. The second largest customer
accounts for 16% of the total sales revenues and operates in Europe. For the current period BP+ comprised 5% of
the total Uscom sales revenue.
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.
Uscom Limited - Annual Report 2014 - 40
NOTES TO FINANCIAL STATEMENTS continued
Note 27: Operating segments (continued)
Australia
Asia
Americas
Europe
$
$
$
$
2,950
8,090
11,040
2,015,246
(2,004,206)
313,050
407,150
-
407,150
140,538
266,612
-
153,916
-
153,916
455,907
(301,991)
-
441,588
74
441,662
261,891
179,771
-
Other
regions
Consolidate
d
$
50,898
-
50,898
24,634
26,264
-
1,056,502
8,164
1,064,666
2,898,216
(1,833,550)
313,050
Segment assets
Segment liabilities
2,508,325
446,046
156,604
-
417,815
3,770
686,466
-
19,080
178,141
6,212
-
41,516
128
23,828
-
56,327
22,288
33,728
97,687
2014
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
Acquisition of property,
plant and equipment and
intangibles
Impairment of patents
Depreciation and
amortisation
2013
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
-
59,297
59,297
1,949,598
(1,890,301)
372,208
316,186
-
316,186
99,809
216,377
-
37,298
-
37,298
199,981
(162,683)
-
162,417
684
163,101
107,963
55,138
-
62,852
-
62,852
25,274
37,578
-
578,753
59,981
638,734
2,382,625
(1,743,891)
372,208
Segment assets
Segment liabilities
1,487,679
457,762
172,681
-
394,504
2,759
760,324
-
Acquisition of property,
plant and equipment and
intangibles
Impairment of patents
Depreciation and
amortisation
Note 28: Contingencies
287,409
10,631
177,454
4,530
97,459
-
586,347
-
28,114
244
24,671
25,993
Other than the guarantee mentioned at Note 23, the consolidated entity did not have any contingent liabilities as
at 30 June 2014 or 30 June 2013.
Note 29: Events after the reporting date
No 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 2014 - 41
(1,520,500)
3,769,210
449,816
90,636
178,269
210,030
-
-
-
-
-
(1,371,683)
2,815,188
460,521
1,148,669
15,161
79,022
-
-
-
-
-
DIRECTORS’ DECLARATION Uscom Limited and its Controlled Entity
The directors of the company declare that:
1. The financial statements, comprising the statement of comprehensive income, statement of financial
position, statement of cash flows, statement of changes in equity, accompanying notes, are in accordance
with the Corporations Act 2001 and:
a. comply with Accounting Standards and the Corporations Regulations 2001; and
b. give a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its
performance for the year ended on that date.
2. The company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
3.
In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its
debts as and when they become due and payable.
4. The directors have been given the declarations required by section 295A.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf
of the directors by:
Dr Rob Phillips
Ms Sheena Jack
Executive Director - Chairman
Non-Executive Director
Sydney, 15 August 2014
Uscom Limited - Annual Report 2014 - 42
INDEPENDENT AUDIT REPORT continued
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of Uscom Limited and its controlled entity
Report on the Financial Report
We have audited the accompanying financial report of Uscom Limited and its controlled entity,
which comprises the consolidated statement of financial position as at 30 June 2014, the
consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then
ended, notes comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the consolidated entity comprising the company and
the entity 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.
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 and its controlled entity, would be in the
same terms if given to the directors as at the time of this auditor’s 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 2014 - 43
INDEPENDENT AUDIT REPORT continued
Opinion
In our opinion:
(a) the financial report of Uscom Limited and its controlled entity 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
2014 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
(b) the financial report also complies with International Financial Reporting Standards as disclosed
in Note 2.
Emphasis of matter
Without modifying our opinion, we draw attention to Note 2 in the financial report, which indicates
that the consolidated entity incurred a net loss after tax of $1,520,500 and incurred net operating
cash outflows of $1,235,738 for the year ended 30 June 2014.
These conditions, along with other matters as set out in Note 2, indicate the existence of a material
uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a
going concern and therefore, the consolidated entity may be unable to realise its assets and
discharge its liabilities in the normal course of business.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 16 of the directors’ report for
the year ended 30 June 2014. 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 and its controlled entity for the year
ended 30 June 2014 complies with section 300A of the Corporations Act 2001.
BDO East Coast Partnership
Tim Sydenham
Partner
Sydney, 15 August 2014
Uscom Limited - Annual Report 2014 - 44
SHAREHOLDER INFORMATION
Additional information required by Australian Stock Exchange Listing Rules is as follows. This information is
current as at 31 July 2014.
(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
107
188
74
126
61
556
Ordinary shares
Number
75,460
543,920
593,645
4,931,115
75,315,350
81,459,490
%
0.09%
0.67%
0.73%
6.05%
92.46%
100%
There were 182 holders of less than a marketable parcel of 208,423 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 2014 are:
Dr Robert Allan Phillips
Dr Stephen Frederick Woodford
Hsbc Custody Nominees (Australia) Limited - A/C 2
Hsbc Custody Nominees (Australia) Limited
Narodni Podnik Ltd
17,046,733
10,268,475
6,266,609
3,338,333
2,746,218
(d)
Twenty largest registered holders – ordinary shares
Balance as at 31 July 2014
Dr Robert Allan Phillips
Dr Stephen Frederick Woodford
Hsbc Custody Nominees (Australia) Limited - A/C 2
Hsbc Custody Nominees (Australia) Limited
Narodni Podnik Ltd
Drp Cartons (Nsw) Pty Ltd
Corf Corporation Pty Limited
Bell Potter Nominees Ltd
Invia Custodian Pty Limited
Merrill Lynch (Australia) Nominees Pty Limited
Moore Family Nominee Pty Ltd
Mr Fredrik Holger Uden
Link Traders (Aust) Pty Ltd
Ubs Nominees Pty Ltd
Big Macs Pty Ltd
Mr John Lionel Gleeson
Ubs Wealth Management Australia Nominees Pty Ltd
Sandhurst Trustees Ltd
Arinya Investments Pty Ltd
Ross Planning Pty Ltd
Ordinary
shares
Number
17,046,733
10,268,475
6,266,609
3,338,333
2,746,218
2,359,616
2,266,667
2,121,836
2,088,118
2,014,982
1,900,000
1,544,970
1,220,809
1,197,834
1,169,111
1,145,819
1,125,000
1,041,667
1,022,101
1,000,001
%
20.93%
12.61%
7.69%
4.10%
3.37%
2.90%
2.78%
2.61%
2.56%
2.47%
2.33%
1.90%
1.50%
1.47%
1.44%
1.41%
1.38%
1.28%
1.26%
1.23%
Total
62,884,899
77.22%
Uscom Limited - Annual Report 2014 - 45
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
Catherine Officer (commenced on 18th July 2013)
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 81,459,490 ordinary shares of the Company on all Member Exchanges of the
Australian Stock Exchange Limited.
Unquoted securities
Options over unissued shares
A total of 2,100,000 options over ordinary shares are on issue. 1,000,000 options are on issue to a director and
1,100,000 options are on issue to eight employees and executives under the Uscom Employee Share Option Plan
and Uscom Executive Share Option Plan.
Uscom Limited - Annual Report 2014 - 46