Uscom Limited
ASX: UCM
2015 ANNUAL
REPORT
Table of Contents
CHAIRMANS LETTER ................................................................................................................. 2222----5555
CHAIRMANS LETTER
CHAIRMANS LETTER
CHAIRMANS LETTER
TESTIMONIAL .................................................................................................................................6666
TESTIMONIAL
TESTIMONIAL
TESTIMONIAL
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THOR PRODUCTS ................................
THOR PRODUCTS
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THOR PRODUCTS
THOR PRODUCTS
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2015 FINANCIAL YEAR HIGHLIGHTS ................................
2015 FINANCIAL YEAR HIGHLIGHTS
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2015 FINANCIAL YEAR HIGHLIGHTS
2015 FINANCIAL YEAR HIGHLIGHTS
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CORPORATE GOVERNANCE ................................
CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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DIRECTORS REPORT ................................
DIRECTORS REPORT
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DIRECTORS REPORT
DIRECTORS REPORT
REPORT
FINANCIAL REPORT
FINANCIAL
REPORT
REPORT
FINANCIAL
FINANCIAL
AUDITORS INDEPENDENCE DECLARATION ........................................................................ 23
INCOME STATEMENT .............................................................................................................. 24
FINANCIAL POSITION STATEMENT ....................................................................................... 25
CHANGES IN EQUITY ............................................................................................................... 26
CASH FLOWS STATEMENT ...................................................................................................... 27
NOTES TO FINANCIAL STATEMENTS .............................................................................. 28-49
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DIRECTORS DECLARATION ................................
DIRECTORS DECLARATION
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DIRECTORS DECLARATION
DIRECTORS DECLARATION
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INDEPENDENT AUDIT REPORT ................................
INDEPENDENT AUDIT REPORT
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INDEPENDENT AUDIT REPORT
INDEPENDENT AUDIT REPORT
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SHAREHOLDER INFORMATION ................................
SHAREHOLDER INFORMATION
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SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
USCOM LIMITED ANNUAL REPORT 2015
Chairmans Letter
“Uscom is a rapidly growing de-risked, medical device company, with a global vision
and ambition to deliver practice changing non-invasive products into critical
healthcare markets. Uscom science is world leading and associated with standard of
care products addressing the diagnosis and management of heart failure,
hypertension, sepsis, pre-eclampsia, asthma and lung disease. Our goal is to create
a major, multi-product, medical device company.”
For Uscom shareholders 2015 was transformational; a year in which our investment in world leading science and
industry leading management yielded real commercial outcomes and global recognition.
2015 Headlines:
1.
2.
Total revenue and income up 48% (to $2.04m), and more than doubled over the last two years
Receipts from customers up 59% (to $1.32m), net operating cash out flow reduced 20% (to $0.99m).
Revenue and Income
$2,039,426
$1,377,716
$1,010,942
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
3. Distribution increased 57% (23 to 36)
4. Agreement to acquire Thor Laboratories profitable ultrasound Company selling devices for application in
2013
2014
2015
rapidly growing asthma and COPD markets with cost-effective international manufacturing
Record growth and sales of USCOM 1A devices
Johnson & Johnson Innovation Australian Biotech Company of the Year
5.
6.
7. Appointment of former Welch Allyn VP Corporate Development to Uscom US VP Business Development
8. USCOM 1A awarded 5 year Chinese Regulatory approval (CFDA) for continued sale into China
9.
10. The gold standard Uscom BP+ central blood pressure (cBP) monitor measurements were endorsed by the
Thor FDA approval granted for sale into the USA
American Medical Association with their recommendation for acceptance for US CPT 1 Code.
11. Global Uscom BP+ and Thor sales and marketing planned to begin FY 2016
12. USCOM 1A recommended for routine pregnancy screening to detect pre-eclampsia
Overview: 2015 has seen continued growth in Uscom operations. Annual revenue and income was up 48% to
$2.04m and customer receipts increased 59% to $1.32m, attributable to the increased sales of the USCOM 1A
device. This follows similar growth in 2014. For the final quarter of FY 2015 Uscom reported a cash loss of $0.05m
and record revenues suggesting approaching profitability.
Cash on hand at the end of the reporting period was $0.53m. The recent PP and SPP capital raising generated an
additional $2.14m, with $700k of these funds allocated for completion of the purchase of Thor Laboratories.
Although we had anticipated to be cash flow positive in 2015, the entity reported a $0.99m negative cash flow for
the year due to the appointment of additional sales and marketing resources, the preparation of the Uscom BP+
for global mass manufacture, and delayed Chinese regulatory approval for the USCOM 1A. This contributed to a
9% increase in costs to $2.91m.
During FY 2015 distributor agreements were increased from 23 to 36 (+57%). We also appointed Stephen Wilson,
the former VP Corporate Development for Welch Allyn as Uscom US VP Business Development to apply his critical
experience to the sale of BP+ and the newly FDA approved Thor products into the US market.
Future growth will be underwritten by continuing growth in Uscom sales, sales of the Uscom BP+ in the US, China
and Europe, and increased sales from the suite of Thor spirometry devices in the US and China.
ANNUAL REPORT 2015
2
Chairmans Letter
Continued
Results: Revenue and income for 2015 grew by 48% to $2.04m from 2014, while customer receipts were up 59%
to $1.32m, and the net cash flow from operating activities for the year was reduced 20% from $1.24m to $0.99m.
There was a 9% increase in cost of operations (to $2.91m) associated with an increase in staff and the development
costs of BP+. There was a 20% decrease in operating loss before income tax ($1.52m to $1.22m).
This small cash outflow from operations represents the increased costs from new appointments and preparation of
BP+ for market, combined with delayed revenue associated with the delayed CFDA approval for USCOM 1A.
It is envisaged that with continuing growth of USCOM 1A revenues from a significantly expanded distribution
network, combined with early BP+ sales, and the addition of Thor revenues, currently greater than $0.5m, the
improving revenue trends will continue.
* As a result of adoption of new accounting policy, the reported 2014 Uscom revenue and income has been “restated” from
$1,064,666 to $1,377,716 – see notes in financial statements. 2015 figures represent revenue and income.
Capital: Cash on hand at the end of the period was $0.53m and combined with the recent $2.14m capital raising,
and predicted increasing revenues we expect Uscom to be well positioned for capital stability in the year ahead.
Sales: The appointment of Denise Pater, formerly of GE Healthcare, Datex-Omeda, Medtel and Ramsay
Healthcare, as Distribution and Sales Manager to collaborate with Steve Haken in Europe and Rik Denicke in the
USA, saw a significant increase in sales. The additional appointment of Stephen Wilson, former Vice President of
Business Development Welch Allyn, to the Uscom sales team is anticipated to strengthen sales growth over the
coming year, particularly given Stephen’s experience in blood pressure and spirometry distribution, as both Uscom
technologies are targeted for the US market this year.
Uscom will acquire additional distribution with the Thor acquisition, and the current Uscom products (USCOM 1A
and Uscom BP+) can be fed into this distribution, while the Thor products can be fed into the growing Uscom
distribution network, which was increased by 57% in 2015. This should accelerate revenue growth in 2016.
Share price: Australian capital markets have been volatile and the Uscom share price finished the year at 19c.
(16c to 27c) with a VWAP of 21c. While Uscom growth remains unrecognised by the market, management anticipate
a realistic revaluation as our results and activities are processed by the market. The effects of the Greek Crisis, The
Chinese Correction and the annual end of financial year sell off have all impacted the share price.
Thor Acquisition: Uscom has agreed to acquire 100% of Thor Laboratories operations and intellectual property,
after completion of legal and financial due diligence by K&L Gates, and BDO Hungary.
Thor is a cash flow positive medical device developer and manufacturer with current annual revenues of
approximately A$500k which specialises in high fidelity digital Doppler measurement of respiratory function. Thor
is based in Budapest, Hungary, a key centre for European medical device manufacture, and owns a number of
devices with specific application in the assessment of asthma, COPD, and other respiratory disorders, with new
potential applications in sleep medicine. The devices have regulatory approval in various jurisdictions including
FDA, CE, and TGA with additional devices in clinical development.
Thor founder, Mr George Ferenczi, will become a full time employee of Uscom as part of the transaction, and will
continue to manage the Thor operations and progress an expanded product development programme for Uscom.
Consideration for Thor and its assets total $1 million over a three year period from the date of acquisition,
comprising $700k in upfront cash, and $300k in cash and equity earn-outs. The Thor tangible assets were valued at
$361k at 31st December 2014, while an additional $100k of cash will be left in the company as working capital. The
IP, operations and global certificates and approvals were not included in the valuation.
The Company considers the Thor acquisition to be a key strategic growth opportunity, delivering cash flow positive
operations, significant revenue with growth potential, internationally accredited manufacturing, R&D capabilities,
product distribution, a spirometric product suite with global regulatory approvals in place, and staff with device
specific experience. There are significant clinical, operational, and strategic synergies associated with the
acquisition.
Science: The USCOM 1A and the Uscom BP+ are breakthrough, noninvasive cardiovascular technologies,
representing the best of cardiac output monitoring and blood pressure technology, and this year saw further
evidence supporting the expanded clinical utility of these technologies. There were 36 new publications supporting
the utility of the 1A and the BP+ in 2015, covering the fields of hypertension, heart failure and sepsis in adults,
children and neonates.
ANNUAL REPORT 2015
3
Chairmans Letter
Continued
Importantly the USCOM 1A was demonstrated to identify pre-eclampsia, or hypertension in pregnancy, at 5 weeks
gestational age, rather than the current 20 weeks, thus allowing for earlier treatment and improved outcomes for
mothers and babies. The study concluded that the 1A could be used as a routine screening tool for all pregnancies.
New evidence supporting the adoption of cBP, or pressure at the heart, has become widely accepted. This heart
pressure is measured by the Uscom BP+ using supra systolic oscillometry, a method gaining recognition as superior
to sub-systolic cuff based blood pressure measured in the arm or pressure pulse measures in the wrist. As
recognition of this clinical shift, cBP measurements were recommended by the American Medical Association for
allocation of a US CPT 1 Code, a precursor to re-imbursement. Uscom BP+ marketing is being developed to take
advantage of these changes.
We will also be delivering Thor devices into our research sites for study and evaluation so the clinical advantages
of the Thor products can be supported by increased academic publications.
2015 also saw the release of “USCOM around the world – paediatric sepsis in Hungary”, a YouTube video with a
number of extremely touching personal testimonials from USCOM users depending on the USCOM 1A to save the
lives of real children daily.
Uscom is a company founded on sound and clinically useful science, and this year confirms the growing success of
this founding mission, a mission that will maintain and preserve our practice leading global reputation and increase
sales.
Distribution: The 48% growth in Uscom 2015 revenues and income has partially been generated by an increase
in the number of distributors appointed in 2014. This year we have continued to grow distribution from 23 to 36, a
further 57%, and expect these appointments to begin contributing to revenue in the coming financial year as there
is a sales lead time of 12-18mths for USCOM 1A. Our sales results support our current distribution growth strategy.
The appointment of Mr Stephen Wilson to lead US distribution activities is anticipated to significantly grow results
for Uscom Inc., the US arm of Uscom. Discussions are ongoing with a number of major distribution partners for
various territories worldwide for the USCOM 1A, the Uscom BP+, and our new suite of Thor products.
For Uscom, distribution partners are the tap into revenue and the key to our future, and the growing number and
quality of these partners will be directly reflected in future financial growth.
Pharmaceutical research is a rapidly growing and emerging opportunity for the Uscom BP+, as it is recommended
as the clinically most applicable central blood pressure device and retails for less than 20% of the price of some
competitor devices. The pharmaceutical research market is valued in excess of $100m pa, and it is reported that
only 5% of all pharmaceutical drug studies use cBP, possibly due to an absence of accurate and simple to operate
devices. Uscom is currently in trials with one of the world’s largest pharmaceutical companies to establish the Uscom
BP+ as a standard of practice in this lucrative market.
Strategy 2016: Products generate profit, and in 2016 our goal is to bring the total Uscom product range,
covering cardiac, vascular and respiratory monitoring to market, and to provide a platform for optimal
commercialisation over the next 5 years to achieve revenue targets of $20m pa by 2020.
Uscom has now negotiated the acquisition of two companies and their practice leading technologies over the last
three years, and, in combination with our USCOM 1A device, they constitute a suite of products with potentially
dominant positions in the premium cardiac, vascular and pulmonary medicine markets. Our objective is to ensure
that these products are cost effectively manufactured, with appropriate regulatory approvals, and sold by capable
and well-managed global distribution to discriminating clinicians, a model designed to drive a continued revenue
upswing and a powerful global entity.
With the Thor acquisition, Uscom will acquire internationally accredited manufacturing, allowing us to optimise
manufacturing to meet expanding global demand, and provide Uscom with a truly international operational
footprint.
The strategy for Uscom is now to complete the commercialisation of our world-leading technologies by increasing
sales and distribution, and thus growing revenue to achieve scale and enduring profitability. The current focus will
be maintained on the flagship USCOM 1A as it continues to grow in adoption, clinical importance and sales. While
our forward strategy is to grow distribution, sales and revenue for the Uscom BP+ and Thor spirometry products,
particularly in the US and Asia.
ANNUAL REPORT 2015
4
Chairmans Letter
Continued
We believe Uscom is well positioned to accelerate growth in the coming year, and Company management is
committed to a strategy of increased distribution and manufacturing growth to meet the anticipated demand.
These developments will continue to change the operational environment for Uscom and will reward shareholders.
Risks: While high growth rates are anticipated to continue for the foreseeable future, as an increasingly global
entity operating in multiple economic environments, Uscom is exposed to the vicissitudes of global markets which
may impair operations and impact predicted outcomes.
Global markets are increasingly volatile, and this may lead to a significant re-alignment of global economies,
currencies and corporate value. If this were to continue, particularly in China, then growth expectations for the year
ahead may need to be revised. Under performance of distributors, particularly where best endeavours contracts
are in place, may also impact forecast revenues. The appointment of key distribution management personnel acts
to significantly mitigate these risks by providing regional hands on contact and continual monitoring of distributor
performance.
Regulatory risks relevant to medical devices are associated with delayed or declined approvals in specific
jurisdictions. While both USCOM 1A and BP+ 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 is also a relevant consideration. Currently there is a small and vital team working on the Uscom
project to ensure and manage on going rapid growth. Development of an executive remuneration plan to ensure
adequate compensation for executives for extraordinary contributions may mitigate the risk of untimely
resignations that may damage operations and impede commercial momentum, and is an important task going
forward. The appointment of Mr Steven Haken, Ms Denise Pater and Mr Stephen Wilson and the acquisition of the
Thor team significantly expands the Uscom team and mitigates such risks.
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 anticipated sales are achieved. Substantial unpredicted
product demand and growth may generate scale up stress on the business, thus challenging cash flow management
and equity adequacy may need focused management.
Conclusion: Products generate profit, and Uscom is positioning itself to occupy a position of global leadership
in the valuable and critical cardiovascular and pulmonary market, ensuring long term shareholder value. The cost-
effective and accredited manufacturing and the experienced R&D team acquired in the Thor transaction will ensure
a pipeline of new generation products to feed into our expanding global sales and distribution network. This
strategy is conceived to ensure the continued revenue growth trends established over the last three years.
The revenue growth for 2016 will be underwritten by continued growth in USCOM 1A sales, the imminent global
marketing of Uscom BP+, particularly in China and the US, and the additional revenue associated with the Thor
devices and its expanded marketing. This revenue growth will be supported by an expanded US distribution for all
three product series as our US distribution strategy becomes effective.
Uscom is a real company, with a vision and strategy for real growth in the years ahead, and has a history of meeting
corporate milestones. Uscom’s focus remains on products, distribution, sales and revenue. We will proceed to
market our new products, and optimise international operations as we upscale operations and manufacturing to
meet the increased demands of our growing international sales organisation.
We are grateful for the ongoing support of shareholders as we prosecute this strategy, and we look forward to
realising the operational potential of the global corporation that we are building.
Thank you.
Associate Professor Rob Phillips
PhD(med), MPhil(med), FASE, DMU(cardiol)
Executive Chairman
Uscom Limited
ANNUAL REPORT 2015
5
“We bought our
USCOM about 4 years
ago, we routinely use
, we routinely use
, we routinely use
, we routinely use
it to manage fluid
it to manage fluid
it to manage fluid
it to manage fluid
and sepsis, and we
and sepsis, and we
and sepsis, and we
and sepsis, and we
love it; it has changed
love it;
love it;
love it;
the way we see and
manage
hemodynamics.”
“…We transformed
We transformed
We transformed
We transformed
the haemodynamic
the haemodynamic
the haemodynamic
the haemodynamic
guidelines. The first
guidelines.
guidelines.
guidelines.
step is USCOM in the
first 5 minutes and
then we see the results
and decide what to
do.”
Eniko Ujhelyi, Director of Pediatric ICU
Szent László Hospital, Hungary
Watch USCOM around the world - Hungary
ANNUAL REPORT 2015
USCOM LIMITED ANNUAL REPORT 2015
Introducing
Introducing
Introducing
Introducing
IROMETRY
SPSPSPSPIROMETRY
IROMETRY
IROMETRY
“Thor
Doppler
digital Doppler
Thor digital
Doppler
Doppler
digital
digital
Thor
Thor
spirometry;
spirometry;
spirometry;
spirometry;
clinical synergy
with the Uscom
with the Uscom
with the Uscom
with the Uscom
suite of products.”
suite of products.
suite of products.
suite of products.
Rob Phillips, CEO
Rob Phillips, CEO
Rob Phillips, CEO
Rob Phillips, CEO
SpiroDesk
ulmonary Diagnostics Desktop
complete standalone Pulmonary Diagnostics Desktop
AAAA complete standalone P
ulmonary Diagnostics Desktop
ulmonary Diagnostics Desktop
complete standalone P
complete standalone P
Station Platform. It is partnered with SpiroTube Mobile
Station Platform. It is partnered with SpiroTube Mobile
Station Platform. It is partnered with SpiroTube Mobile
Station Platform. It is partnered with SpiroTube Mobile
Edition and performs Forced Vital Capacity, Relaxed Vital
Edition and performs Forced Vital Capacity, Relaxed Vital
Edition and performs Forced Vital Capacity, Relaxed Vital
Edition and performs Forced Vital Capacity, Relaxed Vital
Capacity, Maximum Voluntary Ventilation and ECG with
Capacity, Maximum Voluntary Ventilation and ECG with
Capacity, Maximum Voluntary Ventilation and ECG with
Capacity, Maximum Voluntary Ventilation and ECG with
stress tests. It archives measurement results to an integrat
stress tests. It archives measurement results to an integrated ed ed ed
stress tests. It archives measurement results to an integrat
stress tests. It archives measurement results to an integrat
ddddaaaattttaaaabbbbaaaasssseeee wwwwiiiitttthhhh rrrreeeeppppoooorrrrtttt----pppprrrriiiinnnnttttiiiinnnngggg ooooppppttttiiiioooonnnnssss....
–
(cid:1) Forced Vital capacity
Forced Vital capacity
Forced Vital capacity
Forced Vital capacity
(cid:1) Relaxed Vital Capacity
Relaxed Vital Capacity
Relaxed Vital Capacity
Relaxed Vital Capacity
(cid:1) Maximum Voluntary
Maximum Voluntary
Maximum Voluntary
Maximum Voluntary
Ventilation
Ventilation
Ventilation
Ventilation
(cid:1) Oximetry and ECG
Oximetry and ECG
Oximetry and ECG
Oximetry and ECG
(cid:1) Stress Testing
Stress Testing
Stress Testing
Stress Testing
New Products
Otthon 2.0
function diagnostics and
function diagnostics and
pulmonary
AAAA pulmonary
function diagnostics and
pulmonary
function diagnostics and
pulmonary
monitoring device for the use of general
monitoring device for the use of general
monitoring device for the use of general
monitoring device for the use of general
practitio
ners and patients. It is a compact,
practitioners and patients. It is a compact,
ners and patients. It is a compact,
ners and patients. It is a compact,
practitio
practitio
mobile and affordable solution for screening
mobile and affordable solution for screening
mobile and affordable solution for screening
mobile and affordable solution for screening
COPD and asthma.
COPD and asthma.
COPD and asthma.
COPD and asthma.
SpiroTube – PC Spirometer
SpiroTube incorporates a highly cost effective
SpiroTube incorporates a highly cost effective
SpiroTube incorporates a highly cost effective
SpiroTube incorporates a highly cost effective
design. It is user----friendly, robust, compact
design. It is user
friendly, robust, compact
friendly, robust, compact
friendly, robust, compact
design. It is user
design. It is user
Its high connectability ensures it
and mobile.
ensures it
and mobile. Its high connectability
Its high connectability
ensures it
ensures it
Its high connectability
and mobile.
and mobile.
term screening of
long----term screening of
suitable for thethethethe long
isisisis suitable for
term screening of
term screening of
longlong
suitable for
suitable for
COPD and asthma, especially in home care
COPD and asthma, especially in home care
COPD and asthma, especially in home care
COPD and asthma, especially in home care
uuuusssseeee....
2015 Highlights
August
2014
2014
2014
2014
(cid:2) Uscom BP+ monitor approved by the Australian Therapeutic Goods Administration
(TGA).
September
2014
2014
2014
2014
(cid:2) Uscom selected as finalist in the NSW Premiers Export awards. The awards recognise
outstanding international success in the export of products and technologies from New
South Wales.
October
2014
2014
2014
2014
(cid:2) Uscom is awarded the 2014 Johnson & Johnson Innovation Industry Excellence
Company of the Year award at the Annual AusBiotech Life Sciences Conference.
(cid:2) USCOM 1A device sold to the Russian Federation Space Agency for high level research
of cardiovascular physiology in astronauts before, during and after space travel.
December
2014
2014
2014
2014
(cid:2) Denise Pater appointed as Distribution and Sales manager to support and motivate the
worldwide Uscom distribution network and develop new business initiatives.
January
2015
2015
2015
2015
February
2015
2015
2015
2015
(cid:2) Chinese Food and Drug Administration (CFDA) regulatory registration for the USCOM
1A, permitting the continued sale of the device in China for a 5 year period.
(cid:2) Half-year results released with revenue up 147%, sales revenue up 125% and 6 new
distribution agreements in the United States and Europe.
March
2015
2015
2015
2015
(cid:2) The American Medical Association (AMA) accepts recommendation for a new category
I CPT code (9300X1), a major step towards gaining reimbursement coverage in the
United States for clinicians using the Uscom BP+.
April
2015
2015
2015
2015
(cid:2) The Journal of Pregnancy Hypertension publishes peer reviewed study demonstrating
that the USCOM 1A can detect pre-eclampsia as early as 5 weeks into pregnancy.
Conventional blood pressure measures detect it after 20 weeks.
May
2015
2015
2015
2015
(cid:2) National Chinese ICU Society recognises UCOM 1A as the only non-invasive monitor in
their nation-wide survey of current clinical member current practice.
June/July
2015
2015
2015
2015
(cid:2) Steven Wilson, former Welch Allyn Executive appointed as new Vice President of
Business Development in the United States.
(cid:2) Completion of private placement to raise $1.55 million in capital.
(cid:2) Agreement to purchase 100% of Thor Medical Laboratories, with the recruitment of its
founder George Ferenczi, to join Uscom as head of the product development division.
ANNUAL REPORT 2015
9
Corporate Governance
Statement
This statement outlines the Corporate Governance framework and practices adopted by the Board of Directors of
the Board) and in place for the financial year ended 30 June 2015, by reference to the ASX
Uscom Limited (the Board
the Board
the Board
Corporate Governance Council’s Corporate Governance Principles and Recommendations (3rd Edition) (the
the
the
the
Recommendations). The Statement was approved by the Board on the 25th of August 2015.
Recommendations
Recommendations
Recommendations
The Board and Senior Management of Uscom are committed to acting responsibly, ethically and with high
standards of integrity as the Company strives to create shareholder value. Uscom is committed to implementing
the highest standards of corporate governance appropriate for a company of its size and operations.
The Board considers and applies the Recommendations taking into account the circumstances of the Company.
Where the Company’s practices depart from a Recommendation, this Statement identifies the area of divergence
and reasons for it, or any alternative practices adopted by the Company.
The Board has established a number of corporate governance documents consistent with the Recommendations
which form the basis of the Company’s corporate governance framework – these documents are referenced in this
Corporate Governance Statement where relevant, and are as follows:
•
•
•
•
Uscom Board Charter (updated and adopted 27 May 2015);
Uscom Continuous Disclosure & Shareholder Communications Policy (updated and adopted 27 May 2015);
Uscom Code of Conduct (updated and adopted 27 May 2015); and
Uscom Securities Trading Policy (updated and adopted 27 May 2015).
The corporate governance documents are available on the Uscom website under “Investor” then “Corporate
Governance.” http://uscom.com.au/investor/corp_governance.html
Principle 1: Lay solid foundations for management and oversight
The Board has primary responsibility for guiding and monitoring the business and affairs of Uscom, including
compliance with the Company’s corporate governance framework, and in conjunction with senior management,
setting the strategic direction of the Company.
It is the role of Senior Management to manage the Company in accordance with the direction and delegation of
the Board and the responsibility of the Board to provide leadership to, and oversee the activities of Management
in carrying out these delegated duties.
The Board Charter sets out the roles and responsibilities of the Board, including those matters specifically reserved
to the Board. The Charter also sets out the role and responsibility of the Chief Executive Officer, which is primarily
the day to day management of the Company, supported by the senior management team.
The Board Charter provides that prior to the appointment of a new Director, and before a candidate is put forward
as a candidate for election as a Director, appropriate checks will be undertaken including checks regarding the
person’s experience, education, disqualification from holding certain offices, criminal record and bankruptcy
history. At any AGM the Company provides shareholders with all material information in its possession relevant to
a decision on whether or not to elect or re-elect a director.
Non-executive Directors are provided with a formal letter of appointment which sets out the key terms, conditions,
responsibilities and expectations of their appointment. Senior Management are employed under individual service
contracts which set out their terms of employment including details of their duties, responsibilities, rights and
remuneration entitlements.
The Board Charter provides that Directors may seek independent professional advice at the expense of the
Company, when considered necessary to discharge their responsibilities to the Company. Any such advice is the
property of the Company and may be provided to the other Directors.
The Board Charter provides that the Company Secretary is accountable to the Board through the Chairman for all
matters concerning the proper functioning of the Board, including advising on governance matters, monitoring
that the Board’s policies and procedures are followed and ensuring that the business at Board meetings is
accurately captured in the minutes. As a matter of practice, where the Board is considering any matters relating to
the Executive Chairman in his capacity as Chief Executive Officer, the Company Secretary reports and is
accountable to the Non-Executive Directors.
ANNUAL REPORT 2015
10
Corporate Governance
Statement
Continued
The Board does not have a formal Diversity Policy in place and has not established measurable objectives for
achieving measurable objectives for achieving gender diversity at this time. Given the small size of the Company
workforce and the stage of the Company’s development, the Board considers that it is not currently necessary or
practical to establish a Diversity Policy or have measurable objectives aimed at achieving gender diversity. The
Company seeks to promote and support an appropriate mix of diversity on its Board, in senior management and
the organisation more generally. The Board will continue to review this matter, including whether it may be
appropriate to establish a formal framework in this regard as the Company meets its strategy and grows.
The proportion of women employees in the whole organisation, women in senior management positions and
women on the Board are set out in the following table:
Whole Organisation
Whole Organisation
Whole Organisation
Whole Organisation
Senior Management Positions
Senior Management Positions
Senior Management Positions
Senior Management Positions
Board
Board
Board
Board
Proportion of Women
Proportion of Women
Proportion of Women
Proportion of Women
4 of 9 (44%)
0 of 2 (0%)
1 of 3 (33%)
Recommendation 1.5(c)(1)
Recommendation 1.5(c)(1)
Recommendation 1.5(c)(1)
Recommendation 1.5(c)(1)
The Board has not established a formal process for evaluating its performance and that of individual directors to
date. Given the small size of the Board, to date the Directors have considered that they have been able to assess
and monitor each other’s performance on an ongoing basis, and raise any concerns as they arise. The Board Charter
provides that the Board is responsible for undertaking a formal evaluation process to review its performance once
a year, therefore the Board will review this matter with a view to establishing a formal evaluation process in the next
reporting period.
There is currently no formal evaluation process in place by which the Board assesses the performance of senior
management against specific measurable performance criteria. The Board considers that given the size of the
Company and the stage of its development, it is most appropriate to assess senior management’s performance on
a continuous informal basis.
Principle 2: Structure the Board to add value
The current Board has 3 Directors comprising the Executive Chairman and Chief Executive Officer Rob Phillips, and
two independent Non-Executive Directors, Christian Bernecker and Sheena Jack. The Board Charter provides that
an independent director is determined by reference to the factors set out in Box 2.3 of the Recommendations.
Further details about the Directors, including their tenure, skills, experience and expertise relevant to the position
of director, and their non-executive and independent status, are set out in the Directors’ Report on pages 15 to 22
of the Annual Report.
The Executive Chairman Rob Phillips is not independent. The Board considers it is appropriate that Dr Phillips
undertakes this role, given his specific qualifications, knowledge and experience, and deep understanding of the
Company, its products and operations. The Board has also taken into account the size of the Company and the
Board, and the stage of development of the Company’s business and strategy.
The Board Charter sets out the distinct responsibilities of the role of the Executive Chairman and the Non-Executive
Directors, and provides that an Independent Director will be appointed to fulfil the role of Chairman whenever the
Executive Chairman is conflicted.
Dr Phillips is also the Chief Executive Officer of the Company, and therefore the role of the Chairman and Chief
Executive Officer are undertaken by the same person. The Board believes this is appropriate, for the reasons given
above in relation to Dr Phillips’ role as Executive Chairman.
The Board has not established a Nominations Committee at this time, given the current size and composition of
the Board and Company, and taking into account that it is not likely that the size of the Board will increase in the
short to medium-term. The Board carries out the functions that would ordinarily be carried out by a Nomination
Committee.
The Board considers that there is currently an appropriate mix of skills, diversity and experience on the Board,
taking into account the size of the company, the stage of its development and the nature of its operations. The
Company seeks to maintain a Board of Directors with a broad range of relevant financial, industry and other relevant
skills, experience and knowledge.
ANNUAL REPORT 2015
11
Corporate Governance
Statement
Continued
The Board has not developed a skills matrix at this time. The Board considered the attributes of its current Directors
at the time of their appointment, including the specific skills, experience, expertise and diversity they brought to
the Board, in light of the Company’s stage of development, its operations and strategy. To date the Board has
considered that given its small size, it is able to identify any possible gaps in Board skills. However, the Board
believes that a skills matrix would provide a sound basis for both Board evaluation purposes and to assist in
identifying what may be required of future Board candidates, in the event it determines to appoint a new Director.
The Board intends to establish a skills matrix in the next reporting period. The Board will also consider establishing
plans to manage the succession of senior management in the next reporting period.
The Board Charter provides that each new Director will be required to participate in an induction program to
familiarise themselves with the Company, its strategy and operations, and policies and procedures. Directors may
undertake and request training as appropriate for their role, with the permission of the Chairman. The Charter also
provides that in carrying out their duties and responsibilities, Directors may seek independent professional advice
at the Company’s expense, after consultation with the Chairman.
Principle 3: Promote ethical and responsible decision making
The Board is committed to ensuring that the Company maintains the highest standards of integrity, honesty and
fairness in its dealings with all stakeholders, and that the Company complies with all legal and other obligations.
The Company has established a Code of Conduct (the Code
the Code) which applies to all directors, senior management
the Code
the Code
and staff (Employees
Employees). The Code promotes practices that aim to foster the Company’s key values, which include
Employees
Employees
providing a safe and healthy work environment, encouraging Employees to act with fairness, honesty and integrity,
being aware of and abiding by relevant laws and regulations and maintaining high standards of professional
behaviour. Employees are expected to be honest and ethical in their dealings with each other and all stakeholders.
The Company’s Securities Trading Policy applies to all Directors, officers and employees of Uscom. The Policy sets
out the prohibitions against insider trading, and prescribes certain requirements for dealing in Uscom securities.
All Company personnel are prohibited from trading in Uscom securities while in possession of material non-public
information, which is information a reasonable person would expect to have a material effect on the price or value
of Uscom securities. The Policy provides for certain black-out periods when no trading may occur.
Principle 4: Safeguard integrity in corporate reporting
The Board does not have an Audit Committee, having dissolved its Audit Committee in February 2014. The Board
considers that taking into account the size of the Company and the Board, the nature of the Company’s operations
and the stage of the Company’s development, it is not necessary to have a separate Audit Committee. The
functions that would ordinarily be undertaken by an Audit Committee, including issues relating to the Company’s
financial information and review of the Company’s risk controls and processes, are primarily carried out by the two
Non-Executive Directors. Non-Executive Director Sheena Jack is an experienced financial professional who has
held senior positions in that capacity.
The Board has not currently 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.
Prior to approval of the Company’s half year and annual financial reports, the Executive Chairman and General
Manager are required to provide the Board with written assurances in relation to the half year and annual financial
reports 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 compliance and control and that the system is operating
effectively in all material respects in relation to financial reporting risks. These assurances were provided in the
reporting period.
The external auditor attends the Company’s Annual General Meeting and is available to answer shareholder
questions about the conduct of the audit and preparation and conduct of the Independent Auditor’s Report.
Shareholders are also given the opportunity to submit written questions prior to the meeting. The Company
considers that this is important in promoting and encouraging shareholder participation and reflects and supports
the roles of the auditor and the auditor’s accountability to shareholders.
Principle 5: Make timely and balanced disclosure
The Company’s Continuous Disclosure Policy and External Communications Policy sets out the policies and
procedures relating to:
•
Uscom’s continuous disclosure obligations under the ASX Listing Rules and Corporations Act 2001 (Cth);
ANNUAL REPORT 2015
12
Corporate Governance
Statement
Continued
•
•
how Uscom staff are required to deal with potentially price-sensitive information, and communications
with external stakeholders such as the media, security holders and the community to ensure that the
Company meets its continuous disclosure obligations; and
The Company’s shareholder communications policy generally.
It is Uscom’s policy to ensure that all market participants have an equal opportunity to review and access material
information made available by the Company, and that the Company complies with both the letter and spirit of its
continuous disclosure obligations under the ASX Listing Rules and the Corporations Act.
The Continuous Disclosure and External Communications Policy facilitates compliance with the Company’s
continuous disclosure obligations by setting out procedures that must be followed if staff become aware of material
information, and the obligations of senior management and the Board to continuously assess and consider
continuous disclosure matters. The Policy specifies those persons authorised to speak to ASX or other external
parties in relation to the Company, and those disclosure matters that fall within the reserved powers of the Board.
Other matters dealt with in the Policy include:
•
•
•
•
•
dealing with market speculation and rumours;
trading halts;
management of information during periods where the Company may be in possession of price-sensitive
information;
analyst briefings; and
monitoring of media and social media.
Principle 6: Respect the rights of shareholders
Uscom’s Continuous Disclosure and Shareholder Communications Policy sets out its policy and practices in relation
to Uscom’s commitment to providing shareholders with the necessary information and facilities to allow them to
exercise their rights effectively, including:
•
•
•
providing shareholders with ready access to information about Uscom and its governance;
communicating openly and honestly with shareholders; and
encouraging and facilitating shareholder participation in shareholder meetings.
The Company’s website www.uscom.com.au provides detailed information about its business and operations. The
Investor section of the website provides helpful information to shareholders and a link to Uscom’s Share Registrar,
Boardroom. The Investor section also provides a link to the ASX share price and Annual and periodic Reports.
Shareholders can find information about the Company’s corporate governance practices in the Uscom Corporate
Governance section under “Investors”. This includes the Company’s Constitution, Board and Charter and the
Company’s corporate governance policies.
The Company provides shareholders with the option of receiving communications from, and sending
communications to, the Company and Share Registry electronically, for reasons of cost, convenience and
environmental considerations. The Company provides a printed copy of the Annual Report only to those
shareholders who have specifically elected to receive a printed copy. Other shareholders are advised that the
Annual Report is available on the Company’s website.
Shareholders are encouraged to register on the Company website to receive email alerts of ASX Announcements
and Media Releases and other news.
The Company’s Share Register is managed and maintained by Boardroom Limited. Shareholders can access their
shareholding details or make enquiries about their shareholding electronically through the link provided on the
Uscom website in the Investor section, or through the Boardroom InvestorServe facility or by emailing
enquiries@boardroomlimited.com.au.
The Company has not implemented a formal investor relations program to facilitate effective two-way
communication with investors. The Board will consider establishing such a program when it believes it is
appropriate, taking into account the Company’s stage of development, and the resources available to the
Company.
ANNUAL REPORT 2015
13
Corporate Governance
Statement
Continued
Principle 7: Recognise and manage risk
The Board is responsible for oversight of risk, including monitoring and review of risk management matters
delegated to senior management. To date, the Board has not established a formal risk management framework
and does not conduct formal periodic reviews of the effectiveness of specific risk controls. The Board assesses the
Company’s material business risks and controls, including accounting, financial and operating controls, on an
informal and ongoing basis. The Board intends to establish a formal risk management framework and processes
for monitoring the effectiveness of that framework in the next reporting period.
The Company does not retain an Internal Audit function. The Board considers this is appropriate, taking into
account the Company’s stage of development, the scale of its operations and the relative simplicity of its finance
function. The Board intends to review the processes it employs to evaluate risk management processes and internal
control processes as part of its overall consideration of its risk management framework in the next reporting period.
The Board does not consider that the Company has any material exposure to economic, environmental and social
sustainability risks.
Principle 8: Remunerate fairly and responsibly
The Board has not established a Remuneration Committee. The Board is responsible for:
•
•
•
reviewing the performance and remuneration of senior management. In the case of the Executive
Chairman the two non-executive Directors are responsible for review of Dr Phillips’ performance and
remuneration package;
establishing the remuneration framework for non-executive directors, within the threshold approved by
shareholders; and
reviewing and determining equity-based remuneration plans for senior management and employees.
The Company’s remuneration structure distinguishes between non-executive Directors and that of the Executive
Chairman and Senior Management. The Remuneration Report required under section 300A of the Corporations
Act 2001 (Cth) is provided in the Directors’ Report on pages 17-22.
The Company’s Securities Trading Policy specifically prohibits Directors and senior management from entering into
transactions which would limit the economic risk of any unvested entitlements under any equity-based
remuneration schemes. Further, Directors and senior management are prohibited from entering into margin loan
arrangements or other arrangements whereby their securities in the Company may be used as collateral, without
prior approval. Breaches of this policy are regarded as serious misconduct.
ANNUAL REPORT 2015
14
Directors Report
The Directors present their report on Uscom Ltd and its Controlled Entity for the financial year ended 30 June
2015.
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.
Associate Professor R A Phillips
Ms S Jack
Mr C Bernecker
Executive Director - Chairman
Non-Executive Director
Non-Executive Director
Directors’ qualifications and experience
Rob Phillips
Associate Professor Rob Phillips
Associate Professor
Rob Phillips
Rob Phillips
Associate Professor
Associate Professor
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 Uscom to IPO in
2003, and has over 20 years in executive corporate management and capital raising. Rob has overseen the
company’s acquisition of two international medical device companies in 2013 and 2015. Rob has a Doctor of
Philosophy and a Master of Philosophy in Cardiovascular Medicine from The University of Queensland and is an
Adjunct Associate Professor with the Critical Care Research Group, at the School of medicine, 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 author, teacher and examiner in the field of cardiac ultrasound, cardiovascular function
and circulation.
Ms Sheena Jack
Ms Sheena Jack
Ms Sheena Jack
Ms Sheena Jack
Ms Sheena Jack is a Non-Executive Director of Uscom Ltd since November 2011. Sheena was until recently the
Chief Financial Officer of HCF when she took up the role of HCF Chief Strategy Officer. Sheena has over 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
Mr Christian Bernecker
Mr Christian Bernecker
Mr Christian Bernecker is a Non-Executive Director of Uscom Ltd since November 2011. Christian is Chairman of
Stream Group Limited and has more than 10 years of broad investment experience across capital raising,
acquisitions and divestments. Christian qualified as a Chartered Accountant in Australia and holds a Bachelor of
Commerce from Ballarat University.
Company Secretary’s qualifications and experience
Ms Catherine Officer
Ms Catherine Officer
Ms Catherine Officer
Ms Catherine Officer
Catherine Officer is an experienced Company Secretary and Corporate Lawyer with over 20 years experience. She
has previously hold senior positions at ASX Limited and Macquarie Group. She has a Bachelor of Laws from the
University of Melbourne.
Meetings of Directors
Directors
R A Phillips
S Jack
C Bernecker
Board of Directors
Meetings held while a Director
8
8
8
No. of meetings attended
7
8
8
ANNUAL REPORT 2015
15
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 $1,215,654 (2014: $1,520,500)
Dividends
No dividends were declared or recommended for the financial year ended 30 June 2015 (2014: 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 2-5.
Events after the reporting date
Apart from the items disclosed in note 28 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.
The Directors are of the opinion that the provision of non-audit services as disclosed in note 25 in the financial
report does not compromise the external auditor’s independence as outlined in the Corporations Act 2001 for the
following reasons:
• All non-audit services have been reviewed and approved to ensure that they do not impact the integrity
and objectivity of the auditor, and
ANNUAL REPORT 2015
16
Directors Report
Continued
• 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 25 of the financial statements on page 46 for details of auditors’ remuneration.
The auditor’s independence declaration as required under section 307C of the Corporation Act is set out on page
23 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 (Audited)
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:
NonNonNonNon----Executive Directors
Executive Directors
Executive Directors
Executive Directors
Sheena Jack, Non-Executive Director
Christian Bernecker, Non-Executive Director
Executive Directors
Executive Directors
Executive Directors
Executive Directors
Rob Phillips, Executive Director, Chairman, Chief Executive Officer
Senior Executives
Senior Executives
Senior Executives
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.
Non-Executive Directors’ retirement payments are limited to compulsory employer superannuation.
ANNUAL REPORT 2015
17
Directors Report
Continued
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
Fixed remuneration
Fixed remuneration
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
Short----term incentives
term incentives
term incentives
Short
Short
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
Long----term incentives
term incentives
term incentives
LongLong
The Consolidated Entity has adopted an Equity Incentive Plan for the benefit of Executive Director, an employee,
contractor, consultant or any other person whom the Board determines to be eligible to participate in the Plans.
The Board, at its discretion, may approve the issue of options and rights under the Equity Incentive Plan to the
Senior Executives. The vesting of options and rights 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 and
rights 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, 5,409,902 Indeterminate Rights were issued to Rob Phillips on the terms and conditions approved
by shareholders at the AGM on 26 November 2014. Vesting dependent on performance hurdles on 1 July 2018, 1
July 2019 & 1 July 2020. The Board may exercise its discretion to pay cash in lieu of issue of ordinary shares.
450,000 Performance Rights were issued to Nick Schicht on 26 November 2014, vesting dependent on performance
hurdles on 1 July 2018, 1 July 2019 and 1 July 2020.
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.
Details of the employment agreement are as follows:
ANNUAL REPORT 2015
18
Directors Report
Continued
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
Termination
Termination
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 2015.
NonNonNonNon----EEEExecutive
irector
xecutive DDDDirector
irector
irector
xecutive
xecutive
S Jack
C Bernecker
Executive
irector
Executive DDDDirector
irector
irector
Executive
Executive
R Phillips
Senior E
xecutive
Senior Executive
xecutive
xecutive
Senior E
Senior E
N Schicht
Short term benefits
Directors’
Base Fee
$
35,000
38,325
Base salary
$
-
-
-
-
170,000
166,000
Total
Total
Total
Total
73,325
336,000
Post employment
benefits
Superannuation
$
3,325
-
Equity
Share-based
payment
$
-
-
Total
remuneration
$
38,325
38,325
16,150
147,603
333,753
Other
payments
$
-
-
-
20,000
20,000
17,670
37,145
12,450
160,053
216,120
626626626626,,,,525252523333
Remuneration includes salaries, benefits and superannuation contributions in respect of the financial year 2014.
Short term benefits
Directors’
Base Fee
$
33,000
38,238
Base salary
$
-
-
-
-
170,000
166,000
71,238
336,000
Other
payments
$
-
-
-
-
-
Post employment
benefits
Superannuation
$
5,238
-
Equity
Share-based
payment
$
-
-
Total
remuneration
$
38,238
38,238
37,869
42,345(1)
250,214
15,355
58,462
2,927
45,272
184,282
510,972
510,972
510,972
510,972
NonNonNonNon----EEEExecutive
irector
xecutive DDDDirector
irector
irector
xecutive
xecutive
S Jack
C Bernecker
Executive
irector
Executive DDDDirector
irector
irector
Executive
Executive
R Phillips
Senior E
xecutive
Senior Executive
xecutive
xecutive
Senior E
Senior E
N Schicht
Total
Total
Total
Total
(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.
ANNUAL REPORT 2015
19
Directors Report
Continued
Equity Incentive Plan
The Consolidated Entity has adopted a new Equity Incentive Plan for the benefit of an employee, contractor,
consultant or executive director of the Group or any other person whom the Board determines to be eligible to
participate in the Plans.
The purpose of the Plan is to:
•
•
•
•
provide Eligible Persons with an incentive plan which recognises ongoing contribution to the achievement
by the Company of its strategic goals thereby encouraging the mutual interdependence of Participants
and the Company;
align the interests of Participants with shareholders of the Company through the sharing of a personal
interest in the future growth and development of the Company as represented in the price of the
Company’s ordinary fully paid shares;
encourage Eligible Persons to improve the performance of the Company and its total return to
Shareholders; and
provide a means of attracting and retaining skilled and experienced employees.
Under the Plan, the Consolidated Entity will be able to grant short-term incentive and long-term incentive awards
to Eligible Employees (including Executive Directors). The Plan will provide the Board with the flexibility to grant
equity incentives to Eligible Persons in the form of Plan Shares, rights or Options, will only vest on the satisfaction
of appropriate hurdles.
Number of options over ordinary shares held by Directors and Senior Executives
Balance Granted
Exercised
1 July 2014
No.
-
-
1,000,000
300,000
1,300,000
During
FY2015
No.
During
FY2015
No.
-
-
-
-
-
-
-
-
(200,000)
(200,000)
Lapsed /
Cancelled
During
FY2015
No.
-
-
-
-
-
Balance
Total vested
Total
unexercisable
30 June 2015
30 June 2015
30 June 2015
No.
No.
-
-
-
-
No.
-
-
1,000,000
750,000
250,000
100,000
1,100,000
100,000
850,000
-
250,000
NonNonNonNon----EEEExecutive
irector
xecutive DDDDirector
irector
irector
xecutive
xecutive
S Jack
C Bernecker
Executive
irector
Executive DDDDirector
irector
irector
Executive
Executive
R Phillips
SSSSenior
xecutive
enior EEEExecutive
xecutive
xecutive
enior
enior
N Schicht
Total
Total
Total
Total
Details of options outstanding as at end of year
Holders No.
Grant date
8 (Employees &
Executive)
1 (Director)
1 (Consultant)
Total
Total
Total
Total
29 March 2012
7 November 2012
1 December 2014
Exercisable
at 30 June
2015
%
100%
75%
33%
Expiry date
30 June
2015
Outstanding
Option
No.
Exercise
Price
Issued
date fair
value
$
$
29 March 2016
837,500
0.0595
7 November 2016
1 July 2018
1,000,000
75,000
1,912,500
0.0595
0.1700
0.06
0.07
0.20
The options issued prior to this financial year were issued under the previous employee option plan and had 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 was issued for a period of 4 years, which vested 25% in tranches throughout the period.
The options issued on 1 December 2014 were issued under the Equity Incentive Plan. The options vest one third
each on the issue day 1 December 2014, 1 July 2015 and 1 July 2016.
Further details of the options are disclosed in note 18 of the financial statements.
ANNUAL REPORT 2015
20
Directors Report
Continued
Number of rights over ordinary shares held by Directors and Senior Executives
Lapsed /
Cancelled
Exercised
Granted
Balance
Balance
Total
vested
Total
unexercisable
NonNonNonNon----EEEExecutive
irector
xecutive DDDDirector
irector
irector
xecutive
xecutive
S Jack
C Bernecker
irector
Executive DDDDirector
Executive
Executive
irector
irector
Executive
R Phillips
SSSSenior
xecutive
enior EEEExecutive
xecutive
xecutive
enior
enior
N Schicht
Total
Total
Total
Total
1 July 2014
No.
During
FY2015
No.
During
FY2015
No.
During FY2015
30 June 2015
30 June 2015
30 June 2015
No.
No.
No.
No.
-
-
-
-
-
-
-
5,409,902
450,000
5,859,902
-
-
-
-
-
-
-
-
-
-
-
-
5,409,902
450,000
5,859,902
-
-
-
-
-
-
-
5,409,902
450,000
5,859,902
Details of rights outstanding as at end of year
Holders No.
Grant date
Exercisable
at 30 June
2015
%
Expiry date
1 (Director)
1 (Executive)
Total
Total
Total
Total
26 November 2014
26 November 2014
0%
0%
1 July 2020
1 July 2020
30 June 2015
Outstanding
Option
No.
5,409,902
450,000
5,859,902
Exercise
Price
$
0.00
0.00
Issued
date fair
value
$
0.19
0.19
5,409,902 Indeterminate Rights were issued to Rob Phillips on the terms and conditions approved by shareholders
at the AGM on 26 November 2014. Vesting dependent on performance hurdles on 1 July 2018, 1 July 2019 & 1 July
2020. Consideration payable upon vesting is $nil. The Board may exercise its discretion to pay cash in lieu of issue
of ordinary shares.
450,000 Performance Rights were issued to Nick Schicht, vesting dependent on performance hurdles on 1 July 2018,
1 July 2019 and 1 July 2020. Consideration payable upon vesting is $nil.
Number of shares held by Directors and Senior Executives (including indirect interest)
Balance
1 July 2014
No.
Received as
Remuneration
No.
Options
Exercised
No.
Net change
Other*
No.
Balance
30 June 2015
No.
NonNonNonNon----EEEExecutive
irector
xecutive DDDDirector
irector
irector
xecutive
xecutive
S Jack
C Bernecker
Executive
irector
Executive DDDDirector
irector
irector
Executive
Executive
R Phillips
xecutive
enior Executive
SSSSenior E
xecutive
xecutive
enior E
enior E
N Schicht
Total
Total
Total
Total
796,667
-
17,046,733
18,200
17,861,600
-
-
-
-
-
-
-
-
200,000
200,000
-
-
-
-
-
796,667(1)
-
17,046,733(2)
218,200(3)
18,061,600
*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.
ANNUAL REPORT 2015
21
Directors Report
Continued
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2015 are summarised below:
2015
2015
2015
2015
$
2014
2014
2014
2014
$
2013
2013
2013
2013
$
2012
2012
2012
2012
$
2011
2011
2011
2011
$
Sales Revenue
1,515,381
1,056,502
578,753
794,135
834,813
Loss after income tax
(1,215,654)
(1,520,500)
(1,371,683)
(1,824,547)
(2,685,913)
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
2015
2015
2015
2015
2014
2014
2014
2014
2013
2013
2013
2013
Share Price at financial year end ($)
Total dividends declared (cents per share)
Basic earnings declared (cents per share)
0.19
-
(1.5)
0.22
-
(2.0)
0.17
-
(2.2)
2012
2012
2012
2012
0.094
-
(3.5)
2011
2011
2011
2011
0.22
-
(5.8)
This concludes the remuneration report, which has been audited.
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.
Associate Professor Rob Phillips
Ms Sheena Jack
Executive Director - Chairman
Non-Executive Director
Sydney, 25 August 2015
ANNUAL REPORT 2015
22
Auditors 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 2015, 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
BDO East Coast Partnership
BDO East Coast Partnership
BDO East Coast Partnership
Sydney, 25 August 2015
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.
ANNUAL REPORT 2015
23
Statement of Profit or Loss & other
Comprehensive Income
For the FY ended 30 June 2015
Continuing operations
Revenue and other income
Raw materials and consumables used
Expenses from continuing activities
from continuing operations
Loss before income tax from continuing operations
Loss before income tax
from continuing operations
from continuing operations
Loss before income tax
Loss before income tax
Income tax
from continuing operations
Loss after income tax from continuing operations
Loss after income tax
from continuing operations
from continuing operations
Loss after income tax
Loss after income tax
nsive income
Other compreheeeensive income
Other compreh
nsive income
nsive income
Other compreh
Other compreh
reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
Items that may be
reclassified subsequently to profit or loss
reclassified subsequently to profit or loss
Items that may be
Items that may be
Foreign currency translation difference for foreign operations
Other comprehensive income for the year, net of tax
Consolidated
Consolidated
Consolidated
Consolidated
2012012012015555
$
2012012012014444
Restated
$
2,039,426
(341,718)
(2,913,362)
1,377,716
(235,308)
(2,662,908)
(1,215,654)
(1,520,500)
-
-
(1,215,654)
(1,520,500)
Note
3
4
5
6
3,511
3,511
(893)
(893)
year
for the year
income for the
Total comprehensive income
Total comprehensive
year
year
for the
for the
income
income
Total comprehensive
Total comprehensive
(1,212,143)
(1,521,393)
Attributable to:
Attributable to:
Attributable to:
Attributable to:
Owners of the Company
(1,212,143)
(1,521,393)
year
for the year
income for the
Total comprehensive income
Total comprehensive
year
year
for the
for the
income
income
Total comprehensive
Total comprehensive
(1,212,143)
(1,521,393)
Earnings per share from continuing operations attributable to the
Earnings per share from continuing operations attributable to the
Earnings per share from continuing operations attributable to the
Earnings per share from continuing operations attributable to the
owners of the Company
owners of the Company
owners of the Company
owners of the Company
Earnings per share (EPS)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
7
7
(1.5)
(1.5)
(2.0)
(2.0)
This Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the attached
notes.
ANNUAL REPORT 2015
24
Statement of Financial
Position
For the FY ended 30 June 2015
Consolidated
Consolidated
Consolidated
Consolidated
2012012012015555
$
2012012012014444
$
Note
8
9
10
11
14
12
13
15
16
16
526,317
300,753
525,672
366,831
104,820
1,824,393
1,582,834
325,514
216,870
313,050
70,384
2,508,652
46,150
1,065,812
1,111,962
38,039
1,222,518
1,260,557
2,936,355
3,769,209
418,524
196,073
614,597
255,770
172,474
428,244
33,097
33,097
21,572
21,572
647,694
449,816
2,288,661
3,319,393
17
18
6
19
26,019,429
1,806,732
(25,618,591)
81,091
26,006,168
1,638,582
(24,402,937)
77,580
2,288,661
3,319,393
Current assets
Current assets
Current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Tax asset
Other assets
Total current assets
NonNonNonNon----current assets
current assets
current assets
current assets
Plant and equipment
Intangible assets
Total non-current assets
Total assets
Total assets
Total assets
Total assets
Current liabilities
Current liabilities
Current liabilities
Current liabilities
Trade and other payables
Short term provisions
Total current liabilities
NonNonNonNon----current liabilities
current liabilities
current liabilities
current liabilities
Long term provisions
Total non-current liabilities
Total liabilities
Net assets
Net assets
Net assets
Net assets
Equity
Equity
Equity
Equity
Issued capital
Options and rights reserve
Accumulated losses
Translation reserve
Total equity
Total equity
Total equity
Total equity
This Statement of Financial Position is to be read in conjunction with the attached notes.
ANNUAL REPORT 2015
25
Statement of Changes
in Equity
For the FY ended 30 June 2015
Issued
Issued
Issued
Issued
Capital
Capital
Capital
Capital
Options
Options
Options
Options
Reserve
Reserve
Reserve
Reserve
Accumulated
Accumulated
Accumulated
Accumulated
Losses
Losses
Losses
Losses
Consolidated
Consolidated
Consolidated
Consolidated
$
$
$
Foreign
Foreign
Foreign
Foreign
Currency
Currency
Currency
Currency
Translation
Translation
Translation
Translation
Reserve
Reserve
Reserve
Reserve
$
Total
Total
Total
Total
$
Balance at 30 June 2013131313
Balance at 30 June 20
Balance at 30 June 20
Balance at 30 June 20
Loss for the year
Other Comprehensive
Income
Total Comprehensive
Income for the year
Transactions with Owners in
their capacity as owners:
Shares Issued
Transaction
Transaction
Transaction
Transaction
Shares Issued
Shares Issued
Shares Issued
Shares Issued
Share-based payments
costs
costs
costs
costs
on
on
on
on
23,638,157
1,520,474
(22,882,437)
78,473
2,354,667
-
-
-
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 2014141414
Balance at 30 June 20
Balance at 30 June 20
Balance at 30 June 20
26,006,168
1,638,582
(24,402,937)
77,580
3,319,393
Comprehensive
Comprehensive
Comprehensive
Comprehensive
Loss for the year
Other Comprehensive
Income
Total
Total
Total
Total
Income for the year
Income for the year
Income for the year
Income for the year
Transactions with Owners in
their capacity as owners:
Shares Issued
Transaction
Transaction
Transaction
Transaction
Shares Issued
Shares Issued
Shares Issued
Shares Issued
Share-based payments
costs
costs
costs
costs
on
on
on
on
-
-
-
14,875
(1,614)
-
-
-
-
-
-
168,150
(1,215,654)
-
(1,215,654)
-
3,511
3,511
(1,215,654)
3,511
(1,212,143)
-
-
-
-
-
-
14,875
(1,614)
168,150
Balance at 30 June 2011115555
Balance at 30 June 20
Balance at 30 June 20
Balance at 30 June 20
26,019,429
1,806,732
(25,618,591)
81,091
2,288,661
This Statement of Changes in Equity is to be read in conjunction with the attached notes.
ANNUAL REPORT 2015
26
Statement of Cash Flows
For the FY ended 30 June 2015
Consolidated
Consolidated
Consolidated
Consolidated
2012012012015555
$
2014
2014
2014
2014
Restated
Restated
Restated
Restated
$
Note
1,321,080
12,652
(2,639,578)
313,050
829,424
8,090
(2,445,534)
372,282
Cash flows from operating
activities
Cash flows from operating activities
activities
activities
Cash flows from operating
Cash flows from operating
Receipts from customers (inclusive of GST)
Interest received
Payments to suppliers and employees (inclusive of GST)
Grant and other income received
Net cash used in operating activities
20(b)
(992,796)
(1,235,738)
Cash flows from investing activities
Cash flows from investing activities
Cash flows from investing activities
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
Cash flows from financing activities
Cash flows from financing activities
Cash flows from financing activities
Issue of shares (net of share issue cost)
(60,370)
(16,612)
(87,726)
(2,908)
(76,982)
(90,634)
17
13,261
2,368,011
Net cash provided by financing activities
13,261
2,368,011
Net increase/(decrease) in cash held
Net increase/(decrease) in cash held
Net increase/(decrease) in cash held
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
Cash and cash equivalents at the end of the year
Cash and cash equivalents at the end of the year
Cash and cash equivalents at the end of the year
(1,056,517)
1,588,214
(5,380)
526,317
1,041,639
540,600
595
1,582,834
20 (a)
This Statement of Cash Flows is to be read in conjunction with the attached notes.
ANNUAL REPORT 2015
27
Notes to Financial
Statements
Note 1: Adoption of new and revised accounting standards
New, revised or amending Accounting Standards and Interpretations adopted
New, revised or amending Accounting Standards and Interpretations adopted
New, revised or amending Accounting Standards and Interpretations adopted
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 adoption of these Accounting 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 2012
Offsetting Financial Assets and Financial
Standards ---- Offsetting Financial Assets and Financial
3 Amendments to Australian Accounting Standards
AASB 2012----3 Amendments to Australian Accounting
Offsetting Financial Assets and Financial
Offsetting Financial Assets and Financial
Standards
Standards
3 Amendments to Australian Accounting
3 Amendments to Australian Accounting
AASB 2012
AASB 2012
Liabilities
Liabilities
Liabilities
Liabilities
The consolidated entity has applied AASB 2012-3 from 1 July 2014. The amendments add application guidance to
address inconsistencies in the application of the offsetting criteria in AASB 132 'Financial Instruments: Presentation',
by clarifying the meaning of 'currently has a legally enforceable right of set-off'; and clarifies that some gross
settlement systems may be considered to be equivalent to net settlement.
AASB 2013
Financial Assets
Recoverable Amount Disclosures for Non----Financial Assets
ASB 136 ---- Recoverable Amount Disclosures for Non
3 Amendments to AASB 136
AASB 2013----3 Amendments to A
Financial Assets
Financial Assets
Recoverable Amount Disclosures for Non
Recoverable Amount Disclosures for Non
ASB 136
ASB 136
3 Amendments to A
3 Amendments to A
AASB 2013
AASB 2013
The consolidated entity has applied AASB 2013-3 from 1 July 2014. The disclosure requirements of AASB 136
'Impairment of Assets' have been enhanced to require additional information about the fair value measurement
when the recoverable amount of impaired assets is based on fair value less costs of disposals. Additionally, if
measured using a present value technique, the discount rate is required to be disclosed.
AASB 2014
tralian Accounting Standards (Parts A to C)
1 Amendments to Australian Accounting Standards (Parts A to C)
AASB 2014----1 Amendments to Aus
tralian Accounting Standards (Parts A to C)
tralian Accounting Standards (Parts A to C)
1 Amendments to Aus
1 Amendments to Aus
AASB 2014
AASB 2014
The consolidated entity has applied Parts A to C of AASB 2014-1 from 1 July 2014. These amendments affect the
following standards: AASB 2 'Share-based Payment': clarifies the definition of 'vesting condition' by separately
defining a 'performance condition' and a 'service condition' and amends the definition of 'market condition'; AASB
3 'Business Combinations': clarifies that contingent consideration in a business combination is subsequently
measured at fair value with changes in fair value recognised in profit or loss irrespective of whether the contingent
consideration is within the scope of AASB 9; AASB 8 'Operating Segments': amended to require disclosures of
judgements made in applying the aggregation criteria and clarifies that a reconciliation of the total reportable
segment assets to the entity's assets is required only if segment assets are reported regularly to the chief operating
decision maker; AASB 13 'Fair Value Measurement': clarifies that the portfolio exemption applies to the valuation
of contracts within the scope of AASB 9 and AASB 139; AASB 116 'Property, Plant and Equipment' and AASB 138
'Intangible Assets': clarifies that on revaluation, restatement of accumulated depreciation will not necessarily be in
the same proportion to the change in the gross carrying value of the asset; AASB 124 'Related Party Disclosures':
extends the definition of 'related party' to include a management entity that provides KMP services to the entity or
its parent and requires disclosure of the fees paid to the management entity; AASB 140 'Investment Property':
clarifies that the acquisition of an investment property may constitute a business combination.
Note 2: Statement of significant accounting policies
Introductionionionion
Introduct
Introduct
Introduct
(a)
(a)
(a)
(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
Operations and principal activities
Operations and principal activities
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
Scope of financial statements
Scope of financial statements
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.
ANNUAL REPORT 2015
28
Notes to Financial
Statements
Continued
Note 2: Statement of significant accounting policies (continued)
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).
Change of accounting policy in accounting policy for refundable R&D tax incentives
Change of accounting policy in accounting policy for refundable R&D tax incentives
Change of accounting policy in accounting policy for refundable R&D tax incentives
Change of accounting policy in accounting policy for refundable R&D tax incentives
Uscom previously accounted for refundable R&D tax incentives as an income tax benefit. The entity has determined
that these incentives are more akin to government grants because they are not conditional upon earning taxable
income. The entity has therefore made a voluntary change in accounting policy during the reporting period.
Refundable tax incentives are now accounted for as government grants under AASB 120 Accounting for
Government Grants and Disclosure of Government Assistance because the directors consider this policy to provide
more relevant information to meet the economic decision-making needs of users, and to make the financial
statements more reliable.
This change has been applied to the 2014 comparative numbers:
Other Income
Income tax credit
Per Previous
Per Previous
Per Previous
Per Previous
reporting
reporting
reporting
reporting
$
-
313,050
As Restated
As Restated
As Restated
As Restated
$
313,050
-
Currency
Currency
Currency
Currency
The financial report is presented in Australian dollars, which is the Parent Company’s functional and presentational
currency.
Historical Cost Convention
Historical Cost Convention
Historical Cost Convention
Historical Cost Convention
This financial report has been prepared under the Historical Cost Convention.
period
Reporting period
Reporting
period
period
Reporting
Reporting
The financial report is presented for the year ended 30 June 2015. The comparative reporting period was for the
year ended 30 June 2014.
Comparatives
Comparatives
Comparatives
Comparatives
Where required by Accounting Standards comparative figures have been adjusted to conform with changes in
presentation for the current financial year.
Registered office
Registered office
Registered office
Registered office
Level 7, 10 Loftus Street, Sydney NSW 2000.
Authorisation of financial report
Authorisation of financial report
Authorisation of financial report
Authorisation of financial report
The financial report was authorised for issue on 25 August 2015 by the Directors.
(b) Overall policy
Overall policy
(b)
Overall policy
Overall policy
(b)
(b)
The principal accounting policies adopted by the Consolidated Entity are stated in order to assist in the general
understanding of the financial report.
ssumptions
udgment and kkkkey ey ey ey aaaassumptions
Significant jjjjudgment and
Significant
ssumptions
ssumptions
udgment and
udgment and
Significant
Significant
(c)
(c)
(c)(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.
ANNUAL REPORT 2015
29
Notes to Financial
Statements
Continued
Note 2: Statement of significant accounting policies (continued)
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life
intangible assets at each reporting date by evaluating conditions specific to the consolidated entity and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is
determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number
of key estimates and assumptions.
(d) Financial assets and
(d)
inancial liabilities
Financial assets and ffffinancial liabilities
inancial liabilities
inancial liabilities
Financial assets and
Financial assets and
(d)
(d)
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.
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
(e)
onsolidation
Principles of cccconsolidation
onsolidation
onsolidation
Principles of
Principles of
(e)
(e)
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.
ANNUAL REPORT 2015
30
Notes to Financial
Statements
Continued
Note 2: Statement of significant accounting policies (continued)
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.
alances
ransactions and bbbbalances
urrency ttttransactions and
Foreign ccccurrency
Foreign
alances
alances
ransactions and
ransactions and
urrency
urrency
Foreign
Foreign
(f)(f)(f)(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
(g)
ecognition
Revenue rrrrecognition
ecognition
ecognition
Revenue
Revenue
(g)
(g)
• 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
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.
Inventories
Inventories
Inventories
Inventories
(h)
(h)
(h)
(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.
lant and equipment
Property, pppplant and equipment
Property,
lant and equipment
lant and equipment
Property,
Property,
(i)(i)(i)(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.
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%
ANNUAL REPORT 2015
31
Notes to Financial
Statements
Continued
Note 2: Statement of significant accounting policies (continued)
Intangibles
Intangibles
Intangibles
Intangibles
(j)(j)(j)(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.
ssets
Impairment of aaaassets
Impairment of
ssets
ssets
Impairment of
Impairment of
(k)
(k)
(k)(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
Leases
Leases
Leases
(l)(l)(l)(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
(m)
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
(m)
(m)
Cash and cash equivalents comprise cash on hand and at call deposits with banks or financial institutions.
estments
InvInvInvInvestments
estments
estments
(n)
(n)
(n)
(n)
Investments in Controlled Entities are carried at the lower of cost and recoverable amount.
(o) Research &
(o)
xpenditure
evelopment eeeexpenditure
Research & ddddevelopment
xpenditure
xpenditure
evelopment
evelopment
Research &
Research &
(o)
(o)
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 ttttaxaxaxax
Income
Income
Income
(p)
(p)
(p)
(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.
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.
ANNUAL REPORT 2015
32
Notes to Financial
Statements
Continued
Note 2: Statement of significant accounting policies (continued)
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 other income
in the period to which the entitlement relates.
(q) Short term employee benefits
(q)
Short term employee benefits
Short term employee benefits
Short term employee benefits
(q)
(q)
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.
enefits
mployee bbbbenefits
erm eeeemployee
Long tttterm
Long
enefits
enefits
mployee
mployee
erm
erm
Long
Long
(r)(r)(r)(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.
based payment arrangement
Share----based payment arrangement
Share
based payment arrangement
based payment arrangement
Share
Share
(s)(s)(s)(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)(t)(t)(t) Goods and
ax (GST)
ervices ttttax (GST)
Goods and sssservices
ax (GST)
ax (GST)
ervices
ervices
Goods and
Goods and
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of
Financial Position are shown inclusive of GST.
(u) Receivables
(u)
Receivables
Receivables
Receivables
(u)
(u)
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.
ANNUAL REPORT 2015
33
Notes to Financial
Statements
Continued
(v) Contingent
(v)
iabilities
Contingent lllliabilities
iabilities
iabilities
Contingent
Contingent
(v)(v)
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
(w)
Warranties
Warranties
Warranties
(w)
(w)
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.
reporting ddddateateateate
Events after the reporting
Events after the
reporting
reporting
Events after the
Events after the
(x)
(x)
(x)(x)
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 28 to the financial statements.
Note 3: Revenue and other income
Operating revenue
Operating revenue
Operating revenue
Operating revenue
Sale of goods
Other revenue
Other revenue
Other revenue
Other revenue
Interest received
Other income
Other income
Other income
Other income
Grants received - VAT return
Grants receivable – R&D Tax Incentive
Exchange gain
Total other income
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
2014
2014
2014
2014
Restated
Restated
Restated
Restated
$
1,515,381
1,056,502
12,652
8,090
-
366,831
144,562
524,045
74
313,050
-
321,214
operations
from continuing operations
and other income from continuing
Total revenues and other income
Total revenues
operations
operations
from continuing
from continuing
and other income
and other income
Total revenues
Total revenues
2,039,426
1,377,716
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 and review)
Regulatory expenses
Administrative expenses
Exchange losses
activities, excluding finance costs
continuing activities, excluding finance costs
Total expenses from continuing
Total expenses from
activities, excluding finance costs
activities, excluding finance costs
continuing
continuing
Total expenses from
Total expenses from
172,019
59,768
992,060
488,178
557,523
154,613
50,000
71,944
367,257
-
2,913,362
210,030
178,269
793,120
396,522
494,900
134,442
60,500
83,188
287,056
24,881
2,662,908
Operating lease expenses of $138,955 in 2015 (2014: $120,140) are included in occupancy expenses above.
Share based expenses of $168,150 in 2015 (2014: $118,108) are included in employee benefits expenses above.
ANNUAL REPORT 2015
34
Notes to Financial
Statements
Continued
Note 5: Income tax
Major components of income tax
Major components of income tax
Major components of income tax
Major components of income tax
Current income tax
Income tax
Income tax
Income tax
Income tax
Reconciliation between income tax credit and prima facie tax on accounting
Reconciliation between income tax credit and prima facie tax on accounting
Reconciliation between income tax credit and prima facie tax on accounting
Reconciliation between income tax credit and prima facie tax on accounting
loss
loss
loss
loss
Accounting loss before income tax
Tax benefit at 30% in Australia, 15% in USA (2014: 30% in Australia)
Tax effect on non-taxable income and non-deductible expenses
Temporary differences
Deferred tax asset not brought to account
Income tax
Income tax
Income tax
Income tax
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
-
-
2014
2014
2014
2014
Restated
Restated
Restated
Restated
$
-
-
1,215,654
1,520,500
369,318
(167,151)
(36,909)
(165,258)
-
457,700
(131,462)
(8,060)
(318,178)
-
As at 30 June 2015, the Consolidated Entity had estimated unrecouped operating income tax losses of $17,685,151
(2014: $17,017,122). The benefit of these losses of $5,095,594 (2014: $4,910,427) 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
Accumulated losses at the end of the financial year
Accumulated losses at the end of the financial year
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
(24,402,937)
(1,215,654)
(22,882,437)
(1,520,500)
(25,618,591)
(24,402,937)
(1,215,654)
Number
(1,520,500)
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 rights outstanding
Weighted average number of ordinary shares outstanding during the year used in
calculation of diluted EPS
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The options and rights 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.
1,944,418
3,483,832
87,075,411
81,647,161
(1.5)
(1.5)
74,712,512
4,400,068
-
79,112,580
(2.0)
(2.0)
Note 8: Cash and cash equivalents
Cash on hand
Bank: Cheque accounts
Bank: Cash management
Bank: Term deposits
Total cash and cash equivalents
Total cash and cash equivalents
Total cash and cash equivalents
Total cash and cash equivalents
132
447,026
38,741
40,418
526,317
215
725,523
16,340
840,756
1,582,834
ANNUAL REPORT 2015
35
Notes to Financial
Statements
Continued
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
2014
2014
2014
2014
$
300,753
300,753
325,514
325,514
Note 9: Trade and other receivables
Current
Current
Current
Current
Trade receivables
Total current receivables
Total current receivables
Total current receivables
Total current receivables
Trade receivables are non-interest bearing and on an average of 45 day terms. Details of trade receivables past due
but not impaired are disclosed in note 21.
Note 10: Inventories
Current inventories at cost
Current inventories at cost
Current inventories at cost
Current inventories at cost
Raw materials
Work in Progress
Finished products
Total inventories
Total inventories
Total inventories
Total inventories
Note 11: Tax asset
R & D tax incentive
tax asset
Total tax asset
Total
tax asset
tax asset
Total
Total
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
162,172
105,340
258,160
525,672
139,933
39,912
37,025
216,870
366,831
366,831
313,050
313,050
581,315
(542,194)
39,121
564,251
(529,431)
34,820
59,166
(57,422)
1,744
26,130
(22,881)
3,249
34,619
(32,583)
2,036
59,166
(57,114)
2,052
22,120
(21,939)
181
32,871
(31,885)
986
plant and equipment
Total plant and equipment
Total
plant and equipment
plant and equipment
Total
Total
46,150
38,039
Movements in carrying amounts
Movements in carrying amounts
Movements in carrying amounts
Movements in carrying amounts
Useful life
Consolidated Entity
Consolidated Entity
Consolidated Entity
Consolidated Entity
Carrying amount at 1 July 2014
Additions
Disposals
Depreciation expense
Carrying amount at 30 June 2015151515
Carrying amount at 30 June 20
Carrying amount at 30 June 20
Carrying amount at 30 June 20
Plant and
equipment
Office
furniture and
equipment
Computer
software
Low value
asset pool
2-7 years
$
2-7 years
$
3 years
$
3 years
$
34,820
17,064
-
(12,763)
39,121
2,052
-
-
(308)
1,744
181
4,010
-
(942)
3,249
986
1,748
-
(698)
2,036
ANNUAL REPORT 2015
36
Notes to Financial
Statements
Continued
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
2014
2014
2014
2014
$
2,037,460
(971,648)
1,065,812
1,222,518
60,370
(59,768)
(157,308)
1,065,812
1,977,090
(754,572)
1,222,518
1,506,634
87,726
(178,269)
(193,573)
1,222,518
(i)
Note 13: Intangible assets
NonNonNonNon----current
current
current
current
Patents at cost
Accumulated amortisation and impairment
Carrying amount at 30 June
Carrying amount at 30 June
Carrying amount at 30 June
Carrying amount at 30 June
Movements in carrying amounts
Movements in carrying amounts
Movements in carrying amounts
Movements in carrying amounts
Carrying amount at 1 July
Additions
Impairment
Amortisation
Carrying amount at 30 June
Carrying amount at 30 June
Carrying amount at 30 June
Carrying amount at 30 June
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 $59,768 has been recognised in the current
year in relation to certain Patents cancelled in the USA and Europe. In 2014, an impairment charge of $178,269 was
recognised in relation to Patents carried in Australia where there wasn’t sufficient sales generated to support the full
carrying value. The impairment charge is recorded under Expenses from Continuing Activities (refer to note 4).
Note 14: Other assets
Current
Current
Current
Current
GST receivable
Deposit paid
Prepayments
Total other current assets
Total other current assets
Total other current assets
Total other current assets
Note 15: Trade and other payables
Current
Current
Current
Current
Trade payables
Sundry payables and accrued expenses
Employee related payables
Total payables
Total payables
Total payables
Total payables
Note 16: Provisions
Current
Current
Current
Current
Provision for annual leave
Provision for long service leave
NonNonNonNon----current
current
current
current
Provision for long service leave
Provision for warranties
26,240
-
78,580
104,820
179,815
198,888
39,821
418,524
129,837
66,236
196,073
19,797
13,300
33,097
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
(a) Aggregate employee benefits
(a) Aggregate employee benefits
(a) Aggregate employee benefits
(a) Aggregate employee benefits
215,870
185,146
ANNUAL REPORT 2015
37
Notes to Financial
Statements
Continued
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
2014
2014
2014
2014
$
185,146
99,870
(69,146)
215,870
256,733
46,220
(117,807)
185,146
26,019,429
26,006,168
26,019,429
26,006,168
26,006,168
-
-
-
-
14,875
(1,614)
23,638,157
5,206
30,000
1,090,000
1,388,001
-
(145,196)
26,019,429
26,006,168
Note 16: Provisions (continued)
(b) Movement in employee benefits
(b) Movement in employee benefits
(b) Movement in employee benefits
(b) Movement in employee benefits
Balance at beginning of the year
Additional provision
Amounts used
Balance at end of the year
Balance at end of the year
Balance at end of the year
Balance at end of the year
Note 17: Issued capital
Issued capital
Issued capital
Issued capital
Issued capital
Fully paid ordinary shares
equity
Total contributed equity
Total contributed
equity
equity
Total contributed
Total contributed
Movement in issued capital
Movement in issued capital
Movement in issued capital
Movement in issued capital
Shares on issue at the beginning of the year
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
250,000 ordinary shares issued at 5.95 cents
Share issue costs
at the end of the year
Issued Equity at the end of the year
Issued Equity
at the end of the year
at the end of the year
Issued Equity
Issued Equity
Fully paid ordinary s
hares
Fully paid ordinary shares
hares
hares
Fully paid ordinary s
Fully paid ordinary s
Ordinary shares at the beginning of the year
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
250,000 ordinary shares issued by exercise of options on 30 September 2014
Number
81,459,490
-
-
-
-
-
-
250,000
Number
68,171,985
25,000
150,000
62,500
7,100,001
166,667
5,783,337
-
ordinary shares at the end of the year
Total ordinary shares at the end of the year
Total
ordinary shares at the end of the year
ordinary shares at the end of the year
Total
Total
81,709,490
81,459,490
The Company’s authorised share capital amounted to 81,709,490 ordinary shares of no par value at 30 June 2015.
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.
Refer to note 28 for additional ordinary shares issued after the reporting date.
Note 18: Options and rights reserve
The Consolidated Entity has adopted a new Equity Incentive Plan for the benefit of an employee, contractor,
consultant, executive director of the Group or any other person whom the Board determines to be eligible to
participate in the Plans. The Board may impose conditions, including performance related conditions, on the right to
exercise any options and rights granted under the Equity Incentive Plan.
ANNUAL REPORT 2015
38
Notes to Financial
Statements
Continued
Note 18: Options and rights reserve (continued)
The purpose of the Plan is to:
•
•
•
•
provide Eligible Persons with an incentive plan which recognises ongoing contribution to the achievement
by the Company of its strategic goals thereby encouraging the mutual interdependence of Participants and
the Company;
align the interests of Participants with shareholders of the Company through the sharing of a personal
interest in the future growth and development of the Company as represented in the price of the Company’s
ordinary fully paid shares;
encourage Eligible Persons to improve the performance of the Company and its total return to Shareholders;
and
provide a means of attracting and retaining skilled and experienced employees.
Under the Plan, the Consolidated Entity will be able to grant short-term incentive and long-term incentive awards to
Eligible Employees (including Executive Directors). The Plan will provide the Board with the flexibility to grant equity
incentives to Eligible Persons in the form of Plan Shares, rights or Options, will only vest on the satisfaction of
appropriate hurdles.
Effect of share
based payment transactions
Effect of share----based payment transactions
based payment transactions
based payment transactions
Effect of share
Effect of share
Option Planlanlanlan
Share Option P
Share
Option P
Option P
Share
Share
Options and rights reserve balance at the beginning of the year
Expenses arising from share-based payment transactions
Options and rights reserve balance for Share Option Plan at the end of the year
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
2014
2014
2014
2014
$
1,638,582
168,150
1,806,732
1,520,474
118,108
1,638,582
Movement in options during the financial year
Movement in options during the financial year
Movement in options during the financial year
Movement in options during the financial year
Movement during the financial year
Movement during the financial year
Movement during the financial year
Movement during the financial year
Opening number of options
Granted during the financial year – Consultant
Lapsed during the financial year
Cancelled during the financial year
Exercised during the financial year
Closing number of options
Closing number of options
Closing number of options
Closing number of options
Number of
Options 2015
2,100,000
75,000
(12,500)
-
(250,000)
1,912,500
Weighted
average
exercise price
0.06
0.17
0.06
0.06
0.06
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
Details of options outstanding as at end of the year
Details of options outstanding as at end of the year
Details of options outstanding as at end of the year
Details of options outstanding as at end of the year
Exercisable
at 30 June
2015
%
Holders No.
Grant date
Expiry date
30 June 2015
Outstanding
Option
No.
Exercise
Price
$
Issued
date fair
value
$
8 (Employees &
Executives)
1 (Director)
1 (Consultant)
Total
Total
Total
Total
29 March 2012
100%
29 March 2016
837,500
0.0595
7 November 2012
1 December 2014
75%
33%
7 November 2016
1 July 2018
1,000,000
75,000
1,912,500
0.0595
0.1700
0.06
0.06
0.20
ANNUAL REPORT 2015
39
Notes to Financial
Statements
Continued
Note 18: Options and rights reserve (continued)
The options issued prior to this financial year were issued under the existing 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.
The options issued in on 1 December were issued under the Equity Incentive plan. The options vest one third each
on the issue day, 1 July 2015 and 1 July 2016 respectively.
Fair value
Fair value
Fair value
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 $0.20
Exercise price
Option life
Risk-free interest rate
Expected dividends
Expected volatility*
1,837,500 at $0.0595 and 75,000 at $0.17
3-4 years
Range from 2.53% 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.
Refer to note 28 for additional options issued after the reporting date.
s during the financial year
Movement in rights during the financial year
Movement in right
s during the financial year
s during the financial year
Movement in right
Movement in right
Rights at the beginning of the period
Granted during the period
Rights at the end of the period
2015
2015
2015
2015
2014
Number
-
5,859,902
5,859,902
Number
-
-
-
5,409,902 Indeterminate rights were issued to Rob Phillips on the terms and conditions approved by shareholders
at the AGM on 26 November 2014 under the Equity Incentive Plan, vesting dependent on performance hurdles on
1 July 2018, 1 July 2019 & 1 July 2020. Consideration payable upon vesting is $nil. The Board may exercise its
discretion to pay cash in lieu of issue of ordinary shares.
450,000 Performance rights were issued to Nick Schicht under the Equity Incentive Plan, vesting dependent on
performance hurdles on 1 July 2018, 1 July 2019 and 1 July 2020. Consideration payable upon vesting is $nil.
Note 19: Translation reserve
Opening balance
Translation of financial statements of foreign Controlled Entity
Closing balance
Closing balance
Closing balance
Closing balance
Note 20: Cash flow information
(a) Reconciliation of cash
Cash at bank and on hand
Total cash at end of year
Total cash at end of year
Total cash at end of year
Total cash at end of year
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
77,580
3,511
81,091
2014
2014
2014
2014
$
78,473
(893)
77,580
526,317
526,317
1,582,834
1,582,834
ANNUAL REPORT 2015
40
Notes to Financial
Statements
Continued
Note 20: Cash flow information (continued)
(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
R & D tax incentive
GST assets
Increase/(decrease) in liabilities
Trade payables
Sundry payables and accrued expenses
Employee related payables
Employee provisions
Other provisions
used in operating activities
ash used in operating activities
Net cNet cNet cNet cash
used in operating activities
used in operating activities
ash
ash
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
2014
2014
2014
2014
$
(1,215,654)
(1,520,500)
14,711
157,308
59,768
168,150
3,511
24,761
(314,513)
(37,332)
(53,781)
2,896
118,307
32,991
10,963
30,724
4,394
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
(992,796)
(1,235,738)
Note 21: Financial instruments
(a)
(a)
Significant accounting policies
Significant accounting policies
Significant accounting policies
Significant accounting policies
(a)
(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
(b)
Capital risk management
Capital risk management
Capital risk management
(b)
(b)
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 35) and equity attributable to equity holders of the Parent Entity, comprising issued capital (note 17 on page
38), and accumulated losses (note 6 on page 35).
(c) Outstanding contracts
(c)
Outstanding contracts
Outstanding contracts
Outstanding contracts
(c)(c)
At 30 June 2015, there were no outstanding contracts.
(d) Financial risk management objectives
(d)
Financial risk management objectives
Financial risk management objectives
Financial risk management objectives
(d)
(d)
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.
(e) Foreign currency risk management
(e)
Foreign currency risk management
Foreign currency risk management
Foreign currency risk management
(e)
(e)
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 2015 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.
ANNUAL REPORT 2015
41
Notes to Financial
Statements
Continued
Note 21: Financial instruments (continued)
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
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
US$
156,591
216,605
75,467
€
87,791
12,850
£
-
2014
2014
2014
2014
US$
290,166
258,745
1,365
€
50,961
20,300
£
11,860
Foreign currency sensitivity
Foreign currency sensitivity
Foreign currency sensitivity
Foreign currency sensitivity
(f)(f)(f)(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
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
(138,891)
138,891
2014
2014
2014
2014
$
(99,371)
99,371
Interest rate risk management
Interest rate risk management
Interest rate risk management
Interest rate risk management
(g)
(g)
(g)
(g)
The Consolidated Entity does not have any external loans or borrowings as at 30 June 2015 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.
Interest rate sensitivity
Interest rate sensitivity
Interest rate sensitivity
Interest rate sensitivity
(h)
(h)
(h)
(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
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
1,265
(1,265)
2014
2014
2014
2014
$
809
(809)
ANNUAL REPORT 2015
42
Notes to Financial
Statements
Continued
Note 21: Financial instruments (continued)
Credit risk management
Credit risk management
Credit risk management
Credit risk management
(i)(i)(i)(i)
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
Total
Total
Total
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
-
-
9,685
9,685
2014
2014
2014
2014
$
141,566
5,974
44,603
192,143
No bad debt was written off during the year (2014: $Nil). There was no doubtful debt provision as at 30 June 2015
(2014: Nil). The past due debts of $9,685 from one debtor is still outstanding subsequent to the reporting date, but
full recovery is expected based on communication with the debtor.
Liquidity risk management
Liquidity risk management
Liquidity risk management
Liquidity risk management
(j)(j)(j)(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.
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
Financial assets
Cash
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade creditors
Payables
Total financial liabilities
financial assets
Net Net Net Net financial assets
financial assets
financial assets
Weighted
Average
effective
interest
Rate %
Fixed interest rate maturing
Floating
interest
Within 1
year
$
$
1 to 5
years
$
0.5
-
485,899
-
-
485,899
40,418
-
-
40,418
-
-
-
-
-
-
485,899
40,418
-
-
-
-
-
-
-
-
Non-
interest
bearing
$
-
300,753
26,240
326,993
179,815
39,821
219,636
Total
$
526,317
300,753
26,240
853,310
179,815
39,821
219,636
107,357
633,674
ANNUAL REPORT 2015
43
Notes to Financial
Statements
Continued
Note 21: Financial instruments (continued)
Consolidated
Consolidated
Consolidated
Consolidated
2014
2014
2014
2014
Financial assets
Cash
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade creditors
Payables
Total financial liabilities
Net financial assets
Net financial assets
Net financial assets
Net financial assets
Weighted
Average
effective
interest
Rate %
Fixed interest rate maturing
Floating
interest
Within 1
year
$
$
1 to 5
years
$
Non-
interest
bearing
$
Total
$
2.3
-
742,078
-
-
742,078
840,756
-
-
840,756
-
-
-
-
-
-
742,078
840,756
-
-
-
-
-
-
-
-
-
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
Reconciliation
of net financial assets to net assets
Reconciliation of net financial assets to net assets
of net financial assets to net assets
of net financial assets to net assets
Reconciliation
Reconciliation
Net financial assets as above
Non-financial assets and liabilities
R & D tax incentive receivable
Inventories
Deposit paid
Prepayments
Plant and equipment
Intangible assets
Accruals
Provisions
Statement of Financial Position
Net assets per Statement of Financial Position
Net assets per
Statement of Financial Position
Statement of Financial Position
Net assets per
Net assets per
2015
$
633,674
2014
$
1,847,118
366,831
525,672
-
78,580
46,150
1,065,812
(198,888)
(229,170)
313,050
216,870
26,327
14,921
38,039
1,222,518
(165,404)
(194,046)
2,288,661
3,319,393
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.
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 Entityntityntityntity
Parent and Controlled E
and Controlled E
and Controlled E
Parent
Parent
Parent Entity
Parent Entity
Parent Entity
Parent Entity
Significant investments in subsidiaries:
Country of subsidiary incorporation:
Proportion of ownership interest:
Consolidated
Consolidated
Consolidated
Consolidated
The Parent and Ultimate Parent Entity is Uscom Ltd.
Uscom, Inc.
U.S.A
100%
ANNUAL REPORT 2015
44
Notes to Financial
Statements
Continued
Note 22: Related party disclosures (continued)
Key management personnel
Key management personnel
Key management personnel
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:
NonNonNonNon----Executive Directors
Executive Directors
Executive Directors
Executive Directors
Sheena Jack, Non-Executive Director
Christian Bernecker, Non-Executive Director
Executive Directors
Executive Directors
Executive Directors
Executive Directors
Rob Phillips, Executive Director, Chairman, Chief Executive Officer
Senior Executives
Senior Executives
Senior Executives
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 17-22.
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
Total key management personnel remuneration
Total key management personnel remuneration
Total key management personnel remuneration
Note 23: Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of comprehensive income
Statement of comprehensive income
Statement of comprehensive income
Statement of comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Statement of financial position
Statement of financial position
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Equity
Equity
Equity
Contributed equity
Options reserve
Accumulated losses
Total equity
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
409,325
37,145
20,000
160,053
626,523
2014
2014
2014
2014
$
407,238
58,462
-
115,482
581,182
Parent
Parent
Parent
Parent
2015
2015
2015
2015
$
2014
2014
2014
2014
$
(1,246,463)
(1,246,463)
(1,535,874)
(1,535,874)
1,785,997
2,751,433
606,955
640,052
2,484,085
3,622,481
424,474
446,046
26,019,429
1,806,732
(25,714,780)
2,111,381
26,006,168
1,638,582
(24,468,315)
3,176,435
ANNUAL REPORT 2015
45
Notes to Financial
Statements
Continued
Note 23: Parent entity information (Continued)
Contingent liabilities
Contingent liabilities
Contingent liabilities
Contingent liabilities
The parent entity has provided a guarantee in respect of obligations under premises lease of $40,418 (2014: $40,418).
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
2015 or 30 June 2014.
Significant accounting policies
Significant accounting policies
Significant accounting policies
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: Commitments
Operating lease commitments
Operating lease commitments
Operating lease 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
Total operating commitments
Total operating commitments
Total operating commitments
Note 25: Auditors’ remuneration
a. Audit services
Audit services
Audit services
Audit services
BDO East Coast Partnership for
BDO East Coast Partnership for
BDO East Coast Partnership for
BDO East Coast Partnership for
Audit and review of financial reports
for audit services
Total remuneration for audit services
Total remuneration
for audit services
for audit services
Total remuneration
Total remuneration
b. NonNonNonNon----audit services
audit services
audit services
audit services
BDO East Coast Partnership for
BDO East Coast Partnership for
BDO East Coast Partnership for
BDO East Coast Partnership for
Accounting advice
Taxation advice
auditors’ remuneration
Total auditors’ remuneration
Total
auditors’ remuneration
auditors’ remuneration
Total
Total
Consolidated
Consolidated
Consolidated
Consolidated
2015
2015
2015
2015
$
2014
2014
2014
2014
$
67,334
-
67,334
131,862
67,334
199,196
50,000
50,000
60,500
60,500
1,000
1,250
2,250
-
-
-
ANNUAL REPORT 2015
46
Notes to Financial
Statements
Continued
Note 26: Operating segments
Segment information
Segment information
Segment information
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 57% of the total sales. The second largest customer
accounts for 9% of the total sales revenues and operates in Europe. For the current period BP+ comprised 7% of the
total Uscom sales revenue.
Basis of accounting for purposes of reporting by operating s
egments
Basis of accounting for purposes of reporting by operating segments
egments
egments
Basis of accounting for purposes of reporting by operating s
Basis of accounting for purposes of reporting by operating s
Accounting policies
Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 2 and
accounting standard AASB 8 Operating Segments which requires a ‘Management approach’ under which segment
information is presented on the same basis as that used for internal reporting purposes. This has resulted in no
change to the reportable segments as operating segments continue to be reported in a manner consistent with the
internal reporting provided to the chief operating decision maker, which is the Board of Directors.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment. Segment
assets include all assets used by a segment and consist primarily of inventories, property, plant and equipment and
intangible assets. While most of these assets can be directly attributable to individual segments, the carrying amounts
of certain assets used jointly by segments are not allocated. Segment liabilities consist primarily of trade and other
creditors, employee benefits and provisions for warranties. Segment assets and liabilities do not include deferred
income taxes.
Australia
Asia
Americas
Europe
$
$
$
$
37,234
524,045
952,429
-
27,491
-
561,279
2,199,629
(1,638,350)
952,429
234,915
717,514
27,491
502,072
(474,581)
410,635
-
410,635
294,573
116,062
Other
regions
$
87,592
-
87,592
23,891
63,701
2015
2015
2015
2015
Sales to external customers
Other income
Total segment
revenue/income
Segment expenses
Segment result
Consolidated loss from
ordinary activities after income
tax
Segment assets
Segment liabilities
1,781,216
640,052
141,229
-
434,569
7,642
579,341
-
Acquisition of property,
plant and equipment and
intangibles
Impairment of patents
Depreciation and
amortisation
30,228
5,355
4,265
-
30,483
13,109
17,716
41,304
28,252
20,149
34,803
88,322
-
-
-
-
-
Consolidated
$
1,515,381
524,045
2,039,426
3,255,080
(1,215,654)
(1,215,654)
2,936,355
647,694
82,692
59,768
171,526
ANNUAL REPORT 2015
47
Notes to Financial
Statements
Continued
Note 26: Operating segments (continued)
Australia
Asia
Americas
Europe
$
$
$
$
2,950
321,140
407,150
-
153,916
-
324,090
2,015,246
(1,691,156)
407,150
140,538
266,612
153,916
455,907
(301,991)
441,588
74
441,662
261,891
179,771
Other
regions
$
50,898
-
50,898
24,634
26,264
2014
2014
2014
2014
Sales to external customers
Other income
Total segment
revenues/income
Segment expenses
Segment result
Consolidated loss from
ordinary activities after income
tax
Segment assets
Segment liabilities
2,508,325
446,046
156,604
-
417,815
3,770
686,466
-
Acquisition of property,
plant and equipment and
intangibles
Impairment of patents
Depreciation and
amortisation
Note 27: Contingencies
19,080
178,141
6,212
-
41,516
128
23,828
-
56,327
22,288
33,728
97,687
-
-
-
-
-
Consolidated
$
1,056,502
321,214
1,377,716
2,898,216
(1,520,500)
(1,520,500)
3,769,210
449,816
90,636
178,269
210,030
Other than the guarantee mentioned at Note 23, the consolidated entity did not have any contingent liabilities as
at 30 June 2015 or 30 June 2014.
Note 28: Events after the reporting date
and shares and options issued
Capital raising and shares and options issued
Capital raising
and shares and options issued
and shares and options issued
Capital raising
Capital raising
The Consolidated Entity raised $1.55 million capital ($1.45 million on 23 July 2015 and $0.1 million on 14 August
2015) by way of a private placement of fully paid ordinary shares at $0.15 per share. For every 3 shares issued under
the placement the Company also issued one free attaching unquoted option exercisable at $0.25 up until expiry
on 31 July 2017. 9,666,669 fully paid ordinary shares and 3,222,211 unquoted options were issued on 23 July 2015,
and 666,667 fully paid ordinary shares and 222,222 unquoted options were issued on 14 August 2015 under the
private placement.
On 27 July 2015 the Consolidated Entity offered a Share Purchase Plan (SPP) to eligible shareholders, to subscribe
for new fully paid ordinary Uscom shares at $0.15 per share. The SPP was partly underwritten by Patersons Securities
up to $0.4m. In the event that the shortfall is less than the underwritten amount, Patersons Securities may elect to
top up its position by way of a placement of additional shares at $0.15 per share, up to a maximum of 2,666,667
shares. For every three shares subscribed for under the underwriting agreement, Patersons Securities will be issued
with one attaching option exercisable at $0.25, up until expiry on 31 July 2017. On 21 August 2015, applications
from shareholders were received for a total of $0.19m (1,296,652 fully paid ordinary shares) under the SPP.
Underwriter Patersons Securities Limited had elected to top up its position by way of a placement of additional
shares for a total amount of $0.4m (2,666,667 fully paid ordinary shares and 888,889 unquoted options).
In total, the Consolidated Entity has received $2,144,500 before expenses with the capital raising by private
placement and SPP.
275,000 ordinary shares were issued at $0.15 per share on 31 July 2015 as consideration for consultancy and other
services related to the capital raising.
12,500 ordinary shares were issued at $0.0595 per share fully paid on 31 July 2015 pursuant to the exercise of
unquoted employee options.
ANNUAL REPORT 2015
48
Notes to Financial
Statements
Continued
Acquisition of Thor Laboratories KFT
Acquisition of Thor Laboratories KFT
Acquisition of Thor Laboratories KFT
Acquisition of Thor Laboratories KFT
The capital raising outlined above was in part to fund the acquisition of Thor Laboratories KFT in Hungary. The
Heads of Agreement for the acquisition was signed on 8 March 2015. The acquisition is subject to satisfactory
completion of due diligence by the company which is yet to be finalised.
Consideration for the proposed acquisition is as follows:
a) $700K in cash to the Owners of Thor Laboratories KFT (the Owners) on completion of the proposed
transaction.
b) $100K in cash to the Owners on the first anniversary of completion of the proposed transaction
c) $100K in cash to the Owners on the second anniversary of completion of the proposed transaction, subject
to the achievement of revenue targets of not less than $1 million in the financial year 2017. In the event of
any shortfall, this amount will be discounted on an indexed pro rata basis.
d) $100K in equity earn-outs to the Owners over a three year period from the date of acquisition.
ANNUAL REPORT 2015
49
Directors Declaration
Uscom Limited and its Controlled Entity
1. The directors of the company declare that: 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 2015 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:
Associate Professor Rob Phillips
Ms Sheena Jack
Executive Director - Chairman
Non-Executive Director
Sydney, 25 August 2015
ANNUAL REPORT 2015
50
DIRECTORS’ REPORT
Independent Audit Report
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 2015, 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.
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.
ANNUAL REPORT 2015
51
Independent Audit Report
Continued
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.
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 company’s financial position as at 30 June 2015 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.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 22 of the directors’ report for
the year ended 30 June 2015. 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 2015 complies with section 300A of the Corporations Act 2001.
BDO East Coast Partnership
Tim Sydenham
Partner
Sydney, 25 August 2015
ANNUAL REPORT 2015
52
Shareholder Information
Additional information required by Australian Stock Exchange Listing Rules is as follows. This information is
current as at 31 July 2015.
(a) Distribution Schedules of Shareholder
Distribution Schedules of Shareholder
(a)
Distribution Schedules of Shareholder
Distribution Schedules of Shareholder
(a)
(a)
Holdings Ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 99,999,999,999
Total
Total
Total
Total
Holders
Number
103
179
72
148
99
601
Ordinary shares
Number
71,460
521,720
583,103
5,785,545
84,368,497
91,330,325
%
0.08%
0.57%
0.64%
6.33%
92.38%
100%
There were 227 holders of less than a marketable parcel of 341,225 ordinary shares.
(b) Class of shares and voting rights
(b)
Class of shares and voting rights
Class of shares and voting rights
Class of shares and voting rights
(b)
(b)
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
Substantial shareholders
Substantial shareholders
Substantial shareholders
(c)
(c)
(c)(c)
The names of the substantial shareholders listed in the holding company’s register as at 31 July 2015 are:
Dr Robert Allan Phillips
Dr Stephen Frederick Woodford
Hsbc Custody Nominees (Australia) Limited - A/C 2
Hsbc Custody Nominees (Australia) Limited
Drp Cartons (Nsw) Pty Ltd
Drp Cartons (Nsw) Pty Ltd
Notnef Investments Pty Ltd
Ordinary
shares
Number
17,046,733
10,268,475
6,266,609
3,340,833
2,359,616
2,116,636
2,088,118
2,014,982
2,000,000
1,999,745
1,946,965
1,477,640
1,426,534
1,420,948
1,220,809
1,021,667
985,000
954,243
841,209
833,334
%
18.67%
11.24%
6.86%
3.66%
2.58%
2.32%
2.29%
2.21%
2.19%
2.19%
2.13%
1.62%
1.56%
1.56%
1.34%
1.12%
1.08%
1.05%
0.92%
0.91%
Total
Total
Total
Total
61,630,096
67.48%
ANNUAL REPORT 2015
53
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
Registers of securities
Boardroom Pty Limited
Level 12, 225 George 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 91,330,325 ordinary shares of the Company as at 31 July 2015 on all Member
Exchanges of the Australian Stock Exchange Limited.
Unquoted securities
Options
31 July 2015
as at 31 July 2015
over unissued shares as at
and rights over unissued shares
Options and rights
31 July 2015
31 July 2015
as at
as at
over unissued shares
over unissued shares
and rights
and rights
Options
Options
A total of 5,122,211 options over ordinary shares are on issue. 1,000,000 options are on issue to a director. 825,000
options are on issue to six employees and executives under the previous Uscom Employee Share Option Plan
and previous Uscom Executive Share Option Plan; 75,000 options are on issue to a consultant under the new
Equity Incentive Plan. 3,222,111 options are on issue to investors.
A total of 5,859,902 rights over ordinary shares are on issue. 5,409,902 rights are on issue to a director and 450,000
are on issue to an executive under the new Equity Incentive Plan.
ANNUAL REPORT 2015
54
Uscom Limited, Suite 1, Level 7, 10 Loftus Street, Sydney NSW 2000 Australia E: info@uscom.com.au
www.uscom.com.au
USCOM LIMITED ANNUAL REPORT 2015
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