USCOM
ANNUAL
REPORT
2017
Uscom Limited
ASX: UCM
www.uscom.com.au
CONTENTS
CHAIRMANS LETTER ................................................................................................................. 2-7
ANNOUNCEMENTS FY 2017 ............................................................................................. 8
USCOM SUITE OF PRODUCTS .......................................................................................... 9
CORPORATE GOVERNANCE STATEMENT ................................................................ 10-14
DIRECTORS REPORT ................................................................................................... 15-22
FINANCIAL REPORT
AUDITORS INDEPENDENCE DECLARATION ........................................................................ 23
STATEMENT OF PROFIT AND LOSS & OTHER COMPREHENSIVE INCOME .................... 24
STATEMENT OF FINANCIAL POSITION ................................................................................. 25
STATEMENT OF CHANGES IN EQUITY .................................................................................. 26
STATEMENT OF CASH FLOWS................................................................................................ 27
NOTES TO FINANCIAL STATEMENTS .............................................................................. 28-48
DIRECTORS DECLARATION ............................................................................................ 49
INDEPENDENT AUDIT REPORT .................................................................................. 50-52
SHAREHOLDER INFORMATION ................................................................................. 53-54
T
R
O
P
E
R
L
A
U
N
N
A
20
17
CHAIRMAN’S LETTER
“Uscom’s growth strategy continues
to deliver with a 5th consecutive
year of record revenues.”
For Uscom shareholders 2017 was the 5th successive year of record revenues while investing in development and
regulatory preparation of 7 new products for release in FY 2018. It was a year in which the Uscom Board and
Management continued to execute our growth strategy and set a course for continued growth. We have built the
foundations for a great medical device Company.
For FY 2017 we delivered continued growth for shareholders while maintaining prudent and efficient use of resources
as we continued the development of our 7 new products, prepared and submitted multiple regulatory applications,
continued investment in product R&D, and met significant one off operational costs. Uscom has invested in strategic
acquisitions, established a global corporate model, consolidated the Uscom Europe volume manufacturing facility, and
prepared 7 new products as a growth platform for Uscom in FY 2018 and beyond. These investments have been made
with existing resources and therefore the balance sheet remains debt free, and the forthcoming revenues from these
investments are planned to reliably underwrite growth and shareholder value over the coming decade.
Uscom has established a culture of pursuing growth, informing investors, and executing on that strategy to the benefit
of shareholders, and this is planned to continue as we target ongoing growth in FY 2018 with the release and sale of
our 7 new products.
Total Annual Income
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$3,498,959
$2,936,504
$2,039,426
$1,377,716
$1,500,000
$1,010,942
$864,099
$1,000,000
$500,000
$0
2012 2013 2014 2015 2016 2017
2017 Headlines:
Intermittent cash flow positivity
1. Record sales, total revenues and cash receipts (5 years of consecutive record revenue growth)
2. Total revenue up 19% to $3.49M (5 year CAGR – +32% pa)
3. Cash receipts up 20% to $3.52M (4 year CAGR – +36% pa)
4. Net cash used in operating activities down 26% to $0.95M
5.
6. VWAP share price up 25% to 25c (5 year CAGR – +18% pa)
7. Uscom Europe total revenue growth 21% (from $0.58M to $0.70M)
8.
9. Seven new BP+ and SpiroSonic devices prepared for market and revenue in FY 2018
10. Establishment of new Sales, Marketing and Distribution division
11. 1000th USCOM 1A customer sale
Implementation of dual path China distribution model in preparation for BP+ and SpiroSonic CFDA
Page | 2
T
R
O
P
E
R
L
A
U
N
N
A
20
17
CHAIRMAN’S LETTER
continued
Results:
This year was the 5th consecutive year of growth in Uscom operations with total revenue growing to a record $3.50M, up
19% on the pcp, and with a 5 year CAGR of 32%. This follows annual revenue growth of 17%, 36%, 48% and 44%
consecutively since FY 2012. Cash receipts grew to a record $3.52M, 20% on the pcp, with a 4 year CAGR of 36%.
Total operating cash consumption for the year decreased 26% to $0.95M, while monthly and quarterly cash flows for the year
were intermittently positive. The operating loss after income tax decreased 5% to $1.80M from $1.92M, and the cost of
operations increased 11% to $4.59M.
Capital:
Cash on hand at the end of the period was $1.66M despite the non-recurring spend of more than $1.5M. This included one
off cash payments associated with the Thor acquisition ($100k), and the refund of device prepayments to Pioneer to transfer
our distribution to CIIC/Sense ($136k), accounting for $236k off our cash costs.
There were also one off costs to finalise the development of BP+ and BP+ Reporter devices ($250k), as well as rebranding
the “Thor” Spirometers to the Uscom “SpiroSonic” brand, with 7 products prepared for regulatory submissions for CFDA
(China), CE (Europe), and FDA (US). The cost of each CFDA application is in the order of $100k, CE $50k, and FDA $100k for
each device.
Additionally we spent approximately $1M on R&D developing new concepts, IP and devices, and optimising current devices.
Share price:
The Uscom FPO VWAP share price increased 25% in FY 2017 (20-25c), and has demonstrated a 5 year CAGR of 18% per
year. The Uscom share price has trended with, but not matched, revenue and cash receipt growth over the last 5 years
(+32%pa and +36%pa). However we are confident the value of the two corporate acquisitions, strong trend fundamentals
and the revenue upside of 7 new products coming to market will be recognised by investors.
Annual VWAP
0.25
0.22
0.21
0.2
0.15
0.11
D
U
A
$
0.30
0.25
0.20
0.15
0.10
0.05
2012
2013
2014
2015
2016
2017
Sales, marketing and Distribution:
In FY 2017 Uscom established its new global Sales, Marketing and Distribution division within the company, with the specific
aim of growing global sales of our current and new products. As we are now selling into the cardiac, vascular and pulmonary
markets this division within our company will become increasingly important for expanding and supporting our engagement
with distributors and the market and driving global revenues. The establishment of this new Sales, Marketing and
Distribution division coincides with the transition of Uscom from principally a product developer, to that of manufacturer,
distributor and seller of practice leading non-invasive cardiovascular and pulmonary medical devices.
In Q4 the Company appointed Mr Damien Linnett as Global Sales and Marketing Manager. Damien has a Bachelor of
Economics from UQ, and an MBA, and has over 20 years experience selling medical devices with global corporations Datex-
Ohmeda, Spacelabs Healthcare and Kinetic Concepts Inc. Damien will join Denise Pater, our Distribution and Sales
Manager, as the nucleus of the new Uscom Sales and Marketing Division, and they are currently optimising distribution and
sales channels for the USCOM 1A and developing new channels for the BP+ and Spirosonic devices.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 3
CHAIRMAN’S LETTER
continued
Denise Pater oversees our distribution strategy and is responsible for managing and executing distribution agreements.
Distribution drives revenue and we have invested into our global distributors to ensure they are aligned with our culture and
aware of the distinguishing features of our devices and our total number of distributors worldwide continues to increase,
particularly in China.
Distribution Agreements
22
48
16
43
12
41
11
36
80
70
60
50
40
30
20
10
0
11
23
6
12
2013
2014
2015
2016
2017
2018*
ROW China
We continue to seek out the highest quality sales partners worldwide to consolidate our global distribution network and the
number of distribution contracts continues to grow. We will have 8 separate devices to attract high quality distributors
seeking practice leading and novel technologies. While some of our established distributors will sell the new BP+ and
SpiroSonic devices, we are also attracting global groups seeking products with strong competitive advantages.
Our Sales, Marketing and Distribution department has rebranded the SpiroSonic products and prepared the marketing
collateral required to support our growing global network of distributors. They have also driven preparation of the new
Uscom website and been responsible for developing the company’s new digital marketing strategy, creating a platform
from which international sales can springboard.
Education and Distributor Support:
Bev Jacobson our clinical relations manager, has overseen a review and update of all our education support materials so we
can simplify education and training for the increasing number of Uscom distributors and device users. This has included
specialised modules for education of Uscom partners and users across the full range of products in preparation for the
release and marketing of our 7 new products in FY 2018.
New Products:
Uscom is preparing to launch 7 new products into the major global markets of China, Europe and USA in 2018. This
technical achievement has resulted in development of multiple new revenue sources for 2018 at a pace unequalled by
comparable medical device companies. The new products include:
1. Uscom BP+: Uscom BP+ and BP+ Reporter
2. Uscom SpiroSonic devices: Flo, Smart, Mobile, Pro, and the Uscom SpiroReporter
The new Uscom BP+ and BP+ Reporter based on suprasystolic oscillometry will revolutionise the measurement and
management of hypertension, heart failure and maternal health (pre-eclampsia), and will contribute to the science of
vascular health and aging. The device measures blood pressure and pressure waves at the heart as well as in the arm, as
conventional blood pressure devices currently do. A number of BP+ devices were sold into research applications this year as
we continued finessing the devices for regulatory approval and global market release and a device remains on the
International Space Station. The products will have a market in critical care, clinical and home care applications.
The Uscom SpiroSonic series of multi-path digital ultrasonic spirometers provide research quality digital pulmonary testing
at clinic prices, and addresses the massive and growing markets of asthma, COPD and occupational lung disease. The
Page | 4
T
R
O
P
E
R
L
A
U
N
N
A
20
17
CHAIRMAN’S LETTER
continued
digital connectivity of the Uscom SpiroSonic devices to Uscom phone based apps, and ultimately cloud or server based
storage, analytic and monitoring systems is world leading technology and gaining global recognition and adoption. The
products will have a market in critical care, clinics and home care applications, as well as emerging markets in sleep
medicine.
Regulatory:
The regulatory process is ongoing, with SpiroSonic devices already approved for sale in in Europe, and is expected to be
completed for all products by the end of 2018. Below is the current regulatory status.
USCOM 1A
BP+ x 2
SpiroSonic x 5
CE Europe
Yes
Yes (for update)
Yes
FDA US
Yes
Yes (for update)
Preparation
CFDA China
Yes
Submission
Submission
TGA Aus
Yes
Yes (for update)
Yes
Uscom Europe:
Total revenue from Uscom Europe grew 21% in FY 2017 ( $0.58M to $0.70M), following 12% growth the year before, and the
division has been profitable since acquisition. Current growth has been based solely on existing “Thor” business, and we
anticipate significant growth with the global release of SpiroSonic devices planned for FY 2018. The acquisition costs of the
entity have now been met and accounted for.
Uscom SpiroSonic devices receive significant European funding for community based telemetric research projects which will
generate the evidence to support global adoption of these devices. Uscom Europe now has three on going EuroStar grants
for the development of a simple breath test device for early detection of lung cancer, and development of an incentive
based Smart Spacer to promote recovery training and drug uptake in asthma and COPD patients. These grants total $1.35M
over 3 years and will result in new Uscom technologies, IP and products. Uscom SpiroSonic devices are also currently being
sold through New York digital pulmonary home care monitoring Company Cohero.
The Uscom Europe entity delivers cash flow positive operations, significant revenue with growth potential, internationally
accredited manufacturing and R&D capabilities, product distribution, a spirometric product series with global regulatory
approvals, and staff with device specific skills.
The Budapest team is central to preparation and management of the regulatory materials and processes for the BP+ and
SpiroSonic devices in China, Europe and the USA. George Ferenczi, the manager of Uscom Europe, has become an integral
part of Uscom global business and remains in charge of the Budapest operations and oversees broader product
development.
Science:
Uscom devices address the diseases that are responsible for approximately 75% of global mortality, including sepsis, heart
failure, hypertension, asthma and COPD. Our devices improve the clinical decision making process and outcomes for
patients using highly accurate non-invasive devices which improve the physician and patient experience. The three 3
product lines include:
1. The USCOM 1A – the ultrasonic cardiac output monitor.
2. The Uscom BP+ - suprasystolic oscillometric central blood pressure monitor.
3. The Uscom SpiroSonic series of devices – high fidelity digital multi-path ultrasonic spirometers.
The USCOM 1A continues to be recognised as a gold standard for cardiovascular measurement and monitoring. This year
saw the adult sepsis guidelines finally recommend flow based monitoring of haemodynamics, a unique feature of the
USCOM 1A. This recommendation is currently being integrated into USCOM 1A marketing materials and strategies for FY
2018. A record 126 USCOM 1A devices were sold in FY 2017, a year in which we sold our 1000th unit worldwide.
The Uscom BP+ is the most advanced clinically accessible technology for measurement and analysis of central and brachial
blood pressure and is a major advancement in the measurement and management of hypertensive disease with an
estimated 1.56B people worldwide living with hypertension by the year 2025. The updated BP+ and BP+ Reporter has taken
longer to complete and submit to regulatory processes than expected thus impeding expected sales. The development of
revolutionary science is unpredictable, and we have had to overcome a number of technical hurdles during its development.
The BP+ and BP+ Reporter will comply with the US CPT Code criteria and will be highly competitively priced, being
marketed at a fraction of the cost of most of our competitors while delivering more advanced technology.
Uscom digital multi-path ultrasonic SpiroSonic devices are also the central spirometry devices in two practice changing
home care studies of lung transplantation in France, and asthma and COPD home care for the elderly in Catalanya in Spain.
The studies, with outcomes expected in 2018, are anticipated to provide research evidence of cost effectiveness benefit for
home care management of asthma and COPD using Uscom SpiroSonic devices.
Page | 5
T
R
O
P
E
R
L
A
U
N
N
A
20
17
CHAIRMAN’S LETTER
continued
There were 15 new publications supporting the utility of the 1A and the BP+ in FY 2017, covering the fields of hypertension,
heart failure and sepsis in adults, children and neonates and pre-eclampsia.
Uscom is proud of its scientific excellence and practice leading products, and our devices continue to receive support from
experts around the world – Uscom products are “the products the experts use”. The adoption of our devices into the wider
clinical market is the longer term objective that will continue to drive our global growth in sales over the next decade.
Patents:
Uscom was granted two key US patents relating to the BP+ technology during 2017. One for the methods and algorithms
used to measure the central blood pressure, and the other for the device to measure the central BP. This is further
recognition of the strength and novelty of the Uscom BP+ suprasystolic oscillometric method for measuring central BP and
aortic pulse pressure waves.
Strategy FY 2018:
Management’s objective is to continue to execute on our strategy to maintain rapid operational growth based on the
manufacture, distribution and sale of world leading cardiovascular and pulmonary monitoring technologies and to establish
enduring profitability for shareholders.
Over the last five years our strategy has been evolving, with the acquisition and integration of the Pulsecor and Thor
companies, and the preparation of 7 new Uscom products for market in FY 2018. The accompanying growth in our global
distribution network and global corporate structure has occurred in parallel. The bringing to market of 7 products in a single
year has been an outstanding achievement by our team, and our short-term objective remains to launch the Uscom BP+ and
SpiroSonic devices to global markets and optimise their clinical adoption. This is planned to drive future growth beyond
USCOM 1A sales alone and ensure sustainable profitability. We have acquired and invested in new products and
companies, and are preparing for release of 7 new products to market. This has involved significant cost and has been
executed without debt and funded by growing USCOM 1A sales and shareholder contributions. These acquisitions
represent significant unrecognised value that will begin to transform into revenue and profit for shareholders over the
coming years. We have invested wisely and strategically, and are well poised for continuing growth.
It is envisaged that in 2018 revenue growth will be driven by:
1. Continuing growth in USCOM 1A sales
2. An improved distribution network supported by the new Sales, Marketing and Distribution division
3. Growth of BP+ and SpiroSonic sales worldwide following regulatory approval
4. Development of the European and USA markets
To achieve this we will continue our focus on the China market, and ensure they have the marketing and sales collateral and
product required to support our China distribution partners and support educational symposia.
Sales of the BP+ and SprioSonic devices has already begun in the UK and European market and in 2018 we anticipate an
increase in revenue as our new distributors begin taking sales and our products get traction.
The US market is likely to grow significantly once the BP+ and SprioSonic devices are FDA registered. Both devices have re-
imbursement in the US, an essential requirement for sales in this market, and both are ideally timed to coincide with an
increasing incidence and social awareness of hypertension and asthma/COPD monitoring.
Supporting this revenue growth will be the accompanying expansion of Uscom Budapest manufacturing operations to meet
the growing global product demand.
While costs are expected to remain high for the coming period as we finalise global regulatory and marketing for our new
product series, this should be offset by increasing revenue during the financial year and will support our shift to profitability.
For FY 2018 management have a clear strategy focused on getting products to market and growing sales.
Risks:
For Uscom, operating in global markets creates exposure to risk such as the US Health reform, Brexit, the China slow down,
and the North Korea and the South China Sea. All of these unpredictable events impacted global markets and Uscom Sales
in the latter half of the 2017 financial year, and we still delivered outstanding annual growth. However these risks remain and
may evolve to impact our business going forward. While global diversification exposes us to more challenges, it also
mitigates us against regional risk.
Page | 6
T
R
O
P
E
R
L
A
U
N
N
A
20
17
CHAIRMAN’S LETTER
continued
Global markets can change, and this may lead to a re-alignment of global economies, currencies and corporate value. The
impact of such changes is unpredictable but if significant may lead to revised growth expectations.
China is a major market for Uscom and any significant change in marketing terms, such as the introduction of the one or two
invoice system may influence our China revenue and margins while we adjust our distribution channels. Further constraints
on foreign product purchases to protect the China domestic economy and currency, and anti-corruption purges may also
effect China operations. Long term Uscom has confidence in the scales and accessibility of the China market
Under performance of distributors, particularly where best endeavours contracts are in place, may also impact forecast
revenues. The development of an internal Sales, Marketing and Distribution division and the appointment of master
distributors acts to mitigate such risks by providing regional hands-on distributor management and continual performance
monitoring.
Regulatory risks are relevant to medical devices and may result in delayed or declined approvals in specific jurisdictions.
While the USCOM 1A, BP+ and SpiroSonic devices already have approvals in some major jurisdictions, additional regulatory
applications may experience unpredictable delays associated with changed and inefficient regulatory systems which may
delay the time to market of the BP+ and SpiroSonic devices.
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. Implementation of an executive remuneration plan to ensure adequate
compensation for executives for extra-ordinary contributions may mitigate the risk of untimely resignations that may impede
commercial momentum, and is an important task going forward. Recent staff appointments and the acquisition of the
Budapest operations has acted to mitigate this risk.
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 and
may require focused management.
Conclusion:
Uscom delivered its 5th consecutive year of significant growth in FY 2017, and importantly for shareholders has invested,
prepared and positioned Uscom for accelerating future growth. During the last 4 years Uscom has acquired 2 world leading
independently founded cardiovascular and pulmonary medical device companies and their technologies, integrated their
global operations, remained debt free, transitioned to global reporting, rebranded a complete product range and
developed and prepared 7 products for regulatory approval and distribution across the three priority jurisdictions of China,
Europe and the USA, and established a new global corporate model that will operate as the backbone of a profitable
international business.
While an unpredictable global environment envelopes international business, the Uscom strategy involves multiple
technologies and jurisdictions which mitigates investor risks from a technologic and commercial perspective. Uscom
management is confident we have the capability to respond to changes in international markets should they arise.
Uscom is growing a strong business based on sound fundamentals off the back of practice changing science, with the
objective of growing investor returns. We are bringing 7 new products to market over the next 12 months, a feat rarely
achieved by the global healthcare major’s. To support these releases we have established a new Sales, Marketing and
Distribution division, and are building a global multi-product distribution network to ensure effective rollout of these devices
into global markets to generate maximal revenue. These devices and our expanded distribution model are the foundation
for the future growth of Uscom. 2017 was a year we continued building the foundations for our future, and our success has
provided us with the confidence and momentum to view 2018 and beyond with confidence and anticipation. For Uscom and
its shareholders our strategy is to maintain sustained growth.
Thank you.
Associate Professor Rob Phillips
PhD(med), MPhil(med), FASE, DMU(cardiol)
Executive Chairman
Uscom Limited
Page | 7
T
R
O
P
E
R
L
A
U
N
N
A
20
17
ANNOUNCEMENTS FY 2017
July
-
September
.
October
-
December
.
January
-
March
.
April
-
June
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
New US Uscom BP+ Patent. New methods approved for heart failure, hypertension and
vascular health
Additional Uscom BP+ US Patent. New method patent approved for heart failure,
hypertension and vascular health
Uscom Europe Revenue up 48% pa
New Uscom SpiroSonic Pulmonary Digital Monitoring Technologies Approved for
European Sale
Uscom Engaged in Development of NSW Health China Strategy
Uscom Awarded Euro Grant for Lung Cancer Diagnostic
Uscom ends 2016 with record manufacturing
Applications in hypertension, heart failure and vascular Health
Uscom Receives $0.5M R&D Cash Refund
China regulatory submission, distributor training and CIIC sales
New evidence supports USCOM 1A screening and improved outcomes during
pregnancy
Incentive based smart spacer to promote pulmonary recovery training & drug uptake
New global Sales and Marketing Manager appointed to support release of new
products.
Uscom SpiroSonic Devices for French Lung Transplant Study
Spanish eHealth monitoring of patients with chronic disease using digital Uscom
SpiroSonic spirometers and software platform
Uscom advanced digital ultrasonic SpiroSonic lung function devices receive regulatory
listing for sale in Australia
Appointment of established partner to distribute BP+ and BP+ Reporter in South East
Asia
(Excludes Financial Reporting)
Page | 8
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Practice changing
non-invasive
cardiovascular and
pulmonary devices
CORPORATE GOVERNANCE STATEMENT
.
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.
in accordance with
It is the role of Senior Management to manage the
the direction and
Company
delegation of the Board and the responsibility of the
leadership to, and oversee the
Board to provide
activities of Management
these
in carrying out
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.
to
that prior
The Board Charter provides
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
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.
the person’s
experience,
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
their duties,
including details of
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
This statement outlines the Corporate Governance
framework and practices adopted by the Board of
Directors of Uscom Limited (the Board) and in place for
the financial year ended 30 June 2017, by reference to
the ASX Corporate Governance Council’s Corporate
(3rd
Governance Principles and Recommendations
Edition) (the Recommendations). The Statement was
approved by the Board on the 21st of August 2017.
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
to
Uscom
shareholder
is
implementing
the highest standards of corporate
governance appropriate for a company of its size and
operations.
committed
value.
The Board considers and applies the Recommendations
taking into account the circumstances of the Company.
Where
from a
the Company’s practices depart
Recommendation, this Statement identifies the area of
divergence and reasons
it, or any alternative
practices adopted by the Company.
for
The Board has established a number of corporate
the
governance
documents
the
Recommendations which
Company’s corporate governance framework – these
documents are referenced in this Corporate Governance
Statement where relevant, and are as follows:
the basis of
consistent
form
with
• 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
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 10
CORPORATE GOVERNANCE STATEMENT
continued
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.
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:
Proportion of Women
Whole Organisation
8 of 23 (35%)
Senior Management
Positions
0 of 2 (0%)
Board
1 of 4 (25%)
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Recommendation 1.5(c)(1)
The Board has not established a formal process for
evaluating
individual
its performance and that of
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
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.
the Board
that
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
senior management’s
appropriate
performance on a continuous informal basis.
assess
to
Principle 2:
Structure the Board to add value
and
three
The current Board has 4 Directors comprising the
Executive Chairman and Chief Executive Officer Rob
independent Non-Executive
Phillips,
Directors, Christian Bernecker, Sheena Jack and Chao
Xian He.
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
strategy.
Company’s
business
and
Page | 11
CORPORATE GOVERNANCE STATEMENT
continued
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.
there
its development and the nature of
The Board considers
is currently an
that
appropriate mix of skills, diversity and experience on the
Board, taking into account the size of the company, the
stage 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. 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.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
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) which applies to all directors, senior management
and staff (Employees). The Code promotes practices
that aim to foster the Company’s key values, which
include 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
stage of
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
the Company’s
operations and
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
in
financial reports that the declaration provided
accordance with section 295A of the Corporations Act
Page | 12
CORPORATE GOVERNANCE STATEMENT
continued
• management of information during periods where
the Company may be in possession of price-sensitive
information;
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
the audit and
the conduct of
questions about
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);
• 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
disclosure
Company meets
obligations; and
continuous
its
• 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.
and
Disclosure
Continuous
The
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;
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 13
• analyst briefings; and
• monitoring of media and social media.
Principle 6:
Respect the rights of shareholders
relation
Uscom’s Continuous Disclosure and Shareholder
Communications Policy sets out its policy and practices
to providing
in
shareholders with
information and
the necessary
facilities to allow them to exercise their rights effectively,
including:
to Uscom’s commitment
• providing shareholders with
ready access
to
information about Uscom and its governance;
openly
• communicating
and
honestly with
shareholders; and
• encouraging
and
participation in shareholder meetings.
facilitating
shareholder
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.
Investor section also
The
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.
and
from,
communications
The Company provides shareholders with the option of
receiving
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
the
Company website to receive email alerts of ASX
Announcements and Media Releases and other news.
register on
to
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
two-way
relations program
facilitate effective
to
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.
CORPORATE GOVERNANCE STATEMENT
continued
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 15-22.
Principle 7:
Recognise and manage risk
formal
The Board is responsible for oversight of risk, including
monitoring and review of risk management matters
delegated to senior management. To date, the Board
risk management
has not established a
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,
financial and
including accounting,
operating controls, on an informal and ongoing basis.
The Board
risk
management framework and processes for monitoring
the effectiveness of that framework in the next reporting
period.
to establish a
intends
formal
The Company’s Securities Trading Policy specifically
from
prohibits Directors and senior management
entering
the
economic risk of any unvested entitlements under any
equity-based remuneration schemes.
transactions which would
limit
into
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.
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
equity-based
and
remuneration plans for senior management and
employees.
determining
•
Page | 14
T
R
O
P
E
R
L
A
U
N
N
A
20
17
DIRECTORS REPORT
The Directors present their report on Uscom Ltd and its Controlled Entities for the financial year ended 30 June 2017.
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
Mr C X He
Executive Director - Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Directors’ qualifications and experience
Associate Professor Rob Phillips
Rob Phillips is the founder of Uscom Ltd, the Chief Executive Officer, Executive Director and Chief Scientist of the
Company. Rob has 13 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 2016. 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 is a Non-Executive Director of Uscom Ltd since November 2011. Sheena is the CEO of HCF and 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. Sheena is a Chartered Accountant and a
graduate member of the Australian Institute of Company Directors.
Mr Christian Bernecker
Mr Christian Bernecker is a Non-Executive Director of Uscom Ltd since November 2011. Christian is Non-Executive
Director 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.
Mr Chao Xiao He
Mr Chao Xiao He is a Non-Executive Director of Uscom Ltd since 23 March 2016. Mr He was born in Shanghai and
educated in Sydney. For the last 9 years he was based in Shanghai and Singapore as Vice President of Business
Development APAC with Johnson & Johnson. Prior to that Mr He was an Associate at McKinsey & Company in
Shanghai, then Director of Business Development and External Growth APAC and VP Finance China with AB InBev.
based in Hong Kong and Shanghai.
Page | 15
T
R
O
P
E
R
L
A
U
N
N
A
20
17
DIRECTORS REPORT
Continued
Company Secretary’s qualifications and experience
Mr Brett Crowley
Brett Crowley was appointed as the Company Secretary on 24 May 2016. He is a practicing solicitor and a former
Partner of Ernst & Young in Hong Kong and Australia, and of KPMG in Hong Kong, and has worked in China
establishing and managing JV companies there. Mr Crowley is an experienced chairman, finance director and company
secretary of ASX-listed companies, and is a former Senior Legal Member of the NSW Civil and Administrative Tribunal.
Meetings of Directors
Directors
Board of Directors
R A Phillips
S Jack
C Bernecker
C X He
Meetings held while a
Director
6
6
6
6
No. of meetings attended
6
6
6
4
Principal activities
Uscom Ltd is engaged in the development, design, manufacture and marketing of premium non-invasive
cardiovascular and pulmonary medical 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, and owns 100% of Thor
Laboratories KFT., a company that manufactures respiratory devices based in Hungary.
Operating result
The loss of the Consolidated Entity after providing for income tax amounted to $1,800,849 (2016: $1,915,029)
Dividends
No dividends were declared or recommended for the financial year ended 30 June 2017 (2016: 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 2-7.
Events after the reporting date
No matters or circumstances have arisen since the end of the financial year to the date of this report, that has
significantly affected or may significantly affect the activities of the Consolidated Entity, the results of those activities or
the state of affairs of the Consolidated Entity in the ensuing or any subsequent financial year.
Page | 16
T
R
O
P
E
R
L
A
U
N
N
A
20
17
DIRECTORS REPORT
Continued
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 regulations
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
• 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:
Non-Executive Directors
Sheena Jack, Non-Executive Director
Christian Bernecker, Non-Executive Director
Chao Xiao He, Non-Executive Director
Page | 17
T
R
O
P
E
R
L
A
U
N
N
A
20
17
DIRECTORS REPORT
Continued
Executive Directors
Rob Phillips, Executive Director, Chairman, Chief Executive Officer
Senior Executives
Nick Schicht, General Manager
In the Directors’ opinion, there are no other Executives of the Entity.
Remuneration policies
The Board is responsible for reviewing the remuneration policies and practices of the Consolidated Entity, including
the compensation arrangements of Executive Directors, Non-Executive Directors and Senior Executives.
The Consolidated Entity has adopted remuneration policies based on performance and contribution for determining
the nature and amount of emoluments of Board Members and Senior Executives. The objective of these policies is to:
• Make Uscom Ltd and its Controlled Entities an employer of choice
• Attract and retain the highest calibre personnel
• Encourage a culture of reward for effort and contribution
• Set incentives that reward short and medium term performance for the Consolidated Entity
• Encourage professional and personal development
In the case of Senior Executives, a recommendation for compensation review will be made by the Chairman to the
Board, which will conduct a performance review.
Non-Executive Directors
The Board determines the Non-Executive Director remuneration by independent market data for comparative
Companies.
As at the date of this report the maximum aggregate remuneration payable out of the funds of the Entity to Non-
Executive Directors of the Consolidated Entity for their services as Directors including their service on a committee of
Directors is $165,000 per annum.
Non-Executive Directors do not receive any performance related remuneration, therefore they do not receive bonuses
or non-cash benefits.
Non-Executive Directors’ retirement payments are limited to compulsory employer superannuation.
Executive Directors and Senior Executives remuneration
The Consolidated Entity’s remuneration policy directs that the remuneration package appropriately reflects the
Executives’ duties and responsibilities and that remuneration levels attract and retain high calibre Executives with the
skills necessary to successfully manage the Consolidated Entity’s operations and achieve its strategic and financial
objectives.
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 on 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.
Page | 18
T
R
O
P
E
R
L
A
U
N
N
A
20
17
DIRECTORS REPORT
Continued
Fixed remuneration
Senior Executives who possess a high level of skill and experience are offered a competitive base salary. The
performance of each Executive will be reviewed annually. Following the review, the Consolidated Entity may in its sole
discretion increase the salary based on that Executive’s performance, productivity and such other matters as the Board
considers relevant. Superannuation contribution by the Consolidated Entity is limited to the statutory level of wages
and salaries.
Short-term incentives
The remuneration of Uscom Ltd Senior Executives does not include any short-term incentive bonuses as part of their
employment conditions. The Board may however approve discretionary bonuses to Executives in relation to certain
milestones being achieved.
Long-term incentives
The Consolidated Entity has adopted an Equity Incentive Plan for the benefit of the 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.
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:
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 the Consolidated Entity’s performance once the Consolidated Entity
has sufficient market traction.
Termination
Despite anything to the contrary in the agreement, the Consolidated Entity or the Executive may terminate the
employment at any time by giving the other party 3 months’ notice in writing.
If either the Consolidated Entity or the Executive gives notice of termination, the Consolidated Entity may, at its
discretion, choose to terminate the Executive’s employment immediately or at any time during the notice period and
pay the Executive an amount equal to the salary due to them for the residual period of notice at the time of
termination.
Where the Executive gives less than 3 months written notice, the Consolidated Entity may withhold from the
Executive’s final payment an amount equal to the shortfall in the notice period.
The employment of each Executive may be terminated immediately without notice or payment in lieu in the event of
any serious or persistent breach of the agreement, any serious misconduct or wilful neglect of duties, in the event of
bankruptcy or any arrangement or compensation being made with creditors, on conviction of a criminal offence,
permanent incapacity of the Executive or a consistent failure to carry out duties in a manner satisfactory to the
Consolidated Entity.
Page | 19
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Key management personnel remuneration
Remuneration includes salaries, benefits and superannuation contributions in respect of the financial year 2017.
DIRECTORS REPORT
Continued
Short term benefits
Post employment
benefits
Total
remuneration
Performance
related
Non-Executive Director
S Jack
C Bernecker
C X He
Executive Director
R Phillips
Senior Executive
N Schicht
Total
Directors’
Base Fee
$
35,000
38,325
-
-
-
73,325
Non-Executive Director
S Jack
C Bernecker
C X He
Executive Director
R Phillips
Senior Executive
N Schicht
Total
Directors’
Base Fee
$
35,000
38,325
-
-
-
73,325
Base salary
Superannuation
$
-
-
-
$
3,325
-
-
Equity
Share-based
payment
$
-
-
38,325
229,000
33,253
589,194
851,447
189,000
418,000
17,955
54,533
19,211
646,730
226,166
1,192,588
Base salary
Superannuation
$
-
-
-
$
3,325
-
-
Equity
Share-based
payment
$
-
-
10,500
243,000
40,605
225,176
508,781
209,000
452,000
19,855
63,785
19,264
254,940
248,119
844,050
$
38,325
38,325
38,325
$
38,325
38,325
10,500
Remuneration includes salaries, benefits and superannuation contributions in respect of the financial year 2016.
Short term benefits
Post employment
benefits
Total
remuneration
Performance
related
%
-
-
-
69%
8%
51%
%
-
-
-
44%
8%
29%
Equity Incentive Plan
The Consolidated Entity has adopted an 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.
Page | 20
T
R
O
P
E
R
L
A
U
N
N
A
20
17
DIRECTORS REPORT
Continued
Number of options over ordinary shares held by Directors and Senior Executives
Balance Granted
Exercised
1 July 2016
No.
During
FY2017
No.
During
FY2017
No.
Lapsed /
Cancelled
During
FY2017
No.
Balance
Total vested
Total
unexercisable
30 June 2017
30 June 2017
30 June 2017
No.
No.
No.
Non-Executive Director
S Jack
C Bernecker
C X He
Executive Director
R Phillips
Senior Executive
N Schicht
Total
-
-
500,000
100,000
600,000
-
-
-
-
-
-
-
(500,000)
-
-
-
-
(500,000)
(100,000)
(100,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Further details of the options are disclosed in note 18 of the financial statements.
Number of rights over ordinary shares held by Directors and Senior Executives
Balance
Granted
Exercised
1 July 2016
No.
During
FY2017
No.
During
FY2017
No.
Lapsed /
Cancelled
During
FY2017
No.
Balance
Total
vested
Total
unexercisable
30 June 2017
30 June 2017
30 June 2017
No.
No.
No.
Non-Executive Director
S Jack
C Bernecker
C X He
Executive Director
R Phillips
Senior Executive
N Schicht
Total
-
-
5,409,092
450,000
5,859,092
-
-
-
-
-
-
-
(3,272,728)
-
(3,272,728)
-
-
-
-
-
-
-
2,136,364
450,000
2,586,364
-
-
-
-
-
-
-
2,136,364
450,000
2,586,364
Details of rights outstanding as at end of year
Holders No.
Grant date
1 (Director)
1 (Executive)
Total
26 November 2014
26 November 2014
Exercisable
at 30 June
2017
%
0%
0%
Expiry date
1 July 2020
1 July 2020
30 June 2017
Outstanding
Right
No.
2,136,364
450,000
2,586,364
Exercise
Price
$
0.00
0.00
Issued
date fair
value
$
0.19
0.19
5,409,092 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.
Consideration payable upon vesting is $nil. The Board may exercise its discretion to pay cash in lieu of issue of ordinary
shares. Approved by the AGM on 30 November 2016, the vesting dates were amended to 30 November 2016 for
Tranche 1 (1,136,364 rights) and Tranche 2 (2,136,364 rights), and 30 November 2017 for Tranche 3 (2,136,364 rights).
Tranche 1 and Tranche 2 were exercised on 23 December 2016 upon meeting the performance hurdles.
450,000 Performance Rights were issued to Nick Schicht on 26 November 2014, vesting is dependent on performance
hurdles on 1 July 2018, 1 July 2019 and 1 July 2020. Consideration payable upon vesting is $nil.
Page | 21
T
R
O
P
E
R
L
A
U
N
N
A
20
17
DIRECTORS REPORT
Continued
Number ordinary shares held by Directors and Senior Executives
Received as Options/Rights
Balance
1 July 2016
Remuneration
Exercised
No.
No.
No.
Non-Executive Director
S Jack
C Bernecker
C X He
Executive Director
R Phillips
Senior Executive
N Schicht
Total
800,000
-
-
17,580,066
218,200
18,598,266
-
-
-
-
-
-
Balance
30 June
2017
No.
800,000(1)
-
-
-
-
-
3,772,738
21,352,794(2)
-
218,200(3)
3,772,738
22,370,994
*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) 11,350,161 of these ordinary shares are held by Australian Cardiac Sonography Pty Ltd as trustee for the Phillips Superannuation fund.
(3) 10,000 of these ordinary shares are held by family associate.
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2017 are summarised below:
2017
$
2016
$
2015
$
2014
$
2013
$
Sales Revenue
2,723,359
2,482,925
1,515,381
1,056,502
578,753
Loss after income tax
(1,800,849)
(1,915,029)
(1,215,654)
(1,520,500)
(1,371,683)
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
2017
2016
2015
2014
2013
Share Price at financial year end ($)
Total dividends declared (cents per share)
Basic earnings declared (cents per share)
0.19
-
(1.6)
0.25
-
(2.0)
0.19
-
(1.5)
0.22
-
(2.0)
0.17
-
(2.2)
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.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Associate Professor Rob Phillips
Ms Sheena Jack
Executive Director - Chairman
Non-Executive Director
Sydney, 21 August 2017
Page | 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 GARETH FEW TO THE DIRECTORS OF USCOM LIMITED
As lead auditor of Uscom Limited for the year ended 30 June 2017, 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 entities it controlled during the year.
Gareth Few
Partner
BDO East Coast Partnership
Sydney, 21 August 2017
T
R
O
P
E
R
L
A
U
N
N
A
20
17
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.
Page | 23
STATEMENT OF PROFIT OR LOSS
& OTHER COMPREHENSIVE INCOME
For the FY ended 30 June 2017
Consolidated
Continuing operations
Revenue and other income
Raw materials and consumables used
Expenses from continuing activities
Loss before income tax from continuing operations
Income tax
Loss after income tax from continuing operations
Other comprehensive income
Note
2017
$
2016
$
3
4
5
6
3,498,959
(711,203)
(4,587,152)
2,936,504
(708,013)
(4,131,930)
(1,799,396)
(1,903,439)
(1,453)
(11,590)
(1,800,849)
(1,915,029)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation difference for foreign operations, net of tax
Other comprehensive income for the year, net of tax
9,083
9,083
(18,250)
(18,250)
Total comprehensive income for the year
(1,791,766)
(1,933,279)
Attributable to:
Owners of the Company
(1,791,766)
(1,933,279)
Total comprehensive income for the year
(1,791,766)
(1,933,279)
Earnings per share from continuing operations attributable to the
owners of the Company
Earnings per share (EPS)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
7
7
(1.6)
(1.6)
(2.0)
(2.0)
This Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the attached notes.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 24
STATEMENT OF FINANCIAL
POSITION
As at 30 June 2017
Consolidated
2017
$
2016
$
Note
8
9
10
11
14
12
13
15
16
16
1,663,565
196,063
492,209
41,569
503,212
134,706
3,031,324
2,839,773
267,751
418,707
-
429,516
137,039
4,092,786
118,671
1,336,248
1,454,919
74,895
1,544,065
1,618,960
4,486,243
5,711,746
446,349
236,330
682,679
545,899
209,902
755,801
25,552
25,552
17,954
17,954
708,231
773,755
3,778,012
4,937,991
17
18
6
19
30,332,259
2,708,298
(29,334,469)
71,924
30,308,877
2,099,893
(27,533,620)
62,841
3,778,012
4,937,991
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Term Deposit
Tax asset
Other assets
Total current assets
Non-current assets
Plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current provisions
Total current liabilities
Non-current liabilities
Non-current provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Options and rights reserve
Accumulated losses
Translation reserve
Total equity
This Statement of Financial Position is to be read in conjunction with the attached notes.
Page | 25
T
R
O
P
E
R
L
A
U
N
N
A
20
17
STATEMENT OF CHANGES
IN EQUITY
For the FY ended 30 June 2017
Issued
Capital
Options
Reserve
Accumulated
Losses
Consolidated
$
$
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 30 June 2015
26,019,429
1,806,732
(25,618,591)
81,091
2,288,661
Loss for the year
Other Comprehensive
Income
Total Comprehensive
Income for the year
Transactions with Owners in
their capacity as owners:
Shares Issued
Transaction costs on Shares
Issued
Share-based payments
-
-
-
4,539,630
(250,182)
-
-
-
-
-
-
293,161
(1,915,029)
-
(1,915,029)
-
(18,250)
(18,250)
(1,915,029)
(18,250)
(1,933,279)
-
-
-
-
-
-
4,539,630
(250,182)
293,161
Balance at 30 June 2016
30,308,877
2,099,893
(27,533,620)
62,841
4,937,991
Loss for the year
Other Comprehensive
Income
Total Comprehensive
Income for the year
Transactions with Owners in
their capacity as owners:
Shares Issued
Transaction costs on Shares
Issued
Share-based payments
-
-
-
29,750
(6,368)
-
-
-
-
-
-
608,405
(1,800,849)
-
(1,800,849)
-
9,083
9,083
(1,800,849)
9,083
(1,791,766)
-
-
-
-
-
-
29,750
(6,368)
608,405
Balance at 30 June 2017
30,332,259
2,708,298
(29,334,469)
71,924
3,778,012
This Statement of Changes in Equity is to be read in conjunction with the attached notes.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 26
STATEMENT OF CASH FLOWS
For the FY ended 30 June 2017
Consolidated
Note
2017
$
2016
$
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Interest received
Payments to suppliers and employees (inclusive of GST)
Grant and other income received
2,808,137
15,338
(4,472,829)
697,312
2,563,145
10,733
(4,231,505)
366,831
Net cash used in operating activities
20(b)
(952,042)
(1,290,796)
Cash flows from investing activities
Purchase of patents and trademarks
Purchase of plant and equipment
Term deposit
Acquisition of Thor Laboratories
Net cash used in investing activities
Cash flows from financing activities
Issue of shares (net of share issue cost)
(48,427)
(57,552)
(41,569)
(100,000)
(91,365)
(2,507)
-
(591,324)
(247,548)
(685,196)
17
23,382
4,289,448
Net cash provided by financing activities
23,382
4,289,448
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
(1,176,208)
2,839,773
-
1,663,565
2,313,456
527,631
(1,314)
2,839,773
20 (a)
This Statement of Cash Flows is to be read in conjunction with the attached notes.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 27
Note 1: Adoption of new and revised
accounting standards
New, revised or amending Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the new,
revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting
Standards Board ('AASB') that are mandatory for the
current reporting period.
Any new, revised or amending Accounting Standards or
Interpretations that are not yet mandatory have not
been early adopted. The adoption of these Accounting
Standards and Interpretations are not anticipated to
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:
Financial
AASB 9:
Instruments and associated
Amending Standards (applicable to annual reporting
periods beginning on or after 1 January 2018).
The Standard will be applicable retrospectively (subject
to the provisions on hedge accounting outlined below)
and includes revised requirements for the classification
and measurement of
instruments, revised
financial
recognition and derecognition requirements for financial
instruments and simplified requirements for hedge
accounting.
The consolidated entity will adopt this standard from 1
July 2018 and the impact of its adoption is likely to be
minor.
AASB 15: Revenue from Contracts with Customers
(applicable to annual reporting periods beginning on or
after 1 January 2018, as deferred by AASB 2016-
8: Amendments to Australian Accounting Standards –
Effective Date of AASB 15).
When effective, this Standard will replace the current
accounting requirements applicable to revenue with a
single, principles-based model. Except for a limited
number of exceptions, including leases, the new revenue
model in AASB 15 will apply to all contracts with
customers as well as non-monetary exchanges between
entities in the same line of business to facilitate sales to
customers and potential customers.
NOTES TO FINANCIAL
STATEMENTS
Continued
When effective, this Standard will replace the current
accounting requirements applicable to leases in AASB
Interpretations. AASB 16
117: Leases and related
introduces a single
lessee accounting model that
eliminates the requirement for leases to be classified as
operating or finance leases.
The consolidated entity will adopt this standard from 1
July 2018 but the impact of its adoption will not be
significant to the consolidated entity.
Note 2: Statement of significant accounting
policies
Introduction
(a)
The financial report covers the Consolidated Entity of
Uscom Ltd and its Controlled Entities. Uscom Ltd is a
listed public company, incorporated and domiciled in
Australia.
and marketing
Operations and principal activities
Uscom Ltd is engaged in the development, design,
non-invasive
manufacture
cardiovascular and pulmonary 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.
of
Scope of financial statements
The financial report is a general purpose financial report
that has been prepared in accordance with Australian
Accounting
Accounting
Interpretations, the Corporations Act 2001 and complies
with other requirements of the law, as appropriate for-
profit oriented entities.
Standards,
Australian
The financial report complies with Australian Accounting
Standards as
issued by the Australian Accounting
Standards Board and International Financial Reporting
International
Standards
Accounting Standards Board.
issued by
(IFRS) as
the
Currency
The financial report is presented in Australian dollars,
functional and
which
presentational currency.
the Parent Company’s
is
The consolidated entity will adopt this standard from 1
July 2018 and the impact of its adoption is likely to be
minor.
Historical Cost Convention
This financial report has been prepared under the
Historical Cost Convention.
AASB 16: Leases (applicable to annual reporting
periods beginning on or after 1 January 2019).
Reporting period
The financial report is presented for the year ended 30
June 2017. The comparative reporting period was for the
year ended 30 June 2016.
Page | 28
T
R
O
P
E
R
L
A
U
N
N
A
20
17
NOTES TO FINANCIAL
STATEMENTS
Continued
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
in the
value through profit or
statement of profit and loss and other comprehensive
income.
is recognised
loss
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
in subsidiaries, not
investments
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.
liabilities comprise of
Financial
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
Note 2: Statement of significant accounting
policies (continued)
Comparatives
Where required by Accounting Standards comparative
figures have been adjusted to conform with changes in
presentation for the current financial year.
Registered office
Level 7, 10 Loftus Street, Sydney NSW 2000.
Authorisation of financial report
The financial report was authorised for issue on 21
August 2017 by the Directors.
(b) Overall policy
The principal accounting policies adopted by the
Consolidated Entity are stated in order to assist in the
general understanding of the financial report.
Significant judgment and key assumptions
(c)
The Directors evaluate estimates and
judgements
incorporated into the financial report based on historical
knowledge and best available current
information.
Estimates assume a reasonable expectation of future
events and are based on current trends and economic
data, obtained both externally and within the Entity.
The Consolidated Entity assesses impairment at each
reporting date by evaluating conditions specific to the
group that may lead to impairment of assets. Where an
impairment trigger exists, the recoverable amount of the
asset is determined.
intangible assets at each
The consolidated entity assesses impairment of non-
financial assets other than goodwill and other indefinite
life
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 financial liabilities
Financial assets and financial liabilities are recognised on
the Statement of Financial Position when
the
Consolidated Entity becomes party to the contractual
provisions of the financial instrument.
A financial asset is derecognised when the contractual
rights to the cash flows from the financial assets expire
or are transferred and no longer controlled by the Entity.
A financial liability is removed from the statement of
financial position when the obligation specified in the
contract is discharged or cancelled or expires.
Upon initial recognition a financial asset or financial
liability is designated as at fair value through profit or
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 29
NOTES TO FINANCIAL
STATEMENTS
Continued
The gains and losses from conversion of assets and
liabilities, whether realised or unrealised, are included in
profit or loss from continuous operations as they arise.
(g) Revenue recognition
• Sale of goods
Revenue from the sale of goods is recognised when
all significant risks and rewards of ownership have
been transferred to the buyer and when the other
contractual obligations of the Entity are performed.
• Revenue from rendering of services
supplied
Rendering of services consists of training, repair and
product maintenance
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
(h)
Inventories are measured at the lower of cost or net
realisable value. Costs are assigned on the basis of
weighted average costs. Cost comprises all costs of
purchase and conversion and an appropriate proportion
of fixed and variable overheads, net of settlement
discounts. Overheads are applied on the basis of normal
operative capacity. The costs are recognised when
materials are delivered to the Consolidated Entity.
Property, plant and equipment
(i)
Property, plant and equipment are included at cost.
Assets in plant and equipment are depreciated on
diminishing value basis over their estimated useful lives
covering a period of two to seven years.
On disposal of an
item of property, plant and
equipment, the difference between the sales proceeds
and the carrying amount of the asset is recognised as a
gain or loss in the statement of profit or loss and other
comprehensive income.
The depreciation
depreciable assets are:
rates used
for each class of
Class Of Fixed Asset
Depreciation Rate
- Plant & Equipment
- Office Furniture & Equipment
- Computer Software
- Low Value Pool
10% - 40%
15%
40%
37.5%
Note 2: Statement of significant accounting
policies (continued)
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 or 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 or loss to the
extent the carrying amount of the investment at the date
the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not
been recognised.
(e) Principles of consolidation
A Controlled Entity is any entity Uscom Ltd has the
power to control the financial and operating policies of
so as to obtain benefits from its activities.
A list of Controlled Entities is contained in note 22 to the
financial statements. All Controlled Entities have a June
financial year-end.
in the Consolidated Group,
All inter-company balances and transactions between
including any
Entities
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.
(f)
Foreign currency transactions and balances
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.
Page | 30
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Note 2: Statement of significant accounting
policies (continued)
Investments
(n)
Investments in Controlled Entities are carried at the
lower of cost and recoverable amount.
NOTES TO FINANCIAL
STATEMENTS
Continued
Intangibles
(j)
Patents and Trademarks are valued in the financial
statements at cost of acquisition less accumulated
amortisation and are amortised on diminishing value
basis at 12.5% per annum.
The value of Regulatory Approvals was recognised at the
acquisition of Thor Laboratories. Regulatory Approvals
are amortised over 5 years on straight line basis from the
date of acquisition.
Impairment of assets
(k)
At each reporting date, the Consolidated Entity reviews
the carrying values of its tangible and intangible assets
to determine whether there is any indication that those
assets have been impaired. If such an indication exists,
the recoverable amount of the asset, being the higher of
the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of
the asset’s carrying value over its recoverable amount is
expensed to the statement of profit or loss and other
comprehensive income. In assessing value in use, the
estimated future cash flows discounted to their present
value using a pre-tax discount rate.
Leases
(l)
Lease of assets where substantially all the risks and
benefits incidental to the ownership of the asset, but not
the legal ownership, are transferred to the Consolidated
Entity were classified as finance leases. Finance leases
are capitalised, recording an asset and a liability equal to
the present value of the minimum lease payments,
including any guaranteed residual values.
(o) Research & development expenditure
Research & development costs are charged to the
statement of profit or loss and other comprehensive
income as incurred, or deferred where it is probable that
sufficient future benefits will be derived so as to recover
those deferred costs.
Income tax
(p)
Income taxes are accounted for using the Balance Sheet
liability method whereby:
• The tax consequences of recovering (settling) all
financial
(liabilities) are reflected
in the
assets
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.
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.
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.
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.
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.
(m) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and
at call deposits with banks or financial institutions.
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.
Page | 31
T
R
O
P
E
R
L
A
U
N
N
A
20
17
NOTES TO FINANCIAL
STATEMENTS
Continued
by reference to the fair value of the equity instrument
granted.
Transactions with employees and others providing
similar services are measured by reference to the fair
value at grant date of the equity instrument granted.
(t) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of
the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax
Office. In these circumstances the GST is recognised as
part of the cost of acquisition of the asset or as part of
an item of the expense. Receivables and payables in the
Statement of Financial Position are shown inclusive of
GST.
(u) Receivables
Trade receivables and other receivables represent the
principal amounts due at reporting date plus accrued
less, where applicable, any unearned
interest and
income and provision
for doubtful accounts. An
estimated doubtful debt is made when collection of the
full amount is no longer probable.
represent
Trade and other payables
(v)
Trade and other payables
liability
outstanding at the end of the reporting period for
goods and services received by the Group during the
reporting period which remains unpaid. The balance is
recognised as a current liability with the amount being
normally paid within 30 days of recognition of the
liability.
the
(w) Contingent liabilities
A contingent loss is recognised as an expense and a
liability if it is probable that future events will confirm
that, after taking into account any related probable
recovery, an asset has been impaired or a liability
incurred and, a reasonable estimate of the amount of
the resulting loss can be made.
(x) Warranties
Provision is made in respect of the Consolidated Entity’s
estimated liability on all products and services under
warranty at reporting date. The provision is measured at
the present value of future cash flows estimated to be
required to settle the warranty obligation. The future
cash flows have been estimated by reference to the
Consolidated Entity’s history of warranty claims.
(y) Events after the reporting date
Assets and liabilities are adjusted for events incurring
after the reporting date that provide evidence of
conditions existing at the reporting date. Important
after reporting date events which do not meet these
criteria are disclosed
in note 28 to the financial
statements.
Note 2: Statement of significant accounting
policies (continued)
than
benefits
termination
(q) Short term employee benefits
Short term employee benefits are employee benefits
equity
(other
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.
and
The provision for employee entitlements to wages,
salaries and annual leave represents the amount that the
Consolidated Entity has a present obligation to pay
resulting
from employee services provided up to
reporting date. The provision has been calculated after
taking into consideration estimated future increases in
wages and salaries and past experience regarding staff
departures and includes related on-costs.
The undiscounted amount of short-term benefits
expected to be paid is recognised as an expense.
Long term employee benefits
(r)
Long term employee benefits include long-service leave,
long-term disability benefits, deferred compensation
and profit sharing and bonuses payable 12 months or
more after the end of the period in which employee
services are rendered.
Uscom Ltd has adopted an Employee Share Option Plan
for the benefit of Executive Directors and full-time or
part-time staff members employed by the Consolidated
Entity. Refer note 18 to the financial statements for
details.
An Executive Share Option Plan has also been
developed to provide approved participants further
incentive in their performance for the Consolidated
Entity and an opportunity to acquire an ownership
interest in the Consolidated Entity.
Share-based payment arrangement
(s)
Goods or services received or acquired in a share-based
payment transaction are recognised as an increase in
equity if the goods or services were received in an
equity-settled share based payment transaction or as a
liability if the goods and services were acquired in a cash
settled share based payment transaction.
For equity-settled share based transactions, goods or
services received are measured directly at the fair value
of the goods or services received provided this can be
estimated reliably. If a reliable estimate cannot be made
the value of the goods or services is determined
indirectly
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 32
NOTES TO FINANCIAL
STATEMENTS
Continued
Consolidated
2017
$
2016
$
2,723,359
2,482,925
15,338
10,733
558,550
110,195
76,925
14,592
760,262
429,516
-
-
13,330
442,846
Note 3: Revenue and other income
Operating revenue
Sale of goods
Other revenue
Interest received
Other income
Grants – R&D Tax Incentive
Grants – EU Research Grant
Grants – EMDG
Sundry income
Total other income
Total revenues and other income from continuing operations
3,498,959
2,936,504
Note 4: Expenses from continuing activities
Depreciation and amortisation expenses
Employee benefits expense
Research and development expenses
Advertising and marketing expenses
Occupancy expenses
Auditors remuneration (audit and review)
Regulatory expenses
Administrative expenses
Exchange losses
Finance costs
Total expenses from continuing activities, excluding finance costs
284,650
2,264,511
614,117
575,094
185,610
61,541
88,524
453,096
50,918
9,091
4,587,152
278,713
1,765,193
542,903
784,493
156,967
66,630
37,164
491,099
8,768
-
4,131,930
Operating lease expenses of $171,387 in 2017 (2016: $142,215) are included in occupancy expenses above.
Share based expenses of $608,406 in 2017 (2016: $246,286) are included in employee benefits expenses above.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 33
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 5: Income tax
Major components of income tax
Current income tax
Income tax
Reconciliation between income tax credit and prima facie tax on accounting
loss
Accounting loss before income tax
Tax benefit at 27.5% in Australia, 15% in USA, 12% in Hungary (2016: 30% in
Australia, 15% in USA, 12% in Hungary)
Tax effect on non-taxable income and non-deductible expenses
Temporary differences
Deferred tax asset not brought to account
Income tax
Consolidated
2017
$
2016
$
(1,453)
(1,453)
(11,590)
(11,590)
1,799,396
1,903,439
482,512
538,596
(322,407)
(38,095)
(123,463)
(1,453)
(203,386)
(28,508)
(295,112)
(11,590)
As at 30 June 2017, the Consolidated Entity had estimated unrecouped operating income tax losses of $19,217,407
(2016: $18,959,811). The benefit of these losses of $5,100,599 (2016: $5,454,498) has not been brought to account as
realisation is not probable. The benefit will only be obtained if:
• The Consolidated Entity derives future assessable income of a nature and an amount sufficient to enable the
benefits from the deductions for the losses to be realised;
• The Consolidated Entity continues to comply with the conditions for deductibility imposed by the law;
• No changes in tax legislation adversely affect the Consolidated Entity in realising the benefit from the deduction
for the losses.
Note 6: Accumulated losses
Accumulated losses at the beginning of the financial year
Net loss attributable to members of the Entity
Accumulated losses at the end of the financial year
Note 7: Earnings per share
Loss after tax used in calculation of basic and diluted EPS
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)
(27,533,620)
(1,800,849)
(25,618,591)
(1,915,029)
(29,334,469)
(27,533,620)
(1,800,849)
Number
(1,915,029)
Number
110,601,128
96,118,052
4,980,545
4,155,480
5,630,323
5,859,902
119,737,153
107,608,277
(1.6)
(1.6)
(2.0)
(2.0)
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.
Page | 34
T
R
O
P
E
R
L
A
U
N
N
A
20
17
NOTES TO FINANCIAL
STATEMENTS
Continued
Consolidated
2017
$
2016
$
2,283
1,625,720
35,562
-
7,672
1,767,777
23,906
1,040,418
1,663,565
2,839,773
196,063
196,063
267,751
267,751
Note 8: Cash and cash equivalents
Cash on hand
Bank: Cheque accounts
Bank: Cash management
Bank: Term deposits
Total cash and cash equivalents
Note 9: Trade and other receivables
Current
Trade 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
Raw materials
Work in Progress
Finished products
Total inventories
Note 11: Tax asset
Income tax credit
R & D tax incentive
Total tax asset
Note 12: Plant and equipment
Plant and equipment at cost
Accumulated depreciation – including foreign exchange impact
Office furniture and equipment at cost
Accumulated depreciation – including foreign exchange impact
Computer software at cost
Accumulated depreciation – including foreign exchange impact
Low value asset pool at cost
Accumulated depreciation – including foreign exchange impact
305,686
105,927
80,596
492,209
239,745
61,526
117,436
418,707
11,480
491,732
503,212
-
429,516
429,516
709,437
(611,886)
97,551
645,943
(588,089)
57,854
71,052
(62,164)
8,888
45,727
(34,473)
11,254
51,508
(50,530)
978
71,027
(59,832)
11,195
36,910
(32,337)
4,573
50,314
(49,041)
1,273
Total plant and equipment
118,671
74,895
Page | 35
T
R
O
P
E
R
L
A
U
N
N
A
20
17
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 12: Plant and equipment (continued)
Movements in carrying amounts
Useful life
Consolidated Entity
Carrying amount at 1 July 2016
Additions
Disposals
Depreciation expense
Effects of foreign currency exchange differences
Carrying amount at 30 June 2017
Plant and
equipment
Office
furniture and
equipment
2-7 years
$
2-7 years
$
57,854
62,554
-
(23,099)
242
97,551
11,195
753
(929)
(2,131)
-
8,888
Note 13: Intangible assets
Non-current
Patents at cost
Accumulated amortisation and impairment
Carrying amount at 30 June
Regulatory approvals -acquisitions through business combinations
Accumulated amortisation
Carrying amount at 30 June
Total intangible assets
Movements in carrying amounts
Patents carrying amount at 1 July
Additions
Impairment
Amortisation
Patents carrying amount at 30 June
Regulatory approvals -acquisitions through business combinations
Additions
Impairment
Amortisation
Regulatory approvals carrying amount at 30 June
(i)
(i)
Computer
software
Low value
asset pool
3 years
$
4,572
8,634
-
(1,953)
-
11,254
3 years
$
1,273
928
-
(1,223)
-
978
Consolidated
2017
$
2016
$
1,845,687
(908,901)
936,786
630,730
(231,268)
399,462
1,797,260
(778,803)
1,018,457
630,730
(105,122)
525,608
1,336,248
1,544,065
1,018,457
48,427
-
(130,098)
936,786
525,608
-
-
(126,146)
399,462
1,065,812
93,647
-
(141,002)
1,018,457
630,730
-
-
(105,122)
525,608
(i)
Intangible Assets comprise Intellectual Property in the form of Patents and Regulatory approvals (FDA
and CE). Patents and Regulatory approvals have finite useful lives. The current amortisation charge in
respect of Patents and Regulatory approvals is included under Expenses from Continuing Activities in
the Statement of Profit or Loss and Other Comprehensive Income.
Page | 36
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Note 14: Other assets
Current
Accrued income
GST/VAT receivable
Prepayments
Total other current assets
Note 15: Trade and other payables
Current
Trade payables
Sundry payables and accrued expenses
Employee related payables
Total payables
Note 16: Provisions
Current
Provision for annual leave
Provision for long service leave
Non-current
Provision for long service leave
Provision for warranties
NOTES TO FINANCIAL
STATEMENTS
Continued
Consolidated
2017
$
1,623
72,018
61,065
2016
$
-
92,311
44,728
134,706
137,039
111,985
232,365
101,999
446,349
72,811
418,643
54,445
545,899
162,130
74,200
236,330
9,752
15,800
25,552
132,693
77,209
209,902
4,354
13,600
17,954
(a) Aggregate employee benefits
246,082
214,256
(b) Movement in employee benefits
Balance at beginning of the year
Additional provision
Amounts used
Balance at end of the year
(c) Movement in warranties
Balance at beginning of the year
Additional provision
Amounts used
Balance at end of the year
214,256
142,919
(111,093)
246,082
215,870
143,421
(145,035)
214,256
13,600
5,000
(2,800)
15,800
13,300
942
(642)
13,600
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 37
NOTES TO FINANCIAL
STATEMENTS
Continued
Consolidated
2017
$
2016
$
30,332,259
30,308,877
30,332,259
30,308,877
30,308,877
-
-
-
-
-
-
-
-
29,750
-
(6,368)
26,019,429
1,450,000
41,250
744
100,000
594,498
29,750
4,463
2,318,925
-
-
(250,182)
Note 17: Issued capital
Issued capital
Fully paid ordinary shares
Total contributed equity
Movement in issued capital
Shares on issue at the beginning of the year
9,666,669 ordinary shares issued at 15 cents on 23 July 2015
275,000 ordinary shares issued at 15 cents on 31 July 2015
12,500 ordinary shares issued at 5.95 cents on 31 July 2015
666,667 ordinary shares issued at 15 cents on 14 August 2015
3,963,319 ordinary shares issued at 15 cents on 21 August 2015
500,000 ordinary shares issued at 5.95 cents on 30 Sep 2015
75,000 ordinary shares issued at 5.95 cents on 23 March 2016
11,594,625 ordinary shares issued at 20 cents on 10 Jun 2016
500,000 ordinary shares issued at 5.95 cents on 18 August 2016
3,272,728 ordinary shares issued at nil cost on 23 December 2016
Share issue costs
Issued Equity at the end of the year
30,332,259
30,308,877
Fully paid ordinary shares
Ordinary shares at the beginning of the year
Ordinary shares issued at 15 cents by private placement on 23 July 2015
Ordinary shares issued at 15 cents by private placement on 31 July 2015
Ordinary shares issued at 5.95 cents by exercise of option on 31 July 2015
Ordinary shares issued at 15 cents by private placement on 14 August 2015
Ordinary shares issued by private placement on 21 August 2015
Ordinary shares issued by exercise of option on 30 September 201
Ordinary shares issued by exercise of option on 23 March 2016
Ordinary shares issued by private placement on 10 Jun 2016
Ordinary shares issued by exercise of option on 18 August 2016
Ordinary shares issued by exercise of rights on 23 December 2016
Number
108,463,270
-
-
-
-
-
-
-
-
500,000
3,272,728
Number
81,709,490
9,666,669
275,000
12,500
666,667
3,963,319
500,000
75,000
11,594,625
-
-
Total ordinary shares at the end of the year
112,235,998
108,463,270
The Company’s authorised share capital amounted to 112,235,998 ordinary shares of no par value at 30 June 2017.
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.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 38
NOTES TO FINANCIAL
STATEMENTS
Continued
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.
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
Share Option Plan
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
2017
$
2016
$
2,099,893
608,405
2,708,298
1,806,732
293,161
2,099,893
Movement in options during the financial year
Movement during the financial year
Opening number of options
Granted during the financial year – Consultant
Lapsed during the financial year
Exercised during the financial year
Closing number of options
Number of
Options 2017
5,440,544
(100,000)
(500,000)
4,840,544
Weighted
average
exercise price
0.21
0.06
0.06
0.23
Number of
Options 2016
1,912,500
4,765,544
(650,000)
(587,500)
5,440,544
Weighted
average
exercise price
0.06
0.25
0.06
0.06
0.21
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 39
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 18: Options and rights reserve (continued)
Details of options outstanding as at end of the year
Holders No.
Grant date
1 (Consultant)
32 (Investors)
1 (Investor)
1 (Investor)
1 (Investor)
Total
1 December 2014
23 July 2015
14 August 2015
21 August 2015
27 October 2015
Exercisable
at 30 June
2017
%
67%
100%
100%
100%
100%
Expiry date
1 July 2018
31 July 2017
31 July 2017
31 July 2017
31 July 2017
30 June 2017
Outstanding
Option
No.
75,000
3,222,211
222,222
888,889
432,222
4,840,544
Exercise
Price
$
0.1700
0.2500
0.2500
0.2500
0.2500
Issued
date fair
value
$
0.20
0.16
0.15
0.15
0.185
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 July 2015 and 1 July 2016 respectively.
Fair value
Fair value was measured using Blackscholes and the inputs to it were as follows:
Weighted average share price Range from $0.17 to $0.25
Exercise price
Option life
Risk-free interest rate
Expected dividends
Expected volatility*
75,000 at $0.17 and 4,765,544 at $0.25
2-3 years
Range from 2.13% 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.
Movement in rights during the financial year
Rights at the beginning of the period
Exercised during the period
Rights at the end of the period
2017
Number
5,859,092
(3,272,728)
2,586,364
2016
Number
5,859,092
-
5,859,092
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.
Consideration payable upon vesting is $nil. The Board may exercise its discretion to pay cash in lieu of issue of ordinary
shares. Approved by the AGM on 30 November 2016, the vesting dates were amended to 30 November 2016 for
Tranche 1 (1,136,364 rights) and 2 (2,136,364 rights), and 30 November 2017 for Tranche 3 (2,136,364 rights). Tranche 1
and Tranche 2 were exercised on 23 December 2016 upon meeting the performance hurdles.
450,000 Performance rights were issued to Nick Schicht on 26 November 2014 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 Entities
Closing balance
2017
$
62,841
9,083
71,924
2016
$
81,091
(18,250)
62,841
Translation reserve is the movement of assets and liabilities’ value for the foreign subsidiaries due to the fluctuation of
foreign exchange.
Page | 40
T
R
O
P
E
R
L
A
U
N
N
A
20
17
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 20: Cash flow information
(a) Reconciliation of cash
Cash at bank and on hand
Total cash at end of year
(b) Reconciliation of cash flow from operations to loss from continuing operations
after income tax
Loss from continuing operations after income tax
Non cash flows in loss from continuing operations
Depreciation
Amortisation
Options reserve
Translation reserve
(Increase)/decrease in assets
Trade debtors
Inventories
Inventories transferred to PE
Prepayments
tax credit
Accrue income
GST/VAT assets
Increase/(decrease) in liabilities
Trade payables
Sundry payables and accrued expenses
Employee related payables
Employee provisions
Other provisions
Net cash used in operating activities
Consolidated
2017
$
2016
$
1,663,565
1,663,565
2,839,773
2,839,773
(1,800,849)
(1,915,029)
28,406
256,244
608,406
9,083
71,688
(73,502)
(15,318)
(16,337)
(73,696)
(1,623)
20,293
39,174
(85,591)
47,554
31,826
2,200
(952,042)
32,590
246,123
246,286
(18,250)
33,002
106,965
(1,060)
33,852
(62,685)
-
(66,071)
(107,004)
219,756
(37,957)
(1,614)
300
(1,290,796)
Note 21: Financial instruments
Significant accounting policies
(a)
Details of the significant accounting policies and methods adopted, including the criteria of recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 2 to the financial statements.
(b) Capital risk management
The Consolidated Entity manages its capital to ensure that companies in the Consolidated Entity are able to continue
as a going concern. The capital structure of the Entity consists of cash and cash equivalents (note 8 on page 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 34).
(c) Outstanding contracts
At 30 June 2017, there were no outstanding contracts.
(d) Financial risk management objectives
The Consolidated Entity’s principal financial instruments are cash and term deposit accounts. Its financial instruments
risk is with interest rate risk on its cash and term deposits and liquidity risk for its term deposits.
The Consolidated Entity does not enter into or trade financial instruments, including derivative financial instruments,
for speculative purposes. The Board is updated monthly by management as to the amounts of funds available to the
Consolidated Entity from either cash in the bank or term deposits, and continually monitors interest rate movements.
Page | 41
T
R
O
P
E
R
L
A
U
N
N
A
20
17
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 21: Financial instruments (continued)
(e) Foreign currency risk management
The Consolidated Entity undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise. The Consolidated Entity does not have any forward foreign exchange contracts as at
30 June 2017 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 and Euro. The Consolidated Entity incurs costs in US
Dollars for its operations which provide a natural hedge for a portion of income denominated in US Dollars.
The carrying amount of the Consolidated Entity’s foreign currency denominated monetary assets and monetary
liabilities at the reporting date is as follows:
Cash
Current trade debtors
Current trade creditors
Cash
Current trade debtors
Current trade creditors
Consolidated
2017
US$
1,065,122
104,830
19,411
€
98,408
39,530
3,755
2016
US$
656,326
199,456
20,707
€
94,253
-
-
Foreign currency sensitivity
(f)
The Consolidated Entity is mainly exposed to exchange rate risks arising from movements in the US Dollar, Euro and
British Pound against the Australian Dollar, and the US Dollar from the translation of the operations of its Controlled
Entity.
The analysis below demonstrates the profit impact of a 10% movement of US Dollar and a 5% movement of Euro and
British Pound rates against the Australian Dollar with all other variables held constant. 10% and 5% are the sensitivity
rates used when reporting foreign currency risk internally to key management personnel and represents management’s
assessment of the possible change in foreign exchange rates.
Profit/Loss - increase 10% (US$) and 5% (€)
- decrease 10% (US$) and 5% (€)
Consolidated
2017
$
(226,898)
226,898
2016
$
(205,126)
205,126
Interest rate risk management
(g)
The Consolidated Entity does not have any external loans or borrowings as at 30 June 2017 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.
Page | 42
T
R
O
P
E
R
L
A
U
N
N
A
20
17
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 21: Financial instruments (continued)
(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.
Interest rate sensitivity
Profit/Loss - increase 100 basis points
- decrease 100 basis points
Consolidated
2017
$
1,534
(1,534)
2016
$
1,072
(1,072)
(i) Credit risk management
Credit risk represents the loss that would be recognised if counterparties defaulted on its contractual obligations. The
Consolidated Entity’s exposure and the credit ratings of its counterparties are continuously monitored and the
aggregate value of transactions concluded is spread among approved counterparties. Credit exposure is controlled by
counterparty limits that are reviewed and approved by the management annually. Ongoing credit evaluation is also
performed on the financial condition of accounts receivable.
The Consolidated Entity does not have significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics; because the current major counterparties are alliance distributors and
public hospitals with approved funds available prior to purchases under most circumstances.
The credit risk on financial assets of the Consolidated Entity, as recognised on the Statement of Financial Position, is
the carrying amount, net of any allowance for doubtful debts. Credit risk in respect of cash and deposits is minimised
as counterparties are recognised financial intermediaries with acceptable credit ratings determined by a recognised
rating agency.
Debtors outstanding but not impaired
0 - 45 days
46 – 90 days
Over 90 days
Total
Consolidated
2017
$
191,339
-
-
191,339
2016
$
16,592
-
18,736
35,328
No bad debt was written off during the year (2016: $Nil). There was no doubtful debt provision as at 30 June 2017
(2016: Nil). The outstanding debts of $191,339 from four debtors are not past due to the reporting date, full recovery is
expected based on communication with the debtors.
Liquidity risk management
(j)
The objective for managing liquidity risk is to ensure the business has sufficient working capital or access to working
capital as and when required. The Consolidated Entity limits its exposure to liquidity risk by holding the majority of its
assets in cash or term deposits which can be quickly converted to cash if required.
The carrying amounts of financial assets and financial liabilities recorded at cost approximate their fair values.
The following table details the Consolidated Entity’s remaining contractual maturity for its non-derivative financial
assets and liabilities. The table has been drawn up based on the undiscounted cash flows expected to be
received/paid by the Consolidated Entity.
Page | 43
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Note 21: Financial instruments (continued)
Consolidated
Weighted
Average
effective interest
Rate %
0.0
2.5
NOTES TO FINANCIAL
STATEMENTS
Continued
Fixed interest rate maturing
Floating
interest
$
Within 1
year
$
1 to 5
years
$
Non-interest
bearing
$
Total
$
45,474
-
-
-
45,474
-
-
-
-
41,569
-
-
41,569
-
-
-
45,474
41,569
-
-
-
-
-
-
-
-
-
1,618,091
-
196,063
73,641
1,663,565
41,569
196,063
73,641
1,887,795
1,974,838
111,985
101,999
213,984
111,985
101,999
213,984
1,673,811
1,760,854
Weighted
Average
effective
interest
Rate %
Fixed interest rate maturing
Floating
interest
Within 1
year
$
$
1 to 5
years
$
Non-
interest
bearing
$
Total
$
1.3
-
718,349
-
-
1,040,418
-
-
718,349
1,040,418
-
-
-
-
-
-
718,349
1,040,418
-
-
-
-
-
-
-
-
1,081,006
267,751
92,311
2,839,773
267,751
92,311
1,441,068
3,199,835
72,811
54,445
72,811
54,445
127,256
127,256
1,313,812
3,072,579
2017
Financial assets
Cash
Term deposit
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade creditors
Payables
Total financial liabilities
Net financial assets
Consolidated
2016
Financial assets
Cash
Trade receivables
Other receivables
Total financial assets
Financial liabilities
Trade creditors
Sundry payables
Total financial liabilities
Net financial assets
Reconciliation of net financial assets to net assets
Net financial assets as above
Non-financial assets and liabilities
R & D tax incentive receivable
Inventories
Prepayments
Plant and equipment
Intangible assets
Accruals
Provisions
Net assets per Statement of Financial Position
2017
$
1,760,854
2016
$
3,072,579
503,212
492,209
61,065
118,671
1,336,248
(232,365)
(261,882)
429,516
418,707
44,728
74,895
1,544,065
(418,643)
(227,856)
3,778,012
4,937,991
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.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 44
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 22: Related party disclosures
Transactions between related parties are on normal commercial terms and conditions, no more favourable than those
available to other parties unless otherwise stated.
Parent and Controlled Entity
Parent Entity
Significant investments in subsidiaries:
Country of subsidiary incorporation:
Proportion of ownership interest:
Uscom, Inc.
U.S.A
100%
Significant investments in subsidiaries:
Country of subsidiary incorporation:
Proportion of ownership interest:
Uscom Medical Ltd
U.K.
100%
Significant investments in subsidiaries:
Country of subsidiary incorporation:
Proportion of ownership interest:
Thor Laboratories KFT.
Hungary
100%
Consolidated
The Parent and Ultimate Parent Entity is Uscom Limited.
Key management personnel
The following were key management personnel of the Consolidated Entity at any time during the reporting period
and unless otherwise indicated were key management personnel for the entire period:
Non-Executive Directors
Sheena Jack, Non-Executive Director
Christian Bernecker, Non-Executive Director
Chao Xiao He, Non-Executive Director
Executive Directors
Rob Phillips, Executive Director, Chairman, Chief Executive Officer
Senior Executives
Nick Schicht, General Manager
For further remuneration information of key management personnel refer to the remuneration report in the
Directors’ report on pages 15-22.
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
Share-based payment
Total key management personnel remuneration
Consolidated
2017
$
491,325
54,533
646,730
1,192,588
2016
$
525,325
63,785
254,940
844,050
Page | 45
T
R
O
P
E
R
L
A
U
N
N
A
20
17
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 23: Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Options reserve
Accumulated losses
Total equity
Parent
2017
$
2016
$
(1,748,666)
(1,748,666)
(1,831,167)
(1,831,167)
2,659,841
4,367,914
596,418
621,970
3,828,705
5,541,184
660,407
678,361
30,332,259
2,708,298
(29,294,613)
3,745,944
30,308,877
2,099,893
(27,545,947)
4,862,823
Contingent liabilities
The parent entity has provided a guarantee in respect of obligations under premises lease of $41,569 (2016:
$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
2017 or 30 June 2016.
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 commitments represent payments due for office rentals and have an
average term from 18 to 30 months and month to month thereafter.
Less than 1 year
Between 1 and 5 years
Total operating commitments
Note 25: Auditors’ remuneration
a. Audit services
BDO East Coast Partnership for Audit and review of financial reports
BDO Hungary Audit and review of financial reports
Total remuneration for audit services
b. Non-audit services
BDO East Coast Partnership for Accounting advice
BDO Hungary for Due diligence service
BDO Hungary for Taxation advice
Total remuneration for Non-audit services
Total auditors’ remuneration
Page | 46
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Consolidated
2017
$
2016
$
61,035
-
61,035
139,607
71,321
210,928
54,500
7,041
61,541
-
-
-
-
56,500
10,130
66,630
2,000
2,501
1,395
5,896
61,541
72,526
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 26: Operating segments
Segment information
The Consolidated Entity operates in the global health and medical products
industry.
The Consolidated Entity sells two cardiovascular products, the USCOM 1A cardiac output monitor and the
Uscom BP+ central blood pressure monitor and a series of pulmonary products the Uscom SpiroSonic
spirometers.
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 51% of the total sales. For the current period Uscom
1A comprised 78.4%, SpiroSonic spirometers 20.4% and BP+ 1.2% of the total Uscom sales revenue.
Basis of accounting for purposes of reporting by operating segments
Accounting policies
Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 2 and
accounting standard AASB 8 Operating Segments which requires a ‘Management approach’ under which segment
information is presented on the same basis as that used for internal reporting purposes. This has resulted in no
change to the reportable segments as operating segments continue to be reported in a manner consistent with the
internal reporting provided to the chief operating decision maker, which is the Board of Directors.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment. Segment
assets include all assets used by a segment and consist primarily of inventories, property, plant and equipment and
intangible assets. While most of these assets can be directly attributable to individual segments, the carrying
amounts of certain assets used jointly by segments are not allocated. Segment liabilities consist primarily of trade
and other creditors, employee benefits and provisions for warranties. Segment assets and liabilities do not include
deferred income taxes.
Australia
Asia
Americas
Europe
$
$
$
$
47,504
652,300
699,804
3,646,166
(2,946,362)
1,830,924
-
1,830,924
622,107
1,208,817
240,014
-
240,014
411,432
(171,418)
585,100
123,300
708,400
601,257
107,143
(1,453)
Other
regions
$
19,817
-
19,817
17,393
2,424
2017
Sales to external customers
Other income
Total segment revenue/income
Segment expenses
Segment result
Income tax
Consolidated loss from ordinary
activities after income tax
Segment assets
Segment liabilities
2,540,403
621,970
110,622
-
549,512
7,840
1,285,706
78,421
Acquisition of property, plant
and equipment and
intangibles
Depreciation and
amortisation
69,056
-
24,954
27,286
22,022
15,363
37,417
209,848
-
-
-
-
Consolidated
$
2,723,359
775,600
3,498,959
5,298,355
(1,799,396)
(1,453)
(1,800,849)
4,486,243
708,231
121,296
284,650
Page | 47
T
R
O
P
E
R
L
A
U
N
N
A
20
17
NOTES TO FINANCIAL
STATEMENTS
Continued
Note 26: Operating segments (continued)
Australia
Asia
Americas
Europe
$
$
$
$
35,768
440,239
476,007
3,014,003
(2,537,996)
1,271,234
-
1,271,234
355,941
915,293
466,389
-
466,389
649,810
(183,421)
428,350
13,340
441,690
710,858
(269,168)
(11,590)
Other
regions
$
281,184
-
281,184
109,331
171,853
2016
Sales to external customers
Other income
Total segment revenues/income
Segment expenses
Segment result
Income tax
Consolidated loss from ordinary
activities after income tax
Segment assets
Segment liabilities
4,338,477
678,361
125,411
-
542,804
10,373
705,054
85,021
Acquisition of property,
plant and equipment and
intangibles
Impairment of patents
Depreciation and
amortisation
Note 27: Contingencies
16,881
-
1,199
-
51,550
-
716,763
-
27,904
18,684
32,895
199,230
-
-
-
-
-
Consolidated
$
2,482,925
453,579
2,936,504
4,839,943
(1,903,439)
(11,590)
(1,915,029)
5,711,746
773,755
786,393
-
278,713
Other than the guarantee mentioned at Note 23, the consolidated entity did not have any contingent liabilities as at 30
June 2017 or 30 June 2016.
Note 28: Events after the reporting date
No matters or circumstances have arisen since the end of the financial year to the date of this report, that has
significantly affected or may significantly affect the activities of the consolidated entity, the results of those activities or
the state of affairs of the consolidated entity in the ensuing or any subsequent financial year.
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 48
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 2017 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, 21 August 2017
T
R
O
P
E
R
L
A
U
N
N
A
20
17
Page | 49
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
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Uscom Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2017, 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, and notes to the financial
report, including a summary of significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations Act
2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our 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.
Page | 50
T
R
O
P
E
R
L
A
U
N
N
A
20
17
INDEPENDENT AUDIT REPORT
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Impairment and carrying value of intangible assets
- Patents and regulatory approvals
Key audit matter
How the matter was addressed in our audit
As disclosed in note 13 of the financial report, the
Our audit procedures included amongst others:
carrying value of the intangibles was considered
significant to our audit as the carrying value of
$1,336,248 at 30 June 2017 is material to the financial
statements and requires considerable judgement by
management based on uncertain outcomes of
regulatory approvals. The intangibles relate to patents
held in connection with the BP+ and Uscom 1A products
and regulatory approvals of the SpiroThor products
which were recognised as part of the acquisition of
Thor Laboratories in September 2015.
•
Performance of a valuation assessment to
determine whether the carrying value was
impaired. This was done through the assessment
of estimated future discounted cash flows.
•
•
Verified movements in the carrying value of
intangibles.
Scrutinised the inputs of the forecasts provided
by management and agreed to supporting
documentation, such as historical data and
distribution agreements, where appropriate.
•
Reviewed the status of regulatory submissions
when assessing any potential impairment
indicators.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Page | 51
T
R
O
P
E
R
L
A
U
N
N
A
20
17
INDEPENDENT AUDIT REPORT
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2017.
In our opinion, the Remuneration Report of Uscom Limited, for the year ended 30 June 2017, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
BDO East Coast Partnership
Gareth Few
Partner
Sydney, 21 August 2017
Page | 52
T
R
O
P
E
R
L
A
U
N
N
A
20
17
SHAREHOLDER INFORMATION
Additional information required by Australian Stock Exchange Listing Rules is as follows. This information is
current as at 31 July 2017.
(a) Distribution Schedules of Shareholder
Holdings Ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 99,999,999,999
Total
Holders
Number
110
193
83
277
137
800
Ordinary shares
Number
67,293
580,476
685,810
11,267,315
99,885,104
112,485,998
%
0.06%
0.51%
0.61%
10.02%
88.80%
100%
There were 214 holders of less than a marketable parcel of 2,777 ordinary shares.
(b) Class of shares and voting rights
All shares are ordinary shares. Each ordinary share is entitled to one vote when a poll is called, otherwise each
member present at a meeting or by proxy has one vote on a show of hands.
Substantial shareholders
(c)
The names of the substantial shareholders listed in the holding company’s register as at 31 July 2017 are:
DR ROBERT ALLAN PHILLIPS
DR STEPHEN FREDERICK WOODFORD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR JOHN LIONEL GLEESON
JETAN PTY LTD
21,352,794
10,258,475
6,266,609
3,100,000
3,050,000
(d)
Twenty largest registered holders – ordinary shares
Balance as at 31 July 2017
DR ROBERT ALLAN PHILLIPS
DR STEPHEN FREDERICK WOODFORD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR JOHN LIONEL GLEESON
JETAN PTY LTD
DONGJUN SUN
DRP CARTONS (NSW) PTY LTD
Continue reading text version or see original annual report in PDF format above