ANNUAL
REREPORPORTT
Uscom – Transformational Partnership
Positions Uscom for Growth Rebound
FY2022
www.uscom.com.au
WELCOME TO OUR FY2022
ANNUAL REPORT
ANNUAL REPORT
About Us
Uscom has a mission to demonstrate leadership in science and create non-invasive
devices that guide clinicians to improved clinical care and patient outcomes.
Uscom is an emerging global leader in non-invasive cardiovascular and pulmonary
medical devices, developing innovative technologies to solve the challenges of
global disease and health care.
PAGE OF
CONTENTS
CONTENTS
Chairman’s Letter
Directors’ Report
Finanicial Report
Directors’ Declaration
Independent Audit Report
Shareholder Information
1
31
38
63
64
68
CHAIRMAN’S LETTER
CHAIRMAN’S LETTER
“TRANSFORMATIONAL PARTNERSHIP POSITIONS USCOM FOR GROWTH”
Associate Professor Rob Phillips
Chairman and Executive Director
While business as usual has been impossible in FY22 with markets frozen and sales down, Uscom has had
an excellent year. Uscom developed new products, expanded operations and distribution, registered
new IP, advancing regulatory approvals, and established a new transformational manufacturing and R&D
partnership that will underwrite future growth.
The last two and a half years of the global pandemic,
China lockdown, regulatory changes, the Russian
war, and predictions of a recession, have posed
challenges to which Uscom management have
responded. While the world has been suspended,
Uscom has actively invested in the future and has
had two very constructive years.
Uscom has founded its business on maintaining
a fixed strategy of long-term growth driven by
a strong focus on fundamental management. In
FY22, in response to the evolving challenges of the
year, we developed a two-step growth strategy
focused on building the fundamentals of our core
business while coupling sales to the opportunities
of rebounding global economies, thus positioning
Uscom to leverage operational and strategic growth
in both the short and long term.
Management now believes that our two-step
strategy has us well prepared for the resumption
of our long-term compound annual growth rate
of 24%, which is core to the culture of Uscom. We
have used the last two years to invest in expansion,
restructuring, and consolidation while remaining
firmly focused on our strategy, and coupling our
global health growth platform to the inevitable
international economic recovery. Further, as our
growth vectors align and our transformational
Foxconn partnership evolves, we believe Uscom
is poised to exceed these growth trends going
forward.
Uscom’s FY22 Growth
Achievements
01
02
03
04
Foxconn - Completing a
manufacturing and R&D
partnership with the world’s
largest precision electronics
manufacturer, device distributor,
and IP investor.
Continuing development of
new products and regulatory
submissions despite regional
lockdowns making international
operations difficult.
Establishing Regional HQ and
regional sales marketing and
BD manager appointed in
Singapore to service the world’s
largest and fastest growing
markets.
Expanding distribution in China,
Europe and the US. Established
integrated global accounting and
reporting for international HQs.
05
Developed new IP as a
foundation for future products.
06
Raised growth capital from
the Board, Management, and
shareholders to fund international
expansion.
Medtech is a sophisticated and prestigious industry and a foundation of global capital markets. Uscom has developed novel IP and technologies that lead global medical science having created life-saving cardiovascular and pulmonary devices that address diseases responsible for approximately 75% of all global deaths. These innovative technologies add great social and commercial value to communities around the world improving the quality and length of life for their citizens. Uscom’s increasingly recognised devices have established an enduring value, with additional new products and IP in the pipeline and ready for development by the Foxconn system. Uscom remains firmly committed to growing a strong global company while negotiating the vicissitudes of geopolitics, capital markets, regulations, and contagions; this is the role of a global enterprise.Uscom now has staff across the globe in Sydney, Singapore, Beijing, Budapest, and the US, and it is these people who over the last 2 years have driven our continued achievements despite an on-again, off-again world and an infection that has affected us all directly and indirectly. These disruptions have made management and coordinated operations across the globe difficult, but our achievements have been excellent, thanks to the adaptability of our team. For our European HQ in Budapest, it has been particularly challenging with two years of pandemic followed by the Russian war; Ukraine borders with Hungary, our thoughts are with our colleagues in Budapest. On behalf of management and investors, I would like to thank all in our Uscom team for the contributions they have made to support Uscom in unprecedented times. During times of challenge, the experience of a focused Board
is invaluable and I’d also like to thank Christian Bernecker,
Brett Crowley and Meng Xianhui for their generous and
informed contributions to assist us develop strategies we
believe will further build out our strong fundamentals.
For investors this year has been challenging with the S&P
500 posting its worst half since 1970, and I thank you all for
your perseverance. For investors, watching Uscom’s intrinsic
value continue to grow as we achieve our strategic goals
and tick our milestones is a comfort in a stressed market. It
remains our belief that sound, stable strategies, combined
with deliberate and confident execution generate strong
growth, evolving fundamentals, and ultimately market
recognition. In addition to developing fundamentals,
Uscom continues to explore innovative corporate strategies
that generate incremental value steps and we look forward
to delivering this growth to investors.
The current market price demonstrates a disconnect
with the consistent growth in company value. This year
saw the raising of $4.36m in a rights issue to current
shareholders; the lead investors were the Board,
management, and top shareholders. Famed investor
Peter Lynch observed, “Insiders might sell their shares
for any number of reasons, but they buy them for only
one: they think the price will rise.” Thanks to all Uscom
shareholders for their ongoing support, and we look
forward to our value investment shifting market price
in the year ahead as we execute our evolving global
growth strategies.
In summary, Uscom achieved excellent growth in the
most difficult of times and importantly has positioned
itself for conversion of this growth into revenue in all
markets as world economies recover. We have used
the last 2 years to globally diversify and fortify the
company with new products, new IP, new distribution,
a transformational strategic partnership, and have
cash on hand. With all our markets positioned for sales
growth, I am confident that the coming year will resume
our historical strong trend growth as we move into a
strategic new age as the Foxconn partnership evolves.
Despite two difficult years, Uscom, at the end of FY22,
has never been in such a good position, with established
growth fundamentals and healthy cash reserves as global
markets shift gears to recovery and Uscom’s outstanding
medical technologies continue to consolidate leadership
in global health. For the year ahead Uscom will continue
to pursue its strategy of expanding global operations,
growing strong fundamentals, increasing and improving
products and IP, and increasing shareholder value.
Milestones FY2022
A number of key milestones were announced to the ASX over the year. These include:
BP+ detects AF – New
clinical proof for BP+
New SpiroSonic FDA
Filing and new US
Distributors appointed
Russian regulatory
approval - Wondermed
Rights Issue -
$4.36m raised from
Board and Major
holders
Small parcels
consolidation – 269,199
shares and 121 holders
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Koneksa – extended
technology
partnership in Pharma
and eHealth
AAA Credit Enterprise
award for Uscom
China
China Software IP –
taking China IP to 42
Foxconn partnership –
Chinese manufacturing,
distribution and strategic
partnership
SE Asian Manager
appointed in Singapore
and Singapore product
approvals
Foxconn partnership
Foxconn partnership
SE Asian Expansion
SE Asian Expansion
US East Coast Distribution
US East Coast Distribution
SprioSonic NMPA/FDA
SprioSonic NMPA/FDA
The SpiroSonic AIR, FLO, and SMART have just been accepted for NMPA approval and the FDA should be accepted within weeks, allowing new Chinese and US distributors and current partners to activate sales and distribution. FDA submission has been made and response to examiners completed, so we anticipate an early reply.While FY22 was unpredictable and sales were down, Uscom invested in growth, expanding operations and distribution, increasing IP and products, advancing regulatory approvals, and executing transformational manufacturing and R&D partnerships in preparation for an impending global recovery. The key drivers for FY23’s new growth are substantially executed and have relatively immediate pathways to revenue and include:Uscom has signed a partnership deal with Foxconn to manufacture Uscom products in Foxconn’s Beijing High Tech facilities in Daxing, Beijing. The partnership discussion includes potential distribution and strategic opportunities nationally and internationally. The transition to our new premises is progressing rapidly with the fit-out and furnished near completion, key employees have been engaged, and the application documents for the NMPA approvals for our three new devices are advanced. As part of our expanded manufacturing function, Uscom is taking on board its own regulatory team and sharing some roles with Foxconn. We are now furthering Foxconn discussions with regard to the growth of new distribution while activating our current distributors to ensure our open orders are advanced for delivery once the domestic manufactured products are rolled off the manufacturing lines for the Chinese market.With the appointment of Mr. Kelvin Ng as SE Asian Sales and BD Manager we are expecting a rapid expansion of SE Asian activities as new distributors are appointed and current distributors re-activated. SE Asia remains the fastest growing region globally with an anticipated 6-7% growth rate and a ~670m population. Mr. Ng has nearly 25 years of medical device sales experience in the region including with GE and Philips. Mr. Ng’s appointment is to build out Uscom’s new Singaporean distribution hub which is conceived as a geopolitical intermediary between Australia and China. Complimenting this appointment the Singapore Health Sciences Authority recently approved the listing of all Uscom products on the Singapore Medical Device Register (SDMR) and following review over the next month, should receive full approval.The appointment of Sovereign Medical to distribute products on the East Coast of the US from NY to Florida has doubled Uscom’s sales footprint in the US. Sovereign covers 11 previously unserviced states with 12 sales staff, and Uscom US is busy inducting and training these new sales people on the technical and clinical features of the Uscom suite of products. Finances
Total Annual
Receipts
$3.48mil
Net Loss
$1.97mil
Total Revenue
$3.26mil
$5.48m
$4.60m
$3.50m
$3.64m
$3.48m
$2.94m
$2.86m
$2.04m
$1.38m
$1.01m
$0.86m
Future Growth
Cash on Hand
$4.70m
Share Market
Mid-year saw the rights issue to Uscom Board, management, and shareholders who invested $4.36m cash into the company, resulting in a balance of $4.70m at the end of FY22, being an estimated 10.2 months of funding, disregarding any income growth for the next 2.5 years.FY 22 was a growth aberration for Uscom explained by a cluster of inprecented events, and we anticipate the resumption of long-term trends as Foxconn activities accelerate and the Chinese market is restored. Uscom’s new distribution partners in SE Asia, Europe, and the US are also expected to gain traction as global economies begin a post pandemic resurgence. This optimism is further supported by the impending approval of a number of new device regulatory applications currently in the final phases of review. • Global Pandemic: All Uscom markets were interrupted for two years with global intermittent lockdowns in response to the pandemic waves of COVID 19, Delta, and finally multiple Omicron variants.• China Local Manufacture and Pandemic: In China, Uscom’s major market, the first half of FY22 saw new manufacturing regulations and deteriorating Australian geopolitics effectively excluding Uscom products from the Chinese market. This was compounded in the second half with strict regional COVID lockdowns, further limiting our China market access.In FY2022, multiple factors have combined to restrict sales and commerce, resulting in the impaired results of FY22.Uscom has invested in growth in a period of the most difficult global trading environments in modern history. While global headwinds have created challenges for the Medtech sector, Uscom has delivered on fundamentals, investing in a continuing growth strategy in preparation for the pandemic recovery. Uscom is financially sound, with excellent products, an evolving global structure, and with the transformational Foxconn partnership yet to convert to sales. Uscom’s activities remain unrecognised on the Australian exchange, and it remains a unique investment opportunity in one of the most reliable and high-growth sectors of the market.Annual total income trend since 2012, showing a 36% decrease in 2022, and a return to the prepandemic income of 2019. Until last year the CAGR was >24%, but with 2 years of pandemic and wars the 10 year CAGR was 15%. • The War in Europe: The European market has been complicated by 2 years of the pandemic, complex regulatory changes, and now the Russian war, and the fear of a potential global economic ringdown of inflation and recession.Total Annual Receipts is $3.48mil, down 38%Total Revenue is $3.26mil down 28%Net Loss is $1.97mil (after interest and tax)Cash on Hand = $4.70mil, up 175% Foxconn Partnership
Benefits of Foxconn Partnership
Benefits of Foxconn Partnership
Expansion
Expansion
The measure of life.
The new Uscom facilities, in the Foxconn Technology Industry Zone in Beijing, will become the global manufacturing headquarters for Uscom Limited. Combined with our current Chaoyang administration and sales centre, this Foxconn partnership locates Uscom firmly in Beijing, a preferred center for high technology development by the Chinese Government. Foxconn is expanding its activities in high-level medical technology, and Uscom is designated as a National High Technology Enterprise by the High Torch arm of the Chinese Ministry of Science and Technology.Changes in Chinese domestic manufacturing requirements significantly impacted sales in FY22. However, management acted decisively to enact a transformational partnership in Beijing that will comply with domestic manufacturing requirements so that Uscom devices can again be freely sold in the Chinese market. For Uscom this is a transformational partnership with the potential to consolidate and transform global operations providing manufacturing scale and an efficient path to global markets for current and new products, and ensuring reliable supply for expanding distributors. Uscom has sector-leading products, and now needs scale and connections to transition into an international force; the Foxconn partnership is planned to deliver this.• Partner of scale• Chinese local manufacturing solution – access to Chinese markets• Rapid new product development of Uscoms multiple patents• Accelerated and simplified regulatory pathway• Supply chain optimisation and manufacturing cost minimisation• Partnership for manufacturing and R&D• Increased national and global market access• International connections• Strategic opportunities for distribution and investmentThe agreement includes a manufacturing and R&D partnership with the world’s largest precision electronics manufacturer, Foxconn, via its Beijing subsidiary Futaijing Precision Electronics. This partnership will provide global manufacturing capacity, decrease manufacturing costs, accelerate and simplify regulatory times, increase global market access and deliver world-leading supply chain management at a time when supply chain has never been more critical. The agreement includes the manufacture of USCOM 1A and three new Uscom devices to market under the new local manufacturing requirements of China, with further devices being planned. Uscom currently has the order of 36 active IP approvals or submissions covering novel devices and concepts for new products, and Foxconn has the experience and personnel to rapidly deliver these devices to market.Foxconn is one of the world’s largest technology companies with annual revenue of ~$300B and approximately 1.5m employees. They manufacture for Apple, Huawei, Xiaomi, Amazon, Sharp, Sony, Toshiba, Google, Microsoft, and Intel plus many others, and manufacture approximately 40% of all consumer electronic sales worldwide. Operations
South East Asia
South East Asia
China
China
China sales have remained constrained by the Made-in-China 25 manufacturing regulations, the zero COVID pandemic strategy limiting Hospital access and internal travel, and the Australian Government trade war. Despite these challenges, Foxconn partnership will transform our Chinese business as we prepare to relocate to our new manufacturing and R&D space in Daxing, Beijing. Foxconn’s choice of Uscom as a partner was based on the genuinely innovative nature of the products and Uscom’s bulging IP portfolio, combined with Uscom’s impressive professional global footprint. Foxconn management has also expressed an interest in advancing the relationship to include distribution and commercial collaboration. Uscom is planning to have three new versions of the USCOM 1A approved for local manufacture within the next 6 months – The USCOM Basic, USCOM Classic, and the USCOM Advance. Each has different specifications and price points allowing distributors to more accurately tender against lower-priced devices without undermining our high-specification Classic (1A). Uscom is transitioning into a global manufacturing and distribution company and market activities have been partitioned into SE Asia, China, Europe, the US, and the Rest of the World (ROW). Each of these regions has unique regulatory and social requirements and expectations, and Uscom plans to build each jurisdiction into stand-alone operational units specifically targeting independent profitability. Here is a summary of activities for FY22.While we have previously had scattered distri-bution in SE Asia, we now have local experien-ce and connections to larger partners as a pla-tform for regional market penetration. Kelvin is based in Singapore and has ~25 years of Asian medical technology sales and BD experience, having worked with GE, Leica, Philips, Electron Healthcare, and Eckert and Ziegler in ASEAN territories plus Japan, South Korea, China, Pa-kistan, and India; territories in which Uscom is now focused, but has no presence. Kelvin will spearhead our SE Asian Business Development, and Uscom is targeting a strategy to rapidly grow regional sales. Strategically Singapore bridges the geopolitical gulf between Australia and China, and is an established transport hub for imports and exports into and out of Asia, creating another potentially lucrative business expansion opportunity.With a population of ~670m, SE Asia is now the fastest economic growth region in the world and includes the main countries of Singapore, Vietnam, Thailand, Philippines, and Indonesia. This year Uscom established its Re-gional HQ in Singapore and recently appointed Mr. Kelvin Ng of Singapore as our regional Sales and Business Development Manager for the region. Europe
Europe
The US
The US
Dr. Antonio Ferrario leads our European sales team and is coordinating our expanding network of European distributors. This year saw the appointment of Aria from France and they are now inducted and getting into the market with USCOM 1A, BP+, and SpiroSonic devices. Antonio is also expanding our Italian and Spanish distribution and is in discussions with distributors from Scandinavia. We are also developing some excellent pharmacy-based community health projects for BP+ in Italy and the UK. While much of the year was restricted with limited travel and hospital visits, Europe is now transitioning to recovery, and despite the uncertainties created by the Russian war, there is a clear increase in sales opportunities and pipelines.The recent appointment of Sovereign Medical has significantly increased our US sales coverage with their distribution territory covering the east coast from NY to Florida, including 11 states, and doubling the number of US national sales staff to more than 20. This appointment comes at a time when the USCOM 1A is emerging as the leading global technology for the diagnosis and management of preeclampsia, with a number of 1A units entering current purchasing cycles. We are also approaching the SpiroSonic FDA approval as we await the final review of our responses by the examiners. Once the FDA is received we will be able to sell our new AIR and other SpiroSonic devices into national distribution organisations and initiate our US SpiroSonic marketing plan. Our Koneksa digital health partnership continues to develop with a number of very exciting pharma projects anticipated to proceed following FDA approval. Products
Uscom Technology
Uscom Technology
The measure of life.
SpiroSonic AIR
SpiroSonic AIR
SpiroSonicUscom
Uscom has an outstanding reputation for the development of world-leading products and during FY22 the Company continued to develop new IPs for new devices, develop new products, and improve our current stable of specialised cardiovascular pulmonary monitoring technologies.Uscom’s main focus remains on the high-end critical care, hospital, and research market sectors with our USCOM 1A cardiovascular monitor, the BP+ suprasystolic oscillometric blood pressure and vascular health devices, and SpiroSonic lung function technologies.However, Uscom is increasingly developing the digital capabilities of these devices so they can more simply interface with global digital health systems, and become foundation technologies for the expanding markets of eHealth and home care.The AIR can wirelessly interface with Uscom SpiroSonic APPs to cloud-based or clinic-installed SpiroReporter software for remote archiving, analysis, trend analysis, and reporting with oversight from international expert diagnosticians. The combined SpiroSonic AIR, SpiroSonic APPs, and SprioReporter software combine to be a world-leading research-grade pulmonary testing solution for hospitals, clinics, home care, and eHealth. This SpiroSonic technologies are specialised for precision diagnosis and management of asthma, COPD, and long COVID. The SpiroSonic technology is patent protected and currently approved in Europe, and in regulatory cycles in the US, China, and a number of jurisdictions in SE Asia.This year our international engineering team focused on the development of the Uscom SpiroSonic AIR technology developing its specialised application in pulmonary research in Pharma and Long COVID while finalising reviewers’ questions for the FDA submission. The SpiroSonic AIR is a digital, multipath ultrasonic spirometer with a high-level viral disinfection system for the elimination of COVID and Tuberculosis, both critical and emerging transmissible pulmonary infections. The AIR, myAPP, and SpiroReporter can now display 46 advanced parameters of lung function using 48 different performance algorithms and has onboard precision diagnostics and interactive user voice guidance. AIR’s ultrasonic accuracy, software complexity, and simplicity of use make the technology the world leader in spirometry and research-grade lung function testing. The AIR solution is currently approved in Europe and in regulatory process for FDA (US), NMPA (China), and a number of SE Asian countries. IP and Science
Uscom Patents
Uscom Patents
Commercial Value
Commercial Value
Science
Science
Uscom has three new patents progressing through PCT phase to the grant phase, which will provide strong commercial protection for major medical and technical conditions:• Thermometric normalisation of blood pressure: Blood pressure measurement and management are substantially ineffective and while BP+ supra-oscillometric monitoring of central BP is changing practice this patent provides commercial protection for a method that improves further the current methods and has universal application in hypertension measurement and monitoring.• SpiroSonometry: This is a patent covering a variety of new signal methods and feedback incentives and new patient guidance in spirometry. The patent has applications in asthma, COPD, and COVID.• Ventilator calibration technology (Ventitest): This patent covers a simplified and improved method for accurate ultrasonic calibration of ventilator function and can be a modular addition to any ventilator.These patents will join our current patent portfolio of >150 IP submissions worldwide, which can be rapidly converted into new and current products by our new manufacturing partner Foxconn.Uscom is a scientific leader, and in FY22 Uscom maintained its leadership in global science with the publication of 56 peer-reviewed journal articles, 2 blogs and podcasts, and 135 news items and company profiles. China led the publications list while applications in paediatrics, ICU, and maternal health were the most common. This continuing high number of publications indicates that the clinical utility and value of USCOM1A remain current across a wide variety of applications.Uscom has maintained its operational expansion as it pursues its long-term growth goals; raising capital and implementing an evolving global strategy to ensure future growth during one of the most difficult global environments in history. However share markets have struggled, and the disconnect between value and price has become clear, particularly in the Australian Medtech sector. The commercial value of Uscom centres on: • Multiple products in the high-value cardiovascular medical technology sector• Its substantial IP portfolio (~150)• Global regional operations and revenue• An integrated global transfer pricing and accounting system• Established enterprise and operations in China• A new strategic manufacturing and R&D partnership with the world’s largest precision electronics manufacturer Foxconn• Multiple growth drivers positioned to ignite global expansion• Cash in the bankUscom has invested in change during this difficult year in preparation for the global pandemic recovery. Uscom is financially sound with expanding global prospects as the transformational Foxconn partnership converts to revenue, new devices are approved, new distribution becomes effective, and global markets begin to rebound. The Board and management believe that as this year’s unprecedented constellation of challenges resolves, Uscom is extremely well positioned to exceed its long-term trend growth, and deliver investors growth and value, and a rare opportunity. China
China
Risks
Risks
The Pandemic
The Pandemic
Global Markets
Global Markets
The pandemic has reduced Uscom’s business by approximately 50%, and, as the world markets recover, we anticipate our prior high growth trends to return. However, there is the possibility that new variants of COVID or entirely new diseases may arise and Governments introduce further constraints on social and commercial activities. Uscom has cash on hand and is well positioned to maintain global operational growth if further restrictions of market access are implemented.Trade wars, Russian wars, and pandemics are all risks for a global enterprise, so multiple markets, multiple products, and multiple partners are an important part of risk mitigation. Uscom’s transition to a global entity and the transformational partnership with global leading precision electronics manufacturer Foxconn all contribute to limiting risk in the event of unpredictable changes in global markets.China is our major market generating approximately 70% of our global sales, and the current zero COVID policy and Made In China 2025 policy are having significant impacts on our sales and receipts. China is now promoting a return to commercial activities and the market is poised to grow quickly as normal demand returns to medical markets and the targets for improved medical care are restored. Uscom has signed transformational manufacturing and R&D partnership with Foxconn to address the local manufacturing restrictions that have limited sales in the last 12 months. This agreement is also anticipated to provide a number of new opportunities to distribute and sell current and new devices in China and internationally. Distributors
Distributors
Regulatory
Regulatory
Key Personnel
Key Personnel
Other Risks
Other Risks
Distributors deliver Uscom’s products to market, and we depend on them for revenue as our direct sales activities remain small. We are however increasingly appointing and structuring operations so that we have more and stronger regional management of distributors, which we believe will result in increased sales. More distributors worldwide act as a revenue hedge and will result in a reduced risk to global sales revenues, particularly if regional markets are threatened in any way.Regulatory certification is increasingly complex, expensive, and time-consuming in all jurisdictions. Uscom is increasingly taking on board its won regulatory management. At this stage, we are experiencing increased costs, but are anticipating that longer term, as regulations continue to evolve in complexity, in-house management will result in quicker and less expensive regulatory pathways. The partnership with Foxconn and their large team of regulatory experts is also support for our own operations, and as the relationship progresses we anticipate their contacts and experience will be very valuable for Uscom and accelerate regulatory compliance.Uscom is dependent on a small, skilled, and vital team working to ensure and manage ongoing rapid growth, and the loss of key people from the organisation may adversely impact operations. As the Company expands in current and new jurisdictions, and our employee base increases this risk is mitigated. Previously outsourced roles are also being in-housed in Uscom China and Uscom Europe, further hedging these risks.Competitive risks, patent breaches, and scale-up stress are potential threats to our growth expectations and may challenge cash flow management and equity adequacy, and require the focused attention of management. Corporate Social Responsibility
Corporate Social Responsibility
One of the world’s greatest birds, the Gouldian Finch
(Erythrura Gouldiae), is another endangered Australian
species benefiting from AWC intervention. AWC are using
traditional indigenous seasonal grass burning techniques
to revitalise the grasslands and selective removal of
feral predators, and are achieving early success as the
population of the Gouldian finches has begun to increase.
The wild populations used to number in the millions across
Central and Northern Australia, but now are in the order
of 2,500 mature individuals in total. AWC are proactively
and scientifically restoring the Australian landscape for the
benefit of us all.
Uscom supports the vital national activities of the AWC -
www.australianwildlife.org
Rob Phillips personally supports AWC on behalf of Uscom Limited
Summary
Summary
Professor Rob PhillipsUscom Chairman and CEOUscom finished FY22 in a strong position, and management is optimistic that our achievements have positioned the company for resurgent success in the coming years. Our two-step growth strategy has allowed us to report cash on hand, multiple new investments in future growth, pipelined new approvals and new products, and a transformational partnership as we enter FY23. As the world recovers momentum and markets revitalise, we anticipate that the structural investment in Uscom’s global operations that have been implemented over the last two years will leverage the Company into accelerating global growth and rapidly convert our strategy to revenue, and exceeding Uscom’s historical growth trend. Uscom has never been in such a positive position as global economies begin the upswing of the post-pandemic recovery. Uscom is looking forward to converting the investments of FY22 into hard revenue as we gear our operations to the growing global opportunities of FY23, and look forward to the value this will deliver to shareholders. DIRECTORS REPORT
Associate Professor Rob Phillips
Chairman and Executive Director
Mr Christian Bernecker
Non-executive Director
Mr Brett Crowley
Non-executive Director and Company Secretary
Mr Xianhui Meng
Non-executive Director
The Directors present their report on Uscom Ltd and its Controlled Entities for the financial year ended 30 June 2022. 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.Rob Phillips is the founder of Uscom Ltd, and the Chief Execu-tive Officer, Chairman and Chief Scientist of the Company. Rob has 20 years experience in corporate management since taking Uscom public in 2003, and has taken the company global with regional head quarters in Singapore, Beijing and Budapest with offices in Delawere. Rob has a PhD and MPhil in Cardiovascular Medicine from The University of Queensland where he is an Adjunct Associate Professor of Medicine.Mr Christian Bernecker is a Non-Executive Director of Uscom Ltd since November 2011. Christian has more than 10 years of broad investment experience across capital raising, acqui-sitions and divestments. Christian qualified as a Chartered Accountant in Australia and holds a Bachelor of Commerce from Ballarat University.Brett Crowley was appointed as a Non-Executive Director of Uscom Ltd on 23 August 2018. 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 estab-lishing 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.Xianhui Meng is an experienced international value investor, with qualifications in economics, engineering management and business administration. Mr Meng has 10 years experience as a China government departmental head, and 20 years experi-ence as the Executive Manager and Executive Director of a HK Listed Chinese Pharma specialising in sales and distribution. Mr Meng brings both his international corporate management and strategic skills to the Uscom Board. Company secretary
Brett Crowley
Meetings of Directors
Directors
R A Phillips
C Bernecker
B Crowley
X Meng
Principal activities
Board of Directors
Meetings held while a Director
5
5
5
5
No. of meetings attended
5
5
5
5
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 regional head quarters and 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 products primarily in the United States, and owns 100% of Uscom Kft, a company that manufactures
respiratory devices based in Hungary. Uscom Ltd owns 100% of Beijing Uscom Consulting Co. Ltd, a company that manages and
sells Uscom products in China.
Operating result
The loss of the Consolidated Entity after providing for income tax amounted to $1,972,313 (2021: $924,243).
Dividends
No dividends were declared or recommended for the financial year ended 30 June 2022 (2021: nil).
Significant changes in state of affairs
There were no significant changes in state of affairs during the financial year.
Corporate Governance Statement
Refer to the investor page of Uscom Limited’s website www.uscom.com.au/for-investors.
Operating and financial review
The operating and financial review is stated per the Chairman’s letter on pages 1-30.
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.
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.
32
Indemnity of auditors
To the extent permitted by law, the Company has not agreed to indemnify its auditors, BDO Audit Pty Ltd, as part of the terms
of its audit engagement agreement against claims by third parties arising from the audit [for an unspecified amount]. No payment
has been made to indemnify BDO Audit Pty Ltd during or since the financial year.
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 60 for details of auditors’ remuneration.
The auditor’s independence declaration as required under section 307C of the Corporation Act is set out on page 39.
BDO Audit Pty Ltd 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
Christian Bernecker, Non-Executive Director
Brett Crowley, Non-Executive Director
Xianhui Meng, Non-Executive Director
Executive Directors
Rob Phillips, Executive Director, Chairman, Chief Executive Officer
Senior Executives
Nick Schicht, General Manager
In the Directors’ opinion, there are no other Executives of the Entity.
Remuneration policies
The Board is responsible for reviewing the remuneration policies and practices of the Consolidated Entity, including the
compensation arrangements of Executive Directors, Non-Executive Directors and Senior Executives.
The Consolidated Entity has adopted remuneration policies based on performance and contribution for determining the nature
and amount of emoluments of Board Members and Senior Executives. The objective of these policies is to:
• Make Uscom Ltd and its Controlled Entities an employer of choice
33
• 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 Uscom Ltd and its Controlled Entities
• 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 performance reviews.
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 $155,000
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.
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.
34
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 three
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.
Service contracts have been entered into by the Consolidated Entity with non-executive directors, describing the components
and amounts of remuneration applicable on their initial appointment. These contracts are at fixed fees for their service.
Service contracts have been entered into by the Consolidated Entity with key management personnel, describing the components
and amounts applicable on their initial appointment, including terms and performance criteria for performance-related cash
bonuses. These contracts do not fix the amount of remuneration increases from year to year. Remuneration levels are reviewed
generally each year by the Board of Directors to align with changes in job responsibilities and market salary expectations. All
contracts are for on ongoing period.
Key management personnel remuneration
Remuneration includes salaries, benefits and superannuation contributions in respect of the financial year 2022.
Short term benefits
Directors’
Base Fee
$
Base
salary
$
Annual
leave cash
out
$
Annual
leave
accrued
$
Post-employment
benefits
Superannuation
$
Long term
benefits
Long
service
leave
$
Equity
Total
remuneration
Performance
related
Share-based
payment
$
$
%
Non-
Executive
Director
C Bernecker
B Crowley
X Meng
Executive
Director
R Phillips
Senior
Executive
N Schicht
Total
38,325
34,959
-
-
-
-
-
-
-
-
250,755
56,407
-
-
-
-
-
3,495
-
-
-
-
-
-
-
38,325
38,454
-
-
-
-
-
15,687
220,966
543,815
40.6%
-
73,284
210,000
460,755
-
56,407
52,257
52,257
21,000
24,495
8,640
24,327
49,600
270,566
341,497
962,091
14.5%
28.1%
35
Remuneration includes salaries, benefits and superannuation contributions in respect of the financial year 2021.
Short term benefits
Directors’
Base Fee
$
Base
salary
$
Annual
leave cash
out
$
Annual
leave
accrued
$
Post-employment
benefits
Superannuation
$
Long term
benefits
Long
service
leave
$
Equity
Total
remuneration
Performanc
e related
Share-based
payment
$
$
%
Non-Executive
Director
C Bernecker
B Crowley
X Meng
Executive
Director
R Phillips
Senior
Executive
N Schicht
Total
38,325
34,959
-
-
-
-
-
-
-
-
-
-
-
3,321
-
-
-
-
-
-
-
38,250
38,280
-
-
-
-
-
250,755
60,366
37,117
-
13,580
361,176
722,994
50.0%
-
73,284
196,000
446,755
-
60,366
44,988
82,105
18,620
21,941
10,390
23,970
20,000
381,176
289,998
1,089,597
6.9%
35.0%
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 objective of
the EIP is to provide reward and incentive to valuable personnel while preserving cash.
The purpose of the Plan is to:
•
provide Eligible Persons with an incentive plan which rewards ongoing contribution to the achievement by the Company of
its strategic goals thereby encouraging the mutual interdependence of Participants and the Company;
align the interests of Participants with shareholders of the Company through the sharing of a personal interest in the future
growth and development of the Company as represented in the price of the Company’s ordinary fully paid shares;
encourage Eligible Persons to improve the performance of the Company and its total return to Shareholders; and
provide a means of attracting and retaining skilled and experienced employees.
•
•
•
Under the Plan, the Consolidated Entity will be able to grant short-term incentive and long-term incentive awards to Eligible
Employees (including Executive Directors). The Plan will provide the Board with the flexibility to grant equity incentives to Eligible
Persons in the form of Plan Shares, rights or Options, will only vest on the satisfaction of appropriate hurdles.
Number of rights over ordinary shares held by Directors and Senior Executives
Balance
Granted
Exercised
1 July
2021
No.
During
FY2022
No.
During
FY2022
No.
Lapsed /
Cancelled
Balance
Total Vested
Total
Unexercisable
During FY2022
30 June 2022
30 June 2022
30 June 2022
No.
No.
No.
No.
Non-Executive Director
C Bernecker
B Crowley
X Meng
Executive Director
R Phillips (a)
Senior Executive
N Schicht (b)
Total
-
-
-
-
-
-
-
-
-
1,436,782
1,636,782
1,436,782
150,000
1,586,782
400,000
2,036,782
-
1,436,782
-
-
-
-
-
-
-
-
-
1,636,782
550,000
2,186,782
-
-
-
-
150,000
150,000
-
-
-
1,636,782
400,000
2,036,782
Further details of the options and rights are disclosed in Note 19 of the financial statements.
Details of rights outstanding as at end of year
Holders No.
Grant date
1 (Executive)
Total
26-Nov-14
Exercisable
at 30 June 2022
%
100%
Vesting date
1 July 2020
30 June 2022
Outstanding Right
No.
150,000
150,000
Exercise
Price
$
0.00
Issued date
fair value
$
0.19
36
(a) 1,636,782 Indeterminate rights were issued to Rob Phillips on the terms and conditions approved by shareholders at the AGM
on 14 October 2021 under the Equity Incentive Plan, vesting dependent on performance hurdles on 1 July 2022. Consideration
payable upon vesting is $nil. The Board exercised its discretion to pay cash in lieu of issue of ordinary shares. Upon meeting the
performance hurdles, total of 1,636,782 were exercised on 5 July 2022 after the reporting date.
(b) 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. 300,000 were exercised on 28 August 2020 and
remaining balance is 150,000 as the reporting date. 200,000 performance rights were granted to Nick Schicht on 24 August 2021
and 200,000 on 1 April 2022 under the Equity Incentive Plan, vesting dependent on performance hurdles on 1 July 2022, and 1
July 2023. Consideration payable upon vesting is $nil.
Number ordinary shares held by Directors and Senior Executives
Balance
Received as Options/Rights
01 July 2021
Remuneration
Exercised
No.
No.
No.
Subscribed as
Non-Renounceable
Rights Issue
No.
Purchased
on market
No.
Balance
30 June
2022
No.
Non-Executive
Director
C Bernecker
B Crowley
X Meng
Executive Director
R Phillips
Senior Executive
N Schicht
Total
-
200,000
32,860,500
30,600,174
728,143
64,388,817
-
-
-
-
-
-
-
-
-
9,884,550
-
-
-
200,000
- 42,745,050(1)
1,436,782
9,660,761
165,579 41,863,296(2)
-
1,436,782
-
19,545,311
(7,680)
157,899
720,463(3)
85,528,809
*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 Smart Top Overseas Limited managed by Citicorp Nominees Pty Limited, 9,884,550
ordinary shares were subscribed on 16 December 2021 under non renounceable right issue.
(2) R Phillips subscribed 9,660,761 ordinary shares on 16 December 2021 under non renounceable right issue. 165,579 ordinary
shares were purchased on market.
(3) 5,000 of these ordinary shares are held by a family associate.
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2022 are summarised below:
2022
$
2021
$
2020
$
2019
$
2018
$
Sales Revenue
Loss after income tax
2,509,684
(1,972,313)
3,858,081
(924,243)
3,479,758
(1,331,335)
2,844,138
(1,389,398)
2,158,051
(1,950,923)
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share Price at financial year end ($)
Total dividends declared (cents per share)
Basic earnings declared (cents per share)
2022
0.07
-
(1.1)
2021
0.16
-
(0.6)
2020
0.22
-
(0.9)
2019
0.14
-
(1.0)
2018
0.17
-
(1.6)
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.
Professor Rob Phillips
Chairman
18 August 2022
37
FINANCIAL REPORT
Auditors Independence Declaration
Statement of Profit and Loss & Other
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to Financial Statements
39
40
41
42
43
44
AUDITOR’S INDEPENDENCE DECLARATION
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY JOHN BRESOLIN TO THE DIRECTORS OF USCOM LIMITED
As lead auditor of Uscom Limited for the year ended 30 June 2022, 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 period.
John Bresolin
Director
BDO Audit Pty Ltd
Sydney
18 August 2022
BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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.
39
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
& OTHER COMPREHENSIVE INCOME
For the Year Ended 30 June 2022
Revenue
Other Income
Raw materials and consumables used
Expenses from continuing activities
Loss before income tax
Income tax expense/(benefit)
Loss after income tax
Other comprehensive income
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
Total comprehensive (loss) for the year
Attributable to:
Owners of the Company
Total comprehensive (loss) for the year
Earnings per share 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)
Note
Note
2022
$
2021
$
3
3
4
5
6
7
7
2,509,683
3,858,081
743,895
(344,474)
696,728
(485,073)
(4,848,973)
(4,951,940)
(1,939,869)
(882,203)
32,444
42,040
(1,972,313)
(924,243)
(11,354)
(11,354)
50,189
50,189
(1,983,667)
(874,054)
(1,983,667)
(874,054)
(1,983,667)
(874,054)
(1.1)
(1.1)
(0.6)
(0.6)
This Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the attached Notes.
40
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Tax asset
Total current assets
Non-current assets
Other assets
Plant and equipment
Intangible assets
Right-of-use assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Lease liabilities
Total current liabilities
Non-current liabilities
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Note
2022
$
2021
$
8
9
10
11
12
13
14
15
16
17
15
17
15
18
19
6
4,704,185
340,075
872,117
395,709
6,312,086
83,456
46,748
477,010
1,073,640
1,680,853
1,710,554
404,366
894,877
441,283
3,451,080
83,456
99,310
469,684
1,231,438
1,883,889
7,992,940
5,334,969
478,164
197,368
220,466
895,998
556,020
203,765
189,050
948,835
70,100
1,091,586
1,161,686
67,652
1,240,884
1,308,536
2,057,684
2,257,371
5,935,256
3,077,598
39,136,673
3,711,264
(36,912,681)
34,665,560
3,352,406
(34,940,368)
5,935,256
3,077,598
This Statement of Financial Position is to be read in conjunction with the attached Notes.
41
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Year Ended 30 June 2022
Issued
Capital
$
Options and rights
Reserve
$
Other
reserves
$
Accumulated
Losses
$
Foreign Currency
Translation
Reserve
$
Total
$
Balance at 30 June 2020
34,197,430
2,907,072
300,000
(34,016,125)
33,968
3,422,345
Loss for the year
Other comprehensive
income
Total Comprehensive
Income for the year
Transactions with Owners
in their capacity as
owners:
Shares issued (Note 18)
Transaction costs on shares
issued (Note 18)
Share-based payments
(Note 18) (Note 19)
Unissued equity
-
-
-
309,000
(10,870)
170,000
-
-
-
-
-
-
361,177
-
-
-
-
-
-
-
(300,000)
Balance at 30 June 2021
34,665,560
3,268,249
Loss for the year
Other comprehensive
income
Total Comprehensive
Income for the year
Transactions with Owners
in their capacity as
owners:
-
-
-
Shares issued (Note 18)
4,359,074
Transaction costs on shares
issued (Note 18)
Share-based payments
(Note 18) (Note 19)
(54,862)
166,900
-
-
-
-
-
370,212
Balance at 30 June 2022
39,136,673
3,638,461
-
-
-
-
-
-
-
-
(924,243)
-
(924,243)
-
50,189
50,189
(924,243)
50,189
(874,054)
-
-
-
-
-
-
-
-
309,000
(10,870)
531,177
(300,000)
(34,940,368)
84,157 3,077,598
(1,972,313)
-
(1,972,313)
-
(11,354)
(11,354)
(1,972,313)
(11,354)
(1,983,667)
-
-
-
-
-
-
4,359,074
(54,862)
537,112
(36,912,681)
72,804 5,935,256
This Statement of Changes in Equity is to be read in conjunction with the attached Notes.
42
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended 30 June 2022
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Interest received
Interest expense (lease)
Interest expenses (other)
Payments to suppliers and employees (inclusive of GST)
Grant and other income received
Note
Note
2022
$
2021
$
15
2,765,275
4,845,102
21,239
(74,054)
(4,670)
32,144
(83,688)
(11,824)
(4,365,953)
(5,426,761)
690,648
700,005
Net cash from/ (used in) operating activities
21
(967,515)
54,978
Cash flows from investing activities
Purchase of patents and trademarks
Purchase of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares and options
Payment of lease (Principal)
Share issue costs
14
13
18
15
18
(109,487)
(5,826)
(27,841)
(5,510)
(115,313)
(33,351)
4,359,075
(255,313)
(54,862)
-
(270,998)
(10,870)
Net cash provided by/(used in) financing activities
4,048,900
(281,868)
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the year
Exchange rate adjustment for opening balance
2,966,072
1,710,554
27,559
(260,241)
1,920,657
50,138
Cash and cash equivalents at the end of the year
8
4,704,185
1,710,554
This Statement of Cash Flows is to be read in conjunction with the attached Notes.
43
NOTES TO FINANCIAL STATEMENTS
For the Year Ended 30 June 2022
Note 1: Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the financial report are set out below. 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.
The following is a summary of the material accounting policies adopted by the consolidated Group in the preparation of the
financial report. The accounting policies have been consistently applied to all years presented, unless otherwise stated.
Basis of preparation
The financial report is a general-purpose financial report that has been prepared in accordance with Australian Accounting
Standards and interpretations issued by the Australian Accounting Standards Board [“AASB’] and the Corporations Act 2001, as
appropriate for-profit oriented entities.
(i) Statement of compliance
These financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board [“IASB”].
(ii) Historical cost convention
•
•
•
The financial report has been prepared on an accrual basis under the historical cost convention.
The financial report is presented in Australian dollars, which is the Parent Company’s functional and presentational currency.
The financial statements have been approved and authorised for issue by the Board of Directors on the 18 August 2022.
Going concern
The consolidated entity incurred an operating cash outflow of $967,515 during the year ended 30 June 2022 (2021: inflow $54,978).
The total comprehensive loss for the year ended 30 June 2022 was $1,983,667 (2021: $874,054) and the cash on hand as at 30 June
2022 was $4,704,185.
The consolidated entity’s forecasts and projections for the next twelve months take into account the current status, operational
changes and projected future trading performance, and indicate that, in the directors’ opinion, the consolidated entity will be
able to operate as a going concern.
Principles of consolidation
A Controlled Entity is any entity Uscom Ltd has the power to control the financial and operating policies of so as to obtain benefits
from its activities.
A list of Controlled Entities is contained in Note 23 to the financial statements. All Controlled Entities have a June financial year-
end.
All inter-company balances and transactions between Entities in the Consolidated Group, including any unrealised profits or
losses, have been eliminated on consolidation. Accounting policies of Subsidiaries have been changed where necessary to ensure
consistencies with those polices applied by the Parent Entity.
On consolidation, the assets and liabilities of the Consolidated Entity’s overseas operations are translated at exchange rates
prevailing at the reporting dates. Income and expense items are translated at the average exchange rates for the period unless
exchange rates fluctuate significantly. Exchange differences arising, if any, are recognised in the foreign currency translation
reserve, and are recognised in statement of profit or loss and other comprehensive income on disposal of the foreign operation.
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.
New accounting standards and interpretations
The Company has adopted all of the new or amended Accounting Standards and Interpretations issued by the AASB that are
mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet
mandatory have not been early adopted. These standards, amendments or interpretation are not expected to have a material
impact on the entity in the current or future reporting periods and on foreseeable future transactions.
44
Note 2: Critical Accounting Estimates and Judgements
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 company.
Key estimates – valuation of intangible and other non-current assets
The impairment tests are performed at the level of operating segments. The criteria used for these evaluations include
management’s estimate of the asset’s continuing ability to generate positive income from operations and positive cash flow in
future periods compared to the carrying value of the asset, as well as the strategic significance of any identifiable intangible asset
in the business objectives. If assets are considered to be impaired, impairment expenses recorded for the amount by which the
carrying value of the assets exceeds their fair value. Factors that would influence the likelihood of a material change in the reported
results include significant changes in the asset’s ability to generate positive cash flow, a significant decline in the economic and
competitive environment on which the asset depends, significant changes in the strategic business objectives, utilisation of the
asset, and a significant change in the economic and/or political conditions in certain countries.
Key estimates – valuation of employee share option plan shares
At each reporting date, the entity revises its estimate of the number of rights that are expected to become exercisable. The
employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to the
original estimates, is recognised in profit or loss with a corresponding adjustment to equity. The fair value is measured at grant
date and recognised over the period during which the employee becomes unconditionally entitled to the shares or options.
Key Judgements - research and development claim
Judgement is required in determining the amount of grant revenue relating to the research and development claim. There are
certain transactions and calculations undertake during the ordinary course of business for which the ultimate tax determination
may be subject to change. The company calculates its research and development claim based on the company’s understanding
of the tax law. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences
will impact the profit or loss in the year in which such determination is made.
Note 3: Revenue and other income
Operating revenue
Sale of products
Services revenue
Other income
Grants - R&D incentive
Grants – Others
COVID-19 Government subsidies
Foreign exchange gain
Interest received
Sundry income
Total other income
Total revenues and other income from continuing operations
2022
$
2,443,350
66,333
2,509,683
395,346
91,150
130,851
36,004
23,417
67,127
743,895
3,253,578
2021
$
3,847,920
10,161
3,858,081
443,395
87,190
134,000
-
31,738
405
696,728
4,554,810
45
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows
2022
Sales of products
Services revenue
Total
Goods transferred at a point in time
Services transferred over time
Total
2021
Sales of products
Services revenue
Total
Goods transferred at a point in time
Services transferred over time
Total
Recognition and measurement
Australia
$
Asia
$
Americas
$
Europe
$
Other regions
$
Consolidated
$
27,915
13,051
40,966
27,915
13,051
40,966
87,972
8,843
96,815
87,972
8,843
96,815
1,110,301
1,818
1,112,119
1,110,301
1,818
1,112,119
2,445,977
-
2,445,977
2,445,977
-
2,445,977
329,383
898
330,280
329,383
898
330,280
225,532
201
225,733
225,532
201
225,733
816,878
50,567
867,445
816,878
50,567
867,445
991,284
1,117
992,401
991,284
1,117
992,401
158,873
-
158,873
158,873
-
158,873
97,155
-
97,155
97,155
-
97,155
2,443,350
66,333
2,509,684
2,443,350
66,333
2,509,684
3,847,920
10,161
3,858,081
3,847,920
10,161
3,858,081
Revenue is measured at the fair value of the consideration received or receivable. Amounts are disclosed as revenue net of returns,
discounts, allowances and goods and services tax (GST).
• Sale of goods
Revenue from the sale of goods is recognised when control of the products has transferred, being the point in time when the
products are delivered to the customer’s specified location, the amount of revenue can be measured reliably, and it is
probable that payment will be received by the Group.
• Revenue from rendering of services
Rendering of services consists of training, repair and product maintenance supplied to customers. Revenue is recognised
when contractual obligations are expired and services are provided.
•
Interest revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
• Government grants
Government grants revenue is recognised at fair value when there is reasonable assurance that the grant will be received and
the grant conditions will be met.
• Research and developments tax incentive
R&D tax incentives are recognised when there is reasonable assurance that the entity will comply with the conditions attaching
to them and the rebates will be received. R&D tax incentives are recognised as income on a systematic basis over the periods
in which the entity recognises as expenses the related costs for which the rebates are intended to compensate.
Note 4: Expenses from continuing activities
Depreciation and amortisation expenses
Depreciation – right-of-use assets
Employee benefits expense (2022: combined R&D staff costs) *
Research and development expenses (2022: R&D staff costs in above line) *
Advertising and marketing expenses
Occupancy expenses
Auditors remuneration (audit and review)
Regulatory expenses
Administrative expenses
Exchange losses
Finance costs
Total expenses from continuing activities
2022
$
160,338
255,314
2,959,533
43,305
662,706
6,630
93,950
188,193
400,281
-
78,723
4,848,973
2021
$
125,254
270,998
2,195,055
815,857
634,525
14,802
94,200
121,222
533,820
50,694
95,513
4,951,940
* R&D staff costs of $587,508 in 2022 are reclassified from research and development expenses to employee benefits expenses.
(2021: R&D staff costs $633,184 was included in research and development expenses)
46
Employee benefits expenses
Employer contributions to defined contribution superannuation plans are recognised as an expense in the profit or loss as they
are paid or payable. Refer to Note 17 for details on provisions for employee benefits. Share based expenses of $537,112 in 2022
(2021: $531,177) are included in employee benefits expenses above.
Research and development expenses
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.
Note 5: Income tax
Major components of income tax
Current income tax
Income tax expense
Reconciliation between income tax credit and prima facie tax on accounting loss
Accounting loss before income tax
(Tax benefit) at 25% in Australia, 28% in USA, 11% in Hungary, 25% in China (2021: 26% in
Australia, 28% in USA, 11% in Hungary and 25% in China)
Tax effect on non-taxable income and non-deductible expenses
Research and development tax credit
Temporary differences
Deferred tax assets on tax losses not brought to account
Previously unrecognised tax losses now recouped to reduce current tax expense
Income tax expense
2022
$
32,444
32,444
(1,937,869)
(463,197)
482,885
(100,087)
32,671
80,172
-
32,444
2021
$
42,040
42,040
(882,203)
(168,924)
409,773
(121,770)
(18,427)
-
(58,612)
42,040
The consolidated entity currently has carried forward losses of $18.4m from prior years in respect to its Australian operations and
approximately $2.3m in respect to its American and Asia operations. The utilisation of these carried forward losses is conditional
on the consolidated entity meeting the conditions for deductibility imposed by the law in the period in which the consolidated
entity derives sufficient taxable income in order to utilise these losses. For the year ended 30 June 2022, management has
reviewed the deductibility of these losses in comparison to the estimated taxable income derived by the consolidated entity and
are confident that sufficient losses are available to offset the expected taxable income for the financial year ended 30 June 2022.
Whilst the consolidated entity has continued to trade positively due to the COVID-19 induced demand, it is currently not known
with sufficient probability how the consolidated entity’s trade will transpire for the FY23 period and beyond. As a consequence,
the consolidated entity has elected not to recognise any deferred tax assets or carried forward income tax losses.
The table below has summarised the tax losses estimate derived from different jurisdictions.
2022
Tax losses
Tax credit
2021
Tax losses
Tax credit
Note 6: Accumulated Losses
Australia
$
USA
$
Hungary
$
China
$
Singapore
$
Total
$
18,383,537
4,595,884
1,404,799
393,113
511,535
56,269
(71,043)
(17,761)
467,441
79,465
20,696,269
5,106,970
17,780,922
4,623,040
1,625,613
454,905
360,068
39,608
(217,466)
(54,367)
197,520
33,578
19,746,657
5,096,764
Accumulated losses at the beginning of the financial year
Loss for the year
Accumulated losses at the end of the financial year
2022
$
(34,940,368)
(1,972,313)
(36,912,681)
2021
$
(34,016,125)
(924,243)
(34,940,368)
47
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)
2022
$
(1,972,313)
2021
$
(924,243)
Number
171,740,712
148,066,517
-
1,063,834
-
1,114,415
172,804,546
149,180,932
(1.1)
(1.1)
(0.6)
(0.6)
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
Note 8: Cash and cash equivalents
Cash on hand
Bank: Cheque accounts
Bank: Cash management
Bank: Term deposits
Total cash and cash equivalents
2022
$
-
1,641,558
47,405
3,015,222
4,704,185
2021
$
226
1,668,498
26,615
15,215
1,710,554
Cash at bank and on hand bears floating interest rates. The interest rate relating to cash and cash equivalents for the year was
between 0.05% and 0.45% (2021: between 0.05% and 0.75%)
Note 9: Trade and other receivables
Current
Trade receivables (a)
Other receivables (b)
Total current receivables
2022
$
220,654
119,421
340,075
2021
$
225,032
179,335
404,367
Trade receivables and other receivables represent the principal amounts due at reporting date plus accrued interest and less,
where applicable, any unearned income and provision for doubtful accounts. An estimated doubtful debt is made when collection
of the full amount is no longer probable.
a. Past due but not impaired and impairment of receivables
Trade receivables are non-interest bearing and on an average of 45-day terms. Customers with balances past due without
provisions for impairment of receivables amount to $Nil as at 30 June 2022 ($Nil as at 30 June 2021). The company has recognised
a loss of $NIL (2021: $NIL) in profit and loss in respect of impairment of receivables for the year ended 30 June 2022.
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. The ECL assessment completed by the Group as at 30 June 2022 has resulted in an immaterial
credit loss and no impairment allowance has been recognised by the Group (2021: $Nil).
b. Other receivables
These amounts related to prepayments, accrued interest and net GST refunds receivable. None of these receivables are impaired
or past due but not impaired.
c. Fair value and credit risk
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
Information about the company’s exposure to fair value and credit risk in relation to trade and other receivables is provided in
Note 22.
48
Note 10: Inventories
Current inventories at cost
Raw materials
Finished products
Total inventories
2022
$
669,765
202,352
872,117
2021
$
657,832
237,045
894,877
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. Net realisable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale.
Note 11: Tax asset
Income tax credit/(expense)
R & D tax incentive
Total tax asset
Income tax
2022
$
709
395,000
395,709
2021
$
(26,717)
468,000
441,283
Income taxes are accounted for using the Balance Sheet liability method whereby:
• The tax consequences of recovering (settling) all assets (liabilities) are reflected in the financial statements;
• Current and deferred tax is recognised as income or expenses except to the extent that the tax relates to equity items or to a
business combination;
• A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available to realise the
asset;
• Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realised or the liability settled.
The charge for current income tax expense/credit is based on the profit or loss for the year adjusted for any non- assessable or
disallowed items. It is credited using tax rates that have been enacted or are substantively enacted by the reporting date.
Deferred tax is accounted for using the Balance Sheet liability method in respect of temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled.
Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which
case the deferred tax is adjusted directly against equity.
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.
R & D tax incentive
The Consolidated Entity is eligible for a research and development (R&D) grant which is received on an annual basis after the
Australia Tax Office processes the group’s tax return. The amount of R&D grant receivable is accrued based on eligible expenses
incurred during the respective financial year.
Note 12: Other assets
Non-Current
Bank guarantee
Total other non-current assets
2022
$
83,456
83,456
2021
$
83,456
83,456
The parent entity has provided a guarantee in respect of obligations under premises lease of $83,456 (2021: $83,456).
49
Note 13: 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
2022
$
736,781
(708,701)
28,080
192,537
(179,448)
13,089
36,278
(32,924)
3,354
38,542
(36,317)
2,225
2021
$
747,956
(699,625)
48,331
175,712
(127,825)
47,887
43,338
(41,029)
2,309
59,456
(58,673)
783
Total plant and equipment
46,748
99,310
Movements in carrying amounts
Useful life
Plant and
equipment
2-7 years
$
Office furniture
and equipment
2-7 years
$
Computer
software
3 years
$
Low value
asset pool
3 years
$
Consolidated Entity
Carrying amount at 1 July 2021
Additions
Disposals
Depreciation expense
Effects of foreign currency exchange differences
Carrying amount at 30 June 2022
48,331
-
-
(20,319)
68
28,080
47,887
-
-
(34,874)
76
13,089
2,309
3,135
-
(1,607)
(483)
3,354
783
2,691
-
(1,377)
128
2,225
Total
$
99,310
5,826
-
(58,177)
(211)
46,748
Property, plant and equipment are included at cost. Assets in plant and equipment are depreciated on diminishing value basis
over their estimated useful lives covering a period of two to seven years.
On disposal of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of
the asset is recognised as a gain or loss in the statement of profit or loss and other comprehensive income.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
- Plant & Equipment
- Office Furniture & Equipment
- Computer Software
- Low Value Pool
Depreciation Rate
20% - 25%
20%
25%
37.5%
50
Note 14: Intangible assets
Non-current
Patents at cost
Accumulated amortisation
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
Recognition and Measurement
2022
$
2,112,066
(1,635,056)
-
477,010
630,730
(630,730)
-
477,010
469,684
109,486
-
(102,160)
477,010
2021
$
2,002,579
(1,532,895)
-
469,684
630,730
(630,730)
-
469,684
498,121
27,841
-
(56,278)
469,684
Intangibles are carried at cost less accumulated amortisation and impairment losses where applicable. Intangible assets acquired
separately are capitalised at cost or if arising from a business combination at fair value as at the date of acquisition.
Intangible Assets comprise Intellectual Property in the form of Patents and Regulatory approvals (NMPA, 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.
Patents and Trademarks are valued in the financial statements at cost of acquisition less accumulated amortisation and are
amortised on a diminishing value basis at 12.5% per annum.
Impairment of assets
Intangible assets are monitored by management at the level of the four operating segments identified in Note 26.
A segment-level summary of the intangible allocation is presented below:
2022
Patent from cardiovascular products
Less: Impairment provided
Total
2021
Patent from cardiovascular products
Less: Impairment provided
Total
Australia
$
Asia
$
Americas
$
Europe
$
Consolidated
$
66,733
-
66,733
36,975
-
36,975
64,830
-
64,830
74,095
-
74,095
23,114
-
23,114
-
-
-
322,333
-
322,333
358,614
-
358,614
477,010
-
477,010
469,684
-
469,684
The group tests whether intangible assets have suffered any impairment on an annual basis or any indications present that an
asset may be impaired. For the 2022 and 2021 reporting periods, the recoverable amount of the cash-generating units (CGUs)
was determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow
projections based on financial budgets approved by management covering a five-year period.
No impairment identified from the assessment in 2022 (2021: Nil).
51
Note 15: Right-of-use assets and Lease liabilities
Right-of-use assets
Lease liabilities - current
Lease liabilities – non current
Reconciliation of movement in lease liabilities:
Lease liability recognise at 1 July
Additions
Interest expense
Repayment of lease liabilities
Total lease liabilities as at 30 June
2022
$
1,073,640
(220,466)
(1,091,586)
1,312,052
1,429,934
63,378
74,054
(255,314)
1,312,052
2021
$
1,231,438
(189,050)
(1,240,884)
1,429,934
1,617,244
-
83,688
(270,998)
1,429,934
The Group leases business premises (offices and laboratories). Rental contracts are typically for a fixed period of 12 months to 60
months and may include extension options. From 1 July 2019 leases are recognised as a right of use asset and a corresponding
liability at the date at which the lease is available for use by the Group. Assets and liabilities are measured on a present value
basis.
Lease payments are discounted using the interest rate implicit in the lease. Where a rate cannot be readily determined from the
lease (generally the case) then the lessee’s incremental borrowing rate will be used, being the rate the lessee would have to pay
to borrow the funds to obtain the equivalent asset. As the Group does not have any borrowings the incremental borrowing rate
has been determined using a build-up approach whereby the risk-free rate is adjusted for credit risk, considering factors such as
term, country, and currency. Right of use assets are depreciated on a straight-line basis over the term of the lease. The Group has
no variable lease payments in its leases.
Lease payments for operating leases of low value items or for a period of less than 12 months, where substantially all the risks and
benefits remain with the lessor, are charged as expense in the period in which they are incurred.
Note 16: Trade and other payables
Current
Trade payables
Sundry payables and accrued expenses
Employee related payables
Total payables
2022
$
153,690
208,672
115,802
478,164
2021
$
135,583
245,418
175,019
556,020
Trade and other payables represent the 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 carrying amounts of the Group’s trade and other payables are denominated in Australian Dollars. For an analysis of the
financial risks associated with trade and other payable refer to Note 22.
52
Note 17: Provisions
Current
Provision for annual leave
Provision for long service leave
Non-current
Provision for long service leave
Provision for warranties
Provision for make good
(a) Aggregate employee benefits
(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
(d) Movement in make good
Balance at beginning of the year
Additional provision
Amounts used
Balance at end of the year
Short term employee benefits
2022
$
160,956
36,412
197,368
26,826
22,150
21,124
70,100
224,194
226,156
147,521
(149,483)
224,194
26,600
(1,940)
(2,510)
22,150
18,860
2,264
-
21,124
2021
$
156,504
47,261
203,765
22,391
26,600
18,661
67,652
226,156
241,535
142,701
(158,080)
226,156
21,550
8,850
(3,800)
26,600
17,604
1,256
-
18,860
Short term employee benefits are employee benefits (other than termination benefits and equity compensation benefits) which
fall due wholly within 12 months after the end of the period in which employee services are rendered. They comprise wages,
salaries, social security obligations, short-term compensation absences, and profit sharing and bonuses payables within 12 months
and non-mandatory benefits such as medical care, housing, car and service goods.
The provision for employee entitlements to wages, salaries and annual leave represents the amount that the Consolidated Entity
has a present obligation to pay resulting from employee services provided up to reporting date. The provision has been calculated
after taking into consideration estimated future increases in wages and salaries and past experience regarding staff departures
and includes related on-costs.
The undiscounted amount of short-term benefits expected to be paid is recognised as an expense.
Long term employee benefits
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.
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.
Lease Make Good
A provision for Lease Make Good is recognised in relation to the properties held under operating lease. The Group recognises
the provision for property leases which contain specific clauses to restore the property to a specific condition. The provision at
balance date represents management’s best estimate of the present value of the future make good costs required.
53
Note 18: Issued capital
Ordinary shares
Fully paid ordinary shares
Total contributed equity
Movement in issued capital
Shares on issue at the beginning of the year
Ordinary share issued for cash
Ordinary share issued for in lieu of salary
Share issue costs
Issued Equity at the end of the year
2022
Number
2021
Number
2022
$
2021
$
196,768,333
196,768,333
154,384,643
154,384,643
39,136,673
39,136,673
34,665,560
34,665,560
154,384,643
39,627,942
2,755,748
-
196,768,333
149,828,334
3,090,000
1,466,309
-
154,384,643
34,665,560
4,359,074
166,900
(54,862)
39,136,673
34,197,430
309,000
170,000
(10,870)
34,665,560
The Company’s authorised share capital amounted to 196,768,333 ordinary shares of no-par value at 30 June 2022.
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.
Note 19: Options and rights reserve
The Consolidated Entity has adopted an 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 objective of
the EIP is to provide reward and incentive to valuable personnel while preserving cash. 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 rewards 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.
Options and rights reserves (i)
Foreign currency translation reserves
Total reserves
(i) Movement in options and rights reserves
Opening balance
Granted during the period (a)
Exercised during the period (b)
Lapsed during the period
Share-based payment expenses
Fair value of shares issued to employees
Rights at the end of the period
2022
Number
1,586,782
2,036,782
(1,436,782)
-
-
-
2,186,782
2021
Number
450,000
1,436,782
(300,000)
-
-
-
1,586,782
2022
$
3,628,461
72,803
3,711,264
2022
$
3,268,249
-
-
-
537,112
(166,900)
3,638,461
2021
$
3,268,249
84,157
3,352,406
2021
$
2,907,072
-
-
-
531,177
(170,000)
3,268,249
Total
2,186,782
1,586,782
3,638,461
3,268,249
(a) 1,636,782 indeterminate rights were issued to Rob Phillips on the terms and conditions approved by shareholders at the AGM
on 14 October 2021 under the Equity Incentive Plan, vesting dependent on performance hurdles on 1 July 2022. Consideration
54
payable upon vesting is $nil. The Board exercised its discretion to issue ordinary shares in lieu of cash. Upon meeting the
performance hurdles, a total of 1,636,782 rights were exercised on 5 July 2022 after the reporting date.
(b) 200,000 performance rights were granted to Nick Schicht on 24 August 2021 and 200,000 on 1 April 2022 under the Equity
Incentive Plan, vesting dependent on performance hurdles on 1 July 2022, and 1 July 2023. Consideration payable upon vesting
is $nil.
Performance rights were issued during the year, pursuant to the Equity Incentive Plan. Fair values at grant date are determined
using a Black-Scholes Pricing Model that takes into account the exercise price, the term of the rights, the share price at the grant
date, the expected volatility of the underlying share, and risk-free interest rate for the term of the option. The model inputs for
options granted during the year ended 30 June 2022 are noted below:
Grant date
14-Oct-21
24-Aug-21
01-Apr-22
#
Granted
1,636,782
200,000
200,000
Vesting
date
01-Jul-22
01-Jul-22
01-Jul-23
Vesting
period
(months)
8.5
10
14
Exercise
price
Nil
Nil
Nil
Share price
at issue
date
$0.135
$0.145
$0.098
Fair value
at issue
date
$0.135
$0.145
$0.098
Est.
volatility
61%
61%
62%
Expected
dividend
yield
Nil
Nil
Nil
Average
risk-free
rate
0.61%
0.22%
2.50%
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.
Goods or services received or acquired in a share-based payment transaction are recognised as an increase in equity if the goods
or services were received in an equity-settled share-based payment transaction or as a liability if the goods and services were
acquired in a cash settled share-based payment transaction.
For equity-settled share-based transactions, goods or services received are measured directly at the fair value of the goods or
services received provided this can be estimated reliably. If a reliable estimate cannot be made the value of the goods or services
is determined indirectly by reference to the fair value of the equity instrument granted.
Transactions with employees and others providing similar services are measured by reference to the fair value at grant date of the
equity instrument granted.
Note 20: Foreign currency translation reserve
Opening balance
Translation of financial statements of foreign Controlled Entities
Closing balance
2022
$
84,157
(11,354)
72,803
2021
$
33,968
50,189
84,157
All foreign currency transactions during the financial year are brought to account using the exchange rate in effect at the date of
the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at reporting date.
Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
The gains and losses from conversion of assets and liabilities, whether realised or unrealised, are included in profit or loss from
continuous operations as they arise.
55
Note 21: Cash flow information
(a) Reconciliation of cash
Cash at bank and on hand
Total cash at end of year
(b) Reconciliation of cash flow from operations to loss from continuing operations
after income tax
Loss from continuing operations after income tax
Non cash flows in loss from continuing operations
Depreciation
Amortisation
Depreciation on right-of-use assets
Share based payment expenses
FX Gain & Losses
Loss on disposal of PPE
(Increase)/decrease in assets
Trade debtors and other receivables
Other assets
Inventories
Tax credit
Increase/(decrease) in liabilities
Trade and other payables
Provision
Net cash from/ (used in) operating activities
Note 22: Financial instruments
a.
Significant accounting policies
2022
$
2021
$
4,704,185
4,704,185
1,710,554
1,710,554
(1,972,313)
(924,243)
58,177
102,160
255,314
537,112
(11,353)
-
4,378
59,913
22,760
45,574
(65,089)
(4,148)
(967,515)
68,129
56,283
270,998
531,177
50,693
1,595
46,729
(5,851)
(66,025)
75,868
(41,104)
(9,271)
54,978
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 1 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) and equity attributable to equity holders
of the Parent Entity, comprising issued capital (Note 18), and accumulated losses (Note 6).
c.
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.
d.
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 2021 and is
exposed to foreign currency risk on sales and purchases denominated in a currency other than Australian dollars.
The currencies giving rise to this risk is primarily the US Dollar, Euro and Chinese yuan. 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.
56
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
Cash
Current trade debtors
Current trade creditors
Cash
Current trade debtors
Current trade creditors
Cash
Current trade debtors
Current trade creditors
2022
USD
141,583
-
16,837
HUF
5,700,531
51,112
991,947
EUR
104,552
91,364
-
NZD
-
-
8,487
CNY
2,719,189
3,698,837
105,899
2021
USD
152,050
-
22,211
HUF
2,459
3,249,184
10,224,208
EUR
159,251
25,428
10,679
NZD
-
-
18,447
CNY
5,338,138
614,800
16,700
e.
Foreign currency sensitivity
The Consolidated Entity is mainly exposed to exchange rate risks arising from movements in the US Dollar (USD), Euro (EUR),
Hungarian forint (HUF) and Chinese yuan (CNY) against the Australian Dollar (AUD), and the US Dollar from the translation of the
operations of its Controlled Entity. However the entity earns in these same currencies so there is a natural hedge against currency
movements.
The analysis below demonstrates the profit impact of a 10% movement of USD, 5% movement of EUR, HUF and CNY rates against
the AUD 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.
Sensitivity
10% change in USD rate
5% change in EUR rate
5% change in CNY rate
5% change in HUF rate
Profit/Loss
- increase
- decrease
2022
$
190,402
9,264
44,395
18,532
262,593
2021
$
175,480
9,529
75,596
35,811
296,417
(262,593)
262,593
(296,417)
296,417
f.
Interest rate risk management
The Consolidated Entity does not have any external loans or borrowings as at 30 June 2022 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.
57
g.
Interest rate sensitivity
A 100-basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and
represents management’s assessment of the possible change in interest rates.
Profit/Loss - increase 100 basis points
- decrease 100 basis points
h. Credit risk management
2022
$
2,342
(2,342)
2021
$
3,174
(3,174)
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
2022
$
220,654
-
-
220,654
2021
$
225,032
-
-
225,032
No bad debt was written off during the year (2021: $Nil). There was no doubtful debt provision as at 30 June 2022 (2021: Nil). The
outstanding debts $220,654 are not past due to the reporting date. The group applies the AASB 9 simplified approach to
measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. Details included in Note
9.
i.
Liquidity risk management
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 following table details the Consolidated Entity’s remaining contractual maturity for its non-derivative liabilities. The table has
been drawn up based on the undiscounted cash flows expected to be received/paid by the Consolidated Entity.
Consolidated
2022
Trade creditors
Payables
Lease liabilities
Total financial liabilities
2021
Trade creditors
Payables
Lease liabilities
Total financial liabilities
Weighted
Average
effective
interest
Rate %
Fixed interest rate maturing
Floating
interest
Within 1
year
$
$
1 to 5
years
$
Non-interest
bearing
$
Total
$
0
0
6.14
0.0
0.0
5.71
-
-
-
-
-
-
-
-
-
-
310,430
1,226,230
310,430 1,226,230
-
-
-
-
189,050
1,240,884
189,050 1,240,884
153,690
115,802
-
269,492
135,583
175,019
-
310,602
153,690
115,802
1,536,660
1,806,152
135,583
175,019
1,429,935
1,740,537
The carrying amounts of financial assets and financial liabilities recorded at cost approximate their fair values.
58
Note 23: 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:
Uscom Kft
Hungary
100%
Significant investments in subsidiaries:
Country of subsidiary incorporation:
Proportion of ownership interest:
Beijing Uscom Consulting Co. LTD
China
100%
Significant investments in subsidiaries:
Country of subsidiary incorporation:
Proportion of ownership interest:
Uscom SNG Pte. Ltd.
Singapore
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
Christian Bernecker, Non-Executive Director
Brett Crowley, Non-Executive Director
Xianhui Meng, 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 35.
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
Long-term benefits
Share-based payment
Total key management personnel remuneration
2022
$
642,703
24,495
24,327
270,566
962,091
2021
$
662,510
21,941
23,970
381,176
1,089,597
59
Note 24: 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
Contingent liabilities
2022
$
2021
$
(1,983,667)
(1,983,667)
(1,174,054)
(1,174,054)
6,085,128
6,532,532
527,177
597,277
39,136,673
3,638,461
(36,839,879)
5,935,255
3,038,760
3,697,636
552,387
620,039
34,665,560
3,268,249
(34,856,211)
3,077,598
The parent entity has provided a guarantee in respect of obligations under premises lease of $83,456 (2021: $83,456). 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 2022 or 30 June
2021.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1.
Note 25: Auditors’ remuneration
Audit services
BDO Audit Pty Limited for audit and review of financial reports
BDO Hungary for audit
Total remuneration for audit services
Non-audit services
Total audit and non-audit services
Note 26: Operating segments
Segment information
2022
$
92,750
1,200
93,950
-
93,950
2021
$
77,200
12,000
89,200
5,000
94,200
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 Middle East
and Africa, and other regions. For each segment, the CEO and General Manager review internal management reports on at least
a monthly basis.
In 2022, the customer group operates in Asia and accounts for approximately 45% of the total sales (2021: 64%). For the current
period USCOM 1A comprised 84%, SpiroSonic spirometers 15% and BP+ 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 1 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
60
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
$
Consolidated
$
2022
Sales to external customers
Other income/revenue
Total segment revenue/income
Segment expenses
Segment result
Income tax
Consolidated loss from ordinary
activities after income tax
Segment assets
Segment liabilities
Acquisition of plant and
equipment and intangibles
Depreciation and amortisation
2021
Sales to external customers
Other income/revenue
Total segment revenue/income
Segment expenses
Segment result
Income tax
Consolidated loss from ordinary
activities after income tax
Segment assets
Segment liabilities
Acquisition of plant and
equipment and intangibles
Depreciation and amortisation
Note 27: Contingencies
199,839
571,659
771,498
2,791,094
(2,019,597)
-
1,112,119
15,022
1,127,141
978,869
148,272
1,229
(2,019,597)
149,501
6,501,176
1,782,805
42,719
243,745
193,970
591,600
785,570
3,058,217
(2,272,647)
-
1,229,153
163,159
-
49,879
2,445,977
27,932
2,473,909
987,430
1,486,479
(5,391)
(2,272,647)
1,481,088
3,485,014
1,936,777
19,985
245,055
1,404,351
127,210
-
68,260
330,280
61,718
391,998
561,329
(169,330)
-
(169,330)
65,497
15,930
25,548
4,950
225,733
-
225,733
393,364
(167,631)
-
(167,631)
115,057
66,070
1,640
-
867,445
95,497
962,942
862,156
100,785
(33,675)
67,111
197,115
95,791
47,045
117,077
992,401
77,197
1,069,598
998,002
71,596
(36,649)
34,947
330,546
127,314
11,725
82,936
2,509,683
743,895
3,253,578
5,193,448
(1,939,869)
(32,444)
(1,972,313)
7,992,940
2,057,684
115,312
415,651
3,858,081
696,729
4,554,810
5,437,014
(882,203)
(42,040)
(924,243)
5,334,969
2,257,371
33,350
396,252
Other than the guarantee mentioned at Note 24, the consolidated entity did not have any contingent liabilities as at 30 June 2022
or 30 June 2021.
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.
Impact of COVID
The impact of COVID on Uscom’s prior operations has been significant, as predicted last year, while the effect of COVID on future
results of Uscom is uncertain.
The future impact on Uscom operations of COVID and COVID derived viruses very much depends on the course of COVID and
its variants, and the clinical characteristics and the political response to these disease. Possible outcomes range from a rapid
disappearance of the current virus and its variants, as has happened with prior pandemics, through to a rapid increase in its
virulence to become a widespread, persistent and socially devastating global disease.
In the event of scenario 1 there may be an accompanying and steady recovery of global travel and business which will result in a
rapid return of Uscom results to pre-pandemic levels with a rebound of global growth.
In scenario 2 the virus may continue to evolve through multiple iterations with increasing clinical consequences requiring
implementation of current COVID Zero type protocols. In this worst “doomsday” scenario this more clinically dangerous virus
with extreme transmissibility may result in widespread mortality and social disruption. This would result in a global depression of
business activity with significant but difficult to predict commercial consequences for Uscom.
61
The most likely result will be somewhere in between, with variants of the virus recurring annually with diminishing impact as it
becomes an endemic infectious disease, with society and business adapting to a uncomfortable co-existence as its commercial
and social impact diminishes over time.
The USCOM 1A and Uscom SpiroSonic devices are useful to monitor the effective heart and lung function of acutely infected
subjects, and to monitor the post COVID complications of pulmonary fibrosis. Depending on the disease trajectory and social
responses to them, Uscom may benefit from widespread adoption in the global management of the disease with an increase in
sales.
Management are alert to these risks and will continue to monitor and respond appropriately to changes in spread of global
infectious diseases of all kinds.
62
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 Australian 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 2022 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:
Professor Rob Phillips
Chairman
18 August 2022
63
INDEPENDENT AUDIT REPORT
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 2022, 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 2022 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 (including Independence Standards) (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 Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd and BDO Australia Ltd are mem bers 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.
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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
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 14 Intangibles
Asset of the financial report, the
carrying value of intangible assets
were considered significant to our
audit as the carrying value of $477,010
at 30 June 2022 is material to the
financial statements and requires
considerable judgement and
estimation by management based on
increasing uncertain outcomes of
regulatory approvals in all
jurisdictions as well as the
unpredictable effect of COVID-19 on
future results of Uscom.
Our audit procedures include amongst other:
•
Evaluated management’s assessment of the impact
of the COVID-19 pandemic on the Group to assess
any impairment indicators present according to
AASB 136 Impairment of Assets.
• Critically reviewed the Value-in-Use (‘VIU’) models
prepared by management based on the identified
cash generating units (‘CGUs’) through challenging
and testing the following key assumptions:
o Growth on sales volume and price;
o Budgeted gross margin;
o Other operating costs; and
o Long-term growth rate
• Re-performed the valuation assessment of growth
rates, terminal values and discount factors used in
discounted cash flow valuations based on BDO
sensitised results.
• Together with BDO internal specialists, assessed
the reasonableness of the discount rate applied by
management across the different CGUs.
• Reviewed the regulation process for NMPA
approvals for the SpiroSonic device, as well as the
appropriateness of timing reflected in the revenue
forecasts associated with that device.
• Reviewed the accuracy of the impairment models
calculations.
• Reviewed the patents in relation to the
appropriateness of the amortisation rates and
useful economic lives.
65
•
Evaluated the adequacy of the disclosures in the
financial report.
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 2022 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.
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
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Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included the directors’ report for the year ended 30 June
2022.
In our opinion, the Remuneration Report of Uscom Limited, for the year ended 30 June 2022, 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 Audit Pty Ltd
John Bresolin
Director
Sydney, 18 August 2022
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SHAREHOLDERS INFORMATION
Additional information required by Australian Stock Exchange Listing Rules is as follows. This information is current
as at 31 July 2022.
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
43
72
159
403
142
819
Ordinary Shares
Number
5,814
301,504
1,269,531
14,253,273
182,805,512
198,635,884
%
0.000
0.150
0.640
7.180
92.030
100.000
There were 187 holders of less than a marketable parcel of 7,692 ordinary shares.
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
The names of the substantial shareholders listed in the holding company’s register as at 31 July 2022 are:
MR ROBERT ALLAN PHILLIPS
CITICORP NOMINEES PTY LIMITED
JETAN PTY LTD & JETAN PTY LTD
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