Annual Report
2019 – 2020
Atomo Diagnostics Limited ACN 142 925 684
Atomo Rapid HIV tests. Accurate, rapid results.
CEO John Kelly talks about developing tests
for the COVID-19 pandemic response.
Atomo Rapid Elion. Designed to meet the
needs of the rapidly growing self-test market.
TABLE OF CONTENTS
01 OVERVIEW
02 CHAIRMAN’S LETTER
03 CEO’S REPORT
04 OUR JOURNEY
05 DIRECTORS’ REPORT
06 FINANCIAL STATEMENTS
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
07 NOTES TO FINANCIAL STATEMENTS
08 DIRECTORS’ DECLARATION
09 AUDITOR’S REPORT
10 SHAREHOLDER INFORMATION
11 CORPORATE DIRECTORY
3
5
6
7
9
11
32
33
34
35
36
38
71
73
78
82
OUR PURPOSE
Atomo is an emerging global leader in the design
of medical devices for blood-based rapid testing
for professional use and self-testing. Atomo’s
innovative rapid diagnostic test (RDT) devices
simplify procedures, reduce common user errors,
and enhance test reliability.
OUR VISION
Atomo is committed to applying its resources,
technologies and know-how to help address
the fundamental issues affecting global health.
We believe usability is more and more
important as healthcare increasingly transitions
out of laboratories.
Our products are focussed on improving health
outcomes across a range of markets and
applications, including in countries with high
disease burden, weak healthcare systems and
limited facility-based testing. Diagnostic self-
testing and community screening programs are
increasingly seen by many experts as critical
tools in reducing the spread of infectious
disease globally.
01 OVERVIEW
5
Atomo’s primary focus is the expansion of global sales
and continued development of its proprietary rapid
test device technologies that simplify blood-based
medical diagnostic testing processes and reduce errors
when compared to more complex conventional blood-
based rapid diagnostic testing kits that require multiple
accessories to run the test.
Infectious
Disease
Consumer and
Point of Care
OEM
“We are excited about our partnership with Atomo Diagnostics. We believe
the incorporation of the novel Atomo technology into the existing FebriDX
testing system improves its ease of use and accuracy, allowing for broader
acceptance in outpatient settings.”
Rob Sambursky, President and Chief Technology
and Medical Officer of RPS/Lumos
“We invested in Atomo because it is a patented, innovative company
helping to achieve our twin objectives of meeting global health needs as
well as delivering a strong return for our investors”
Curt LaBelle, President Global Health Investment Fund
“The user-centred design achieved with this product as a result of our
collaboration with Atomo makes it ideal for OTC markets and self-testing”
Milovan Stankov Puges, CEO, NG Biotech
6 02 CHAIRMAN’S LETTER
On behalf of the Board of Atomo Diagnostics Limited
(Atomo), I am delighted to introduce the company’s
Annual Report to 30 June 2020. This is our first Annual
Report since our successful capital raising and listing
on the Australian Securities Exchange (ASX) on 16 April
2020. Reflecting government directed social distancing
measures, Atomo was the first “virtual” listing on the ASX.
Atomo was included in June into the ASX All Ordinaries
Index.
Through and following our IPO we warmly welcome
many of you as recent shareholders, and thank all of our
shareholders for your continuing interest and support. Our
register currently exceeds 8,000, spanning individuals
and prominent institutional investors.
Business Update
As you know Atomo supplies devices for the rapid testing
of blood by both professional users and consumers, to
detect and test for infectious diseases, chronic health
conditions and consumer wellness. Atomo has two
business models for developing and commercialising
diagnostic devices; the first is selling Finished Products
and the second is selling original equipment manufacturer
(OEM) devices. The corresponding marketing strategies
allow Atomo to maximise commercial opportunities to
seek scale across a breadth of rapid test applications and
geographies.
Funds raised through our listing are in part financing the
expansion of our production capacity. We have more
than doubled our production capacity during 2020 now
producing 750,000 devices monthly. Ongoing demand
sees Atomo continuing to invest in growing our capacity.
Atomo’s commitment to evolving rapid testing and the
flexible nature of our diagnostic platforms allows us to
respond promptly to identified opportunities and enables
us to help address public health demands, including those
arising from the ongoing COVID-19 pandemic. In response
to the COVID-19 pandemic, we have signed agreements
with Access Bio, Inc (USA) and NG Biotech to house each
company’s COVID-19 antibody RDT on Atomo’s platform,
making these available in the North American, European
and Australian markets amongst others. We have also
announced that Atomo is launching the marketing of
Access Bio’s COVID-19 antigen test in Australia, New
Zealand and India.
You may recall that Atomo’s first Finished Product tests
for HIV were made available for professional use as well
as a version approved for self-test use. We are proud that
Atomo’s HIV self-test is the only HIV self-test approved
by the Therapeutic Goods Administration (TGA) for
use in Australia. Atomo supplies NASDAQ listed Mylan
Pharmaceuticals and UK based healthcare company
Owen Mumford with HIV tests for sale through contracts
covering more than 100 countries, across Europe, Asia,
Africa and Central & South Amercia. Atomo markets
its HIV products directly in Australia. Atomo’s branded
product portfolio was expanded to meet these demands,
taking responsibility for regional distribution of Atomo
branded COVID-19 rapid antibody and antigen tests.
The appeal of Atomo’s integrated user-friendly platforms
is also underpinning growth of our OEM business.
Supply contracts have been extended to manufacture
devices for RPS/Lumos Diagnostics to house its FebriDx
rapid test, allowing point-of-care testing to distinguish
bacterial from viral infections.
Looking Ahead
Atomo is well positioned to sustain meaningful rates of
growth across Finished Products and OEM contracts.
Combining the growth of recurring revenues with
established partners and proven responsiveness to
emerging opportunities, we are well capitalised to deliver
on our advised global strategy.
Board Renewal
Atomo’s Board of Directors bring strong commercial
and industry experience across critical aspects of our
business. One of the Board’s priorities is to ensure that
we have capabilities and domain expertise to govern our
global business effectively. We were delighted this year
to welcome Connie Carnabuci and Paul Kasian to join our
Board. Connie and Paul bring a wealth of experiences
and skills that continue building the Board’s diversity
and depth. We also welcomed Gillian Nairn as Company
Secretary.
The Atomo Team
Lastly and most importantly, the Board recognises the
outstanding efforts of the Atomo team. These efforts
are under the tireless leadership of CEO John Kelly,
alongside his executive team of CFO Will Souter, CCO
Fabio Baglioni and COO Mark Smith. As we have seen
throughout the last financial year and beyond, Atomo
continues to navigate successfully through changing
conditions, identifying and acting on new opportunities.
We are excited about the years ahead.
John Keith
Chair, Atomo Board
03 CEO’S REPORT
This last year represents a watershed in Atomo’s history
and its journey to becoming a global leader in point
of care diagnostics. Despite significant economic and
financial uncertainty, we successfully listed on the
Australian Securities Exchange (ASX) in April 2020.
Atomo was able to quickly pivot to assist in the fight
against the emerging COVID-19 pandemic, redirecting
product capacity to enable our partner in Europe
to launch their COVID-19 rapid test in France. This
was followed up by a second extensive agreement
covering North America with another trusted partner.
Through these strategic relationships the company
has also been able to obtain rights for our own Atomo
branded COVID-19 rapid antibody and antigen tests. We
continued to support our HIV business, which we believe
will provide revenues to the company in the coming
years as HIV self testing plays an ever-increasing role in
the diagnosis of HIV infection globally.
There was an improvement in underlying EBITDA, from a
loss of $4.08 million in FY19, to a loss of $2.38 million in
FY20 suggesting that Atomo is on a path to becoming
EBITDA positive. The company’s debt was fully repaid
from the IPO proceeds and we finished the year with $27
million cash on hand.
Additionally, ongoing investment brought the total
research and development spend for FY20, including
amounts capitalised, to approximately $2.3 million,
reflecting ongoing investment in product development
and improvements in key proprietary manufacturing
processes.
The Financial Summary
Key Activities
We are pleased to report on these encouraging financial
results, detailed in this report. The combination of strong
growth in revenues, the elimination of debt and robust
investment in capacity and new applications create a
solid foundation for ongoing success. Further, the results
reflect a strategy of expanding the depth and breadth
of product and market segments to drive growth whilst
maintaining and building margins.
In FY20, gross margin increased from 18% to 60% as
the business continued to benefit from a move towards
more efficient economies of scale, and COVID-19 test
sales delivered higher margins. Revenue from sales to
customers increased by 895% to $5.37 million. This was
driven by:
• the acceleration of product registrations and in-country
launch of HIV products by the Group’s HIV products
distribution partners;
• the growth of other OEM business in Europe and the
United States; and
• significant customer demand for Atomo’s COVID-19
point of care antibody testing devices.
We are extremely pleased with the trajectory of sales
growth, noting that revenue in FY20 was 10 times that of
FY19.
Our listing has enabled Atomo to expand operations.
We were well situated to meet the challenges of the
COVID-19 pandemic – a once-in-a-lifetime challenge and
an opportunity for Atomo to contribute to addressing
this global problem. Partnership agreements include:
• in late March, NG Biotech SAS (France) for COVID-19
antibody RDT devices to be distributed in France;
• in August, Access Bio, Inc (USA) for COVID-19 antibody
RDT tests in the North American market, including a
take or pay for 2 million units by September FY21;
• in August, TGA approval granted for supply in Australia
of the AtomoRapid COVID-19 antibody rapid test;
• in September, obtaining the rights to distribute Access
Bio’s antigen test under the Atomo brand in Australia,
New Zealand, and India.
The global pandemic has highlighted that traditional
models of testing in hospitals, laboratories and
centralised institutions are not, on their own, adequate.
In the case of COVID-19 this centralised testing approach
has not been flexible or scalable enough to meet the
needs of communities globally. We see technology that
allows simple and rapid testing at home, and in point-of-
care settings as the future of the delivery of healthcare in
the modern era.
8 03 CEO’S REPORT
Looking Forward
We are excited to progress our journey as we move into
FY21. During the year we are planning to:
• expand strategic commercialisation and distribution
partnerships across key global markets with a clear
focus on expansion of clinical test applications
commercialised on Atomo devices;
• seek new global markets for COVID-19 and HIV as
well as scaling up our OEM sales channels, supporting
key partners in these channels and ensuring that
manufacturing capacity is in place to support significant
scale up across these businesses;
• launch new Atomo finished products in high value
diagnostic segments across professional use point-of-
care markets, including doctors’ offices, telehealth and
community screening channels as well a focus on the
rapidly emerging consumer / at home health segment;
• focus on the development and commercialisation of
new products and technologies, including additional
AtomoRapid devices, a new low-cost digital reader and
eHealth app based solutions; and
• expand Atomo’s business footprint and scale, including
setting up a North American business operation,
increasing production capacity, increasing business
via OEM channels and new Atomo finished product
commercialisation activities.
John Kelly
CEO Atomo
04 OUR JOURNEY
9
2014
2015
2016
2017
2018
2019
2020
AtomoRapid RDT awarded ‘Best in Show’ at
Medical Design Excellence Awards (MDEA)
Atomo wins ‘Innovation in Export’ Award
at Premier’s NSW Export Awards
US$6m loan from Global Health Investment Fund
(GHIF) to support business scale-up
Atomo launches in the South African private sector
to establish performance and market data
GHIF leads follow-on equity round investment
totalling A$4.3m
Atomo secures impact loan & follow on equity
from GHIF
US$2.6m grant from Bill & Melinda Gates
Foundation (BMGF) to develop HIV self-test
Atomo secures CE Mark for its HIV Self-Test
Access Bio and Atomo announce development
of world’s first Hepatitis C self-test
Atomo partners with RPS/Lumos Diagnostics to
develop next generation FebriDx
Atomo and Mylan partner for HIV self-test
Atomo HIV self-test approved by Australian
TGA as first and only HIV self-test
Commencement of sales to HIV distributors
Atomo (Mylan) HIV self-test prequalified by WHO
Completes $16million pre-IPO fundraise
South African assembly and packing facility for
HIV self-tests
Atomo lists on ASX (AT1)
Atomo secures Australian TGA approval for its
COVID-19 antibody test
Atomo secures COVID-19 agreements for Europe
and North America
05 DIRECTORS’
REPORT
05 DIRECTORS’ REPORT
11
The Directors present their report, together with the financial statements, on the
consolidated entity (referred to hereafter as the ‘Group’) consisting of Atomo
Diagnostics Limited (referred to hereafter as the ‘Company’ or ‘Parent Entity’)
and the entities it controlled at the end of, or during, the year ended 30 June 2020.
All amounts are presented in Australian dollars (AUD) unless otherwise stated.
DIRECTORS
The Directors of Atomo Diagnostics Limited at any time
during or since the end of the financial year are:
Director
John Perry Keith (Chairman)
John Michael Kelly (Chief Executive Officer)
George Alexander Sidis
Curt Harold LaBelle
Doris-Ann Williams
Connie Bernadette Carnabuci
Paul Alexander Kasian
Appointed
Resigned
2 December 2011
1 April 2010
1 April 2010
n/a
n/a
3 February 2020
21 October 2016
n/a
6 April 2017
22 January 2020
4 February 2020
4 February 2020
n/a
n/a
The Company Secretary is Gillian Maria Nairn who was appointed on 4 February 2020.
Robert Joseph Snoch was Company Secretary from 8 December 2016 until 4 February 2020.
OPERATING & FINANCIAL REVIEW
Principal Activities
The principal activities of the Group during the course
of the year were the development and sale of medical
devices.
There were no significant changes in the nature of the
activities of the Group during the year.
Review of operations
The loss for the consolidated entity after providing for
income tax amounted to $9,218,105 (30 June 2019: loss of
$5,055,112).
Revenue increased by 895% for the year, from $0.54
million in 2019 to $5.37 million in 2020. This growth in
revenue was driven by:
• the acceleration of registrations and in-country rollout of
HIV products by the Group’s HIV products distribution
partners;
• the launch in Europe of customer RDT products that
utilise the Group’s Pascal device; and
• significant customer demand for the Group’s COVID-19
point of care antibody testing devices.
During the year, the Group incurred significant one-off
expenses relating the Company’s Initial Public Offering
on the ASX and the bringing to account cash and non-
cash finance costs as described further below.
Finance costs during the year amounting to $5.29 million
comprised the following:
• $0.45 million plus $0.76 million (totalling $1.21 million)
relating to actual cash interest payable on the GHIF loan
and converting note;
• $3.25 million relating to (i) effective interest rate
adjustments predominantly on the converting note and
GHIF loan ($7.06 million) and (ii) fair value adjustments
totalling $3.80 million (income) in relation to the
warrants attached to the GHIF loan, and the embedded
derivative on the converting note; and
• $0.83 million in costs associated with the raising of the
converting note.
Cash and cash equivalents as at 30 June 2020
amounted to $27.1 million compared to $1.9 million as
at 30 June 2019. The significant increase in cash and
cash equivalents during the year is attributable to the
proceeds received by the Company via the issue of
converting notes during the year and upon its Initial
Public Offering, net of associated costs and working
capital used during the year.
12
Significant changes in the state of affairs
• On 28 February 2020, GHIF exercised 21,818,184
• During the months of October and November 2019, the
Company raised $16.05 million through the issue of non-
redeemable converting notes. These notes were interest
bearing and convertible at the earlier of the occurrence
of a significant equity raising transaction, or twelve (12)
months from the date of issue. Of the $16.05 million,
a non-cash portion amounting to $1.76 million was
issued to Global Health Investment Fund LLC (“GHIF”)
in satisfaction of the first repayment of their loan (as
described in Note 13). All of the converting notes were
converted into 100,302,363 ordinary shares in the
Company as part of the Initial Public Offering (“IPO”)
described below.
• On 19 December 2019, the shareholders of the Company
approved a 1:8 split of the Company’s share capital.
• On 19 December 2019, the shareholders of the Company
approved the conversion of all Ord+ shares into ordinary
shares on a 1:1 basis, effective at the time that the
company became a public company.
• On 21 February 2020, the Company changed from
being a proprietary company with the name Atomo
Diagnostics Pty Limited, to being a public company with
the name Atomo Diagnostics Limited. The Company
also adopted a new constitution suitable for a public
ASX listed company pursuant to shareholder approval
obtained at a general meeting held on 19 December
2019.
• Prior to the IPO (details below), holders of 18,049,440
options (on a post-share split basis) had accepted an
early exercise offer presented by the Company, resulting
in the issue of 8,768,491 ordinary shares.
warrants (post-share split basis) on a cashless basis
resulting in the issue of 10,868,183 ordinary shares.
• On 14 April 2020, the Company was admitted to the
Official List of the Australian Securities Exchange
(“ASX”) after completing an IPO raising $30 million via
the issue of 150,000,010 ordinary shares at an issue price
of $0.20. The Company’s shares commenced trading on
the ASX on 16 April 2020.
• Concurrently with the IPO, 47,838,768 B Class shares
were converted into ordinary shares on a 1:1 basis
pursuant to approval by shareholders on 19 December
2019.
• On 14 April 2020, 6,800,000 options were issued to the
Company’s Managing Director (John Kelly) and three
(3) other key management personnel. These options are
exercisable at $0.25 within 36 months from their vesting
date. These options vest in three equal tranches in 12
month, 24 months and 36 month respectively, subject
to satisfaction of vesting conditions relating to KPIs.
A further 1,600,000 options were issued to ID&E Pty
Limited on the same terms as those noted above.
• On 21 April 2020, the Group repaid in full it’s debt to
GHIF. As a result, the Company had no debt as at 30
June 2020.
In the opinion of the Directors, there were no other
significant changes in the state of affairs of the Group
during the financial year.
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June
2020 that has significantly affected, or may significantly
affect the Group’s operations, the results of those
operations, or the consolidated entity’s state of affairs in
future financial years.
Impacts of Covid-19
ENVIRONMENTAL REGULATION
13
The Group’s operations are not subject to any significant
environmental regulation under both Australian
Commonwealth or State law. The Board believes that
the Group has adequate systems in place for the
management of its environmental requirements.
Atomo has traded successfully throughout the COVID-19
pandemic and in fact has seen performance improve as
a direct result. During the initial phases of the COVID-19
epidemic, business of the Group was temporarily
negatively impacted as global health refocused
resources to respond to COVID-19 and supply chains
were interrupted. Thereafter, as the Group’s supply chain
quickly returned to normal and as customers began to
address the COVID-19 situation, there was a significant
improvement in the Group’s financial and trading position
as revenue increased driven by demand from customers
seeking to use Atomo devices in their products to test
for antibodies produced in response to exposure to
COVID-19.
Likely developments and expected results of operations
As Atomo moves into FY21, the focus will be on
continuing to meet increasing demand created by the
ongoing COVID-19 pandemic, as well as continuing to
progress activities in the following key areas:
• scale-up and ongoing roll-out of business in the HIV self-
test market;
• expansion of sales of OEM products to existing and new
OEM customers; and
• developing and expanding new Atomo rapid test
products and entry into new point of care test markets.
In order to support these activities, the Company will
continue to invest in ongoing research and development
and the expansion of its manufacturing capacity.
14
INFORMATION ON DIRECTORS
Name:
Title:
Experience and expertise:
John Keith
Independent Non-Executive Chairman
John Keith has served as the Non-Executive Director of Atomo since November
2011 and became Chairman in 2014.
Mr Keith is a Managing Director of BNP Paribas, establishing and leading its
financial institutions coverage team. Prior to joining BNP Paribas in 2011, Mr
Keith held country management and senior business and coverage positions for
Nomura Securities in Sydney and Hong Kong. His career comprises working with
supranational, sovereign and institutional clients across all areas of investment
and institutional banking. He has also served on the boards of ASIA Limited,
Calliva Limited, Room to Read Australia Foundation and Ascham Foundation.
Mr Keith holds a Bachelor of Arts (Hons) majoring in Economic History from the
Victoria University of Wellington, a Master of Applied Finance from Macquarie
University and a Global Executive MBA from the University of Sydney.
Other current Directorships:
Nil
Former Directorships (last 3 years): Nil
Special responsibilities:
Member of the Audit and Risk Committee and Member of the Nomination and
Remuneration Committee
Interests in shares:
Interests in options:
3,261,056
3,600,000
Contractual rights to shares:
Nil
Name:
Title:
John Kelly
Managing Director and CEO
Experience and expertise:
John Kelly is the Managing Director and CEO of Atomo.
For more than 20 years Mr Kelly has focused on developing and commercialising
medical devices to enhance usability and performance, having started with CR
Bard in Europe developing Class III implantable cardiology products.
Prior to co-founding Atomo in 2010, Mr Kelly acted as the Chief Operating
Officer (COO) of Unilife Corporation, which was previously an ASX-listed
company (ASX:UNS) and subsequent to his departure, a Nasdaq listed company
(NASDAQ:UNIS). At Unilife Corporation, he led the global operations team from
2005 to 2008, developing ‘Unifill’, the world’s first glass prefilled drug delivery
device with integrated auto retract safety feature, and this technology was
successfully licensed to Sanofi Aventis for US$47 million. Prior to joining Unilife
in 2005, Mr Kelly spent five years at ResMed where he led the New Product
Implementation Group and managed the development of the ground-breaking
Mirage Swift and Activa mask systems.
Mr Kelly holds an Honours degree in Mechanical Engineering from the University of
Liverpool, a Master’s degree in Manufacturing Systems Engineering from Queen’s
University Belfast, and an Executive MBA from the University of Sydney, where he
was awarded the Business School’s inaugural ‘Excellence in Leadership’ scholarship.
Other current Directorships:
Nil
Former Directorships (last 3 years): Nil
Special responsibilities:
Nil
Interests in shares:
Interests in options:
73,530,248
2,000,000
Contractual rights to shares:
Nil
15
Name:
Title:
Curt LaBelle
Non-Executive Director
Experience and expertise:
Curt LaBelle has served as a Non-Executive Director of Atomo since October
2016.
Dr LaBelle has been actively involved in the healthcare industry for 20 years,
both operationally and as an investor. Dr LaBelle is President at the Global
Health Investment Fund (GHIF), a social impact investment fund, which manages
approximately US$108 million backed by the Gates Foundation, JP Morgan and
others. He also serves as a Director on the boards of Alydia Health, Evenovia and
Atticus Medical.
Prior to joining GHIF, Dr LaBelle was Managing Director at Tullis Health Investors
and Vice President at Investor Growth Capital. He is a former chairman of
Impulse Monitoring (acquired by Nuvasive), Exagen Inc. (NASDAQ:XGN) and a
former Director of Sirion Therapeutics (products acquired by Alcon and Bausch),
SafeOp Surgical (acquired by AlphaTec) and KAI Pharmaceuticals (acquired by
Amgen).
As Dr LaBelle is President at GHIF, a substantial shareholder of Atomo, Dr
LaBelle is not considered to be an independent Director.
Dr LaBelle holds a Bachelor of Economics from Brigham Young University, and
both MD and MBA degrees from Columbia University.
Other current Directorships:
Director of Eyenovia Inc. (NASDAQ:EYEN)
Former Directorships (last 3 years): Former chairman of Exagen Inc. (NASDAQ: XGN)
Special responsibilities:
Member of the Audit and Risk Committee
Interests in shares:
Interests in options:
63,851,280
3,600,000
Contractual rights to shares:
Nil
Name:
Title:
Experience and expertise:
Other current Directorships:
Paul Kasian
Independent Non-Executive Director
Dr Kasian is an experienced executive Director with demonstrated success in
both domestic and international companies encompassing senior leadership,
strategy, investment and risk roles.
His other roles have included Chief Investment Officer and Head of Global
Financials at HSBC Asset Management, Founding Director of Accordius and
Founding Director of Wallara Asset Management.
He holds a PhD in Microbiology and a Master of Business Administration, both
from the University of Melbourne, and is a Graduate Member of the Australian
Institute of Company Directors.
Dr Kasian is currently Non-Executive Director (appointed 31 August 2016) and
Chairman (appointed 15 September 2018) of IODM Limited (ASX:IOD). He is
also Non-Executive Director (appointed 16 October 2019) of Eco Systems Ltd
(ASX:ESL).
Former Directorships (last 3 years): Previously he served as a Non-Executive Director, then Chairman and CEO of
Genetic Technologies Limited (appointed 12 December 2013 and resigned 23
September 2019).
Special responsibilities:
Chair of the Audit and Risk Committee
Interests in shares:
Interests in options:
Contractual rights to shares:
100,000
Nil
Nil
16
Name:
Title:
Experience and expertise:
Connie Carnabuci
Independent Non-Executive Director
Connie Carnabuci has over 30 years’ experience advising intellectual property
and technology intensive businesses in Australia and across Asia on commercial,
corporate and regulatory matters.
She has been internationally recognised as a leading lawyer in her field by a
number of independent commentators, including Euromoney (Leading Woman
in Business Law, Patents & Technology).
Ms Carnabuci holds an executive role as the General Counsel of the Australian
Broadcasting Corporation. She is a professional Non-Executive Director and
currently serves on the Board and the Remuneration Committee of OFX. Ms
Carnabuci is a former partner of Mallesons Stephen Jacques and Freshfields
Bruckhaus Deringer. She is a member of the Business Advisory Council of the
UNSW Business School. She serves as the Vice President of the Cranbrook
School Parents Association. She was the Chair of the NFP, Kids Giving Back, from
2015 to 2018.
Ms Carnabuci is a graduate of UNSW (B.Commerce (Marketing), with merit/LLB,
1986) and the Australian Institute of Company Directors.
Other current Directorships:
Connie Carnabuci currently serves as a Non-Executive Director on the Board,
and the Remuneration Committee of OFX Group Limited (ASX:OFX).
Former Directorships (last 3 years): None.
Special responsibilities:
Chair of the Nomination and Remuneration Committee
Interests in shares:
Interests in options:
Contractual rights to shares:
75,000
Nil
Nil
‘Other current Directorships’ quoted above are current Directorships for listed entities only and excludes Directorships
of all other types of entities, unless otherwise stated.
‘Former Directorships (last 3 years)’ quoted above are Directorships held in the last 3 years for listed entities only and
excludes Directorships of all other types of entities, unless otherwise stated.
COMPANY SECRETARY
Gillian Nairn has over 20 years legal and governance experience in various listed and public companies, as well as in
private practice.
Ms Nairn is an employee of Company Matters Pty Ltd, a company secretarial service provider. Prior to joining
Company Matters, Ms Nairn held various company secretarial roles, predominantly with listed entities, in a variety of
sectors including manufacturing, oil and gas, professional services and education.
Ms Nairn holds a Bachelor of Laws and Bachelor of Arts from UNSW and a Graduate Diploma in Applied Corporate
Governance. She is a Fellow of the Governance Institute of Australia and holds a current NSW legal practising
certificate.
Ms Nairn was appointed as Company Secretary on 4 February 2020.
17
MEETINGS OF DIRECTORS
The number of meetings of the company’s Board of Directors (‘the Board’) and of each Board committee held during
the year ended 30 June 2020, and the number of meetings attended by each Director were:
Full board
Audit & Risk Committee
Nomination and
Remuneration Committee
Held^
Attended
Held^
Attended
Held^
Attended
John Keith
John Kelly
Curt LaBelle
Connie Carnabuci
Paul Kasian
George Sidis^^
Doris-Ann Williams^^^
11
11
11
9
9
2
2
11
11
11
9
9
2
2
1
-
1
-
1
-
-
1
1
1
-
1
-
-
1
-
-
1
1
-
-
1
1
-
1
1
-
-
^ Represents the number of meetings held to which the Director was required to attend as a member of the relevant
committee.
^^ Resigned on 3 February 2020
^^^ Resigned on 22 January 2020
REMUNERATION REPORT (AUDITED)
The remuneration report details the key management
personnel remuneration arrangements for the
consolidated entity, in accordance with the requirements
of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having
authority and responsibility for planning, directing
and controlling the activities of the entity, directly or
indirectly, including all Directors.
The remuneration report is set out under the following
main headings:
• Principles used to determine the nature and amount of
remuneration
• Details of remuneration
• Service agreements
• Share-based compensation
• Additional disclosures relating to key management
personnel
Principles used to determine the nature and amount of
remuneration
Atomo’s Board of Directors (“the Board”) has reserved
to itself responsibility for approving the Company’s
remuneration policies and satisfying itself that
remuneration policies are aligned with the Group’s
purpose, values, strategic objectives and risk appetite.
The Board has also reserved to itself the appointment
and removal of the Managing Director and the Company
Secretary and determination of their remuneration and
conditions of service, including any financial incentives.
To assist the Board in fulfilling its responsibilities in
respect of remuneration related matters, shortly prior
to listing, the Board established a Nomination and
Remuneration Committee (“NRC”). The Board delegated
the following remuneration related matters to the NRC:
(i) set the fees and salaries paid to both executive and
Non-Executive Directors;
(ii) make recommendations to the Board regarding the
remuneration of the Managing Director and direct
reports to the Managing Director;
(iii) obtain independent, market-based remuneration
benchmarks on an annual basis to ensure
competitive levels of benefit;
(iv) make recommendations to the Board regarding the
design of all executive incentive plans;
18
(v) ensure that the recommended remuneration of
the Managing Director and direct reports to the
Managing Director comprises a suitable balance
between fixed and incentive pay, reflecting short
and long-term objectives relevant to Atomo’s scale,
performance and business objectives;
(vi) adopt and implement policies and practice regarding
the deferral of performance-based remuneration;
and
(vii) make recommendations to the Board regarding
performance management policies and procedures,
consistent with incentive-based remuneration
practices and designed by reference to specified
performance targets, for the Managing Director and
direct reports to the Managing Director.
A copy of the NRC’s Charter is available on Atomo’s
website.
Non-Executive Directors’ remuneration
Each of the Non-Executive Directors has entered into
appointment letters with Atomo confirming the terms
of their appointment and their roles and responsibilities.
A Non-Executive Director may terminate their
Directorship at any time by advising the Board in writing.
The appointment letters are otherwise on standard
commercial terms.
The Chair, John Keith, receives $130,000 and each Non-
Executive Director receives $50,000.
Each Chair of a Board Committee will receive an
additional amount of $20,000 per annum. The Chairs of
the Board Committees are Paul Kasian (Audit and Risk
Committee) and Connie Carnabuci (Nomination and
Remuneration Committee).
Directors may also be reimbursed for expenses properly
incurred by them in dealing with the Company’s business
or in carrying out their duties as a Director.
Under the Constitution, the Board decides the total
amount paid to each Non-Executive Director as
remuneration for their services as a Director. However,
under the ASX Listing Rules, the total amount of fees
paid to all Directors for their services (excluding, for
these purposes, the salary of any Executive Director)
must not exceed in aggregate in any financial year
the amount fixed by the Company’s shareholders in
general meeting. This amount has been fixed initially in
the Company’s Constitution at $500,000 per annum in
aggregate and may be varied by ordinary resolution in a
general meeting.
Executive remuneration
The Group aims to reward executives based on their
position and responsibility, with a level and mix of
remuneration which has both fixed and variable
components.
The executive remuneration and reward framework has
four components:
• base pay and non-monetary benefits;
• short-term performance incentives;
• share-based payments; and
• other remuneration such as superannuation and long
service leave.
The combination of these comprises the executive’s total
remuneration.
Fixed remuneration, consisting of base salary,
superannuation and non-monetary benefits, is reviewed
annually by the Nomination and Remuneration
Committee based on individual and business unit
performance, the overall performance of the Group and
comparable market remunerations.
Executives may receive their fixed remuneration in the
form of cash or other fringe benefits (for example motor
vehicle benefits) where it does not create any additional
costs to the consolidated entity and provides additional
value to the executive.
The short-term incentives (‘STI’) program is designed
to align the targets of the business units with the
performance hurdles of executives. STI payments are
granted to executives based on specific targets and key
performance indicators (‘KPI’s’) being achieved. None
of the executives received any short term incentives
during the 2020 financial year with the exception of
the Managing Director who received short term cash
incentives of $209,384 which was payable upon meeting
certain performance criteria and Atomo’s admission to
the official list of the Australian Securities Exchange.
The long-term incentives (‘LTI’) include long service leave
and share-based payments. Upon Atomo’s admission
to ASX, Atomo increased the fixed remuneration of its
executives to align their remuneration with the market,
and granted each of the executives an allocation of
options under Atomo’s Employee Share Option Plan
(ESOP). Further details can be found under the heading
“Share-based compensation” below.
19
DETAILS OF REMUNERATION
Amounts of remuneration
Details of the remuneration of key management
personnel of the consolidated entity are set out in
the following tables. Where individuals were key
management personnel for only part of the year, only
remuneration relating to that period is included in the
tables below.
The key management personnel of the consolidated
entity consisted of the following Directors of Atomo
Diagnostics Limited:
• John Keith – Independent Non-Executive Chairman
• John Kelly – Founder and Managing Director
• Curt LaBelle – Non-Executive Director
• Paul Kasian – Independent Non-Executive Director
• Connie Carnabuci – Independent Non-Executive Director
• George Sidis – Non-Executive Director (resigned 3
February 2020)
• Doris-Ann Williams – Non-Executive Director (resigned
22 January 2020)
And the following executives:
• William Souter – Chief Financial Officer
• Mark Smith – Chief Operating Officer
• Fabio Baglioni – Chief Commercial Officer
20
2020
Cash
salary and
fees
$
Non-Executive Directors:
John Keith
Curt LaBelle *
Paul Kasian
Connie Carnabuci
George Sidis **
Doris-Ann Williams
Executive Directors:
32,500
12,500
15,982
17,500
-
-
$
-
-
-
-
-
-
John Kelly
298,083
209,384
Other Key Management Personnel:
William Souter
Mark Smith
Fabio Baglioni
94,651
208,924
91,565
-
-
-
Totals
771,705
209,384
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash
bonus
Non-
monetary
Super-
annuation
Long
service
leave
Equity-
settled
shares
Equity-
settled
options
Total
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
1,518
-
-
-
$
-
-
-
-
-
-
46,101
24,955
8,309
1,401
-
-
-
-
55,928
26,356
$
$
$
-
-
-
-
-
-
-
-
-
-
-
21,772
19,450
-
-
3,023
9,821
54,272
31,950
17,500
17,500
3,023
9,821
32,422
610,945
25,938
130,299
25,938
234,862
25,938
117,503
164,302
1,227,675
* Amounts included under “Equity-settled options” include amounts paid to GHIF, of which Curt LaBelle is President.
** Amounts included under “Equity-settled options” include amounts paid to ID&E Pty Ltd, which is controlled by George Sidis.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash
salary and
fees
Cash
bonus
Non-
monetary
Super-
annuation
Long
service
leave
Equity-
settled
shares
Equity-
settled
options
Total
2019
Non-Executive Directors:
John Keith
Curt LaBelle *
Paul Kasian
Connie Carnabuci
George Sidis **
Doris-Ann Williams
Executive Directors:
$
-
-
-
-
-
-
$
-
-
-
-
-
-
John Kelly
248,091
40,000
Other Key Management Personnel:
William Souter
Mark Smith
Fabio Baglioni
-
4,605
-
-
-
-
Totals
252,696
40,000
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
$
-
-
-
-
-
-
26,600
4,000
-
-
-
-
-
-
26,600
4,000
$
$
$
-
-
-
-
-
-
-
-
-
-
-
51,698
43,536
51,698
43,536
-
-
-
-
10,124
10,124
38,954
38,954
-
-
-
-
318,691
-
4,605
-
144,312
467,608
* Amounts included under “Equity-settled options” include amounts paid to GHIF, of which Curt LaBelle is President.
** Amounts included under “Equity-settled options” include amounts paid to ID&E Pty Ltd, which is controlled by George Sidis.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
John Keith
Curt LaBelle
Paul Kasian
Connie Carnabuci
George Sidis
Doris-Ann Williams
Executive Directors:
John Kelly
Other Key Management Personnel:
William Souter
Mark Smith
Fabio Baglioni
Fixed remuneration
At risk – STI
At risk – LTI
2020
2019
2020
2019
2020
2019
100%
100%
100%
100%
100%
100%
100%
100%
n/a
n/a
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
59%
87%
35%
13%
6%
79%
89%
78%
n/a
100%
n/a
-
-
-
n/a
-
n/a
21%
11%
22%
n/a
-
n/a
21
-
-
-
-
-
-
-
Cash bonuses are dependent on meeting defined performance measures. The maximum bonus values are established
at the start of each financial year and amounts payable to KMPs are determined by the Board in consultation with the
Nomination and Remuneration Committee.
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Non-Executive Directors:
John Keith
Curt LaBelle
Paul Kasian
Connie Carnabuci
George Sidis
Doris-Ann Williams
Executive Directors:
John Kelly
Other Key Management Personnel:
William Souter
Mark Smith
Fabio Baglioni
Cash bonus paid/
payable
Cash bonus forfeited
2020
2019
2020
2019
-
-
-
-
-
-
-
-
-
-
-
-
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
SERVICE AGREEMENTS
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
John Kelly
Managing Director.
1 October 2011
Not specified.
Annual salary of $420,000 commencing from 1 April 2020 (including
superannuation) plus a cash bonus of up to 20% of base salary (subject to
the satisfaction of performance criteria), to be reviewed annually by the
Nomination and Remuneration Committee.
John Kelly is entitled to participate in the Company’s share and option plans.
During the year, the Company granted 2,000,000 of options. Please refer to
the section titled “Share-based compensation” for further details.
Ten (10) week termination notice by either party however this notice
period does not apply if the employment is terminated for serious and
wilful misconduct or any conduct by John Kelly that amounts to fraud,
theft, violence, harassment, gross negligence or any other action that may
otherwise bring the Company into disrepute.
William Souter
Chief Financial Officer.
10 March 2020
Not specified.
Annual salary of $300,000 commencing from 1 April 2020 (including
superannuation) plus a cash bonus of up to 20% of base salary (subject to
the satisfaction of performance criteria), to be reviewed annually by the
Nomination and Remuneration Committee.
William Souter is entitled to participate in the Company’s share and option
plans. During the year, the Company granted 1,600,000 of options. Please
refer to the section titled “Share-based compensation” for further details.
Ten (10) week termination notice by either party however this notice
period does not apply if the employment is terminated for serious and
wilful misconduct or any conduct by William Souter that amounts to fraud,
theft, violence, harassment, gross negligence or any other action that may
otherwise bring the Company into disrepute.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
23
Mark Smith
Chief Operating Officer.
1 October 2019
Not specified.
Annual salary of GBP 150,000 commencing from 1 April 2020 plus a
cash bonus of up to 20% of base salary (subject to the satisfaction of
performance criteria), to be reviewed annually by the Nomination and
Remuneration Committee.
Mark Smith is entitled to participate in the Company’s share and option
plans. During the year, the Company granted 1,600,000 of options. Please
refer to the section titled “Share-based compensation” for further details.
The agreement will terminate automatically without further action if the
parties mutually agree to terminate the agreement. Additionally, either party
may terminate the agreement:
a. by providing eight (8) weeks’ notice; or
b. by providing written notice, if the other party has breached the agreement
and either the breach is not capable of rectification or the other party had
not complied with a notice to perform or rectify the breach.
Fabio Baglioni
Chief Commercial Officer
17 February 2020
Not specified.
Annual salary of kr 1,320,000 commencing from 17 February 2020 plus
a cash bonus of up to 20% of base salary (subject to the satisfaction of
performance criteria) to be reviewed annually by the Nomination and
Remuneration Committee / Company. In addition, the Company will also pay
the COO’s occupational pension to Collectum under the terms of the benefit
of ITP1.
Fabio Baglioni is entitled to participate in the Company’s share and option
plans. During the year, the Company granted 1,600,000 of options. Please
refer to the section titled “Share-based compensation” for further details.
Eight (8) week termination notice by either party however this notice
period does not apply if the employment is terminated for serious and
wilful misconduct or any conduct by Fabio Baglioni that amounts to fraud,
theft, violence, harassment, gross negligence or any other action that may
otherwise bring the Company into disrepute.
24
SHARE-BASED COMPENSATION
Share plan details
As at the date of this report, the Company had the
following options outstanding under the pre-IPO option
plans:
Expiry Date
14 April 2022
24 November
2020
6 April 2021
6 April 2022
15 September
2022
11 April 2023
Total
Exercise price
$0.03
$0.16
$0.16
$0.16
$0.16
$0.16
Number of
options
2,293,184
5,000,000
3,600,000
6,800,000
800,000
4,800,000
23,293,184
All options were granted over unissued fully paid
ordinary shares in the Company. Options granted carry
no dividend or voting rights.
Prior to being listed on the ASX, the Company
established a tax exempt employee share plan (“Tax
Exempt Plan”). Under the Tax Exempt Plan, the Company
may offer an eligible person restricted shares in the
Company which are subject to a three year holding lock
while the person remains employed by the Company.
Offers of restricted shares under the Tax Exempt Plan
not exceeding a total value of A$1,000 or such other
amount as permitted under Subdivision 83A-B of the Tax
Act may be reduced from the assessable income of that
eligible person for the income year in which the eligible
person acquires those restricted shares. The objective of
the Tax Exempt Plan is to align the interests of eligible
Atomo employees and contractors with shareholders
through the sharing of a personal interest in the future
growth and development of the Company and to
provide a means of attracting and retaining skilled and
experienced eligible persons.
As at the date of this report, no grants of shares have
been made under the Tax Exempt Plan.
Option plan details
1. Pre-IPO option plan details
In prior financial years, the Company issued options
to employees, Directors and key stakeholders to align
the interests of those parties through the sharing of a
personal interest in the future growth and development
of the Company and to provide a means of attracting
and retaining skilled and experienced eligible persons.
25
2. New option plan details
Shortly prior to being listed on the ASX, the Company established a new employee option plan to align the interests
of eligible employees and Directors with shareholders through the sharing of a personal interest in the future growth
and development of the Company and to provide a means of attracting and retaining skilled and experienced eligible
persons.
Upon Atomo’s admission to the official list of ASX, Atomo granted a total of 6,800,000 options under the new option
plan to the four (4) executive KMPs exercisable at $0.25 within 36 months from the date of vesting. The options
will vest in three equal tranches in 12 months, 24 months and 36 months respectively, subject to the satisfaction of
vesting conditions relating to KPIs determined by the Managing Director or in the case of the Managing Director,
determined by the Board in consultation with the Nomination and Remuneration Committee.
As at the date of this report, the Company had granted 6,800,000 options to key management personnel under the
new option plan:
Number
of options
granted
Grant date
Vesting
date and
exercisable
date
Expiry date
Exercise
price
Fair value
per option at
grant date
Name
John Kelly
John Kelly
John Kelly
William Souter
William Souter
666,667
14 April 2020
14 April 2021
14 April 2024
666,667
14 April 2020
14 April 2022
14 April 2025
666,666
14 April 2020
14 April 2023
14 April 2026
533,333
14 April 2020
14 April 2021
14 April 2024
533,333
14 April 2020
14 April 2022
14 April 2025
William Souter
533,334
14 April 2020
14 April 2023
14 April 2026
Mark Smith
Mark Smith
Mark Smith
Fabio Baglioni
Fabio Baglioni
Fabio Baglioni
533,333
14 April 2020
14 April 2021
14 April 2024
533,333
14 April 2020
14 April 2022
14 April 2025
533,334
14 April 2020
14 April 2023
14 April 2026
533,333
14 April 2020
14 April 2021
14 April 2024
533,333
14 April 2020
14 April 2022
14 April 2025
533,334
14 April 2020
14 April 2023
14 April 2026
Total^
6,800,000
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
$0.118
$0.131
$0.141
$0.118
$0.131
$0.141
$0.118
$0.131
$0.141
$0.118
$0.131
$0.141
^ These options form part of the 8,400,000 options issued to executive management and I D & E Pty Ltd ATF I D E Trust as disclosed on the ASX on 14
April 2020.
All options were granted over unissued fully paid ordinary shares in the Company. Options granted carry no dividend
or voting rights.
26
ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL
Shareholding:
The number of shares in the Company held during the financial year by each Director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at
the start of
the year
Exercise
of options
Exercise
of GHIF
warrants
Issued on
Conversion
of Converting
Note
Acquired
through IPO
Balance at
the end of
the year
2,781,056
480,000
73,530,248
34,666,672
-
-
-
-
-
-
9,032,248
408,000
-
-
7,790,224
-
-
-
-
-
-
-
-
-
10,868,183
18,316,425
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,261,056
73,530,248
63,851,280
100,000
100,000
75,000
75,000
-
-
9,440,248
-
250,000
250,000
-
-
7,790,224
-
127,800,448
888,000
10,868,183
18,316,425
425,000 158,298,056
Ordinary shares*
John Keith
John Kelly
Curt LaBelle**
Paul Kasian
Connie Carnabuci
George Sidis^
Doris-Ann Williams^^
William Souter
Mark Smith
Fabio Baglioni
Totals
* All share numbers are presented on a post share split basis
** Includes shares held by Global Health Investment Fund LLC. Curt LaBelle is President at GHIF.
^ Resigned on 3 February 2020
^^ Resigned on 22 January 2020
Option holding:
The number of options over ordinary shares in the Company held during the financial year by each Director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Options over ordinary shares*
John Keith
John Kelly
Curt LaBelle**
Paul Kasian
Connie Carnabuci
George Sidis^
Doris-Ann Williams^^
William Souter
Mark Smith
Fabio Baglioni
Totals
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
6,000,000
-
(2,400,000)
-
2,000,000
3,600,000
-
-
-
-
-
-
-
-
-
1,680,000
1,600,000
(480,000)
3,600,000
-
-
-
-
1,600,000
1,600,000
1,600,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,600,000
2,000,000
3,600,000
-
-
2,800,000
3,600,000
1,600,000
1,600,000
1,600,000
14,880,000
8,400,000 (2,880,000)
- 20,400,000
* All option numbers are presented on a post share split basis
** Includes options held by Global Health Investment Fund LLC, except for the warrants as described in Note 13. Curt LaBelle is President at GHIF.
^ Resigned on 3 February 2020
^^ Resigned on 22 January 2020
27
Other transactions with key management personnel and their related parties:
Transactions between related parties are on normal commercial terms and conditions and no more favourable than
those available to other parties, unless stated otherwise. The following transactions occurred with related parties:
ID&E Pty Ltd, a company controlled by Mr George Sidis, previously a Non-Executive
Director of the Company, provided the following services during the year:
Purchase of inventory (Atomo devices)
Research and development
Plant and equipment
Other services
Total
Consolidated
2020
2019
1,383,733
1,524,861
670,401
560,306
399,676
1,242,145
599,357
168,332
4,139,301
2,409,510
Mr George Sidis resigned as a Director of Atomo on 3 February 2020. A significant portion of the transactions noted
above occurred while Mr George Sidis was a Director of Atomo.
At the end of the financial year, the following amounts were shown owing to related
parties in trade and other payables:
640,615
392,073
Curt LaBelle is a Non-Executive Director of the Company and is also President of GHIF. GHIF is also a substantial
shareholder of the Company holding 11.38% of the issued capital of the Company as at 30 June 2020 (2019: 11.9%).
During the year, the Group had borrowings from GHIF (further details of which can be found at Note 13 of the financial
statements) and GHIF was also a participant in the converting notes issued during the year holding $2.93 million of
the total $16.05 million issued (further details of which can be found at Note 13 of the financial statements).
Statutory performance indicators
The Company aims to align its executive remuneration to its strategic and business objective and the creation
of shareholder wealth. The table below shows measures of the Group’s financial performance over the last three
years (being the extent of available historic audited performance information) as required by the Corporations Act
2001. However, these are not necessarily consistent with the measures used in determining the variable amounts of
remuneration to be awarded to KMPs. As a consequence, there may not always be a direct correlation between the
statutory key performance measures and the variable remuneration awarded.
Measure
2020
2019
2018
Loss for the year attributable to the Company ($)
(9,613,955)
(5,083,335)
(4,915,202)
Basic earnings per share (cents)
(2.71)
(1.82)
(1.86)
Dividend payments
Dividend payout ratio^
Increase / (decrease) in share price^^
Total KMP incentives as a percentage of profit / (loss) for the year
^ The dividend payout ratio is calculated on dividends paid and profit for the year.
-
-
70.0%
(12.8%)
-
-
-
-
-
-
(9.2%)
(6.1%)
^^ Atomo’s shares first traded on the ASX on 16 April 2020 after successful completion of its IPO. Accordingly, no share price information has been
provided prior to FY20. For FY20, the movement in shares price has been calculated as the difference between the IPO price (i.e. $0.20) and the closing
price as at 30 June 2020 (i.e. $0.34).
This concludes the remuneration report, which has been audited.
28
SHARES UNDER OPTION
INDEMNITY AND INSURANCE OF OFFICERS
The Company has indemnified the Directors and
executives of the Company for costs incurred, in their
capacity as a Director or executive, for which they may
be held personally liable, except where there is a lack of
good faith.
During the financial year, the Company paid a premium
in respect of a contract to insure the Directors and
executives of the Company against a liability to the
extent permitted by the Corporations Act 2001. The
contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the
financial year, indemnified or agreed to indemnify the
auditor of the Company or any related entity against a
liability incurred by the auditor.
During the financial year, the Company has not paid a
premium in respect of a contract to insure the auditor of
the Company or any related entity.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene
in any proceedings to which the Company is a party
for the purpose of taking responsibility on behalf of the
Company for all or part of those proceedings.
Unissued ordinary shares of Atomo Diagnostics Limited
under option at the date of this report are as follows:
Expiry Date
14 April 2022
24 November 2020
6 April 2021
6 April 2022
15 September 2022
11 April 2023
14 April 2024
14 April 2025
14 April 2026
Total
Exercise
ice
Number of
options
$0.03
2,293,184
$0.16
$0.16
$0.16
$0.16
$0.16
$0.25
$0.25
$0.25
5,000,000
3,600,000
6,800,000
800,000
4,800,000
2,799,999
2,799,999
2,800,002
31,693,184
No person entitled to exercise the options had or has any
right by virtue of the option to participate in any share
issue of the Company or of any other body corporate.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
The following ordinary shares of Atomo Diagnostics
Limited were issued during the year ended 30 June
2020 and up to the date of this report on the exercise of
options granted:
Date options granted
Exercise
price
Number of
shares issued
20 April 2012
21 November 2012
27 June 2014
24 November 2016
6 April 2017
6 April 2018
15 September 2018
Total
$0.03
$0.03
$0.08
$0.16
$0.16
$0.16
$0.16
408,000
5,610,491
480,000
1,080,000
240,000
560,000
390,000
8,768,491
NON-AUDIT SERVICES
AUDITOR’S INDEPENDENCE DECLARATION
29
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act
2001 is set out immediately after this Directors’ report.
AUDITOR
On 27 July 2020, KPMG Australia resigned as auditor of
the Company. On 3 August 2020, BDO Audit Pty Ltd was
appointed as auditor of the Company.
BDO Audit Pty Ltd continues in office in accordance with
section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution
of Directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the Directors
___________________________
John Keith
Chairman
31 August 2020
Sydney
Details of the amounts paid or payable to the Company’s
auditors for non-audit services provided during the
financial year by the auditors are outlined in Note 20 to
the financial statements.
The Directors are satisfied that the provision of non-
audit services during the financial year, by the auditors
(or by another person or firm on the auditors’ behalf), is
compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services as
disclosed in Note 20 to the financial statements do
not compromise the external auditors’ independence
requirements of 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 auditors; and
• none of the services undermine the general principles
relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants issued
by the Accounting Professional and Ethical Standards
Board, including reviewing or auditing the auditor’s
own work, acting in a management or decision-making
capacity for the company, acting as advocate for the
company or jointly sharing economic risks and rewards.
OFFICERS OF THE COMPANY WHO ARE FORMER
PARTNERS OF THE COMPANY’S AUDITORS
There are no officers of the company who are former
partners of KPMG Australia or BDO Australia.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in Corporations
Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to ‘rounding-
off’. Amounts in this report have been rounded off in
accordance with that Corporations Instrument to the
nearest dollar.
30
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF ATOMO DIAGNOSTICS
LIMITED
As lead auditor of Atomo Diagnostics Limited for the year ended 30 June 2020, 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 Atomo Diagnostics Limited and the entities it controlled during the
period.
Gareth Few
Director
BDO Audit Pty Ltd
Sydney
31 August 2020
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.
06
06 FINANCIAL
STATEMENTS
32 06 FINANCIAL STATEMENTS
GENERAL INFORMATION
The financial statements cover Atomo Diagnostics Limited as a consolidated entity consisting of Atomo Diagnostics
Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in
Australian dollars, which is Atomo Diagnostics Limited’s functional and presentation currency.
Atomo Diagnostics Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business are:
REGISTERED OFFICE
Level 2
701 – 703 Parramatta Road
Leichhardt NSW 2040
Tel: +61 2 9099 4750
PRINCIPAL PLACE OF BUSINESS
Level 2
701 – 703 Parramatta Road
Leichhardt NSW 2040
Tel: +61 2 9099 4750
A description of the nature of the consolidated entity’s operations and its principal activities are included in the
Directors’ report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 31 August 2020.
The Directors have the power to amend and reissue the financial statements.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
33
Revenue
Cost of sales
Gross profit
Other income
Employee benefits expenses
Foreign exchange gains / (losses)
Depreciation and amortisation
Research and development expenses
Inventory obsolescence expense
Insurance expenses
IPO expenses not taken up in equity
IT expenses
Occupancy expenses
Professional and consulting fees expense
Regulatory expenses
Travel expenses
Other expenses
Results from operating activities
Finance income
Finance costs
Net finance income / (cost)
Note
1(g), 3
2020
5,368,698
2019
539,736
(2,173,731)
(443,419)
3,194,967
96,317
3
844,518
1,325,485
4(a)
(2,972,709)
(2,104,304)
(556,249)
(381,006)
4(b)
(687,087)
(560,607)
(695,009)
(1,335,561)
223,752
(86,981)
(883,866)
(146,958)
(78,209)
(33,756)
-
(120,076)
(32,724)
(78,364)
(929,695)
(293,594)
(131,294)
(709,190)
(35,947)
(182,285)
(801,856)
(443,003)
(3,954,785)
(4,640,506)
4(c)
4(c)
4(c)
21,858
22,333
(5,285,178)
(436,939)
(5,263,320)
(414,606)
Loss before income tax
(9,218,105)
(5,055,112)
Income tax (expense) / benefit
5(a)
-
-
Loss for the year
(9,218,105)
(5,055,112)
Other comprehensive income
Foreign currency translation reserve
(395,849)
(28,223)
Total comprehensive income for the year
(9,613,954)
(5,083,335)
Loss per share for profit attributable to the owners
of Atomo Diagnostics Limited
Basic earnings per share
Diluted earnings per share
Cents
Cents
28
28
(2.71)
(2.71)
(1.82)
(1.82)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
34
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Employee benefits
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets / (liabilities)
Equity
Issued capital
Foreign currency translation reserve
Share based payment reserve
Accumulated losses
Total equity
The above statement of financial position should be read in conjunction with the accompanying notes
Note
2020
2019
6(a)
27,103,838
7
8
5(b)
3,487,521
1,209,676
1,273,201
1,855,706
582,005
787,718
771,177
33,074,236
3,996,606
9
10
11
12
13
14
15
12
14
15
16
17
17
1,452,598
1,153,296
55,710
-
1,518,334
900,396
3,026,642
2,053,692
36,100,878
6,050,298
1,296,904
1,049,876
-
3,928,101
47,866
162,570
-
74,369
1,507,340
5,052,346
-
6,410,560
7,675
105,023
112,698
-
58,978
6,469,538
1,620,038
11,521,885
34,480,840
(5,471,587)
66,514,571
(451,342)
746,970
17,110,055
(55,493)
585,105
(32,329,359)
(23,111,254)
34,480,840
(5,471,587)
35
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020
Consolidated
Issued capital
Foreign
Currency
Translation
Reserve
Share based
payment
reserve
Accumulated
losses
Total equity
Balance at 1 July 2018
13,194,931
(27,270)
(18,056,142)
(4,888,481)
Loss for the year
Other comprehensive income
Total comprehensive income for the year
-
-
-
-
(28,223)
(28,223)
Transactions with owners, recorded directly in equity
Ordinary shares issued during the year
Capital raising costs
Equity-settled share based payments
Total transactions with owners
3,923,122
(7,998)
-
3,915,124
-
-
-
-
-
-
-
-
-
585,105
585,105
(5,055,112)
(5,055,112)
-
(28,223)
(5,055,112)
(5,083,335)
-
-
-
-
3,923,122
(7,998)
585,105
4,500,229
Balance at 30 June 2019
17,110,055
(55,493)
585,105
(23,111,254)
(5,471,587)
Balance at 1 July 2019
17,110,055
(55,493)
585,105
(23,111,254)
(5,471,587)
Loss for the year
Other comprehensive income
Total comprehensive income for the
year
-
-
-
-
(395,849)
(395,849)
Transactions with owners, recorded directly in equity
Ordinary shares issued during the year
51,143,218
Capital raising costs
(2,245,060)
Equity-settled share-based payments
-
Exercise of options
Total transactions with owners
506,358
49,404,516
-
-
-
-
-
-
-
-
-
-
490,542
(328,677)
161,865
(9,218,105)
(9,218,105)
-
(395,849)
(9,218,105)
(9,613,954)
-
-
-
-
-
51,143,218
(2,245,060)
490,542
177,681
49,566,381
Balance at 30 June 2020
66,514,571
(451,342)
746,970 (32,329,359)
34,480,840
The above statement of changes in equity should be read in conjunction with the accompanying notes
36
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Receipts from grant donors
Payments to suppliers and employees
Cash used in operations
Interest received
Interest paid
IPO costs not taken up in financing activities
R&D tax incentive received
Net cash from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Net cash used in investing activities
Cash flows from financing activities
Repayment of borrowings
Repayment of leases
Net proceeds from issue of share capital
Net proceeds from issue of convertible notes
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate fluctuations on cash held
Note
2020
2019
2,463,182
-
477,023
390,725
(7,135,970)
(5,429,490)
(4,672,788)
(4,561,742)
21,858
22,333
(1,498,548)
(633,439)
(883,866)
-
771,416
3,334,361
6(b)
(6,261,928)
(1,838,487)
(818,690)
(739,915)
(1,174,451)
(73,442)
(1,993,141)
(813,357)
(9,342,512)
(79,169)
-
27,806,235
2,434,317
15,221,874
-
33,606,428
2,434,317
25,351,360
1,855,706
(103,228)
(217,527)
1,993,596
79,637
Cash and cash equivalents at the end of the financial year
6(a)
27,103,838
1,855,706
The above statement of cash flows should be read in conjunction with the accompanying notes
07
07NOTES TO FINANCIAL
STATEMENTS
38 07 NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the
preparation of the financial statements are set out below.
These policies have been consistently applied to all the
years presented, unless otherwise stated.
(a) New or amended Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the new or
amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board
(‘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.
The Directors have reviewed all of the new and revised
accounting standards and interpretations issued by
the Australian Accounting Standards Board for annual
reporting periods beginning or after 1 July 2019. It has
been determined that there is no impact, material or
otherwise, of any other new or revised accounting
standards and interpretations other than those outlined
in the New and amended standards adopted by the
group outlined above.
The following Accounting Standards and Interpretations
are most relevant to the consolidated entity:
AASB 16 Leases:
AASB 16 introduces a single, on-balance sheet lease
accounting model for lessees. A lessee recognises
a right-of-use asset representing its right to use the
underlying asset and a lease liability representing its
obligation to make lease payments. For short-term leases
(lease term of 12 months or less) and leases of low-value
assets, the Group has opted to recognise a lease expense
on a straight-line basis as permitted by AASB 16.
AASB 16 replaces existing leases guidance, including
AASB 117 Leases, IFRIC 4 Determining whether an
Arrangement contains a Lease, SIC-15 Operating Leases
– Incentives and SIC-27 Evaluation the Substance of
Transactions Involving the Legal Form of a Lease.
Previously, the Group recognised operating lease
expenses on a straight-line basis over the term of the
lease. Under AASB 16, the Group will recognise new
assets and liabilities for its operating leases of rented
premises. The nature of expenses related to those leases
will now change because the Group will recognise a
depreciation charge for right-of-use assets and interest
expense on lease liabilities, included in finance costs,
based on the interest rate implicit in the contract.
Following the adoption of AASB 16, the Group has
recognised additional lease liabilities of $133,151.
AASB Interpretation 23:
The Group has adopted AASB Interpretation 23
Uncertainty over Income Tax Treatments from 1 July 2019.
AASB Interpretation 23 outlines the requirements around
accounting for uncertain tax positions. The Group has
concluded that it is probable that the tax authorities will
accept the current method of calculating the Group’s
current tax liability which is calculated in accordance
with AASB 112.
(b) Basis of preparation
These general purpose financial statements have 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 for-profit
oriented entities. These financial statements also comply
with International Financial Reporting Standards as
issued by the International Accounting Standards Board
(‘IASB’).
Historical cost convention:
The financial statements have been prepared under the
historical cost convention, except for, where applicable,
the revaluation of financial assets and liabilities at fair
value through profit or loss, financial assets at fair value
through other comprehensive income, investment
properties, certain classes of property, plant and
equipment and derivative financial instruments.
Reclassification of prior year amounts and balances:
In certain circumstances, prior year amounts and
balances have been reclassified for comparability.
Critical accounting estimates:
The preparation of the financial statements requires
the use of certain critical accounting estimates. It
also requires management to exercise its judgement
in the process of applying the consolidated entity’s
accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements,
are disclosed in Note 1(b).
(c) Parent entity information
In accordance with the Corporations Act 2001,
these financial statements present the results of the
consolidated entity only. Supplementary information
about the parent entity is disclosed in Note 25.
39
(d) Principles of consolidation
(e) Operating segments
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of Atomo
Diagnostics Limited (‘company’ or ‘parent entity’) as at
30 June 2020 and the results of all subsidiaries for the
year then ended. Atomo Diagnostics Limited and its
subsidiaries together are referred to in these financial
statements as the ‘consolidated entity’.
Subsidiaries are all those entities over which the
consolidated entity has control. The consolidated
entity controls an entity when the consolidated entity
is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect
those returns through its power to direct the activities
of the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the consolidated
entity. They are de-consolidated from the date that
control ceases.
Intercompany transactions, balances and unrealised gains
on transactions between entities in the consolidated
entity are eliminated except where such amounts arise
on monetary items that form part of the net investments
in a foreign operation, in which case they are recognised
in reserves. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment
of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the
consolidated entity.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as
an equity transaction, where the difference between the
consideration transferred and the book value of the share
of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of
subsidiaries are shown separately in the statement
of profit or loss and other comprehensive income,
statement of financial position and statement of changes
in equity of the consolidated entity. Losses incurred
by the consolidated entity are attributed to the non-
controlling interest in full, even if that results in a deficit
balance.
Where the consolidated entity loses control over a
subsidiary, it derecognises the assets including goodwill,
liabilities and non-controlling interest in the subsidiary
together with any cumulative translation differences
recognised in equity. The consolidated entity recognises
the fair value of the consideration received and the fair
value of any investment retained together with any gain
or loss in profit or loss.
The Group manages its operations as a single business
operation and there are no parts of the Group that
qualify as operating segments under AASB 8 Operating
Segments. The CEO (Chief Operating Decision Maker
or “CODM”) assesses the financial performance of the
Group in an integrated basis only and accordingly, the
Group is managed on the basis of a single segment,
being medical device research and development.
Information presented to the CODM on a monthly basis is
categorised by type of expenditure.
(f) Foreign currency translation
The financial statements are presented in Australian
dollars, which is Atomo Diagnostics Limited’s functional
and presentation currency.
Foreign currency transactions:
Foreign currency transactions are translated into
Australian dollars using the exchange rates prevailing
at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such
transactions and from the translation at financial year-
end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in
profit or loss.
Foreign operations:
The assets and liabilities of foreign operations are
translated into Australian dollars using the exchange
rates at the reporting date. The revenues and expenses of
foreign operations are translated into Australian dollars
using the average exchange rates, which approximate
the rates at the dates of the transactions, for the period.
All resulting foreign exchange differences are recognised
in other comprehensive income through the foreign
currency reserve in equity.
The foreign currency reserve is recognised in profit or
loss when the foreign operation or net investment is
disposed of.
(g) Revenue recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers and sale of
goods
Revenue is measured based on the consideration
specified in a contract with a customer. The Group
recognises revenue when it transfers control over a good
or service to a customer.
40
Customers obtain control of the HIV self-testing kits
when the goods are ready and released by Quality
Assurance (QA). It is then the responsibility of the
customer to make the necessary arrangements for freight
and the collection of goods from the Group’s warehouse.
Invoices are generated once the goods are released by
QA and ready for collection by the customer. Invoices are
usually payable within 30 to 75 days, dependent on the
contracted agreement. The contracts do not allow the
customers to return the goods as the testing kits have
a set shelf-life and have gone through vigorous testing
prior to delivery.
Where sales are made to customers on an OEM basis
for use in their own test, including for COVID-19, revenue
is recognised at the point transfer of control over those
products at the warehouse delivery point.
Since none of the contracts permit the customer to
return an item, revenue is recognised for all the goods
once the goods have been released by QA and are
available for collection at the Group’s warehouse.
Interest
Interest revenue is recognised as interest accrues using
the effective interest method. This is a method of
calculating the amortised cost of a financial asset and
allocating the interest income over the relevant period
using the effective interest rate, which is the rate that
exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying
amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when
the right to receive payment is established.
(h) Income tax
Income tax expense comprises current and deferred tax.
It is recognised in profit or loss except to the extent that
it relates to a business combination, or items recognised
directly in equity or in other comprehensive income.
Current tax:
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year and
any adjustment to tax payable or receivable in respect of
previous years. It is measured using tax rates enacted or
substantively enacted at the reporting date. Current tax
also includes any tax liability arising from dividends.
Current tax assets and liabilities are offset only if certain
criteria are met.
Deferred tax:
Deferred tax is recognised in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax is
not recognised for temporary differences on the initial
recognition of assets or liabilities in a transaction that
is not a business combination and that affects neither
accounting nor taxable profit or loss, or on taxable
temporary differences arising on the initial recognition of
goodwill.
Deferred tax assets are recognised for unused tax losses,
tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will
be available against which they can be utilised. Deferred
tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that
the related tax benefit will be realised; such reductions
are reversed when the probability of future taxable
profits improves.
Unrecognised deferred tax assets are reassessed at
each reporting date and recognised to the extent that it
has become probable that future taxable profits will be
available against which they can be used.
Deferred tax is measured at the tax rates that are
expected to be applied to temporary differences when
they reverse, using tax rates enacted or substantively
enacted at the reporting date.
The measurement of deferred tax reflects the tax
consequences that could follow the manner in which the
Group expects, at the reporting date, to recover or settle
the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain
criteria are met.
R&D tax incentives:
R&D tax incentives received by the Group are recognised
as other income over the periods necessary to match
the benefit of the incentive with the costs for which it
is intended to compensate (“associated costs”). Such
periods will depend on whether the associated costs are
capitalised or expensed as incurred.
Under this policy, for that portion of associated costs
which are expensed during the period, the proportional
incentive is recognised in other income in full during
the same period. For that portion of associated costs
which are capitalised during the period, the proportional
incentive is initially offset against the capitalised
associated costs and recognised against amortisation
expense on a systematic basis matching the useful life of
the capitalised asset.
41
(i) Current and non-current classification
(m) Property, plant and equipment
Assets and liabilities are presented in the statement
of financial position based on current and non-current
classification.
An asset is classified as current when: it is either
expected to be realised or intended to be sold or
consumed in the consolidated entity’s normal operating
cycle; it is held primarily for the purpose of trading; it
is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent
unless restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when: it is either
expected to be settled in the consolidated entity’s normal
operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within 12 months after
the reporting period; or there is no unconditional right
to defer the settlement of the liability for at least 12
months after the reporting period. All other liabilities are
classified as non-current.
Deferred tax assets and liabilities are always classified as
non-current.
(j) Cash and cash equivalents
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short-term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
(k) Trade and other receivables
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using
the effective interest method, less any allowance for
expected credit losses. Trade receivables are generally
due for settlement within 30 days but certain customers
have longer payment terms.
Other receivables are recognised at amortised cost, less
any allowance for expected credit losses.
(l) Inventories
Raw materials, work in progress and finished goods are
stated at the lower of cost and net realisable value on a
‘first in first out’ basis.
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.
Recognition and measurement:
Items of property, plant and equipment are measured
at cost less accumulated depreciation and accumulated
impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the asset.
If significant parts of an item of property, plant and
equipment have different useful lives, they are accounted
for as separate items (major components) of property,
plant and equipment.
Any gain and loss on disposal of an item of property,
plant and equipment is recognised in profit or loss.
Subsequent expenditure:
Subsequent expenditure is capitalised only when it is
probable that the future economic benefits associated
with the expenditure will flow to the Group.
Depreciation:
Depreciation is calculated based on the cost of property,
plant and equipment less their estimated residual values
using the straight-line basis over their estimated useful
lives, and is generally recognised in profit or loss.
The estimated useful lives of property, plant and
equipment are as follows:
Plant and equipment
2 – 5 years
Depreciation methods, useful lives and residual values
are reviewed at each reporting date and adjusted if
appropriate.
(n) Leases
The Group recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-
use asset is initially measured at cost, which comprises
the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement
date, plus any initial direct costs incurred and an estimate
of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is
located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date
to the earlier of the end of the useful life of the right-of-
use asset or the end of the lease term. The estimated
useful lives of right-of-use assets are determined on
the same basis as those of property and equipment. In
addition, the right-of-use asset is periodically reduced
by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
42
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate.
Generally, the Group uses its incremental borrowing rate
as the discount rate.
The lease liability is measured at amortised cost using
the effective interest method. It is remeasured when
there is a change in future lease payments arising from
a change in an index or rate, if there is a change in the
Group’s estimate of the amount expected to be payable
under a residual value guarantee, or if the Group changes
its assessment of whether it will exercise a purchase,
extension or termination option.
The Group has elected not to recognise right-of-use
assets and lease liabilities for short-term leases that have
a lease term of 12 months or less and leases of low-
value assets. The Group recognises the lease payments
associated with these leases as an expense on a straight-
line basis over the lease term.
(o) Intangible assets
Recognition and measurement:
Computer software:
Computer software comprises computer application
system software and licenses. Costs incurred in
developing products or systems and costs incurred
in acquiring software and licenses that will contribute
to future period financial benefits through revenue
generation and/or cost reduction are capitalised to
computer software. Costs capitalised include external
direct costs of materials and services, direct payroll and
payroll-related costs.
Patents, trademarks and licences:
Other intangible assets, including patents, trademarks
and licences that are acquired by the Group and
have finite useful lives are measured at cost less any
accumulated amortisation and impairment losses.
Capitalised development costs:
Capitalised development costs relate to the Company’s
rapid-deployment and associated manufacturing
platforms and are only capitalised only if the expenditure
can be measured reliably, the product or process is
technically and commercially feasible, future economic
benefits are probable, and the Group intends to and has
sufficient resources to complete development and to
use or sell the asset. Otherwise, it is recognised in profit
or loss as incurred. Subsequent to initial recognition,
development expenditure is measured at cost less
accumulated amortisation and any accumulated
impairment losses.
Expenditure on research activities is recognised in profit
or loss as incurred.
Subsequent expenditure:
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure,
including expenditure on internally generated goodwill
and brands, is recognised in profit or loss as incurred.
Amortisation:
Amortisation is calculated based on the cost of intangible
assets less their estimated residual values using the
straight-line method over their estimated useful lives, and
is generally recognised in profit or loss.
The estimated useful lives of intangible assets are as
follows:
Patents and trademarks
10 – 20 years
Other intangibles
10 years
Capitalised development costs
10 years
Amortisation methods, useful lives and residual values
are reviewed at each reporting date and adjusted if
appropriate.
(p) Impairment
Non-derivative financial assets:
Financial assets not classified as at fair value through
profit or loss are assessed at each reporting date to
determine whether there is evidence of impairment.
An impairment loss in respect of a financial asset
measured at amortised cost is calculated as the
difference between its carrying amount and the present
value of the estimated future cash flows discounted at
the asset’s original effective interest rate. Losses are
recognised in profit or loss and reflected in an allowance
account against loans and receivables. Interest on the
impaired asset continues to be recognised. When a
subsequent event causes the amount of impairment loss
to decrease, the decrease in impairment loss is reversed
through profit or loss.
Non-financial assets:
At each reporting date, the Group reviews the carrying
amounts of its non-financial assets (other than deferred
tax assets) to determine whether there is any indication
of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated. Goodwill is
tested annually for impairment.
43
For impairment testing, assets are grouped together into
the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the
cash inflows of other assets or cash generating units
(“CGUs”). Goodwill arising from a business combination is
allocated to CGUs or groups of CGUs that are expected
to benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the
greater of its value in use and its fair value less costs to
sell. Value in use is based on the estimated future cash
flows, discounted to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to the
asset or CGU.
An impairment loss is recognised if the carrying amount
of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They
are allocated first to reduce the carrying amount of
any goodwill allocated to the CGU, and then to reduce
the carrying amount of assets in the CGU on a pro rata
basis. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had
been recognised.
(q) Trade and other payables
These amounts represent liabilities for goods and
services provided to the Group prior to the end of the
financial year and which are unpaid. Due to their short-
term nature they are measured at amortised cost and
are not discounted. The amounts are unsecured and are
usually paid within 30 days of recognition.
(r) Financial instruments
Classification and measurement – non-derivative
financial assets and financial liabilities:
On 1 July 2018 (the date of initial application of AASB
9), the Group’s management assessed which business
models applied to the financial assets held by the
Group and classified its financial instruments into the
appropriate AASB 9 categories.
Financial assets classified as held-to-maturity and loans
and receivables under AASB 139 that were measured at
amortised cost continued to be measured at amortised
cost under AASB 9 as they are held within a business
model to collect contractual cash flows and these cash
flows consist solely of payments of principal and interest
on the principal amount outstanding.
In relation to the impairment of financial assets, AASB 9
requires an expected credit loss model as opposed to an
incurred credit loss model under AASB 139. The expected
credit loss model requires the Group to account for
expected credit losses and changes in those expected
credit losses at each reporting date to reflect changes in
credit risk since initial recognition of the financial assets.
Consequently, it is no longer necessary for a credit event
to have occurred before credit losses are recognised.
The Group has one type of financial assets (trade and
other receivables) that are subject to AASB 9’s new
expected credit loss model.
Financial liabilities are classified as measured at
amortised cost or FVTPL. A financial liability is classified
as at FVTPL if it is classified as held-for-trading, it
is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at
fair value and net gains and losses, including any interest
expense, are recognised in profit or loss. Other financial
liabilities are subsequently measured at amortised cost
using the effective interest method. Interest expense
and foreign exchange gains and losses are recognised in
profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.
Apart from the above, the application of AASB 9 had
no impact on the classification and measurement of the
Group’s financial assets and liabilities.
Convertible notes:
During the months of October and November 2019,
the Company raised $16.05 million through the issue of
converting notes. These notes were interest bearing at
an annual rate of 10% and convertible at the earlier of the
occurrence of a significant equity raising transaction, or
twelve (12) months from the date of issue. Further details
of the terms attaching to the converting notes can be
found at Note 13.
All of the converting notes were converted into
100,302,363 ordinary shares in the Company as part of
the IPO which was completed in April 2020.
The convertible notes were treated as debt and were
accounted for as two (2) components being:
a. a liability component; and
b. an embedded derivative liability.
44
The liability component of the converting notes was
initially recognised at fair value. Any directly attributable
transaction costs were allocated against the liability.
Subsequent to initial recognition, the liability component
of the converting note was measured at amortised cost
using the effective interest method. Interest related to
the financial liability was recognised in profit or loss. On
conversion, the financial liability was reclassified to equity
and no gain or loss is recognised.
The embedded derivative component of the converting
notes was initially measured at fair value through profit
and loss and any net gains and losses were recognised
in profit and loss. The value of this derivative was
calculated using the Monte Carlo method and recognised
at fair value through profit and loss. This component
was revalued (for which the fair value movement
was accounted for through profit and loss) and then
reclassified to issued capital when the converting notes
were converted into ordinary shares at the time of the
Company’s IPO.
Warrants
The warrants issued to GHIF as part of the GHIF loan
(as described in Note 13) were initially recognised as a
liability and measured at fair value through profit and loss
and any net gains and losses were recognised in profit
and loss.
This liability was revalued (for which the fair value
movement was recognised through profit and loss) and
then reclassified to issued capital when the warrants
were exercised and converted into ordinary shares at the
time of the Company’s IPO.
(s) Provisions
Provisions are recognised when the Group has a present
(legal or constructive) obligation as a result of a past
event, it is probable the consolidated entity will be
required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. The
amount recognised as a provision is the best estimate
of the consideration required to settle the present
obligation at the reporting date, taking into account
the risks and uncertainties surrounding the obligation.
If the time value of money is material, provisions are
discounted using a current pre-tax rate specific to the
liability. The increase in the provision resulting from the
passage of time is recognised as a finance cost.
(t) Employee benefits
Short-term employee benefits:
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and long service leave expected to
be settled wholly within 12 months of the reporting date
are measured at the amounts expected to be paid when
the liabilities are settled.
Other long-term employee benefits:
The liability for annual leave and long service leave not
expected to be settled within 12 months of the reporting
date are measured at the present value of expected
future payments to be made in respect of services
provided by employees up to the reporting date using
the projected unit credit method. Consideration is given
to expected future wage and salary levels, experience of
employee departures and periods of service. Expected
future payments are discounted using market yields at
the reporting date on corporate bonds with terms to
maturity and currency that match, as closely as possible,
the estimated future cash outflows.
Defined contribution superannuation expense:
Contributions to defined contribution superannuation
plans are expensed in the period in which they are
incurred.
Share-based payments:
Equity-settled and cash-settled share-based
compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or
options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled
transactions are awards of cash for the exchange of
services, where the amount of cash is determined by
reference to the share price.
The cost of equity-settled transactions are measured
at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes
option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the
share price at grant date and expected price volatility of
the underlying share, the expected dividend yield and the
risk free interest rate for the term of the option, together
with non-vesting conditions that do not determine
whether the consolidated entity receives the services
that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
45
(u) Fair value measurement
When an asset or liability, financial or non-financial,
is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would
be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at
the measurement date; and assumes that the transaction
will take place either: in the principal market; or in the
absence of a principal market, in the most advantageous
market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interests.
For non-financial assets, the fair value measurement is
based on its highest and best use. Valuation techniques
that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, are
used, maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified
into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making
the measurements. Classifications are reviewed at
each reporting date and transfers between levels are
determined based on a reassessment of the lowest level
of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements,
external valuers may be used when internal expertise
is either not available or when the valuation is deemed
to be significant. External valuers are selected based
on market knowledge and reputation. Where there is a
significant change in fair value of an asset or liability from
one period to another, an analysis is undertaken, which
includes a verification of the major inputs applied in the
latest valuation and a comparison, where applicable, with
external sources of data.
(v) Issued capital
Ordinary shares, Class B shares and Ord+ shares are
classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
(w) Dividends
Dividends are recognised when declared during the
financial year and no longer at the discretion of the
company.
The cost of equity-settled transactions are recognised as
an expense with a corresponding increase in equity over
the vesting period. Where early exercise has occurred,
this cost is accelerated. The cumulative charge to profit
or loss is calculated based on the grant date fair value
of the award, the best estimate of the number of awards
that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss
for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in
previous periods.
The cost of cash-settled transactions is initially, and at
each reporting date until vested, determined by applying
either the Binomial or Black-Scholes option pricing model,
taking into consideration the terms and conditions on
which the award was granted. The cumulative charge to
profit or loss until settlement of the liability is calculated
as follows:
• during the vesting period, the liability at each reporting
date is the fair value of the award at that date multiplied
by the expired portion of the vesting period.
• from the end of the vesting period until settlement of the
award, the liability is the full fair value of the liability at
the reporting date.
All changes in the liability are recognised in profit or loss.
The ultimate cost of cash-settled transactions is the cash
paid to settle the liability.
Market conditions are taken into consideration in
determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective
of whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum
an expense is recognised as if the modification has
not been made. An additional expense is recognised,
over the remaining vesting period, for any modification
that increases the total fair value of the share-based
compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the
consolidated entity or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition
is not within the control of the consolidated entity or
employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over
the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as
if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new
replacement award is substituted for the cancelled award,
the cancelled and new award is treated as if they were a
modification.
46
(x) Earnings per share
Basic earnings per share:
Basic earnings per share is calculated by dividing the
profit attributable to the owners of Atomo Diagnostics
Limited, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued
during the financial year.
Diluted earnings per share:
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest and
other financing costs associated with dilutive potential
ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
(y) Goods and Services Tax (‘GST’) and other similar
taxes
Revenues, expenses and assets are recognised net of
the amount of associated GST, unless the GST incurred
is not recoverable from the tax authority. In this case it
is recognised as part of the cost of the acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the tax authority
is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities which are recoverable from, or
payable to the tax authority, are presented as operating
cash flows.
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to, the tax
authority.
(z) Rounding of amounts
The Company is of a kind referred to in Corporations
Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to ‘rounding-
off’. Amounts in this report have been rounded off in
accordance with that Corporations Instrument to the
nearest dollar.
NOTE 2. CRITICAL ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the reported amounts in the
financial statements. Management continually evaluates
its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and
assumptions on historical experience and on other
various factors, including expectations of future events,
management believes to be reasonable under the
circumstances. The resulting accounting judgements and
estimates will seldom equal the related actual results.
The judgements, estimates and assumptions that have
a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities (refer to
the respective notes) within the next financial year are
discussed below.
Share-based payment transactions:
The Group measures the cost of equity-settled
transactions with employees by reference to the fair
value of the equity instruments at the date at which
they are granted. The fair value of options is determined
by using the Black- Scholes model taking into account
the terms and conditions upon which the instruments
were granted and includes assumptions which require
judgement.
The accounting estimates and assumptions relating to
equity-settled share-based payments would have no
impact on the carrying amounts of assets and liabilities
within the next annual reporting period but may impact
profit or loss and equity.
Allowance for expected credit losses:
The allowance for expected credit losses assessment
requires a degree of estimation and judgement. It is
based on the lifetime expected credit loss, grouped
based on days overdue, and makes assumptions
to allocate an overall expected credit loss rate for
each group. These assumptions include recent sales
experience and historical collection rates.
Write-down of inventories:
Any write-down of inventories requires a degree of
estimation and judgement. The level of the write-down
is assessed by taking into account the recent sales
experience, the ageing of inventories and other factors
that affect inventory obsolescence.
Fair value measurement hierarchy:
NOTE 3. REVENUE AND OTHER INCOME
47
Consolidated
2020
2019
Revenue:
Revenue from sale of goods
COVID-19
HIV
Other OEM
Other
3,397,307
1,184,743
522,626
264,022
5,368,698
Other income:
R&D tax rebate received
807,018
Grants received
Other income
-
37,500
844,518
-
326,855
140,791
72,090
539,736
805,538
427,567
92,380
1,325,485
Total revenue and other
income
6,213,216
1,865,221
The Group is required to classify all assets and liabilities,
measured at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to
the entire fair value measurement, being: Level 1: Quoted
prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the
measurement date; Level 2: Inputs other than quoted
prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly; and
Level 3: Unobservable inputs for the asset or liability.
Considerable judgement is required to determine what is
significant to fair value and therefore which category the
asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level
3 is determined by the use of valuation models. These
include discounted cash flow analysis or the use of
observable inputs that require significant adjustments
based on unobservable inputs.
Estimation of useful lives of assets:
The Group determines the estimated useful lives and
related depreciation and amortisation charges for its
property, plant and equipment and finite life intangible
assets. The useful lives could change significantly as a
result of technical innovations or some other event. The
depreciation and amortisation charge will increase where
the useful lives are less than previously estimated lives,
or technically obsolete or non-strategic assets that have
been abandoned or sold will be written off or written
down.
Impairment of intangible assets:
The Group tests intangible assets for impairment for
each reporting period or more frequently if events or
changes in circumstances indicate it has suffered any
impairment, in accordance with the accounting policy
stated in Note 3(o). The recoverable amount of a cash
generating unit (“CGU”) is determined based on value-
in-use calculations whereby cash flows are projected and
extrapolated over a five year period with growth rates
that do not exceed the long-term average growth rate
for the market in which the Group operates. The discount
rate used reflects the Group’s pre-tax weighted average
cost of capital.
48
NOTE 4. EXPENSES
Profit before income tax from continuing operations includes the following specific
expenses:
(a) Employee benefits expense
Salaries, wages and Directors’ fees
Contributions to defined contribution superannuation funds
Equity-settled share-based payments
Other employment related expenses
(b) Depreciation and amortisation expense
Depreciation expense (Note 9)
Amortisation expense (Note 11)
Right-of-use assets (Note 10)
(c) Net finance income / (cost)
Interest income
Cash Interest expense
Effective interest expense
Borrowing costs
Fair value gain / (loss) on financial liabilities
Consolidated
2020
2019
2,118,598
1,336,162
161,061
616,930
76,120
118,531
585,105
64,506
2,972,709
2,104,304
519,388
90,090
77,609
495,220
65,387
-
687,087
560,607
21,858
22,333
(1,207,464)
(656,105)
(7,055,755)
(382,263)
(826,397)
-
3,804,438
601,429
(5,263,320)
(414,606)
49
NOTE 5. INCOME TAX
(a) Income tax benefit
Income tax benefit comprises current and deferred tax expense and is recognised in profit or loss, except to the
extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.
The components of income tax benefit comprise:
Current tax
Deferred tax
Total income tax benefit
The prima facie tax on profit before income tax is reconciled to the income tax benefit as follows:
Consolidated
2020
2019
-
-
-
-
-
-
Loss before income tax
Tax using the Company’s domestic Australian tax rate (27.5%)
Permanent and temporary differences
Under provision of tax in prior years
Other
Tax losses not brought to account
Total income tax benefit
(b) Current tax assets
Consolidated
2020
2019
(9,218,105)
(5,055,112)
2,534,979
1,390,156
(1,783,117)
206,141
-
(34,361)
50,813
24,479
(802,675)
(1,586,415)
-
-
The current tax asset as at 30 June 2020 of $1,273,201 (2019: $771,177) represents income tax rebates receivable from
relevant tax authorities on the Group’s research and development expenditure. Refer to Note 1(h) for the Group’s
accounting polity for R&D tax incentives.
(c) Deferred tax assets and liabilities
Due to the uncertainty of the Group generating sufficient taxable income to offset tax losses carried forward, the
future tax benefits of these losses, to the extent that they do not set off temporary differences that have resulted in
deferred tax liabilities, has not been brought to account in these financial statements.
50
NOTE 6. CURRENT ASSETS – CASH AND CASH EQUIVALENTS
(a) Cash and cash equivalents in statement of cash flows
Cash at bank
Consolidated
2020
2019
27,103,838
1,855,706
27,103,838
1,855,706
(b) Reconciliation of cash flows from operating activities
Loss for the year
(9,218,104)
(5,055,112)
Adjustments for:
Depreciation and amortisation
Unrealised currency translation movements
Equity-settled share-based payment transactions
Fair value (gain) / loss on financial liabilities
Finance costs
687,087
556,249
616,930
560,607
513,264
585,105
(3,804,438)
(601,429)
7,882,152
310,509
5,937,980
1,368,056
Operating profit before changes in working capital and provisions
(3,280,124)
(3,687,056)
Changes in working capital and provisions:
Change in trade and other receivables
Change in trade and other payables
Change in inventories
Change in employee benefits
(2,941,119)
2,349,858
247,027
7,438
(421,958)
(529,225)
134,246
20,498
(2,981,804)
1,848,569
Net cash from operating activities
(6,261,928)
(1,838,487)
NOTE 7. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
Receivables from trade customers
Expected credit loss /
bad debt provision
Other receivables
Consolidated
2020
2019
3,003,406
314,306
-
-
484,115
267,699
3,487,521
582,005
The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short-term
nature of the balances.
Ageing of receivables from trade customers:
Consolidated – 2020
Receivables from trade
customers
0 to 30
Days
31 to 60
Days
61 to 90
Days
91 to 120
Days
121 +
Days
Total
2,822,642
27,027
-
74,825
78,912
3,003,406
NOTE 8. CURRENT ASSETS – INVENTORIES
Raw materials
Raw materials provision
Work in progress
Finished goods
NOTE 9. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
Plant and equipment –
at cost
Less: Accumulated depreciation
Total plant and equipment
51
Consolidated
2020
2019
876,105
1,038,968
(24,764)
(416,851)
22,498
335,837
78,791
86,810
1,209,676
787,718
Consolidated
2020
2019
3,050,584
2,231,894
(1,597,986)
(1,078,598)
1,452,598
1,153,296
Total property, plant and equipment
1,452,598
1,153,296
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated
Balance at 1 July 2018
Additions
Depreciation expense
Balance at 30 June 2019
Balance at 1 July 2019
Additions
Depreciation expense
Balance at 30 June 2020
Plant and
equipment
Total
908,601
739,915
908,601
739,915
(495,220)
(495,220)
1,153,296
1,153,296
1,153,296
1,153,296
818,690
818,690
(519,388)
(519,388)
1,452,598
1,452,598
52
NOTE 10. NON-CURRENT ASSETS – RIGHT-OF-USE ASSETS
Land and buildings – right-of-use (Note 14)
Less: Accumulated depreciation (Note 14)
Plant and equipment – right-of-use (Note 14)
Less: Accumulated depreciation (Note 14)
Total right-of-use assets
Additions to the right-of-use assets during the year were $133,221.
Consolidated
2020
2019
118,727
(73,887)
44,840
14,493
(3,623)
10,870
55,710
-
-
-
-
-
-
-
The Group leases land and buildings for its offices in Sydney Australia and warehouse in South Africa under
agreements of between one (1) to two (2) years with, in some cases, options to extend. The Group also leases a single
piece of office equipment under a five (5) year agreement.
NOTE 11. NON-CURRENT ASSETS – INTANGIBLES
Patents and trademarks
Less Accumulated amortisation
Total patents and trademarks
Product development assets
Less: Accumulated amortisation
Total product development assets
Other intangibles
Less: Accumulated amortisation
Total other intangibles
Total intangibles
Consolidated
2020
2019
1,449,224
1,078,390
(536,164)
(210,182)
913,060
868,208
605,812
(20,817)
584,995
-
-
-
91,429
91,429
(71,150)
(59,241)
20,279
32,188
1,518,334
900,396
53
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated
Balance at 1 July 2018
Additions
Amortisation expense
Balance at 30 June 2019
Balance at 1 July 2019
Additions
Amortisation expense
Capitalisation of R&D rebate
Capitalised R&D rebate recognised in profit and loss
Product
development
costs
Patents and
trademarks
Other
intangibles
848,297
73,442
(53,531)
868,208
44,044
-
(11,856)
32,188
Total
892,341
73,442
(65,387)
900,396
868,208
102,215
32,188
-
900,396
1,174,449
(57,363)
(11,909)
(106,118)
-
-
-
-
(466,421)
16,028
-
-
-
-
-
1,072,234
(36,846)
(466,421)
16,028
Balance at 30 June 2020
584,995
913,060
20,279
1,518,334
NOTE 12. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other payables
Consolidated
2020
2019
930,035
604,033
302,350
64,519
417,169
28,674
1,296,904
1,049,876
All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value.
NOTE 13. BORROWINGS
Current:
Loan from Global Health Investment Fund LLC
Warrants recognised at fair value through profit or loss
Non-current:
Loan from Global Health Investment Fund LLC
Total borrowings
Consolidated
2020
2019
-
-
-
-
-
-
1,758,376
2,169,725
3,928,101
6,410,560
6,410,560
10,338,661
54
Loan from Global Health Investment Fund LLC (“GHIF”):
Converting notes:
During the year ended 30 June 2020, the loan from GHIF
was repaid in full.
In December 2015, the Company received a loan from
GHIF for an amount of US$6,000,000. The principal of
the loan was repayable:
(i) 20% of the principal drawn by 30 June 2020;
(ii) a further 35% of the principal drawn by 31 December
2020; and
(iii) the remainder of the loan by 31 December 2021.
Interest was payable at the rate of 7% annually in arrears
at 31 December each year. Security was provided by
a floating charge over the revolving assets (inventory,
negotiable instruments and plant and equipment) of the
Company and a fixed charge over all other collateral (all
other property).
The loan agreement required certain performance
commitments including:
(i) making products and services available to
disadvantaged patients on a tiered pricing
structure. This commitment also applied to partners,
distributors of the Company or assignee of
intellectual property; and
(ii) until full repayment of the loan, dividends or
distributions paid by the Company could not exceed
50% of the cumulative retained profits of the
Company.
GHIF also had an option to receive up to 2,727,273 shares
(or 21,818,184 on a post share split basis) in the Company
at an exercise price of US$0.55 which was exercised on a
cash-less basis prior to the IPO ultimately resulting in the
issue of 10,868,183 shares (on a post share split basis).
These options were initially recognised as a liability
and measured at fair value through profit and loss and
any net gains and losses were recognised in profit and
loss. This liability was revalued (for which the fair value
movement was recognised through profit and loss) and
then reclassified to issued capital when the warrants
were exercised and converted into ordinary shares at the
time of the Company’s IPO.
During the months of October and November 2019,
the Company raised $16.05 million through the issue of
converting notes. These notes were interest bearing at
an annual rate of 10% and convertible at the earlier of the
occurrence of a significant equity raising transaction, or
twelve (12) months from the date of issue. Of the $16.05
million, a non-cash portion amounting to $1.76 million
was issued to GHIF in satisfaction of the first repayment
of their loan (as described above).
Of the $16.05 million, a non-cash portion amounting
to $1.76 million was issued to Global Health Investment
Fund LLC (“GHIF”) in satisfaction of the first repayment
of their loan (see above).
All of the converting notes were converted into
100,302,363 ordinary shares in the Company as part of
the IPO at a 20% discount to the IPO price in accordance
with the terms of the converting notes which were as
follows:
a. The converting notes were to convert into ordinary
shares at the earlier of:
(i) twelve (12) months from the date of issue; or
(ii) on the occurrence of a “conversion event”
being either:
- an “initial public offering event” being the
receipt by the Company of conditional approval
from either the Australian Securities Exchange
or any other financial market as applicable;
- a “capital raising event” being a capital raising
undertaken by the Company to raise a minimum
of AUD$15 million, but does not include any
capital raising undertaken by the Company as
part of an initial public offering; or
- a “change of control event” being any event
which has the effect of a change in control of
the Company.
b. The conversion price of the converting notes to
ordinary shares was to be:
(i) if the converting notes convert on the occurrence
of an “initial public offering event”, the lesser of
80% of the issue price under the prospectus, or
the “maximum conversion price”;
(ii) if the converting notes convert on the occurrence
of a “capital raising event”, the lesser of 80% of
the issue price under the capital raising, or the
“maximum conversion price”;
55
NOTE 15. EMPLOYEE BENEFITS
Current:
Liability for annual leave
Non-current:
Liability for long service
leave
Consolidated
2020
2019
162,570
162,570
74,369
74,369
105,023
58,978
105,023
58,978
Total employee benefits
267,593
133,347
The current provision for employee benefits includes
all unconditional entitlements where employees have
completed the required period of service and also those
where employees are entitled to pro-rata payments in
certain circumstances. The entire amount is presented as
current since the consolidated entity does not have an
unconditional right to defer settlement.
(iii) if the converting notes convert on the occurrence
of a “control event”, the lesser of 80% of the
last price per share at which the control event
occurred, of the “maximum conversion price”; or
(iv) if the converting notes convert at maturity, the
lesser of 70% of the fair market value per share,
or the “maximum conversion price”.
For the purpose of the above, “maximum conversion
price” means:
(i) if the converting notes convert on the occurrence
of an “initial public offering event”, a “capital
raising event” or a “control event”, then the
price per share equal to 80% of AUD$65 million
divided by the number of shares on issue
immediately prior to the occurrence of the
conversion event; or
(ii) if the converting notes convert on maturity, then
the price per share equal to 70% of AUD$65
million divided by the number of shares on
issue immediately prior to the occurrence of the
conversion event.
The variable conversion terms set out above gave rise
to an embedded derivative attached to the converting
notes. The value of this derivative was calculated using
the Monte Carlo method and recognised at fair value
through profit and loss.
NOTE 14. LEASE LIABILITIES
Consolidated
2020
2019
Current:
Right-of-use lease liabilities
(Note 10)
Non-current:
Right-of-use lease liabilities
(Note 10)
47,866
47,866
7,675
7,675
Total lease liabilities
55,541
AASB 16 Leases has been adopted with a modified
retrospective transition approach so there are no
disclosures for the comparative period.
-
-
-
-
-
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Ord+ shares:
During the year, 15,630,816 Ord+ shares (post share
split) were converted into ordinary shares on a 1:1 basis
pursuant to approval by shareholders on 19 December
2019. As at 30 June 2020, no Ord+ shares remained on
issue.
Ord+ shares had the same rights as ordinary voting
shares and were subject to the terms of the Investors
Agreements and the Company’s Constitution, save for
the special terms that attached to Ord+ shares which
were as follows:
i.
the shares were issued with an accompanying
entitlement to bonus shares which were to be
issued in the event that a subsequent capital activity
occurred at a price less than $1.50 per ordinary share;
and
ii.
the bonus shares entitlement applied in respect of
the next capital activity that had one of the following
characteristics:
a. if the company issued further ordinary shares for
a price less than $1.50 ($0.1875 on a post share
split basis) per share (other than in response to
the exercise of existing share options or warrants),
with an aggregate issue offer value in excess of
$3,000,000; or
b. if an agreement was made by which all of the
ordinary shares in the Company were to be sold
at an average price of less that $1.50 ($0.1875 on a
post share split basis) per share.
Capital risk management:
The Group’s objectives when managing capital is to
safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits
for other stakeholders, maintain sufficient financial
flexibility to pursue its growth objectives and to maintain
an optimum capital structure to reduce the cost of
capital.
NOTE 16. EQUITY – ISSUED CAPITAL
(CONTINUED)
Ordinary shares:
Ordinary shares entitle the holder to participate in
dividends and the proceeds on the winding up of the
company in proportion to the number of and amounts
paid on the shares held. The fully paid ordinary shares
have no par value and the company does not have a
limited amount of authorised capital.
On a show of hands every member present at a meeting
in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Class B shares:
During the year and concurrently with the IPO,
47,838,768 B Class shares (post share split) were
converted into ordinary shares on a 1:1 basis pursuant to
approval by shareholders on 19 December 2019. As at 30
June 2020, no B Class shares remained on issue.
B Class shares had the same rights as ordinary voting
shares and were subject to the terms of the Investors
Agreements and the Company’s Constitution, save for
the special terms that attached to B Class shares which
were as follows:
i. upon winding-up of the Company, each B Class share
would convert into 1.2 ordinary shares;
ii.
iii.
in the event of sale of all the shares in the Company
for a total consideration of not more than
US$20,000,000, each B Class share would convert
into 1.2 ordinary shares with effect immediately
prior to the sale. If the sale price was more than
US$20,000,000 then the B Class shares would
convert into ordinary shares on a 1 for 1 basis;
in the event of listing of the Company’s shares on a
securities exchange at an initial price implying a total
company market capitalisation of not more than
US$20,000,000, each B Class share would convert
into 1.2 ordinary shares with effect immediately prior
to the sale. If the initial price implies a total company
market capitalisation of more than US$20,000,000
then the B class shares would convert into ordinary
shares 1 for 1; and
iv. for any period when a B Class shareholder holds
a minimum of 2 million shares in the Company
(whether B class or ordinary shares), the shareholder
would have the right to appoint a Director to the
board.
58
NOTE 17. EQUITY – RESERVES
Foreign currency
translation reserve
Share based
payment reserve
Consolidated
2020
2019
(451,343)
(55,493)
746,970
585,105
295,627
529,612
Foreign currency translation reserve:
This reserve is used to recognise exchange differences arising from the translation of the financial statements of
foreign operations to Australian dollars and the effect of permanent loans with foreign operations within the Group.
Share based payment reserve:
This reserve is used to recognise the fair value of equity-settled share-based payments where they related to yet-to-
be exercised options.
Movements in reserves:
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2018
Equity-settled share-based payments
Foreign currency translation
Balance as at 30 June 2019
Balance at 1 July 2019
Equity-settled share-based payments
Exercise of options
Foreign currency translation
Balance at 30 June 2020
NOTE 18. EQUITY – DIVIDENDS
Foreign
currency
Share based
payment
Total
(27,270)
-
(27,270)
-
585,105
585,105
(28,223)
-
(28,223)
(55,493)
585,105
529,612
(55,493)
585,105
529,612
-
-
490,542
490,542
(328,677)
(328,677)
(395,850)
-
(395,850)
(451,343)
746,970
295,627
No dividends were paid or declared during the financial year (2019: Nil).
Franking credits:
Franking credits available for subsequent financial years.
Consolidated
2020
-
2019
-
59
NOTE 19. FINANCIAL RISK MANAGEMENT
Market risk:
Financial risk management objectives:
The Group’s activities expose it to a variety of financial
risks including market risk (including foreign currency
risk, price risk and interest rate risk), credit risk and
liquidity risk. The Group’s overall risk management
objectives seek to minimise potential adverse effects on
the financial performance of the Group. The Group uses
different methods to measure different types of risk to
which it is exposed. These methods include sensitivity
analysis in the case of interest rate, foreign exchange and
other price risks, ageing analysis for credit risk and beta
analysis in respect of investment portfolios to determine
market risk.
Risk management is carried out by senior finance
executives (‘finance’) under policies approved by the
Board of Directors (‘the Board’). These policies include
identification and analysis of the risk exposure of the
Group and appropriate procedures, controls and risk
limits. Finance identifies and evaluates financial risks
within the Group. Finance reports to the Board on a
monthly basis.
Market risk is the risk that the fair value of future cash
flows of a financial instrument will fluctuate because
of changes in market prices, such as foreign exchange
rates and interest rates. The objective of market
risk management is to manage and control market
risk exposures within acceptable parameters, while
optimising the return.
Foreign currency risk:
The consolidated entity undertakes certain transactions
denominated in foreign currency and is exposed to
foreign currency risk through foreign exchange rate
fluctuations.
Foreign exchange risk arises from future commercial
transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the
entity’s functional currency. The risk is measured using
sensitivity analysis and cash flow forecasting.
The carrying amount of the consolidated entity’s foreign
currency denominated financial assets and financial
liabilities at the reporting date were as follows:
Consolidated
US Dollars
British Pounds
South African Rand
Japanese Yen
EURO
Swedish Krona Sek
2020
Assets
2019
Liabilities
2020
2019
3,564,797
1,364,028
144,256
145,343
15,990
203,623
108,104
180,011
-
-
-
-
-
-
5,212
25,719
3,308
3,215
3,618
22,267
37,610
-
8,863
-
3,784,410
1,652,142
185,328
214,083
60
Reasonably possible movements in the Australian dollar against all other currencies as at 30 June 2020 would have
affected the measurement of financial instruments denominated in a foreign currency and affected profit or loss and
equity by the amounts shown below. This analysis assumes that all other variables remain constant and ignores any
impact of forecast sales and purchases:
Consolidated
Profit Before Tax
2020
2019
2020
Equity
2019
AUD Strengthening by 10%
(327,189)
(130,733)
(327,189)
(130,733)
AUD Weakening by 10%
399,898
159,784
399,898
159,784
Price risk:
Liquidity risk:
The Group is not exposed to any significant price risk.
Interest rate risk:
As at 30 June 2020, the Group was not exposed to any
significant interest rate risk. There is minimal exposure
to the impact of adverse changes in benchmark interest
rates.
The Group was exposed to variable interest rate risks
on cash and short-term deposits. A reasonably possible
change of 100 basis points in interest rates at the
reporting date would have increased or decreased profit
before tax by $100,041 This analysis assumes that all
other variables remain constant.
Credit risk:
Credit risk refers to the risk that a counterparty will
default on its contractual obligations resulting in financial
loss to the Group. The Group has a code of credit,
including undertaking customer due diligence, confirming
references and setting appropriate credit limits as
appropriate. The maximum exposure to credit risk at
the reporting date to recognised financial assets is the
carrying amount, net of any provisions for impairment of
those assets, as disclosed in the statement of financial
position and notes to the financial statements.
Generally, trade receivables are written off when there is
no reasonable expectation of recovery. Indicators of this
include the failure of a debtor to engage in a repayment
plan, no active enforcement activity and a failure to make
contractual payments for a period greater than 1 year.
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or
another financial asset. The Group manages liquidity risk
by maintaining adequate cash reserves and available
borrowing facilities by continuously monitoring actual
and forecast cash flows and matching the maturity
profiles of financial assets and liabilities.
Financing arrangements:
The Group has no used or unused financing facilities in
place as at 30 June 2020.
As at 30 June 2019, the Group had a single borrowing
facility with GHIF. There were no unused amounts on this
facility as at 30 June 2019. Refer to Note 13 for further
details.
Remaining contractual maturities:
The following tables detail the Group’s remaining
contractual maturity for its financial instrument
liabilities. The tables have been drawn up based on the
undiscounted cash flows of financial liabilities based
on the earliest date on which the financial liabilities are
required to be paid. The tables include both interest and
principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from
their carrying amount in the statement of financial
position.
61
Weighted
average
interest rate
1 year or
less
Between 1
and 2 years
Between 2
and 5 years Over 5 years
Remaining
contractual
maturities
-
-
930,035
366,869
-
-
7.00%
47,866
1,344,770
7,675
7,675
-
-
-
-
-
-
-
-
-
-
-
-
Weighted
average
interest rate
1 year or
less
Between 1
and 2 years
Between 2
and 5 years Over 5 years
Remaining
contractual
maturities
Consolidated – 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing
Lease liabilities
Total non-derivatives
Consolidated – 2019
Non-derivatives
Non-interest bearing
Trade payables
Other payables
-
-
604,033
445,843
-
-
-
-
-
-
-
-
-
-
-
-
Interest-bearing – fixed rate
Loan from GHIF
Total non-derivatives
7.00%
1,633,787
2,859,128
3,676,021
2,683,663
2,859,128
3,676,021
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
62
NOTE 20. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by the Company’s auditors,
their network firms and unrelated firms:
Audit and assurance services:
KMPG Australia:
Audit of financial statements
BDO Australia:
Audit of financial statements
Total audit and assurance services
Other services:
KMPG Australia:
Tax advisory services
BDO Australia:
Independent limited assurance services in relation to prospectus
Total other services
Total auditors’ remuneration
NOTE 21. CONTINGENT ASSETS
There were no contingent assets as at 30 June 2020.
NOTE 22. CONTINGENT LIABILITIES
Consolidated
2020
2019
108,790
58,000
46,000
-
154,790
58,000
23,140
13,250
164,897
188,037
-
13,250
342,827
71,250
During the 2016 financial year, the Group received a grant from The NSW Health Medical Devices Fund for $1.8 million
to support development and validation of a digitally integrated and e-health enabled version of the AtomoRapid HIV
Self Test. The project has detailed budget and completion milestones. The funding is classified as a grant, however, if
the Group achieves a result greater than $500,000 EBITDA from sales of products specifically developed under the
project, then repayments of the grant and an amount of imputed capitalised interest will be required. It is not foreseen
that the Group will earn EBITDA greater than $500,000 from products developed under the project.
NOTE 23. COMMITMENTS
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Plant and equipment
Other commitments
Inventory
Total commitments
63
Consolidated
2020
2019
2,668,969
2,463,221
5,132,190
-
-
-
Capital commitments relate to the expansion of manufacturing capacity to support growth. Plant and equipment to
be purchased includes additional tooling, assembly lines and associated machinery to support increased production
of Atomo’s suite of devices.
Inventory commitments relate to volumes of devices committed to be purchased throughout the year for sale to
customers.
NOTE 24. RELATED PARTY TRANSACTIONS
Parent entity:
Atomo Diagnostics Limited is the parent entity.
Subsidiaries:
Interests in subsidiaries are set out in Note 26.
Key management personnel compensation:
The aggregate compensation made to Directors and other members of key management personnel of the Group is
set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Total key management personnel compensation
Consolidated
2020
2019
981,089
284,605
55,928
26,356
164,302
26,600
4,000
144,312
1,227,675
459,517
Further details relating to key management personnel compensation are set out in the remuneration report included
in the Directors’ report.
64
Transactions with other related parties:
Transactions between related parties are on normal commercial terms and conditions and no more favourable than
those available to other parties, unless stated otherwise. The following transactions occurred with related parties:
ID&E Pty Ltd, a company controlled by Mr George Sidis, previously a Non-Executive
Director of the Company, provided the following services during the year:
Purchase of inventory
Research and development
Plant and equipment
Other services
Total
Consolidated
2020
2019
1,383,733
399,676
1,524,861
1,242,145
670,401
560,306
599,357
168,332
4,139,301
2,409,510
Mr George Sidis resigned as a Director of Atomo on 3 February 2020. A significant portion of the transactions noted
above occurred while Mr George Sidis was a Director of Atomo.
At the end of the financial year, the following amounts were shown owing to related
parties in trade and other payables:
640,615
392,073
Key management personnel transactions:
Directors and other key management personnel hold 28.2% of the issued capital of the Company as at 30 June 2020
(2019: 44%).
Loans from related parties:
Curt LaBelle is a Non-Executive Director of the Company and is also President of GHIF. During the year, the Group had
borrowings from GHIF, further details of which can be found at Note 13. GHIF is also a substantial shareholder of the
Company holding 11.38% of the issued capital of the Company as at 30 June 2020 (2019: 11.9%).
NOTE 25. PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
Statement of financial position
Assets
Total current assets
Total non-current assets
Total assets
Liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
Total net assets
Equity
Share capital
Share based payment reserve
Retained earnings
Total equity
65
2020
Parent
2019
(9,392,919)
(3,701,142)
-
-
(9,392,919)
(3,701,142)
Parent
2020
2019
38,388,486
7,139,760
2,787,862
1,927,679
41,176,348
9,067,439
1,447,299
3,194,605
105,023
6,422,270
1,552,322
9,616,875
39,624,026 (549,436)
66,514,571
17,110,055
746,970
585,105
(27,637,515)
(18,244,596)
39,624,026 (549,436)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
None.
Contingent liabilities
The contingent liability described in Note 22 is attributable to the parent entity. (2019: Nil).
Commitments
100% of the commitments disclosed at Note 23 are attributable to the parent entity (2019: Nil).
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1,
except for the following:
• Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
• Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
66
NOTE 26. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned
subsidiaries and branch operations in accordance with the accounting policy described in Note 1:
Name
Parent entity:
Atomo Diagnostics Limited
Subsidiaries:
Atomo Australia Pty Limited
Atomo Limited
Principal place of business /
Country of incorporation
Ownership interest
2020
%
2019
%
Australia
Australia
United Kingdom
100%
100%
100%
100%
Branch operations:
Atomo South Africa (operating branch of Atomo
Australia Pty Limited)
South Africa
100%
100%
NOTE 27. EVENTS AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect
the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in
future financial years.
NOTE 28. EARNINGS PER SHARE
67
Consolidated
2020
2019
Loss after income tax attributable to the owners of Atomo Diagnostics Limited
(9,613,954)
(5,083,335)
-
-
-
Loss after income tax attributable to the owners of Atomo Diagnostics Limited used in
calculating diluted earnings per share
(9,613,954)
(5,083,335)
Basic earnings per share
Diluted earnings per share
Cents
(2.71)
(2.71)
Cents
(1.82)
(1.82)
Number
Number
Weighted average number of ordinary shares:
Weighted average number of ordinary shares used in calculating basic earnings per
share
355,359,884 278,775,434
Adjustments for calculation of diluted earnings per share:
No adjustments given that in a loss situation, this would be anti-dilutive.
-
-
Weighted average number of ordinary shares used in calculating diluted earnings per
share
355,359,884 278,775,434
The weighted average number of ordinary shares used in the calculation for earnings per share for 2019 and 2020 has
been amended to reflect the 1:8 share split which took place during the 2020 year.
68
NOTE 29. SHARE-BASED PAYMENTS
Atomo has issued options under an “pre-IPO option plan” and a “new option plan”. Refer to the Remuneration Report
set out in the Directors’ Report for further details regarding each of these option plans.
Set out below are summaries of options granted under the pre-IPO and new option plans. All option quantities quoted
are on a post share split basis:
2020
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
20/04/2012
14 April 2022
21/11/2012
14 April 2022
27/06/2014
14 April 2022
$0.03
$0.03
$0.08
480,000
8,862,624
800,000
24/11/2016
24/11/2020
$0.16
10,400,000
06/04/2017 06/04/2021
06/04/2018 06/04/2022
15/09/2018
15/09/2022
11/04/2019
11/04/2023
14/04/2020 14/04/2024
14/04/2020 14/04/2025
14/04/2020 14/04/2026
$0.16
$0.16
$0.16
$0.16
$0.25
$0.25
$0.25
4,800,000
9,200,000
2,000,000
4,800,000
-
-
-
-
-
-
-
-
(480,000)
(6,569,440)
(800,000)
(5,400,000)
(1,200,000)
(2,400,000)
(1,200,000)
-
-
-
-
-
-
-
2,799,999
2,799,999
2,800,002
41,342,624
8,400,000 (18,049,440)
-
-
-
-
-
-
-
-
-
-
-
-
-
2,293,184
-
5,000,000
3,600,000
6,800,000
800,000
4,800,000
2,799,999
2,799,999
2,800,002
31,693,184
Weighted average exercise price
$0.13
$0.25
$0.11
n/a
$0.17
2019
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
20/04/2012 Note 1
21/11/2012
Note 1
27/06/2014
Note 1
$0.03
$0.03
$0.08
480,000
8,862,624
800,000
24/11/2016
24/11/2020
$0.16
10,400,000
06/04/2017 06/04/2021
$0.16
06/04/2018 06/04/2022 $0.16
15/09/2018
15/09/2022
$0.16
11/04/2019
11/04/2023
$0.16
4,800,000
9,200,000
-
-
-
-
-
-
-
-
2,000,000
4,800,000
34,542,624
6,800,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
480,000
8,862,624
800,000
10,400,000
4,800,000
9,200,000
2,000,000
4,800,000
41,342,624
Weighted average exercise price
$0.12
$0.16
n/a
n/a
$0.13
Note 1: These options originally had an exercise being two (2) years after their vesting date. These options
subsequently vested upon the successful IPO of the Company on 14 April 2020 (being the date that the Company
was admitted to the official list of the ASX. Accordingly, subsequent to 30 June 2019, the expiry date of these options
were set to 14 April 2022.
69
For the options granted during the current financial year, the valuation model inputs used to determine the fair value
at the grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value at
grant date
14/04/2020 14/04/2024
14/04/2020 14/04/2025
14/04/2020 14/04/2026
$0.20
$0.20
$0.20
$0.25
$0.25
$0.25
90.00%
90.00%
90.00%
0.00%
0.00%
0.00%
0.26%
0.35%
0.45%
$0.118
$0.131
$0.141
08 DIRECTORS’
DECLARATION
08 DIRECTORS’ DECLARATION
71
In the Directors’ opinion:
• the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
• the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
• the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as
at 30 June 2020 and of its performance for the financial year ended on that date; and
• there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors:
___________________________
John Keith
Chairman
31 August 2020
Sydney
09AUDITOR’S
REPORT
09 AUDITOR’S REPORT
73
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Atomo Diagnostics Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Atomo Diagnostics Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2020, 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 2020 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 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.
74
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.
Recognition and conversion of financial instruments
Key audit matter
How the matter was addressed in our audit
As set out in note 13, the Group issued convertible
Our procedures, amongst others, included:
Review the convertible debt and borrowing
agreements held to verify whether the input
used within the different calculations is
appropriately;
Review the calculated effective interest rate
method to account for the unwinding of the
liability component of the borrowings and
convertible note;
Review the fair value calculation of the
derivative liabilities upon initial recognition and
right before conversion and whether the
movement was accounted for through profit and
loss; and
Verify whether the recognition and conversion
of these financial instruments is in accordance
with Australian Accounting Standards.
notes amounting to a face value of $16m during the
year which were subsequently converted into common
shares upon Initial Public Offering (IPO). In addition the
Group paid back their USD$6m GHIF loan during the
period. Accounting for these notes and borrowings and
the subsequent measurement is complex and the
valuation requires significant judgement. The
conversion price clause attached to the convertible
notes and the warrants attached to the GHIF loan were
in both cases defined as a separate derivative liability
and segregated from the host instrument. A valuation
exercise was carried out by management at initial
recognition and immediately before conversion with
respect to these derivative liabilities, which required
judgement and estimation. The derivative liability is
measured at fair value through profit and loss. The
liability component of both financial instruments is
measured at amortised costs using the effective
interest rate method.
The audit of these financial instruments is a key audit
matter due to the significant judgment and complexity
involved in assessing the determination of the fair
value of the identified derivative liabilities and the
complexities within the effective interest rate method.
75
Revenue recognition
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 3, the Group recognised revenue
Our procedures, amongst others, included:
from the sale of goods of $5,368,698 for the year
ended 30 June 2020. Revenue was identified as a key
audit matter as it is a key performance indicator to the
users of the financial report.
•
Considering whether the revenue recognition
policies are in accordance with Australian
Accounting Standards and the Group’s
accounting policies described in Note 1;
•
•
Substantive testing around year end to
ensure that revenue is correctly recorded in
the period to which it relates; and
Select a sample of revenue transactions
during the year and substantively test to
ensure that the revenues have been
appropriately reflected in the financial
statements for the year ended 30 June
2020.
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 2020, 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.
76
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.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2020.
In our opinion, the Remuneration Report of Atomo Diagnostics Limited, for the year ended 30 June
2020, 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
Gareth Few
Director
Sydney, 31 August 2020
10
10SHAREHOLDER
INFORMATION
78 10 SHAREHOLDER INFORMATION
Investor information as at 25 September 2020.
NUMBER OF SECURITYHOLDERS
At the specified date, there were 8,789 holders of ordinary shares (quoted and unquoted) and 18 holders of options
(unquoted) over ordinary shares. These were the only classes of equity securities on issue.
SHAREHOLDING DISTRIBUTION
Size of shareholding
Number of holders
Number of shares % of Issued Capital
1-1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 and above
Total
403
4,087
1,488
2,501
314
8,793
322,108
10,432,628
12,131,681
80,135,384
458,376,006
561,397,807
0.06
1.86
2.16
14.27
81.65
100
TWENTY LARGEST HOLDERS OF QUOTED ORDINARY SHARES
Name
Shares held % of issued capital
1
2
DALRAIDA HOLDINGS PTY LIMITED
GLOBAL HEALTH INVESTMENT FUND I LLC
3 WALKER GROUP HOLDINGS PTY LTD
4 NATIONAL NOMINEES LIMITED
5
6
7
8
9
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BLUEFLAG HOLDINGS PTY LTD
GRAND CHALLENGES CANADA
LIVERBIRD PTY LTD
10 SOKOLOV PTY LTD
11
I D E PTY LTD
12 MARK ANDREW SMITH
13
JOHN MICHAEL KELLY
14 LEO JAMES LYNCH & JUDITH ANNE BESWICK
15 BNP PARIBAS NOMS PTY LTD
16 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
17 MR IAN FREDRICK JOHNSON
18 BOSANA NOMINEES PTY LTD
19 RUTH KAREN DEVNEY
20 NICOLA JAYNE RIGBY
Total
66,160,000
63,851,280
46,660,718
32,478,361
18,556,834
17,624,130
13,760,000
11,390,824
9,731,653
9,202,181
9,032,248
7,790,224
7,370,248
7,321,121
6,972,741
6,528,750
6,079,560
5,881,496
5,626,408
4,846,220
356,864,997
11.79
11.38
8.32
5.79
3.31
3.14
2.45
2.03
1.73
1.64
1.61
1.39
1.31
1.30
1.24
1.16
1.08
1.05
1.00
0.86
63.60
79
SUBSTANTIAL HOLDERS
Substantial holders as disclosed in substantial holding notices given to the Company were as follows:
Name of substantial holder
Dalraida Holdings Pty Ltd
Global Health Investment Fund I, LLC
Walker Group Holdings Pty Ltd
Perennial Value Management Limited
Ellerston Capital Limited
Number of shares
over which relevant
interest is held % of issued capital
Date of Notice
73,530,248
63,851,280
46,660,718
41,762,504
34,375,000
13.11
11.38
8.32
7.44
6.13
23.4.2020
23.4.2020
8.5.2020
15.6.2020
17.4.2020
QUOTED SHARES SUBJECT TO VOLUNTARY ESCROW
There were 68,881,432 quoted ordinary shares subject to a voluntary escrow period (excluding shares subject to ASX
restrictions) as follows:
Voluntary escrow period
6 months from date of quotation
12 months from date of quotation
Total
UNQUOTED RESTRICTED SECURITIES
Number of shares
Date escrow
period ends
19,775,112
16 October 2020
49,106,320
68,881,432
16 April 2021
There were 156,307,471 unquoted ordinary shares and 19,200,000 unquoted options over ordinary shares subject to a
restriction period as follows:
Restriction period
Class of security
Number
24 months ASX restriction
from date of official quotation
ORD
156,307,471
24 months ASX restriction
from date of official quotation
Options
19,200,000
Number
of holders
Date escrow period
ends
10
6
16 April 2021
16 April 2021
OPTIONHOLDING DISTRIBUTION
Size of optionholding
Number of holders Number of options % of Issued Options
1-1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 and above
Total
0
0
0
0
18
18
0
0
0
0
31,693,184
31,693,184
-
-
-
-
100
100
80
UNQUOTED OPTIONS OVER ORDINARY SHARES
There were 31,693,184 unquoted options over ordinary shares on issue, 19,200,000 of which were restricted securities
as follows:
Unquoted options – description
Number of options
Number of holders
Options expiring 6 Apr 2021 Ex 16C Restricted
Options expiring 6 Apr 2022 Ex 16C Restricted
Options expiring 11 Apr 2023 Ex 16C Restricted
Options expiring various dates Ex 25C Restricted
Options expiring 24 Nov 2020 Ex 16C Restricted
Options expiring 24 Nov 2020 Ex 16C
Options expiring 6 Apr 2022 Ex 16C
Options expiring 15 Sept 2022 Ex 16C
Options expiring 16 Apr 2022 Ex 3C
Options expiring various dates Ex 25C
Total options on issue
No person holds 20% or more of the unquoted options on issue.
VOTING RIGHTS
3,600,000
6,000,000
4,800,000
3,600,000
1,200,000
3,800,000
800,000
800,000
2,293,184
4,800,000
31,693,184
4
5
5
2
1
4
1
1
1
3
Ordinary shares (including partly paid shares) carry voting rights on a one for one basis and unlisted options do not
carry voting rights.
UNMARKETABLE PARCELS
There no holders of an unmarketable parcel of shares based on the closing market price of $0.355 at the specified
date.
OTHER ASX REQUIRED INFORMATION
During the period between admission to the Official List of ASX and the end of the reporting period, the Company
used the cash and assets in a form readily convertible to cash that it had at the time of admission to the ASX, in a way
consistent with its business objectives. This statement is made pursuant to ASX Listing Rule 4.10.19.
11
11CORPORATE
DIRECTORY
82 11 CORPORATE DIRECTORY
Directors
Independent Non-Executive Chairman
John Keith
Managing Director & CEO
John Kelly
Non-Executive Directors
Curt LaBelle
Connie Carnabuci
Paul Kasian
Company Secretary
Gillian Nairn
Registered office
Share Registry
Auditor
Solicitors
Level 2,
701-703 Parramatta Road
Leichhardt, NSW 2040
Tel: +61 2 9099 4750
Link Market Services Limited
Level 12, 680 George Street
Sydney, NSW 2000
Tel: 1300 554 474
BDO Audit Pty Ltd
Level 11, 1 Margaret Street
Sydney NSW 2000
HWL Ebsworth Lawyers
Level 14, Australia Square
264-278 George Street
Sydney, NSW 2000
Stock exchange listing
Atomo Diagnostics Limited shares are listed on the Australian Securities Exchange
(ASX code:AT1)
Website
www.atomodiagnostics.com
Atomo Diagnostics Limited
ACN 142 925 684